ECP Commercial I LLC v. Boaz Shopping Center LLC et al

Filing 1

Agreed ORDER Appointing Receiver. $46.00; Receipt Number 073196. by Thomas Anderson, United States District Judge, Western District of Tennessee on 2/19/2016. (Attachments: # 1 Exhibit 1 Part 1, # 2 Exhibit 1 Part 2, # 3 Exhibit 1 Part 3, # 4 Exhibit 1 Part 4, # 5 Exhibit 1 Part 5, # 6 Exhibit 1 Part 6, # 7 Exhibit 2) (dbera, )

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
ECP COMMERCIAL I LLC
383 Inverness Parkway, Suite 390
Englewood, Colorado 80112
Plaintiff,
v.
BOAZ SHOPPING CENTER LLC
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
and
EDEN SHOPPING CENTER LLC
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
and
MAYODAN SHOPPING CENTER LLC
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
and
NEWTON SHOPPING CENTER LLC
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
and
PLAINVIEW II SHOPPING CENTER LLC
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
and

234216

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

EXHIBIT 1

CASE NO.: 15-cv-02247-STA-cgc

PUEBLO WEST SHOPPING CENTER LLC
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
and
JEFF H. FARMER, JR.,
as Collection Agent
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
and
JEFF H. FARMER, III,
as Collection Agent
5851 Ridge Bend Road
Memphis, Tennessee 38120-9412
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

SECOND AMENDED COMPLAINT FOR FORECLOSURE,
APPOINTMENT OF A RECEIVER, AND INJUNCTIVE RELIEF

Plaintiff, ECP Commercial I LLC (“ECP”), for its Complaint against the defendants
respectfully states as follows:
PARTIES, JURISDICTION, AND VENUE
1.

ECP brings this second amended complaint to address junior lienholders who

were omitted inadvertently from the prior Amended Complaint for Foreclosure, Appointment of
Receiver and Injunctive Relief.
2.

Plaintiff, ECP, is a Delaware limited liability company that has its principal place

of business at 383 Inverness Parkway, Suite 390, Englewood, Colorado 80112.

-2-

The sole

member of ECP is ECP Capital I LLC. The sole member of ECP Capital I LLC is Excelsior
Capital Partners LLC. No member of Excelsior Capital Partners LLC is a citizen of the same
state as any defendant for diversity purposes. No member or sub-member of ECP or its members
and sub-members is a citizen of Tennessee.
3.

Defendant Boaz Shopping Center LLC (“Boaz”) is a Delaware limited liability

company that has its principal place of business at 5851 Ridge Bend Road Memphis, Tennessee
38120-9412, and is a citizen of Tennessee for diversity purposes. Boaz has two members. One
member is an individual citizen of Tennessee. The second member is a limited liability company
whose members are all individual citizens of Tennessee.

Defendant Boaz is named as a

Defendant as it may claim an interest in the property, as defined herein, which is the subject of
this foreclosure.
4.

Defendant Eden Shopping Center LLC (“Eden”) is a Delaware limited liability

company that has its principal place of business at 5851 Ridge Bend Road Memphis, Tennessee
38120-9412, and is a citizen of Tennessee for diversity purposes. Eden has two members. One
member is an individual citizen of Tennessee. The second member is a limited liability company
whose members are all individual citizens of Tennessee.

Defendant Eden is named as a

Defendant as it may claim an interest in the property, as defined herein, which is the subject of
this foreclosure.
5.

Defendant Mayodan Shopping Center LLC (“Mayodan”) is a Delaware limited

liability company that has its principal place of business at 5851 Ridge Bend Road Memphis,
Tennessee 38120-9412, and is a citizen of Tennessee for diversity purposes. Mayodan has two
members. One member is an individual citizen of Tennessee. The second member is a limited

-3-

liability company whose members are all individual citizens of Tennessee. Defendant Mayodan
is named as a Defendant as it may claim an interest in the property, as defined herein, which is
the subject of this foreclosure.
6.

Defendant Newton Shopping Center LLC (“Newton”) is a Delaware limited

liability company that has its principal place of business at 5851 Ridge Bend Road Memphis,
Tennessee 38120-9412, and is a citizen of Tennessee for diversity purposes. Newton has two
members. One member is an individual citizen of Tennessee. The second member is a limited
liability company whose members are all individual citizens of Tennessee. Defendant Newton is
named as a Defendant as it may claim an interest in the property, as defined herein, which is the
subject of this foreclosure.
7.

Defendant Plainview Shopping Center II LLC (“Plainview”) is a Delaware

limited liability company that has its principal place of business at 5851 Ridge Bend Road
Memphis, Tennessee 38120-9412, and is a citizen of Tennessee for diversity purposes.
Plainview Shopping Center LLC has one member. The sole member is a limited liability
company whose sole member is an individual resident of Tennessee. Plainview Shopping Center
LLC is diverse with respect to ECP. Defendant Plainview is named as a Defendant as it may
claim an interest in the property, as defined herein, which is the subject of this foreclosure.
8.

Defendant Pueblo West Shopping Center LLC (“Pueblo” and together with Boaz,

Eden, Mayodan, Newton and Plainview, the “Shopping Center Defendants”) is a Delaware
limited liability company that has its principal place of business at 5851 Ridge Bend Road
Memphis, Tennessee 38120-9412, and is a citizen of Tennessee for diversity purposes. Pueblo
West Shopping Center LLC has two members.

-4-

One member is an individual citizen of

Tennessee. The other member is a limited liability company whose members are individual
citizens of Tennessee. Pueblo West Shopping Center LLC is diverse with respect to ECP.
Defendant Pueblo is named as a Defendant as it may claim an interest in the property, as defined
herein, which is the subject of this foreclosure.
9.

Defendant Jeff H. Farmer, Jr. (“Farmer”), is an individual citizen of Tennessee.

Farmer is named as a Defendant only in his capacity as “Collection Agent” (defined herein) as he
may claim an interest in the property as Collection Agent which is the subject of this foreclosure.
10.

Defendant Jeff H. Farmer, III (“Farmer III”) is an individual citizen of Tennessee.

Farmer III is named as a Defendant only in his capacity as “Collection Agent” (defined herein)
as he may claim an interest in the property as Collection Agent which is the subject of this
foreclosure.
11.

This Court has personal jurisdiction over the defendants.

12.

Venue is proper in this Court pursuant to 28 U.S.C. § 1391, as the Defendants are

residents of this judicial district.
13.

This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 on the

grounds that this civil action constitutes a controversy between citizens of different states and the
amount in controversy exceeds $75,000.

FACTS
The Master Loan
14.

On December 8, 2005, The Spectra Group, Inc. (“Spectra”), Farmer, and

KeyBank, National Association (“KeyBank”) entered into a Master Construction Loan

-5-

Agreement (the “Original Master Loan Agreement”) and related agreements and documents that
established a $75,000,000.00 commercial loan (the “Original Master Loan”) to Spectra and
otherwise reflected certain loan arrangements between the parties. A copy of the Original
Master Loan Agreement is attached as Exhibit 1 and incorporated herein.

The Cedartown, Georgia Loan
15.

On August 4, 2006, Cedartown LLC (“Cedartown”) and KeyBank entered into a

Project Agreement (the “Cedartown Loan Agreement”) and related agreements and documents
that established a $3,800,000.00 commercial loan (the “Cedartown Loan”) to Cedartown and
otherwise reflected certain loan arrangements between the parties. A copy of the Cedartown
Loan Agreement is attached as Exhibit 2 and incorporated herein.
16.

Cedartown and KeyBank entered into a $3,590,000.00 Promissory Note on

August 4, 2006 that evidenced a portion of the Cedartown Loan (“Cedartown Note A”). A copy
of Cedartown Note A is attached as Exhibit 3 and incorporated herein.
17.

Cedartown and KeyBank entered into a $210,000.00 Promissory Note on August

4, 2006 that evidenced a portion of the Cedartown Loan (“Cedartown Note B” and together with
Cedartown Note A, the “Cedartown Notes”). A copy of Cedartown Note B is attached as Exhibit
4 and incorporated herein.
18.

The Cedartown Notes included Cedartown’s promise to make certain payments to

KeyBank and to perform various other obligations.
19.

To secure the payment and performance of its obligations under the Cedartown

Loan Agreement and the Cedartown Notes, Cedartown executed a Mortgage, Assignment of

-6-

Rents, Security Agreement and Fixture Filing in favor of KeyBank (the “Original Cedartown
Mortgage”) on August 4, 2006, which was recorded in the official records of Polk County,
Georgia at Book 1172 Page 0001. The property and premises conveyed by the Cedartown
Mortgage as security for the Cedartown Loan Agreement and the Cedartown Note, and more
fully described in Exhibit A to the Cedartown Mortgage, include certain buildings,
improvements, appurtenances, fixtures and personal property located thereon, and all rents,
income, proceeds and profits accruing and to accrue therefrom, consisting of a shopping center
known as the Cedartown Retail Center (collectively, the “Cedartown Property”). A copy of the
Cedartown Mortgage is attached as Exhibit 5 and incorporated herein.
20.

Also to secure the payment and performance of its obligations under the

Cedartown Loan Agreement and the Cedartown Notes, Cedartown executed an Assignment of
Leases and Rents (the “Original Cedartown Assignment”) in favor of KeyBank on August 4,
2006, which was recorded in the official records of Polk County, Georgia at Book 1172 Page
0030. Among other things, the Assignment provides for Cedartown’s assignment and transfer to
KeyBank of all the rents, income, and profits then or to become due from the real property and
improvements described in the Cedartown Assignment, including but not limited to all payments
from the leases identified in the Cedartown Assignment. A copy of the Cedartown Assignment
is attached as Exhibit 6 and incorporated herein.

The Eden, North Carolina Loan
21.

On August 10, 2005, Eden and KeyBank entered into a Project Agreement (the

“Eden Loan Agreement”) and related agreements and documents that established a

-7-

$2,512,500.00 commercial loan (the “Eden Loan”) to Eden and otherwise reflected certain loan
arrangements between the parties. A copy of the Eden Loan Agreement is attached as Exhibit 7
and incorporated herein.
22.

Eden and KeyBank entered into a $2,512,500.00 Promissory Note on August 10,

2005 that evidenced the Eden Loan (the “Eden Note”). A copy of the Eden Note is attached as
Exhibit 8 and incorporated herein.
23.

The Eden Note included Eden’s promise to make certain payments to KeyBank

and to perform various other obligations.
24.

To secure the payment and performance of its obligations under the Eden Loan

Agreement and the Eden Note, Eden executed a Mortgage, Assignment of Rents, Security
Agreement and Fixture Filing in favor of KeyBank (the “Original Eden Mortgage”) on August 3,
2005, which was recorded in the official records of Rockingham County, North Carolina at Book
1252 Page 483. The property and premises conveyed by the Eden Mortgage as security for the
Eden Loan Agreement and the Eden Note, and more fully described in Exhibit A to the Eden
Mortgage, include certain buildings, improvements, appurtenances, fixtures and personal
property located thereon, and all rents, income, proceeds and profits accruing and to accrue
therefrom, consisting of a shopping center known as the Eden Retail Center (collectively, the
“Eden Property”). A copy of the Eden Mortgage is attached as Exhibit 9 and incorporated
herein.
25.

Also to secure the payment and performance of its obligations under the Eden

Loan Agreement and the Eden Notes, Eden executed an Assignment of Leases and Rents (the
“Original Eden Assignment”) in favor of KeyBank on August 3, 2005, which was recorded in

-8-

the official records of Rockingham County, North Carolina at Book 1252 Page 515. Among
other things, the Assignment provides for Eden’s assignment and transfer to KeyBank of all the
rents, income, and profits then or to become due from the real property and improvements
described in the Eden Assignment, including but not limited to all payments from the leases
identified in the Eden Assignment. A copy of the Eden Assignment is attached as Exhibit 10 and
incorporated herein.

The Mayodan, North Carolina Loan
26.

On August 25, 2006, Tyler Shopping Center LLC, Pulaski Shopping Center LLC,

Shawnee Shopping Center LLC, Ft. Dodge, Keokuk Shopping Center LLC, West Burlington
Shopping Center LLC, Marshalltown Shopping Center LLC, Oskaloosa Shopping Center LLC,
(collectively, “Original Mayodan Borrower”) and KeyBank entered into a Project Agreement
(the “Mayodan Loan Agreement”) and related agreements and documents that established a
$4,875,000.00 commercial loan (the “Mayodan Loan”) to Original Mayodan Borrower and
otherwise reflected certain loan arrangements between the parties. A copy of the Mayodan Loan
Agreement is attached as Exhibit 11 and incorporated herein.
27.

Original Mayodan Borrower and KeyBank entered into a $4,875,000.00

Promissory Note on August 25, 2006 that evidenced a portion of the Mayodan Loan (the
“Mayodan Note”). A copy of the Mayodan Note is attached as Exhibit 12 and incorporated
herein.
28.

The Mayodan Note included Original Mayodan Borrower’s promise to make

certain payments to KeyBank and to perform various other obligations.

-9-

29.

To secure the payment and performance of its obligations under the Mayodan

Loan Agreement and the Mayodan Note, Original Mayodan Borrower executed a Construction
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing in favor of KeyBank
(the “Original Mayodan Mortgage”) on August 25, 2006, which was recorded in the official
records of Rockingham County, North Carolina at Book 1294 Page 1984. The property and
premises conveyed by the Mayodan Mortgage as security for the Mayodan Loan Agreement and
the Mayodan Note, and more fully described in Exhibit A to the Mayodan Mortgage, include
certain buildings, improvements, appurtenances, fixtures and personal property located thereon,
and all rents, income, proceeds and profits accruing and to accrue therefrom, consisting of a
shopping center known as the Mayodan Retail Center (collectively, the “Mayodan Property”). A
copy of the Mayodan Mortgage is attached as Exhibit 13 and incorporated herein.
30.

Also to secure the payment and performance of its obligations under the Mayodan

Loan Agreement and the Mayodan Notes, Original Mayodan Borrower executed an Assignment
of Leases and Rents (the “Original Mayodan Assignment”) in favor of KeyBank on August 25,
2006, which was recorded in the official records of Rockingham County, North Carolina at Book
1294 Page 2015.

Among other things, the Assignment provides for Original Mayodan

Borrower’s assignment and transfer to KeyBank of all the rents, income, and profits then or to
become due from the real property and improvements described in the Mayodan Assignment,
including but not limited to all payments from the leases identified in the Mayodan Assignment.
A copy of the Mayodan Assignment is attached as Exhibit 14 and incorporated herein.

- 10 -

The Pueblo, Colorado Loan
31.

On October 11, 2006, Durant Shopping Center LLC, Newton, Zachary Shopping

Center LLC (collectively, “Original Pueblo Borrower”), Spectra, Farmer, and KeyBank entered
into a Project Agreement (the “Pueblo Loan Agreement”) and related agreements and documents
that established a $2,250,000.00 commercial loan (the “Pueblo Loan”) to Pueblo Borrower and
otherwise reflected certain loan arrangements between the parties. A copy of the Pueblo Loan
Agreement is attached as Exhibit 15 and incorporated herein.
32.

Original Pueblo Borrower and KeyBank entered into a $2,250,000.00 Promissory

Note on October 11, 2006 that evidenced the Pueblo Loan (the “Pueblo Note”). A copy of the
Pueblo Note is attached as Exhibit 16 and incorporated herein.
33.

The Pueblo Note included Original Pueblo Borrower’s promise to make certain

payments to KeyBank and to perform various other obligations.
34.

To secure the payment and performance of its obligations under the Pueblo Loan

Agreement and the Pueblo Note, Original Pueblo Borrower executed a Construction Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing in favor of KeyBank (the
“Original Pueblo Mortgage”) on October 11, 2006, which was recorded in the official records of
Pueblo County, Colorado as file number 1698835. The property and premises conveyed by the
Pueblo Mortgage as security for the Pueblo Loan Agreement and the Pueblo Note, and more
fully described in Exhibit A to the Pueblo Mortgage, include certain buildings, improvements,
appurtenances, fixtures and personal property located thereon, and all rents, income, proceeds
and profits accruing and to accrue therefrom, consisting of a shopping center known as the
Pueblo Retail Center (collectively, the “Pueblo Property” and, together with the Cedartown

- 11 -

Property, the Eden Property and the Mayodan Property, the “Mortgaged Properties”). A copy of
the Pueblo Mortgage is attached as Exhibit 17 and incorporated herein.
35.

Also to secure the payment and performance of its obligations under the Pueblo

Loan Agreement and the Pueblo Note, Original Pueblo Borrower executed an Assignment of
Leases and Rents (the “Original Pueblo Assignment”) in favor of KeyBank on October 11, 2006,
which was recorded in the official records of Pueblo County, Colorado as file number 1698836.
Among other things, the Assignment provides for Pueblo’s assignment and transfer to KeyBank
of all the rents, income, and profits then or to become due from the real property and
improvements described in the Pueblo Assignment, including but not limited to all payments
from the leases identified in the Pueblo Assignment. A copy of the Pueblo Assignment is
attached as Exhibit 18 and incorporated herein.

Amendments to the Loan Documents
36.

Spectra, Farmer and others requested and KeyBank agreed to make certain

modifications to their agreements. As a result, the following amendments were made:
A. Spectra, Farmer and KeyBank entered into a First Amendment to Master Construction
Loan Agreement on June 30, 2006 (the “First Amendment to Master Loan Agreement”).
A copy of the First Amendment to Loan Agreement is attached as Exhibit 19 and
incorporated herein.
B. Spectra, Farmer and KeyBank entered into a Second Amendment to Master Construction
Loan Agreement on October 10, 2006 (the “Second Amendment to Master Loan
Agreement”). A copy of the Second Amendment to Loan Agreement is attached as
Exhibit 20 and incorporated herein.
C. Spectra, Farmer and KeyBank entered into a Third Amendment to Master Construction
Loan Agreement on July 18, 2007 (the “Third Amendment to Master Loan Agreement”).

- 12 -

A copy of the Third Amendment to Loan Agreement is attached as Exhibit 21 and
incorporated herein.
D. Spectra, Farmer and KeyBank entered into a Fourth Amendment to Master Construction
Loan Agreement on October 10, 2007 (the “Fourth Amendment to Master Loan
Agreement”). A copy of the Fourth Amendment to Loan Agreement is attached as
Exhibit 22 and incorporated herein.
E. Spectra, Farmer and KeyBank entered into a Fifth Amendment to Master Construction
Loan Agreement on April 15, 2009 (the “Fifth Amendment to Master Loan Agreement”).
A copy of the Fifth Amendment to Loan Agreement is attached as Exhibit 23 and
incorporated herein.
F. In connection with the Fifth Amendment to Master Loan Agreement, certain mortgages
were modified, including as follows:
i.

On June 26, 2009, Tell City Shopping Center LLC, Ottumwa Shopping Center
LLC, Newcastle Shopping Center LLC, Keokuk Shopping Center LLC (together,
“Cedartown Borrower”) and KeyBank entered into a First Amendment to
Mortgage, Assignment of Rents, Security Agreement and Fixture Filing and Deed
to Secure Debt which amended the Original Cedartown Mortgage (the
“Cedartown Mortgage Amendment” and together with the Original Cedartown
Mortgage, the “Cedartown Mortgage”), which was recorded in the official records
of Polk County, Georgia on September 9, 2009 at book 1340 page 112. A copy of
the Cedartown Mortgage Amendment is attached hereto as Exhibit 24 and
incorporated herein by reference.

ii.

On June 26, 2009, Cedartown Borrower and KeyBank entered into a First
Amendment to Assignment of Leases and Rents which amended the Original
Cedartown Assignment (the “Cedartown Assignment Amendment” and together
with the Original Cedartown Assignment, the “Cedartown Assignment”), which
was recorded in the official records of Polk County, Georgia on September 9,
2009 at book 1340 page 123. A copy of the Cedartown Assignment Amendment
is attached hereto as Exhibit 25 and incorporated herein by reference.

iii.

On June 26, 2009, Eden and KeyBank entered into a First Amendment to
Construction Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing which amended the Original Eden Mortgage (the “Eden Mortgage
Amendment” and together with the Original Eden Mortgage, the “Eden
Mortgage”), which was recorded in the official records of Rockingham County,
North Carolina on September 3, 2009 as file number 20090009155. A copy of the
Eden Mortgage Amendment is attached hereto as Exhibit 26 and incorporated
herein by reference.

- 13 -

iv.

On June 26, 2009, Eden and KeyBank entered into a First Amendment to
Assignment of Leases and Rents which amended the Original Eden Assignment
(the “Eden Assignment Amendment” and together with the Original Eden
Assignment, the “Eden Assignment”), which was recorded in the official records
of Rockingham County, North Carolina on September 3, 2009 as file number
20090009156. A copy of the Eden Assignment Amendment is attached hereto as
Exhibit 27 and incorporated herein by reference.

v.

On June 26, 2009, Mayodan Borrower and KeyBank entered into a First
Amendment to Construction Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing which amended the Original Mayodan Mortgage
(the “Mayodan Mortgage Amendment” and together with the Original Mayodan
Mortgage, the “Mayodan Mortgage”), which was recorded in the official records
of Rockingham County, North Carolina on September 3, 2009 as file number
20090009157. A copy of the Mayodan Mortgage Amendment is attached hereto
as Exhibit 28 and incorporated herein by reference.

vi.

On June 26, 2009, Mayodan Borrower and KeyBank entered into a First
Amendment to Assignment of Leases and Rents which amended the Original
Mayodan Assignment (the “Mayodan Assignment Amendment” and together with
the Original Mayodan Assignment, the “Mayodan Assignment”), which was
recorded in the official records of Rockingham County, North Carolina on
September 3, 2009 as file number 20090009158. A copy of the Mayodan
Assignment Amendment is attached hereto as Exhibit 29 and incorporated herein
by reference.

vii.

On June 26, 2009, Pueblo Borrower and KeyBank entered into a First
Amendment to Construction Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing which amended the Original Pueblo Mortgage (the
“Pueblo Mortgage Amendment” and together with the Original Pueblo Mortgage,
the “Pueblo Mortgage”; the Pueblo Mortgage, together with the Cedartown
Mortgage, the Eden Mortgage and the Mayodan Mortgage, the “Mortgages”),
which was recorded in the official records of Pueblo County, Colorado on August
25, 2009 as file number 1816477. A copy of the Pueblo Mortgage Amendment is
attached hereto as Exhibit 30 and incorporated herein by reference.

viii.

On June 26, 2009, Pueblo Borrower and KeyBank entered into a First
Amendment to Assignment of Leases and Rents which amended the Original
Pueblo Assignment (the “Pueblo Assignment Amendment” and together with the
Original Pueblo Assignment, the “Pueblo Assignment”; the Pueblo Assignment,
together with the Cedartown Assignment, the Eden Assignment and the Mayodan
Assignment, the “Assignments”), which was recorded in the official records of
Pueblo County, Colorado on August 25, 2009 as file number 1816478. A copy of

- 14 -

the Pueblo Assignment Amendment is attached hereto as Exhibit 31 and
incorporated herein by reference.
ix.

Each amendment described in paragraph 111(F)(i-viii) caused the documents
described therein to be cross-collateralized, so that each secured all indebtedness
owed to KeyBank under the Master Loan Agreement, as amended.

G. Spectra, Farmer and KeyBank entered into a Loan Extension Agreement and Sixth
Amendment to Master Construction Loan Agreement on July 15, 2010 (the “Sixth
Amendment to Master Loan Agreement”). A copy of the Sixth Amendment to Loan
Agreement is attached hereto as Exhibit 32 and incorporated herein by reference.
H. KeyBank, Defendants and others entered into a Seventh Amendment to Master
Construction Loan Agreement on April 15, 2011 (the “Seventh Amendment to Master
Loan Agreement”). A copy of the Seventh Amendment to Master Loan Agreement is
attached hereto as Exhibit 33 and incorporated herein by reference.

The Amended and Restated Notes
37.

Certain defendants and other parties (collectively, the “Main Note Borrowers”)

and KeyBank entered into an April 15, 2011 Fourth Amended and Restated Promissory Note #1
(“Note 1”), whereby the Main Note Borrowers promised to pay KeyBank the sum of
$61,183,162.51 with interest at the rate and according to the terms of Note 1. A copy of Note 1
is attached hereto as Exhibit 34 and incorporated herein by reference.
38.

The Main Note Borrowers and KeyBank entered into an April 15, 2011 Fourth

Amended and Restated Promissory Note #2 (“Note 2”), whereby the Main Note Borrowers
promised to pay KeyBank the sum of $4,563,625.15 with interest at the rate and according to the
terms of Note 2. A copy of Note 2 is attached hereto as Exhibit 35 and incorporated herein by
reference.
39.

The Main Note Borrowers and KeyBank entered into an April 15, 2011 Third

Amended and Restated Promissory Note #3 (“Note 3”), whereby the Note

- 15 -

3 Borrowers

promised to pay KeyBank the sum of $2,670,206.11 with interest at the rate and according to the
terms of Note 3. A copy of Note 3 is attached as Exhibit 36 and incorporated herein.
40.

Radcliff Shopping Center LLC, Ottumwa Shopping Center LLC, Shelbyville

Shopping Center LLC, Plainview Shopping Center LLC, Boaz, La Junta Shopping Center LLC,
Wauseon Shopping Center LLC, Ft. Dodge Shopping Center LLC (collectively, the “Salisbury
Borrowers”; the Salisbury Borrowers, together with the Main Note Borrowers, the “Borrowers”)
and KeyBank entered into an April 15, 2011 Amended and Restated Promissory Note (the
“Salisbury Note” and, together with Note 1, Note 2 and Note 3, the “Notes”), whereby the
Salisbury Borrowers promised to pay KeyBank the sum of $732,032.97 with interest at the rate
and according to the terms of the Salisbury Note and the Master Agreement. A copy of the
Salisbury Note is attached as Exhibit 37 and incorporated herein.

Defaults and Forbearance
41.

The Notes matured on April 15, 2012 (the “Original Maturity Date”).

42.

Spectra, Farmer, Borrowers and KeyBank entered into a Forbearance Agreement

dated July 5, 2012, (“Forbearance Agreement”) by which KeyBank agreed to forbear from
exercising its remedies until the earlier of certain “Terminating Events” (as described therein) or
September 24, 2012 (the “Forbearance Date”). A copy of the Forbearance Agreement is attached
as Exhibit 38 and incorporated herein.
43.

Spectra, Farmer and Borrowers defaulted on their Obligations to KeyBank under

the Notes by, among other things, failing to pay KeyBank all amounts due under the Notes on
the Forbearance Date.

- 16 -

KeyBank’s Assignment of the Loan Documents to ECP
44.

By a Purchase and Sale Agreement dated September 27, 2013 and related

documents, KeyBank assigned to ECP all of KeyBank’s right, title, and interest in and to the
Loan Documents and all amounts due thereunder.
45.

A copy of the Allonge to Note 1 is attached hereto as Exhibit 39 and incorporated

herein by reference.
46.

A copy of the Allonge to Note 2 is attached hereto as Exhibit 40 and incorporated

herein by reference.
47.

A copy of the Allonge to Note 3 is attached hereto as Exhibit 41 and incorporated

herein by reference.
48.

A copy of the Allonge to the Salisbury Note is attached hereto as Exhibit 42 and

incorporated herein by reference.
49.

A copy of the Assignment of Mortgage, assigning the Cedartown Mortgage from

KeyBank to ECP and recorded in the official records of Polk County, Georgia at book 1483 page
219, is attached hereto as Exhibit 43 and incorporated herein by reference.
50.

A copy of the Assignment of Construction Deed of Trust, assigning the Eden

Mortgage from KeyBank to ECP and recorded in the official records of Rockingham County,
North Carolina at book 1464 page 1898, is attached hereto as Exhibit 44 and incorporated herein
by reference.
51.

A copy of the Assignment of Construction Deed of Trust, assigning the Mayodan

Mortgage from KeyBank to ECP and recorded in the official records of Rockingham County,

- 17 -

North Carolina at book 1464 page 1888, is attached hereto as Exhibit 45 and incorporated herein
by reference.
52.

A copy of the Assignment of Construction Deed of Trust, assigning the Pueblo

Mortgage from KeyBank to ECP and recorded in the official records of Pueblo County,
Colorado as file number 1957991, is attached hereto as Exhibit 46 and incorporated herein by
reference.
53.

To date, Borrowers remain in default of their Obligations to ECP under the Notes

and the Loan Agreement, and have failed to make payment of their outstanding obligations to
ECP.

Need and Grounds for Appointment of a Receiver
54.

The appointment of a receiver is necessary to preserve and manage the Mortgaged

Properties and collect the rents and profits therefrom during the pendency of this foreclosure
action.
55.

Each of the Mortgages contains a clause granting the secured party the right to

seek appointment of a receiver of the mortgaged property upon the occurrence of an Event of
Default (Cedartown Mortgage, §6.3(b); Eden Mortgage, §6.3(b); Mayodan Mortgage, §6.3(b);
Pueblo Mortgage, §6.3(b)).
56.

Absent the granting of the relief requested in this Complaint, the Mortgaged

Properties remains at risk of damage or loss, and neither Borrowers nor ECP will be able to
maximize the value of the Mortgaged Properties in a controlled, orderly fashion.

- 18 -

57.

ECP's interests in the Mortgaged Properties will be irreparably harmed if a

receiver is not appointed to take control of and to manage the Mortgaged Properties and collect
the rents and profits therefrom.
58.

As a direct and proximate result of Borrowers’ breach of the Loan Documents,

ECP has suffered injury in the amount of $36,067,244.35 as of May 28, 2015, plus reasonable
attorneys’ fees, interest, costs of this action, and other expenses incurred by ECP in enforcing its
rights under the Loan Documents.
59.

ECP’s economic injury increases so long as the Obligations owed by the

Borrowers remain unpaid.

The Collection Agents
60.

Farmer and Farmer III are authorized “Collection Agent” for Phillip Bittker, 6960

Orchard LLC, Scott Breimeister, Bittjal, Janet Brueck, John Clayton, Cohen Building, Cohen
Realty, MAJ Investors, MarthaGraber Hartman Trust, JF Investments, James Jalenak – YDJ,
L.R. Jalenak, Robert J Kaplan, Ronald Krelstein, Morris J Kriger, Frank Ognibene, Michael
Pietrangelo, Michael Pietrangelo Grandchildrens Trust, William Plough Trust, Joe Prather - The
Cascade Group, Alan Samules – YDJ, Rudi Scheidt, Lee Schwartzberg, Bobbie Shainberg
Marital Trust, Sally Shainberg Trust, Marty Silver, Martin Stein, Steve Wishnia, and Wishnia
LLC with respect to certain transactions related to the Cedartown Property (the “Cedartown
Collection Agent”).
61.

Cedartown Collection Agent may claim some interest in the Cedartown Property,

which interest, if any, is subordinate to ECP’s first priority lien.

- 19 -

62.

Farmer is the duly authorized successor collection agent for Phillip Bittker,

Bittjal, Allan Bittker, Ernest Buttross, John Buttross, John Clayton, Francis L. Fraenkel,
Physical Medicine Assoc. - Mayo Friedlis, L.R. Jalenak, Shimon Kaminetzky, Robert J
Kaplan, Wes Kraker, Ronald Krelstein, Fred Kesselman, Debbie Ognibene, Frank Ognibene
Clinic, Michael Pietrangelo, Bill Razzouk, Lee Schwartzberg, Marty Silver, and Steve
Wishnia with respect to certain transactions related to the Eden Property (the “Eden
Collection Agent”).
63.

Eden Collection Agent may claim some interest in the Eden Property, which

interest, if any, is subordinate to ECP’s first priority lien.
64.

Farmer is the duly authorized collection agent for 6960, Lois Abrosh, Richard

Awdeh, Bittjal Partners, Phillip Bittker, Allan Bittker, Ernest Buttross, John Buttross, John
Clayton, Francis Fraenkel, Zachary Fusco, Jo A. Fusco, L. R. Jalenak, JF Investments, Wesley
Kraker, Davis Kraus, Ronald Krelstein, Morris Kriger, MAJ Investors, Jerome Makowsky,
Hubert Menke Mar Trt A, Hubert Menke Mar Trt B, Debbie Ognibene, Ognibene Clinic PS
Plan, R.M./Peter Osborne Partn, Michael Pietrangelo, William Razzouk, Lee Schwartzberg,
Bobbie Shainberg, Martin G. Silver, TTEE, Merle Stahl, Prather Family Trust, and Steven
Wishnia with respect to certain transactions related to the Mayodan Property (the “Mayodan
Collection Agent”).
65.

Mayodan Collection Agent may claim some interest in the Mayodan Property,

which interest, if any, is subordinate to ECP’s first priority lien.
66.

Farmer is the duly authorized collection agent for Allan M. Bittker, Sole Trustee,

or his successors in Trust, under the Allen M. Bittker Living Trust, dated December 20, l 996, as

- 20 -

amended, and Phillip L. Bittker, Sole Trustee, or his successors in Trust, under the Phillip L.
Bittker Living Trust, dated June 23, 1983, as amended, with respect to certain transactions
related to the Pueblo Property (the “Pueblo Collection Agent”).
67.

Pueblo Collection Agent may claim some interest in the Pueblo Property, which

interest, if any, is subordinate to ECP’s first priority lien.

COUNT ONE – FORECLOSURE OF THE CEDARTOWN MORTGAGE
68.

ECP incorporates each of the averments of the foregoing paragraphs of this

Complaint as if such averments were set forth in full and at length in this Count.
69.

The Cedartown Mortgage is a valid and subsisting first lien on the Cedartown

Property, subject only to any lien of the other persons named as defendants in this action.
70.

ECP is the owner and holder of the Cedartown Mortgage and is entitled to

foreclose the Cedartown Mortgage.
71.

Title to the Cedartown Property is vested in defendant Plainview and Plainview is

thus the real party in interest with respect to this action to foreclose upon the Cedartown
Mortgage. A copy of a First American Title Insurance Company Title Insurance Commitment
evidencing Plainview's interest in the Plainview Property is attached hereto as Exhibit 47 and
incorporated by reference.
COUNT TWO – FORECLOSURE OF THE EDEN MORTGAGE
72.

ECP incorporates each of the averments of the foregoing paragraphs of this

Complaint as if such averments were set forth in full and at length in this Count.

- 21 -

73.

The Eden Mortgage is a valid and subsisting first lien on the Eden Property,

subject only to any lien of the other persons named as defendants in this action.
74.

ECP is the owner and holder of the Eden Mortgage and is entitled to foreclose the

Eden Mortgage.
75.

Title to the Eden Property is vested in defendant Eden and Eden is thus the real

party in interest with respect to this action to foreclose upon the Eden Mortgage. A copy of a
First American Title Insurance Company Title Insurance Commitment evidencing Eden’s
interest in the Eden Property is attached hereto as Exhibit 48 and incorporated by reference.
COUNT THREE – FORECLOSURE OF THE MAYODAN MORTGAGE
76.

ECP incorporates each of the averments of the foregoing paragraphs of this

Complaint as if such averments were set forth in full and at length in this Count.
77.

The Mayodan Mortgage is a valid and subsisting first lien on the Mayodan

Property, subject only to any lien of the other persons named as defendants in this action.
78.

ECP is the owner and holder of the Mayodan Mortgage and is entitled to foreclose

the Mayodan Mortgage.
79.

Title to the Mayodan Property is vested in defendant Mayodan and Mayodan is

thus the real party in interest with respect to this action to foreclose upon the Mayodan
Mortgage. A copy of a First American Title Insurance Company Title Insurance Commitment
evidencing Mayodan’s interest in the Mayodan Property is attached hereto as Exhibit 49 and
incorporated by reference.

- 22 -

COUNT FOUR – FORECLOSURE OF THE PUEBLO MORTGAGE
80.

ECP incorporates each of the averments of the foregoing paragraphs of this

Complaint as if such averments were set forth in full and at length in this Count.
81.

The Pueblo Mortgage is a valid and subsisting first lien on the Pueblo Property,

subject only to any lien of the other persons named as defendants in this action.
82.

ECP is the owner and holder of the Pueblo Mortgage and is entitled to foreclose

the Pueblo Mortgage.
83.

Title to the Pueblo Property is vested in defendants Boaz, Newton and Pueblo and

Boaz, Newton and Pueblo are thus the real parties in interest with respect to this action to
foreclose upon the Pueblo Mortgage. A copy of a First American Title Insurance Company Title
Insurance Commitment evidencing the interests of Boaz, Newton and Pueblo in the Pueblo
Property is attached hereto as Exhibit 50 and incorporated by reference.

COUNT FIVE – APPOINTMENT OF RECEIVER FOR MORTGAGED PROPERTIES
84.

ECP incorporates each of the averments of the foregoing paragraphs of this

Complaint as if such averments were set forth in full and at length in this Count Eleven.
85.

Borrowers consented in writing to the appointment of a receiver for the

Mortgaged Properties, upon the occurrence and during the continuation of an event of default
under the Mortgages.
86.

As a matter of enforcement of the Mortgages, ECP is entitled to the appointment

of a receiver.

- 23 -

87.

The Mortgaged Properties are at risk of diminution and loss of value if a receiver

is not appointed to protect and manage the Mortgaged Properties and collect the rents and profits
therefrom during the pendency of this foreclosure action.
88.

By reason of the foregoing, ECP is suffering and will continue to suffer

immediate and irreparable injury, loss, and damage unless a receiver is appointed in this case.
89.

The appointment of a receiver is necessary to preserve, protect, and maintain the

value of ECP's secured interests in the Mortgaged Properties.
90.

The Mortgaged Properties and the rents and proceeds therefrom constitute funds

in litigation, and the rights of ECP cannot be fully protected without the appointment of a
receiver as requested herein.
91.

There is an imminent and foreseeable danger of harm to the Mortgaged

Properties, thereby authorizing the intervention of equity to appoint a receiver to take possession
and control of same.
92.

The Mortgaged Properties securing ECP's claims constitute assets charged with

the payment of debts where there is manifest danger of loss, destruction, or diminution in value
thereof.
93.

Appointment of a receiver in this case is consistent with Rule 66 of the Federal

Rules of Civil Procedure, 28 U.S.C. § 959, and applicable law.
94.

ECP is entitled to the immediate appointment of a receiver having the powers,

privileges, immunities and duties substantially as set forth in the draft proposed form of order
attached as Exhibit 51 and incorporated herein (the "Proposed Order").

- 24 -

COUNT SIX - INJUNCTION IN AID OF RECEIVERSHIP
95.

ECP incorporates each of the averments of the foregoing paragraphs of this

Complaint as if such averments were set forth in full and at length in this Count Six.
96.

ECP has no adequate remedy at law and is in danger of suffering irreparable harm

and injury as a result of imminent damage to or loss of the Mortgaged Properties.
97.

ECP is likely to succeed on the merits in this action.

98.

In connection with the appointment of a receiver as prayed for herein, it is

necessary and appropriate for the Court to enter an order imposing an injunction in aid of the
receiver fulfilling his duties as set forth in the Proposed Order. Such relief is necessary to the
implementation of the Proposed Order and the protection and preservation of the Mortgaged
Property.
WHEREFORE, ECP prays that process issue and that ECP have judgment as follows:
(a) Pursuant to Count One, that the Court find that the liens of the Cedartown
Mortgage and financing statements are valid and subsisting first liens on the
Cedartown Property, subject only to any lien that may be held by the other
persons named as defendants in this action, and that the Court enter an order (i)
foreclosing and cancelling the Cedartown Mortgage; (ii) foreclosing all rights,
title, liens and the equity of redemption and dower of all defendants named in this
action, (iii) requiring that the Cedartown Property be sold free and clear of all
liens, interests and dower, (iv) requiring all defendants to set up their liens or
interest in the Cedartown Property or be forever barred from asserting such liens
or interests, (v) ordering all liens to be marshaled; (vi) requiring that the proceeds

- 25 -

of the sale of the Cedartown Property be applied to pay all amounts due ECP
under the Loan Documents, and (vii) granting ECP all other relief, legal and
equitable, as may be proper and necessary, including, for example, a writ of
possession
(b) Pursuant to Count Two, that the Court find that the liens of the Eden Mortgage
and financing statements are valid and subsisting first liens on the Eden Property,
subject only to any lien that may be held by the other persons named as
defendants in this action, and that the Court enter an order (i) foreclosing and
cancelling the Eden Mortgage; (ii) foreclosing all rights, title, liens and the equity
of redemption and dower of all defendants named in this action, (iii) requiring that
the Eden Property be sold free and clear of all liens, interests and dower, (iv)
requiring all defendants to set up their liens or interest in the Eden Property or be
forever barred from asserting such liens or interests, (v) ordering all liens to be
marshaled; (vi) requiring that the proceeds of the sale of the Eden Property be
applied to pay all amounts due ECP under the Loan Documents, and (vii) granting
ECP all other relief, legal and equitable, as may be proper and necessary,
including, for example, a writ of possession
(c) Pursuant to Count Three, that the Court find that the liens of the Mayodan
Mortgage and financing statements are valid and subsisting first liens on the
Mayodan Property, subject only to any lien that may be held by the other persons
named as defendants in this action, and that the Court enter an order (i)
foreclosing and cancelling the Mayodan Mortgage; (ii) foreclosing all rights, title,

- 26 -

liens and the equity of redemption and dower of all defendants named in this
action, (iii) requiring that the Mayodan Property be sold free and clear of all liens,
interests and dower, (iv) requiring all defendants to set up their liens or interest in
the Mayodan Property or be forever barred from asserting such liens or interests,
(v) ordering all liens to be marshaled; (vi) requiring that the proceeds of the sale
of the Mayodan Property be applied to pay all amounts due ECP under the Loan
Documents, and (vii) granting ECP all other relief, legal and equitable, as may be
proper and necessary, including, for example, a writ of possession
(d) Pursuant to Count Four, that the Court find that the liens of the Pueblo Mortgage
and financing statements are valid and subsisting first liens on the Pueblo
Property, subject only to any lien that may be held by the other persons named as
defendants in this action, and that the Court enter an order (i) foreclosing and
cancelling the Pueblo Mortgage; (ii) foreclosing all rights, title, liens and the
equity of redemption and dower of all defendants named in this action, (iii)
requiring that the Pueblo Property be sold free and clear of all liens, interests and
dower, (iv) requiring all defendants to set up their liens or interest in the Pueblo
Property or be forever barred from asserting such liens or interests, (v) ordering
all liens to be marshaled; (vi) requiring that the proceeds of the sale of the Pueblo
Property be applied to pay all amounts due ECP under the Loan Documents, and
(vii) granting ECP all other relief, legal and equitable, as may be proper and
necessary, including, for example, a writ of possession
(e) Pursuant to Count Five, that the Court enter the Proposed Order appointing a

- 27 -

receiver for the Mortgaged Property, and all of the income, revenue and fixtures
relating thereto, with all of the powers and authorities set forth in the Proposed
Order;
(f) Pursuant to Count Six, that the Court grant the injunctive relief provided in the
Proposed Order; and
(g) That the Court grant to ECP such other and further relief as is just and equitable
under the circumstances.
Respectfully submitted, this 29th day of January, 2016.
LEITESS FRIEDBERG PC
/s/ Jeremy S. Friedberg
Jeremy S. Friedberg
10451 Mill Run Circle, Suite 1000
Baltimore, Maryland 21117
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
OF COUNSEL
BRADLEY ARANT BOULT CUMMINGS LLP
/s/ Austin L. McMullen
Austin L. McMullen
Roundabout Plaza
1600 Division Street, Ste. 700
Nashville, TN 37203
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
Attorneys for ECP Commercial I LLC

- 28 -

CERTIFICATE OF SERVICE
The undersigned hereby certifies that he has this 29th day of January, 2016, caused a true
and correct copy of the foregoing SECOND AMENDED COMPLAINT FOR FORECLOSURE,
APPOINTMENT OF A RECEIVER, AND INJUNCTIVE RELIEF and exhibits thereto to be
served by electronic delivery, upon the following parties:
Michael P. Coury
Glankler Brown, PLLC
6000 Poplar Avenue
Suite 400
Memphis, TN 38119
Counsel for Defendants for Boaz Shopping Center, LLC, Eden Shopping Center, LLC,
Mayodan Shopping Center, LLC, Newton Shopping Center, LLC, Plainview II Shopping
Center, LLC, Pueblo West Shopping Center, LLC, Jeff H. Farmer, Jr. and Jeff H. Farmer,
III
By:

- 29 -

/s/ Jeremy S. Friedberg
Jeremy Friedberg

MASTER CONSTRlJCTION LOAN AGREEMENT
FOR A PROJECT LOAN FACILITY IN THE AMOlJNT OF
$75,000,000.00
MADE BY AND BETWEEN
THE SPECTRA GROUP, INC.,
a Delaware corporation
AND

JEFF H. FARMER, JR.

AND
KEYBANK NATIONAL ASSOCIATION,
a national banking association,
580 Walnut Street, 2"d Floor,
Cincinnati, Ohio 45202

Dated as

of~~ ),J\,J_\.1, SJ , 2005

EXHIBIT 1

TABLE OF CONTENTS
ARTICLE I INCORPORATION OF RECTfALS AND EXHIBITS ............................................. !
1.1
1.2

Incorporation of Recitals .......................................................................................... I
Incorporation of Exhibits ......................................................................................... !

ARTICLE 2 DEFINITIONS ............................................................................................................ !
2. I
2.2

f)efined Tern1s ......................................................................................................... 1
Other Definitional Provisions ................................................................................ 12

ARTICLE 3 BORROWER'S REPRESENTATIONS AND WARRANTIES .............................. 12

3.1
3.2

Representations and Warranties ............................................................................. I 2
Survival of Representations and Warranties .......................................................... 15

ARTICLE 4 PROJECT LOANS AND PROJECT LOAN DOCUMENTS .................................. 15

!

I
••

4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9

4.10
4.11

Project Loan ........................................................................................................... 15
Project Loan Requests; Approval. ......................................................................... 16
Project Docun1ents ................................................................................................. 18
Term of Each Project Loan .................................................................................... 18
Stabilized Tranche ................................................................................................. 19
Prepayments ........................................................................................................... 20
Required Principal Payments ................................................................................. 20
Late Charge ............................................................................................................ 21
Miscellaneous ........................................................................................................ 21
()utlot Loan ............................................................................................................ 21
Indebtedness Secured By Project Loan Documents .............................................. 21

ARTICLE 5 INTEREST ................................................................................................................ 22

5 .1
5.2

Interest Rate ........................................................................................................... 22
Interest Rate Agreements ....................................................................................... 24

ARTICLE 6 COSTS OF MAINTAINING LOAN ........................................................................ 24
6.1

6.2

Increased Costs and Capital Adequacy .................................................................. 24
Borrower Withholding ........................................................................................... 26

ARTICLE 7 LOAN EXPENSE AND ADVANCES .................................................... , ............... 26

7 .I
7.2
7.3
7.4

Loan and Administration Expenses ....................................................................... 26
Loan Fee; Commitment Fee ................................................................................... 27
Exit Fee .................................................................................................................. 27
Lender's Attorneys' Fees and Disbursements ......................................................... 27

(i)

7.5
7.6
7. 7

Time of Payment of Fees and Expenses ................................................................ 27
Expenses and Advances Secured by Project Documents ...................................... 27
Right of Lender to Make Advances to Cure Borrower's Defaults ......................... 28

ARTICLE 8 NON-CONSTRUCTION REQUIREMENTS PRECEDENT TO TilE
OPL::NJNG OF A PROJECT LOAN ...................................................................... 28

8. J

Non-Construction Conditions Precedent. .............................................................. 28

ARTICLE 9 CONSTRUCTION REQUfREMENTS PRECEDENT TO TIIE OPENING
OF TH'E PROJECT LOAN .................................................................................... 3l
9.1

Required Construction Documents ........................................................................ 31

ARTICLE I 0 BUDGET AND CONTINGENCY FUND ............................................................. 33
I 0.1
I 0.2
I 0.3
10.4

Budget. ................................................................................................................... 33
Budget Line Iten1s .................................................................................................. 33
Contingency Fund .................................................................................................. 33
Optional Method for Payment of Interest. ............................................................. 34

ARTICLE 11 SUFFICIENCY OF PROJECT LOAN ................................................................... 34
11.1

Project Loan In Balance ......................................................................................... 34

ARTICLE 12 CONSTRUCTION PAYOUT REQUIREMENTS ................................................. 35
12.1
12.2
12.3
12.4
12.5
12.6
12.7

Applicability of Sections ........................................................................................ 35
Monthly Payouts .................................................................................................... 35
Documents to be Furnished for Each Disbursement.. ............................................ 35
Retainages .............................................................................................................. 36
Disbursements for Materials Stored On-Site ......................................................... 36
Disbursements for Offsite Materials ...................................................................... 37
Disbursements For Tenant Work and Allowances ................................................ 37

ARTICLE 13 FINAL DISBURSEMENT FOR CONSTRUCTION ............................................ 37
13.1

Final Disbursement for Construction ..................................................................... 3 7

ARTICLE 14 RESERVED ............................................................................................................ 38
ARTICLE 15 OTHER COVENANTS .......................................................................................... 39
15.1
15.2

Borrower further covenants and agrees as follows: ............................................... 39
Authorized Representative .................................................................................... .45

(ii)

I
~

ARTICLE 16 CASUALTIES AND CONDEMNATION ............................................................ .45
16.1
16.2

Lender's Election to Apply Proceeds on Indebtedness ......................................... .45
Borrower's Obligation to Rebuild and Use of Proceeds Therefor. ....................... .46

ARTICLE I7 ASSIGNMENTS BY LENDER AND BORROWER ........................................... .46
17.1
17.2
I 7.3
17.4

Assignments and Participations ............................................................................ .46
Prohibition of Assignments and Transfers by Borrower. ..................................... .4 7
Prohibition of Transfers in Violation of ERISA ................................................... .47
Successors and Assigns ......................................................................................... .47

ARTICLE I 8 TIME OF THE ESSENCE ..................................................................................... .47
I8.I

Time is ofthe Essence .......................................................................................... .47

ARTICLE 19 EVENTS OF DEFAULT ....................................................................................... .48
ARTICLE 20 LENDER'S REMEDIES IN EVENT OF DEFAULT ............................................ 50
20.1

Remedies Conferred Upon Lender ........ ,. .............................................................. 50

ARTICLE 21 GENERAL PROVISIONS ..................................................................................... 51
21 .1
21.2
21 .3
21.4
21 .5
21 .6
21.7
21.8
21 .9
21.10
21.11
21.12
21.13

Captions ................................................................................................................. 51
Modification; Waiver ............................................................................................. 51
Governing Law ...................................................................................................... 51
Acquiescence Not to Constitute Waiver of Lender's Requirements ...................... 51
Disclaimer by Lender. ............................................................................................ 52
Partial Invalidity; Severability ............................................................................... 52
Definitions Include Amendments ................................................. ,. ....................... 53
Execution in Counterparts ...................................................................................... 53
Entire Agreement. .................................................................................................. 53
Waiver ofDamages ................................................................................................ 53
Claims Against Lender. ..................... ,. .................................................................. 53
Jurisdiction ............................................................................................................. 53
Set-Offs .................................................................................................................. 54

ARTICLE 22 N()TICES ................................................................................................................ 54
ARTICLE 23 WAIVER OF JURY TRIAL ................................................................................... 56

(iii)

ARTICLE 24 OHIO PROVISIONS .............................................................................................. 56
24.1
24.2

Lender's Attorneys' Fees ........................................................................................ 56
Notice of Commencement. ........... ,........................................................................ 56

EXHIBITS TO LOAN AGREEMENT
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I

Title Requirements
Form of Survey Certification
LIBOR Notice Election
Insurance Requirements
Architect's Certificate
Borrower's Certificate
Soft and Hard Cost Requisition Form
Borrower's Certificate of Compliance
Project Agreement

(iv)

!
~
~'

MASTER CONSTRUCTION LOAN AGREEMENT
___
THIS MASTER CONSTRUCTION LOAN AGREEMENT ("Agreement") is made as of
\~)~_~cA~\..l_\.
'Z?
, 2005 ("the date of this Agreement"), by and between THE SPECTRA
GROUP, INC., a Delaware corporation and JEFF H. FARMER, JR., jointly and severally
("Developer"), and KEYBANK NATIONAL ASSOCIATION, a national banking association,
its successors and assigns ("Lender").
W

l IN E fi .S. E I

H:

RE,CITALS

A.
Developer is engaged in the business of acquisition and construction of "ShadowAnchored" retail centers that are adjacent to Super Wal-Mart stores.
B.
Developer has requested, and Lender has agreed to make available to Developer,
and entities owned and controlled by Developer, or any of them, a revolving line of credit facility
for the acquisition of land and construction of retail centers thereon in various states in the
United States of America, all on the terms and conditions hereinafter set forth.

~
~
'

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:

ARTICLE 1
INCORPORATION OF RECITALS AND EXHIBITS

l.l

Incorporation of Recitals.

The foregoing preambles and all other recitals set forth herein are made a part hereof by
this reference.

1.2

Incorporation of Exhibits.

Exhibits A through I, to this Agreement, attached hereto are incorporated m this
Agreement and expressly made a part hereof by this reference.

ARTICLE 2
DEFINITIONS

2.1

Defined Terms.
The following terms as used herein shall have the following meanings:

Adjusted LIBOR Rate: For any LIBOR Rate Interest Period, an interest rate per annum
equal to the sum of (A) the rate obtained by dividing (x) the LIBOR Rate for such LIBOR Rate

-1-

!l

Interest Period by (y) a percentage equal to one hundred percent (I 00%) minus the Reserve
Percentage for such LIBOR Rate Interest Period and (B) the LIBOR Rate Margin.
Adjusted Prime Rate: A rate per annum equal to the sum of (a) the Prime Rate Margin
and (b) the greater of ( i) the Prime Rate or ( ii) zero percent (0%) in excess of the Federal Funds
Effective Rate. Any change in the Adjusted Prime Rate shall be effective immediately from and
after such change in the Adjusted Prime Rate.
AfTiliate: With respect to a specified person or entity, any individual, partnership,
corporation, limited liability company, trust, unincorporated organization, association or other
entity which, directly or indirectly, through one or more intermediaries, controls or is controlled
by or is under common control with such person or entity, including, without limitation, any
general or limited partnership in which such person or entity is a partner.
Agreement:
This Master Construction Loan Agreement, as the same may be
supplemented, modified or amended from time to time.
Applicable Rate: As such term is defined in Section 5.l(a).
Appraisal: An MAl certified appraisal of a Project performed in accordance with
FIRREA and Lender's appraisal requirements by an appraiser selected and retained by Lender.
Architect: Duplantis Design Group, P.C. or such other architect designated for a
particular Project and approved by Lender in its sole but reasonable discretion.
Architect's Certificate: A certificate with respect to a particular Project in the form of
Exhibit E attached hereto executed by the Architect in favor of Lender.
Assignment of Rents: An assignment of leases and rents made by Borrower in favor of
Lender with respect to a Project assigning all leases, subleases and other agreements relating to
the use and occupancy of all or any portion of such Project, and all present and future leases,
rents, issues and profits therefrom.
Authorized Representative: Jeff H. Farmer, Jr.
Bankruptcy Code: Title 11 of the United States Code entitled "Bankruptcy" as now or
hereafter in effect, or any successor thereto or any other present or future bankruptcy or
insolvency statute.
Bond: A Performance Bond and Labor and Material Payment Bond in a form approved
by Lender, with the General Contractor or each Major Subcontractor, as the case may be, as
principal, with a surety company acceptable to Lender and licensed to do business in the State, as
surety, with a dual obligee rider in favor of Lender.

-2-

Borrower: An entity which will be the owner of a Project and the borrower under the
Project Loan made in respect of such Project. Jeff H. Farmer, Jr. shall control at least 50% of the
ownership interest of each Borrower and shall control the managing member or general partner
of each Borrower.
Breakage Costs: (a) The cost to Lender of re-employing funds bearing interest at an
Adjusted LJBOR Rate, incurred (or expected to be incurred) in connection with (i) any payment
of any portion of a Project Loan bearing interest at an Adjusted LIBOR Rate prior to the
termination of any applicable LIBOR Rate Interest Period, (ii) the conversion of an Adjusted
LIB OR Rate to any other applicable interest rate on a date other than the last day of the relevant
interest period, or (iii) the failure of Borrower to draw down, on the first day of the applicable
LIBOR Rate Interest Period, any amount as to which Borrower has elected a LIBOR Rate Option
and (b) any amounts payable by Borrower under any Interest Rate Agreement with respect to any
Project Loan in connection with termination of such Agreement.
Budget: The budget for a Project specifying all costs and expenses of every kind and
nature whatever to be incurred by Borrower in connection with a particular Project prior to the
Maturity Date for the Project Loan relating to such Project as it may be amended or
supplemented from time to time with the consent of Lender.

l

i
'

.

f,

Budget Line Item: As such term is defined in Section I 0.2.
Business Day: A day of the year on which banks are not required or authorized to close
in Cincinnati, Ohio.
Change Order: Any request for changes in the Plans and Specifications or a Construction
Contract for a Project (other than minor field changes involving no extra cost).
ComQ!etion Date: With respect to a Project, the date set f01ih in the Project Agreement
relating to such Project, subject to extension pursuant to Section 15.1 (b).
Construction or construction: With respect to a particular Project, the construction and
equipping of the Improvements in accordance with the Plans and Specifications, and all Tenant
Work and related improvements required to be performed by Borrower under Leases and the
installation of all personal property, fixtures and equipment required for the operation of such
Project.
Construction Commencement Date: With respect to a particular Project, no later than
30 days from the date ofthe Project Agreement.
Construction Schedule: A schedule satisfactory to Lender and Lender's Consultant,
establishing a timetable for completion of the Construction of a particular Project, showing, on a
monthly basis, the anticipated progress of the Construction and also showing that the
Improvements can be completed on or before the Completion Date.
Construction Tranche. As such term is defined in Section 4.1.

-3-

~ontingen0'

Fund: A Budget Line Item which shall represent an amount necessary to
provide reasonable assurances to Lender that additional funds are available to be used if
additional costs and expenses are incurred or additional interest accrues on a particular Project
Loan, or unanticipated events or problems occur.
Control: As such term is used with respect to any person or entity, including the
correlative meanings of the terms "controlled by" and "under common control with", shall mean
the possession, directly or indirectly, of the power to direct or cause the direction of the
management policies of such person or entity, whether through the ownership of voting
securities, by contract or otherwise.
j)ebt Service Coverage Ratio: With respect to a particular period, the ratio of (a) the
annualized Net Operating Income of a Project to (b) the 'fotal Annual Debt Service in connection
with the Project Loan for such Project.
Default or default: Any event, circumstance or condition, which, if it were to continue
uncured, would, with notice or lapse of time or both, constitute an Event of Default hereunder.
Default Rate: A rate per annum equal to three percentage points (300 basis points) in
excess of the Interest Rate otherwise applicable on each outstanding advance of a Project Loan,
but shall not at any time exceed the highest rate permitted by law.
Deficiency Deposit: As such term is defined in Section 11.1.
Environmental Indemni!Y_:
An environmental indemnity from the Borrower and
Guarantors, jointly and severally, indemnifying Lender, with respect to a particular Project Site,
with regard to all matters related to Hazardous Material and other environmental matters in form
acceptable to Lender in its sole discretion.
Environmental Proceedings: Any environmental proceedings, whether civil (including
actions by private parties), criminal, or administrative proceedings, relating to a Project.
Environmental Report: An environmental report prepared at Borrower's expense by a
qualified environmental consultant approved by Lender for a particular Project, dated not more
than three (3) months prior to the Loan Opening Date for such Project and addressed to Lender
(or subject to separate letter agreement permitting Lender to rely on such environmental report).
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder from time to time.
Event of Default: As such term is defined in Article 19.
Exit Fee: As such term is defined in Section 7.3.
Extended Project Maturity Date: As such term is defined in Section 4.4.
Extension Option: As such term is defined in Section 4.4.

-4-

~
~

Extension Term: The period of time commencing on the day after the Initial Project
Maturity Date for any particular Project Loan which has an Extension Option and ending on the
Extended Project Maturity Date for such Project Loan.
Eederal Funds Effective Rate: Shall mean, for any day, the rate per annum (rounded
upward to the nearest on one-hundredth of one percent (Ill 00 of I%)) announced by the Federal
Reserve Bank of Cleveland on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank in substantially the same manner as
such Federal Reserve Bank computes and announces the weighted average it refers to as the
"Federal Funds Effective Rate."
FIRREA: The Financial Institutions Reform, Recovery And Enforcement Act of 1989, as
amended from time to time.
General Contract: With respect to a Project, the general contract(s) between the
Borrower owning the Project and General Contractor, ·pertaining to the construction of all onsite
and offsite improvements for such Project.
General Contractor:

To be selected by Borrower for each Project and acceptable to

Lender.
Governmental Approvals: Collectively, all consents, licenses, and permits and all other
authorizations or approvals required from any Governmental Authority for the Construction in
accordance with the Plans and Specifications for a particular Project.
Governmental Authority: Any federal, state, county or municipal government, or
political subdivision thereof, any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality, or public body, or any court, administrative
tribunal, or public utility.
Gross Revenues: For any period, all revenues of Borrower, determined on a cash basis,
derived from the ownership, operation, use, leasing and occupancy of a particular Project during
such period; provided, however, that in no event shall Gross Revenues include (i) any loan
proceeds, (ii) proceeds or payments under insurance policies (except proceeds of business
interruption insurance); (iii) condemnation proceeds; (iv) any security deposits received from
tenants in the Project, unless and until the same are applied to rent or other obligations in
accordance with the tenant's lease; or (v) any other extraordinary items, in Lender's reasonable
discretion.
Guarantor: Collectively, those parties or entities that have guaranteed any Project Loan.
Guaranty: A guaranty executed by each Guarantor and pursuant to which one or more of
the Guarantors guarantee payment of principal, interest and other amounts due under the Project
Documents as to any Project Loan.

-5-

~

~'

Hazardous Material: Means and includes gasoline, petroleum, asbestos containing
materials, explosives, radioactive materials or any hazardous or toxic material, substance or
waste which is dclined by those or similar terms or is regulated as such under any Law of any
Uovernmental Authority having jurisdiction over any Project or any portion thereof or its use,
including:
(i) any "hazardous substance" defined as such in (or for purposes of) the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.A.
~ 9601(14) as may be amended from time to time, or any so-called "superfund" or "superlien"
Law, including the judicial interpretation thereof; (ii) any "pollutant or contaminant" as defined
in 42 U.S.C.A. ~ 9601 (33); (iii) any material now defined as "hazardous waste" pursuant to
40 C.F.R. Part 260; (iv) any petroleum, including crude oil or any fraction thereof; (v) natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel; (vi) any
"hazardous chemical" as defined pursuant to 29 C.F.R. Part 191 0; and (vii) any other toxic
substance or contaminant that is subject to any other Law or other past or present requirement of ·
any Governmental Authority. Any reference above to a Law, includes the same as it may be
amended from time to time, including the judicial interpretation thereof.
[mprovements: A shopping center consisting of one or more buildings together with
related improvements to be constructed by Borrower upon a Project Site in accordance with the
applicable Plans and Specifications.
In Balance or in balance: As such term is defined in Article II.
Including or including: Including hut not limited to.
Initial Project Maturity Date: With respect to each Project Loan, twelve (I 2) months
from the date of the Project Agreement for such Project Loan.
Interest Rate Agreement: As such term is defined in Section 5.2.
Interest Rate Protection Product: As such term is defined in Section 5.2.
Internal Revenue Code: The Internal Revenue Code of 1986, as amended from time to
time.
Laws: Collectively, all federal, state and local laws, statutes, codes, ordinances, orders,
rules and regulations, including judicial opinions or precedential authority in the applicable
jurisdiction.
Late Charge: As defined in Section 4.8.
Leases: The collective reference to all leases, subleases and occupancy agreements
affecting a particular Project or any part thereof now existing or hereafter executed and all
amendments, modifications or supplements thereto approved in writing by Lender.
Lender: As defined in the opening paragraph of this Agreement, and including any
successor holder of the Loan from time to time.

-6-

Lender's Consultant: An independent consulting architect, inspector, and/or engineer
designated by Lender in Lender's sole discretion.
LIBOR Business Day: A Business Day on which dealings in U.S. dollars arc carried on
in the London Interbank Market.
LIBOR Rate: For any LIBOR Rate Interest Period, the average rate (rounded upwards to
the nearest 1/16 111 ) as shown in Dow Jones Markets (formerly Telerate) (Page 3750) at which
deposits in U.S. dollars are offered by first class banks in the London Interbank Market at
approximately I I :00 a.m. (London time) on the day that is two (2) LIBOR Business Days prior
to the first day of such LIBOR Rate Interest Period with a maturity approximately equal to such
UBOR Rate Interest Period and in an amount approximately equal to the amount to which such
LIBOR Rate Interest Period relates, adjusted for reserves and taxes if required by future
regulations. If Dow .Jones Markets no longer reports such rate or Lender determines in good
faith that the rate so reported no longer accurately reflects the rate available to Lender in the
London Interbank Market, Lender may select a replacement index.
LIBOR Rate Interest Period: With respect to each amount bearing interest at a LIBOR
based rate, a period of one, two or three months, to the extent deposits with such maturities are
available to Lender, commencing on a LIBOR Business Day, as selected by Borrower provided,
however, that (i) any LIBOR Rate Interest Period which would otherwise end on a day which is
not a LIBOR Business Day shall continue to and end on the next succeeding LIBOR Business
Day, unless the result would be that such LIBOR Rate Interest Period would be extended to the
next succeeding calendar month, in which case such LIBOR Rate Interest Period shall end on the
next preceding LIBOR Business Day and (ii) any LIBOR Rate Interest Period which begins on a
day for which there is no numerically corresponding date in the calendar month in which such
LIBOR Rate Interest Period would otherwise end shall instead end on the last LIBOR Business
Day of such calendar month.
LIBOR Rate Margin: (a) For Project Loans (except as hereinafter described in (b) of this
definition) 1.85 percent (185 basis points) per annum, provided that if an Interest Rate
Agreement in form and substance acceptable to Lender in its sole discretion is in effect with
respect to all Project Loans outstanding hereunder and no Event of Default has occurred and is
continuing, then 1.75 percent (175 basis points) per annum; and (b) for those portions of Project
Loans designated an Outlot Loan, 2.35 percent (235 basis points) per annum provided that if an
Interest Rate Agreement in form and substance acceptable to Lender in its sole discretion is in
effect with respect to all Project Loans outstanding hereunder and no Event of Default has
occurred and is continuing, then 2.25 percent (225 basis points) per annum.
LIBOR Rate Option: As defined in Section 5.1 (b).
Loan: The $75,000,000 line of credit facility made up of the Construction Tranche and
the Stabilized Tranche.
Loan Amount: The maximum amount of the aggregated Project Loans as set forth in
Section 4.1 as reduced by principal payments made from time to time.

-7-

Loan Opening Date: With respect to any particular Project Loan, the date the Mortgage
has been recorded and all conditions to the initial disbursement of the particular Project Loan
have been satisfied.
Major Subcontractor: Any subcontractor under a Major Subcontract.
Major Subcontracts: With respect to a particular Project Loan, all subcontracts between
the General Contractor and any subcontractors and material suppliers which provide for an
aggregate contract price equal to or greater than $25,000.00.
Material Adverse Change or material adverse change: If, in Lender's reasonable
discretion, the business prospects, operations or financial condition of a person, entity or
property has changed in a manner which could impair the value of Lender's security for any
particular Project Loan or the Loan in general, prevent timely repayment of any Project Loan or
otherwise prevent the applicable person or entity from timely performing any of its material
obligations under any Project Documents.
Monthly Excess Cash Flow: For any month, the amount by which Gross Revenues for
any Project Loan exceed the sum of (w) actual cash operating expenses and (x) actual debt
service on such Project Loan.
Mortgage: For each particular Project Loan, a mortgage (or deed of trust), assignment of
leases and rents, security agreement and fixture filing in form and substance satisfactory to
Lender in its sole discretion, executed by Borrower for the benefit of Lender securing this
Agreement, the Project Agreement and all other Project Documents and all obligations of
Borrower in connection with the Project Loan, granting a first priority lien on Borrower's fee
interest in the particular Project, subject only to the Permitted Exceptions, as such mortgage or
deed of trust may be amended, supplemented or modified from time to time.
Net Operating Income: For any period, the gross income from operations of a particular
Project derived from arm's length, market rate rents from leases with unaffiliated third parties,
service fees or charges, (excluding capital gains income derived from the sale of assets and other
items of income which the Lender reasonably determines are unlikely to occur in any subsequent
period), less operating expenses (such as cleaning, utilities, administrative, landscaping, security
and management expenses), repairs and maintenance and reserves for replacements), and less
fixed exp_enses (such as insurance, real estate and other taxes), all as relating to the particular
Project, assuming for each of the foregoing categories of expenses, for any period during which
ninety-five percent (95%) of the net rentable area of the Project is not leased and occupied, a
ninety-five percent (95%) occupancy level. All operating expenses shall be related to the
particular Project, shall be for services from ann's length third party transactions or equivalent to
the same, and shall exclude all expenses for capital improvements and replacements, debt service
and depreciation or amortization of capital expenditures and other similar non-cash items.
Note: With respect to a Project Loan, a promissory note, in the amount of the Project
Loan, executed by the appropriate Borrower and payable to the order of Lender, evidencing the
Project Loan.

-8-

~
I

Opening of a Project Loan or Project Loan Opening: The tirst disbursement of Project
Loan proceeds with respect to a particular Project.
Operating Account: A deposit account opened and maintained by a Borrower with
Lender with respect to a Project Loan, to be utilized in the manner set forth in Section 4.9.
Operating Expenses: For any period, the pro forma costs and expenses of owning,
operating, managing and maintaining a particular Project (as shown in the Appraisal obtained for
such Project) during such period incurred by a Borrower, determined on a cash basis (except for
real and personal property taxes and insurance premiums, which shall be determined on an
accrual basis) (including, a $0.15 per square foot structural reserve, a seven percent (7%)
vacancy factor and a Jive percent (5%) management fee), excepting, however, (i) interest or
principal due on the particular Project Loan and (ii) capital expenditures by such Borrower.
Outlot Loan. As defined in Section 4.1 0.
Performance and Completion Guaranty: A guaranty of performance and completion,
executed by one or more of the Guarantors and pursuant to which one or more of the Guarantors
guaranty the lien-free and timely completion of a particular Project in accordance with all
provisions of this Agreement and Borrower's obligation to keep such Project Loan In Balance
and to pay for all cost overruns.
Permitted Exceptions: With respect to a particular Project, those matters listed on
Schedule B to the Title Policy to which title to the Project may be subject at the Project Loan
Opening and thereafter such other title exceptions as Lender may reasonably approve in writing.
Plans and Specifications: Detailed plans and specifications for the Improvements for a
particular Project Site, as approved by Lender pursuant to Section 9.1 (f), as modified hereafter
with Lender's prior written approval or as otherwise expressly permitted by this Agreement.
Prime Rate: That interest rate established from time to time by Lender as Lender's Prime
Rate, whether or not such rate is publicly announced; the Prime Rate may not be the lowest
interest rate charged by Lender for commercial or other extensions of credit;
Prime Rate Margin: 0% (0 basis points) per annum, except for an Outlot Loan, .50%
(50 basis points) per annum.
Pro-Forma Projection:
particular Project.

A pro forma statement of projected income and expenses of a

Project Agreement: A Project Agreement in the form of Exhibit I attached hereto, with
blanks completed appropriately, entered into between Lender and a Borrower, pursuant to which
Lender approves a Project for funding hereunder as required by Section 4.2, as the same may be
supplemented, modified or amended from time to time.
Project Closing: The closing date for a Project Loan.

-9-

prqject Cost: With respect to a Project, all costs and expenses incurred or to be incurred
by a Borrower in acquiring a Project Site, owning the Project and for work, labor and materials
furnished in connection with or incidental to the construction of such Project.
Project Documents: The collective reference, with respect to a Project Loan, to this
Agreement, the Project Agreement and the documents and instruments listed in Section 4.J, and
all the other documents and instruments entered into from time to time with respect to, or
evidencing or securing, the particular Project Loan or any obligation of payment thereof or
performance of Borrower's or Guarantor's obligations in connection with the transaction
contemplated hereunder and any Interest Rate Agreement, each as it may be amended.
supplemented or modified from time to time.
ProjecU.oan: With respect to a Project, that pmiion of the Loan approved by the Lender
and allocated to pay Project Costs for such Project, as shown on the Budget for such Project and
reflected in the Note and the Project Agreement for such Project.
Project Loan Cmmnitment Expiration Date: June 30, 2006.
Project Loan Maturity Date: The Initial Project Maturity Date, provided, if a Borrower
timely satisfies the conditions to extend the term of a particular Project Loan pursuant to
Section 4.4(b ), then the Project Maturity Date for such Project Loan shall be extended to the
Extended Project Maturity Date.
Project Site: The real estate designated by a Borrower or the Developer and approved by
Lender for the location and construction of a retail shopping center and related improvements.
Project: A Project Site and the Improvements to be constructed thereon.
Required Leases: Leases covering in the aggregate not less than 75% of the total rentable
space of any particular Project with tenants, and containing terms, satisfactory to Lender in its
sole discretion.
With respect to any particular Project, each building permit,
Required Permits:
environmental permit, utility permit, land use permit, wetland permit and any other permits,
approvals or licenses issued by any Governmental authority which are required in connection the
Construction or operation of such Project.
Reserve Percentage: For any LIBOR Rate Interest Period, that percentage which is
specified three (3) Business Days before the first day of such LIBOR Rate Interest Period by the
Board of Governors of the Federal Reserve System (or any successor) or any other governmental
or quasi-governmental authority with jurisdiction over Lender for determining the maximum
reserve requirement (including, but not limited to, any marginal reserve requirement) for Lender
with respect to liabilities constituting of or including (among other liabilities) Eurocurrency
liabilities in an amount equal to that portion of the Loan affected by such LIB OR Rate Interest
Period and with a maturity equal to such LIBOR Rate Interest Period.

-I 0-

Soil Report: A soil test report prepared by a licensed engineer satisfactory to Lender
indicating to the satisfaction of Lender that the soil and subsurface conditions underlying a
particular Project will support the Improvements with respect to such Project.
Stabilized Tranche. As such term is defined in Section 4.1.
State: The state in which a particular Project Site is located.
Subcontracts: Subcontracts for labor or materials to be furnished to a particular Project.
Tenant: The tenant under a Lease.
Tenant Work: With respect to a particular Project, work that Borrower is obligated to
perform pursuant to Leases for individual Tenants in their respective leased premises in the
Improvements for such Project.
Title Insurer: First American Title Insurance Company, or such other title insurance
company licensed in the State as may be approved in writing by Lender.
Title Policv: With respect to any particular Project, an ALTA Mortgagee's Loan Title
Insurance Policy with extended coverage issued by the Title Insurer insuring the lien of the
Mortgage as a valid first, prior and paramount lien upon the Project and all appurtenant
easements, and subject to no other exceptions other than the Permitted Exceptions and otherwise
satisfying the requirements of Exhibit A attached hereto and made a part hereof
Total Annual Debt Service: The aggregate of debt service payments for a 12 month
period on the stated principal amount of any particular Project Loan, assuming (i) a per annum
interest rate (herein, "Assumed Rate") equal to 2.0% above the yield on ten year United States
Treasury notes as of the close of business on the day preceding the date of calculation, as
announced on Bloomberg.com or another reliable source selected by Lender, provided that such
rate shall in no event be lower than 7% for purposes of this calculation, and (ii) monthly
payments of principal and interest based on an amortization period of twenty-five (25) years.
Transfer: Any sale, transfer, lease (other than a Lease approved by Lender), conveyance,
alienation, pledge, assignment, mortgage, encumbrance hypothecation or other disposition of
(a) all or any portion of a Project or any portion of any other security for any Project Loan, (b) all
or any portion of a Borrower's right, title and interest (legal or equitable) in and to a Project or
any portion of any other security for any Project Loan, or (c) any interest in a Borrower or any
interest in any entity which directly or indirectly holds an interest in, or directly or indirectly
controls, a Borrower.
Unavoidable Delay: Any delay in the construction of any particular Project, caused by
natural disaster, fire, earthquake, floods, explosion, extraordinary adverse weather conditions,
inability to procure or a general shortage of labor, equipment, facilities, energy, materials or
supplies in the open market, failure of transportation, strikes or lockouts for which Borrower has
notified Lender in writing.

-11-

~
~
~

2.2

Other Definitional Provisions.

All terms defined in this Agreement shall have the same meanings when used in the Note,
Mortgage, any other Project Documents, or any certificate or other document made or delivered
pursuant hereto. The words "hereor', "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement.

ARTICLE 3
BORROWER'S REPRESENTATIONS AND WARRANTIES
3.1

Representations and Warranties.

To induce Lender to fund each Project Loan approved by Lender, Developer and each
Borrower with respect to such Project Loan, represent and warrant, jointly and severally, to
Lender as follows (with references to the Project being to that Project funded by such Project
Loan):
(a)
Borrower has good and marketable fee simple title to the Project, subject only to
the Permitted Exceptions.
(b)
Except as previously disclosed to Lender in writing, no litigation or proceedings
are pending, or to the best of Borrower's or Developer's knowledge threatened, against Borrower
or any Guarantor, which could, if adversely determined, cause a Material Adverse Change with
respect to Borrower, any Guarantor or the Project. There are no pending Environmental
Proceedings and neither Borrower nor Developer has any knowledge of any threatened
Environmental Proceedings or any facts or circumstances which may give rise to any future
Environmental Proceedings.
(c)
Borrower is a duly organized and validly existing limited liability company and
has full power and authority to execute, deliver and perform all Project Documents to which
Borrower is a party, and such execution, delivery and performance have been duly authorized by
all requisite action on the part of Borrower.
No consent, approval or authorization of or declaration, registration or filing with
(d)
any Governmental Authority or nongovernmental person or entity, including any creditor,
partner, or member of Borrower or any Guarantor, is required in connection with the execution,
delivery and performance of this Agreement or any of the Project Documents other than the
recordation of the Mortgage, Assignment of Leases and Rents and the filing of UCC-1 Financing
Statements, except for such consents, approvals or authorizations of or declarations or filings
with any Governmental Authority or non-governmental person or entity where the failure to so
obtain would not have an adverse effect on Borrower or such Guarantor or which have been
obtained as of any date on which this representation is made or remade.
(c)
The execution, delivery and performance of this Agreement, the execution and
payment of the Note and the granting ofthe Mortgage and other security interests under the other
Project Documents have not constituted and will not constitute, upon the giving of notice or

-12-

lapse of time or both, a breach or default under any other agreement to which Borrower or
Guarantor is a party or may be bound or affected, or a violation of any law or court order which
may atfect the Project, any part thereof~ any interest therein, or the use thereof.
(f)
There is no default under this Agreement or the other Project Documents, nor any
condition which, after notice or the passage of time or both, would constitute a default or a1i
Event of Default under said documents.
(g)
No condemnation of any portion of the Project, (ii) no condemnation or relocation
of any roadways abutting the Project, and (iii) no proceeding to deny access to the Project fl·om
any point or planned point of access to the Project, has commenced or, to the best of Borrower's
or Developer's knowledge, is contemplated by any Governmental Authority.

'T'he amounts set forth in the Budget present a full and complete itemization by
(h)
category of all costs, expenses and fees which Borrower and Developer reasonably expect to pay
or reasonably anticipates becoming obligated to pay to complete the Construction and operate
the Project (until the Project achieves breakeven operations). Borrower and Developer are
unaware of any other such costs, expenses or fees which are material and are not covered by the
Budget.

I
I

Neither the construction of the Improvements nor the use of the Project when
completed and the contemplated accessory uses will violate (i) any Laws (including subdivision,
zoning, building, environmental protection and wetland protection Laws), or (ii) any building
permits, restrictions of record, or agreements affecting the Project or any part thereof. Neither
the zoning authorizations, approvals or variances nor any other right to construct or to use the
Project is to any extent dependent upon or related to any real estate other than the Project Site.
All Government Approvals required for the Construction in accordance with the Plans and
Specifications have been obtained or will be obtained prior to the Loan Opening Date for the
Project, and all Laws relating to the Construction and operation of the Improvements have been
complied with and all permits and licenses required for the operation of the Project which cannot
be obtained until the Construction is completed can be obtained if the Improvements are
completed in accordance with the Plans and Specifications.
(i)

(j)
The Project will have adequate water, gas and electrical supply, storm and
sanitary sewerage facilities, other required public utilities, fire and police protection, and means
of access between the Project and public highways; none of the foregoing will be foreseeably
delayed or impeded by virtue of any requirements under any applicable Laws.
(k)
No brokerage fees or commissions are payable by or to any person in connection
with this Agreement, the Project Agreement or the Project Loan to be disbursed hereunder.
(I)
All financial statements and other information previously furnished by Borrower
or any Guarantor or Tenant to Lender in connection with the Project Loan or the Loan are true,
complete and correct and fairly present the financial conditions of the subjects thereof as of the
respective dates thereof and do not fail to state any material fact necessary to make such
statements or infonnation not misleading, and no Material Adverse Change with respect to
Borrower or any Guarantor or Tenant has occurred since the respective dates of such statements

-13-

and information. Neither Borrower nor any Guarantor or Tenant has any material liability,
contingent or otherwise, not disclosed in such financial statements.
(m)
Except as disclosed by Borrower to Lender, (i) the Project is in a clean, safe and
healthful condition, and, except for materials used in the ordinary course of construction,
maintenance and operation of the Project, is free of all Hazardous Material and is in compliance
with all applicable Laws; (ii) neither Borrower nor, to the best knowledge of Borrower and
Developer, any other person or entity, has ever caused or permitted any Hazardous Material to be
placed, held, located or disposed of on, under, at or in a manner to affect the Project, or any part
thereof, and the Project has never been used (whether by Borrower or, to the best knowledge of
Borrower and Developer, by any other person or entity) for any activities involving, directly or
indirectly, the use, generation, treatment, storage, transportation, or disposal of any Hazardous
Material; (iii) neither the Project nor Borrower is subject to any existing, pending, or, to the best
of Borrower's and Developer's knowledge, threatened investigation or inquiry by any
Governmental Authority, and the Project is not subject to any remedial obligations under any
applicable Laws pertaining to health or the environment; and (iv) there are no underground
tanks, vessels, or similar facilities for the storage, containment or accumulation of Hazardous
Materials of any sort on, under or affecting the Project.
(n)
'fhe Project is taxed separately without regard to any other property and for all
purposes tl1e Project may be mortgaged, conveyed and otherwise dealt with as an independent
parcel.
(o)
Except for Leases which have been provided to and approved by Lender in
writing, Borrower and its agents have not entered into any Leases, subleases or other
arrangements for occupancy of space within the Project. True, correct and complete copies of all
Leases, as amended, have been delivered to Lender. All Leases are in full force and effect.
Neither Borrower nor any Tenant is in default under any Lease and Borrower has disclosed to
Lender in writing any material default by the tenant under any Lease.
(p)
When the Construction is completed in accordance with the Plans and
Specifications, no building or other improvement will encroach upon any property line, building
I inc, setback line, side yard line or any recorded or visible easement (or other easement of which
Borrower is aware or has reason to believe may exist) with respect to the Project.
The Loan is not being made for the purpose of purchasing or carrying "margin
(g)
stock" within the meaning of Regulation G, T, U or X issued by the Board of Governors of the
Federal Reserve System, and Borrower agrees to execute all instruments necessary to comply
with all the requirements of Regulation U of the Federal Reserve System.
(r)
Borrower is not a party in interest to any plan defined or regulated under ERISA,
and the assets of Borrower are not "plan assets" of any employee benefit plan covered by ERISA
or Section 4975 of the Internal Revenue Code.
Borrower is not a "foreign person" within the meaning of Section I 445 or 7701 of
(s)
the Internal Revenue Code.

-14-

(t)
Borrower uses no trade name other than its actual name set forth herein.
principal place of business of Borrower is as stated in Article 22.
(u)

Borrower's place of formation or organization is the State of Delaware.

(v)

The

All statements set forth in the Recitals are true and correct.

(w)
Neither Borrower nor any Ciuarantor is (or will be) a person with whom Lender is
restricted from doing business under regulations of the Office of Foreign Asset Control
("OFAC") of the Department of the Treasury of the United States of America (including, those
Persons named on ()FAC's Specially Designated and Blocked Persons list) or under any statute,
executive order (including, the September 24, 2001 Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and is not and shall not engage in any dealings or
transactions or otherwise be associated with such persons. In addition, Borrower hereby agrees
to provide to the Lender with any additional information that the Lender deems necessary from
time to time in order to ensure compliance with all applicable Laws concerning money
laundering and similar activities.
(x)
All times during the term of the Loan, Jetf H. Farmer, Jr. or an entity controlled
by Jeff H. Farmer, Jr. shall be the managing member ofthe Borrower.

3.2

Survival of Representations and Warranties.

Such Borrower agrees that all of the representations and warranties set forth in
Section 3 .I and elsewhere in this Agreement are true as of the date hereof, will be true at the
Project Closing and, except for matters which have been disclosed by Borrower and approved by
Lender in writing, at all times thereafter. Each request for a disbursement under the Project
Documents shall constitute a reaffirmation of such representations and warranties, as deemed
modified in accordance with the disclosures made and approved as aforesaid, as of the date of
such request. It shall be a condition precedent to the Project Closing and each subsequent
disbursement that each of said representations and warranties is true and correct as of the date of
such requested disbursement. Each disbursement of Loan proceeds shall be deemed to be a
reaffirmation by Borrower that each of the representations and warranties is true and correct as
of the date of such disbursement. In addition, at Lender's request, Borrower shall reaffirm such
representations and warranties in writing prior to each disbursement hereunder.

ARTICLE 4
PROJECT LOANS AND PROJECT LOAN DOCUMENTS
4.1

Project Loan.

Subject to the terms and conditions hereof, and relying upon the
warranties herein set forth, during the period commencing on the date of
ending on the Project Loan Commitment Expiration Date, Lender agrees to
to various Borrowers from time to time in an aggregate principal amount

-15-

representations and
this Agreement and
make Project Loans
not to exceed Fifty

Million Dollars ($50,000,000) (the "Construction Tranche"). Additionally, in the event a Project
Loan in the Construction Tranche becomes stabilized by meeting the requirements set forth in
Section 4.5 hereof in Lender's sole determination and discretion, a Borrower shall have the right
to request that such Project Loan be designated by Lender in writing as stabilized and removed
from the Construction Tranche. In no event shall the aggregate principal amount of Project
Loans designated by Lender as stabilized and removed from the Construction Tranche exceed
Twenty-Five Million Dollars ($25,000,000.00) (the "Stabilized Tranche"). In the event a Project
Loan is removed from the Construction Tranche and designated as part of the Stabilized Tranche
by Lender, the aggregate principal amount of such Project Loan shall not be included in
calculating availability of Loan proceeds under the Construction Tranche. Lender's commitment
to make Project Loans shall expire on the Project Loan Commitment Expiration Date. In no
event shall Lender be obligated to make any Project Loan on or after the Project Loan
Commitment E;:xpiration Date. Notwithstanding the foregoing, subject to the terms and
conditions hereof, Lender shall fund after the Project Loan Commitment Expiration Date any
Project Loan for which the Project Closing has occurred prior to the Project Loan Commitment
Expiration Date. The proceeds of a Project Loan will be advanced to the Borrower thereunder as
acquisition and construction of the Project in respect of which such Project Loan is made
progresses, in accordance with and subject to the requirements and limitations set forth herein
and in the other Project Documents for such Project Loan. Proceeds of the Loan shall be
allocated to the Projects by the Developer in such manner as the Developer shall determine and
Lender may approve pursuant to Section 4.2 below. If prior to the Project Loan Commitment
Expiration Date, a Borrower repays a Project Loan, Loan proceeds in an amount equal to the
amount of the repaid Project Loan will again be made available to the Developer to allocate to a
Project, subject to the terms and conditions hereof. In no event shall Lender be obligated to
approve or fund a new Project Loan if there is then continuing an Event of Default under any
Project Loan. The parties acknowledge that the Project Loans in existence as of the date of this
Agreement are described on Schedule 1 attached hereto and made a part hereof and the Project
Loans in the Construction Tranche and the Stabilized Tranche as of the date of this Agreement
are accurately shown thereon. This Agreement shall not in any way be deemed to apply to the
Project, or amend the Project Documents, for the Project Loans referred to on Schedule 1,
provided that the amounts of such Project Loans shall be applied against the limits on the Loan.

4.2

Project Loan Requests; Approval.

Developer shall submit a written request for any desired Project Loan. The written
request for approval for a Project Loan shall be accompanied by a Budget, a site plan or location
map, an authorization and request to engage appraiser, name of Borrower and identity of
Borrower's members, a pro forma operating statement and relevant market information, together
with the information required under Articles 8 and 9 hereof and such other information as Lender
deems reasonable, appropriate or necessary with respect to such Project Loan and the Project to
be acquired and constructed with the proceeds thereof. Lender covenants and agrees to use
commercially reasonable efforts to approve or disapprove a Project Loan, subject to the terms of
this Agreement, following receipt of a request for approval by Developer and all information and
documents requested by Lender. Lender shall be under no obligation to approve any specific
Project Loan whether or not the following minimum conditions are met.

-16-

I
f

~

'

Lender and Developer agree each Project Loan in respect of a Project shall satisfy the
following minimum conditions together with the requirements set forth elsewhere herein:
(a)
The Project must be shadow anchored by Wai-Mart and share a parking field with
Wal-Mart or be considered part of the "retail hub" in a given community, all as determined by
Lender in its sole discretion.
(b)
The amount of a Project Loan (including any Outlot Loan in connection with such
Project Loan) shall not exceed $4,800,000.
(c)
The Project shall be 75% pre-leased with tenants acceptable to Lender and
generate a "Debt Service Coverage Ratio" of not less than 1.15:1.00 based upon (i) the actual
rental income provided under the leases meeting the pre-leasing requirement, (ii) an assumed
interest rate of 7<!;;) per annum, and (iii) interest only payments on the debt.
(d)
'T'he Project must be a new construction project and contain not more than 40,000
square feet of leasable space.
(e)
Such Project shall generate a "Debt Service Coverage Ratio" of not less than
1.25: I .00, based upon (i) such Borrower's pro forma operating statement for such Project (as
approved by Lender in its sole discretion with such assumptions consistent with Lender's
assumptions when underwriting permanent take out loans), (ii) an assumed interest rate equal to
the then current ten (I 0) year U.S. Treasury Note plus two hundred (200) basis points (but in no
event less than 7% per annum), and (iii) a thirty (30) year amortization period. The Appraisal for
such Project must support Borrower's pro forma rent and expense statement.
(t)
The ratio of the amount of such Project Loan to the fair market value of such
Project based on the Appraisal shall not exceed seventy-five percent (75%).
(g)
The ratio of the amount of such Project Loan to the total cost of such Project as
set forth in the Budget, excluding contractor profit in the event an affiliate of a Developer or a
member of a Developer is the contractor and developer's fee in excess of $100,000.00 unless
approved in writing by Lender, shall not exceed eighty percent (80%).
(h)
The spread of the stage of completion of all Projects financed by the Loan is
satisfactory to Lender in its sole discretion.
In connection with the approval of a Project Loan, Lender may impose reasonable
requirements regarding disbursement of Project Loan proceeds in addition to those set forth
herein. Such additional requirements will be set forth in the Project Agreement to be executed
by Lender and the Borrower in respect to such Project, which Project Agreement, when
executed, shall be deemed to be a modification and amendment of this Agreement as to the
particular Project Loan.

-17-

4.3

Project Documents.

Developer agrees that it will cause each Borrower or Guarantor, as appropriate, on or
before the Loan Opening Date with respect to any Project Loan, to execute and deliver or cause
to be executed and delivered to Lender the following documents in form and substance
acceptable to Lender with respect to such Project Loan:
(a)

The Project Agreement.

(b)

The Note.

(c)

The Mortgage.

(d)

The Assignment of Rents.

(c)

The Performance and Completion Guaranty.

(f)

The Guaranties.

(g)

The Environmental Indemnity.

(h)
A collateral assignment of construction documents, including, without limitation,
the General Contract, all architecture and engineering contracts, Plans and Specifications,
permits, licenses, approvals and development rights, together with consents to the assignment
and continuation agreements from the General Contractor, the architect and other parties
reasonably specified by Lender.
(i)
Such UCC financing statements as Lender determines are advisable or necessary
to perfect or notify third parties of the security interests intended to be created by the Project
Documents.

(j)
Such other documents, instruments or certificates as Lender and its counsel may
reasonably require, including such documents as Lender in its sole discretion deems necessary or
appropriate to effectuate the terms and conditions of this Agreement and the Project Documents,
and to comply with any Laws.

4.4

Term of Each Project Loan.

(a)
All principal, interest and other sums due under the Project Documents with
respect to any Project Loan shall be due and payable in full on the Project Maturity Date for such
Project Loan, without relief from valuation and appraisement laws. All references herein to the
Maturity Date shall mean Initial Project Maturity Date, provided that Borrower shall have the
one-time right to extend the Initial Maturity Date for one additional six (6) month term (the
"Extension Option"), thereby extending the Initial Maturity Date to the six month anniversary of
the Initial Project Maturity Date (the "Extended Maturity Date").
(b)
Borrower may only exercise the Extension Option with respect to any particular
Project Loan upon satisfying the following conditions with respect to such Project Loan:

-18-

(i)

(ii)

Lender shall have received Borrower's and Guarantors' current financial
statements, certified as correct by Borrower and Guarantor. There must be no
material adverse change in Borrower's or Guarantor's financial condition;

(iii)

Construction of the Improvements has been completed in accordance with all
requirements of this Loan Agreement and the Project Agreement;

(iv)

Such notice is accompanied by an extension fee in the amount of 25 basis points
(.25%)) ofthe maximum amount of the Project Loan;

(v)

No Event of Default exists under the Project Documents, nor any event which
would be an Event of Default if not cured within the time allowed; and

(vi)

For the Extended Term, the Debt Service Coverage Ratio is not less than 1.25:
1.00 based on (i) the actual rental income provided under the Leases for the
Project, (ii) an assumed interest rate equal to the then current ten ( 10) year U.S.
Treasury Note plus two hundred (200) basis points (but in no event Jess than 7%
per annum), and (iii) a twenty-five (25) year amortization period;

(vii)

For the Extended Term, the Project is at least 93% occupied by Tenants
acceptable to Lender under Leases providing for rents no less than pro forma rents
set out in the Appraisal approved by Lender hereunder; and

(viii)

4.5

Borrower shall have delivered to Lender written notice of such election no earlier
than sixty (60) days and no later than thirty (30) prior to the Initial Project
Maturity Date;

Any portion of the Project Loan which is an Outlot Loan shall be paid in full on
the Initial Maturity Date for such Project Loan.

Stabilized Tranche.

In connection with Developer's or Borrower's request to move a Project Loan from the
Construction Tranche to the Stabilized Tranche, such party shall deliver, or cause the Borrower
to deliver, to Lender such information and documentation requested by Lender, including
without limitation operating statements and rent rolls. Lender shall use commercially reasonable
efforts to approve or disapprove the transfer of a Project Loan after request by Borrower and
receipt by Lender of all requested documents and information. Lender shall be under no
obligation to approve the transfer of a Project Loan from the Construction Tranche to the
Stabilized Tranche whether or not the following conditions are met. Lender, Developer and each
Borrower agree that the following minimum conditions must be satisfied prior to the transfer of a
Project Loan from the Construction Tranche to the Stabilized Tranche:
(a)
The ratio ofthe amount of such Project Loan for which transfer is requested to the
fair market value of such Project shall not exceed seventy-five percent (75%);

-19-

(b)
The ratio of the amount of such Project Loan to the total cost of such Project,
excluding contractor profit in the event an affiliate of a Developer or a member of a Developer is
the contractor and developer's fee in excess of $100,000.00 unless approved in writing by
Lender, shall not exceed eighty percent (80°/rJ);
(c)
The Project relating to the Project Loan for which such transfer is requested shall
generate a Debt Service Coverage Ratio of not less than 1.00: 1.00 based upon (i) the actual rental
income provided by the Leases for the Project, (ii) an assumed interest rate equal to seven
percent (7%) per anmim, and (iii) a thirty (30) year amortization period;
(d)
Upon inclusion of the Project Loan for such Project in the Stabilized Tranche, the
Debt Service Coverage Ratio for all Projects in the Stabilized Tranche in the aggregate shall be
not less than 1.20:1.00 based upon (i) actual income provided by the Leases for all such
aggregated Projects, (ii) the higher of annualized actual expenses or pro forma expenses as
shown in the Budget when the Project Loan was approved, shall be used in determining Net
Operating Income, (iii) an assumed interest rate equal to seven percent (7%) per annum, and (iv)
a thirty (30) year amortization period;
(e)
Eighty percent (80%) of the rentable square footage of the Project shall be leased
to tenants (which tenants and leases shall be acceptable to Lender in its sole discretion) who shall
be occupying their entire space and paying their full rent due under their Lease;
(f)
Upon inclusion of the Project Loan for such Project in the Stabilized Tranche, an
aggregate of eighty-five percent (85%) of all of the rentable square footage of all of the Projects
included in the Stabilized Tranche shall be leased to tenants (which tenants and leases shall be
acceptable to Lender in its sole discretion) who shall be occupying their entire space and paying
their full rent due under their Lease; and

(g)
discretion.

4.6

Such other conditions and requirements of Lender in its sole but reasonable

Prepayments.

Except as set forth herein, Borrower shall have the right to make prepayments of any
Project Loan, in whole or in part, without prepayment penalty, upon not less than seven (7) days'
prior written notice to Lender. No prepayment of all or part of any Project Loan shall be
permitted unless same is made together with the payment of all interest accrued on the Project
Loan through the date of prepayment and an amount equal to all Breakage Costs and attorneys'
fees and disbursements incurred by Lender as a result of the prepayment.

4. 7

Required Principal Payments.

All principal shall be paid on or before the Maturity Date. On the first day of each month
during the Extended Term, Borrower shall make mortgage-style principal and interest payments
based on the assumed term and interest rate used in calculating the Debt Service Coverage Ratio.

-20-

4.8

Late Charge.

Any and all amounts due hereunder or under the other Project Documents which remain
unpaid more than ten (1 0) days after the date said amount was due and payable shall incur a fee
(the "Late Charge") equal to the greater of (a) ten percent (1 0%) of said amount or (b) $25.00,
which payment shall be in addition to all of Lender's other rights and remedies under the Project
Documents, provided that no Late Charge shall apply to the final payment of principal on the
Maturity Date.
4.9

Miscellaneous.

To the extent that Lender may have acquiesced in noncompliance with any requirements
precedent to the Project Loan Opening or precedent to any subsequent disbursement of Loan
proceeds, such acquiescence shall not constitute a waiver by Lender, and Lender may at any time
after such acquiescence require Borrower to comply with all such requirements with respect to
the same or any other Project Loan.
Borrower shall, prior to the Opening of the Loan, at the request of Lender, open an
Operating Account. Borrower authorizes Lender to disburse Loan proceeds by crediting the
Operating Account; provided, however, that Lender shall not be obligated to use such method.
Lender is further authorized to pay any principal, interest or other amounts due upon the Note or
other Project Documents when and as same shall become due by debiting funds on deposit in the
Operating Account.
4. I 0

Outlot Loan.

Lender and Developer acknowledge that certain Projects may include parcels of land
which will be used as outlots and either leased or sold to third parties. Lender agrees to make
available to Developer up to a maximum of $1,500,000.00 of the Loan proceeds for the
acquisition of outlots in connection with Projects (the "Outlot Loan"): provided that (i) in no
event shall Lender be obligated to disburse more than $500,000.00 for an outlot for any one
Project, (ii) the ratio of the amount of the Outlot Loan to the fair market value of the outlot shall
not exceed fifty percent (50%), and (iii) the ratio of the amount of the Outlot Loan to the cost of
the Outlot shall not exceed sixty percent (60%). An Outlot Loan shall only be made by Lender
in connection with an approved Project Loan and such Outlot Loan shall be subject to all of the
provisions of this Agreement. The Extension Option shall not apply to the Outlot Loan and the
Outlot Loan shall be aggregated with the Project Loan to which it relates when determining ifthe
provisions of Section 4.2 are met. The parties acknowledge that the current outstanding Outlot
Loans as of the date of this Agreement are Keokuk Shopping Center at $208,000.00, Pampa
Shopping Center at $260,000.00 and Uvalde Shopping Center at $175,500.00 for a total of
$643,500.00. No pay down of these existing Outlot Loans shall be required to meet the above
loan to cost and loan to value ratios.
4.11
Indebtedness Secured By Project Loan Documents. At the request of Lender, any
Borrower which is 100% owned by Developer shall cross-collateralize its Project Loan with any
other Project Loans owned by a Borrower which is owned 100% by Developer. It is the
intention of the parties hereto and all Borrowers that the Note for each Project Loan, and the
Mortgage and other documents securing the Note, shall evidence and secure the following: any

-21-

and all loans, advances, debts, liabilities, obligations, eovenants and duties owing by any
Developer, any Borrower, or any Affiliate of any Borrower or any Developer, to Lender, or any
direct or indirect subsidiary or any Affiliate of Lender, or any parent or related party to Lender,
of any kind or nature, present or fl.tture, whether direct or indirect, absolute or contingent, joint or
severaL clue or to become due, now existing or hereinafter arising, whether or not (i) evidenced
by any other note. guaranty or other instrument, (ii) arising under any agreement, instrument or
document, (iii) for the payment of money, (iv) arising by reason of an extension of credit,
opening of a letter of credit, loan, equipment lease or guaranty, or (v) arising under any interest
or currently swap, future, option or other interest rate protection or similar agreement, including
without limitation, a "Interest Rate Agreement" as hereinafter defined.

ARTICLE 5
INTEREST
5.1

Interest Rate.

(a)
Each Project Loan (including without limitation Project Loans closed prior to the
date of this Agreement) will bear interest at the Applicable Rate, unless the Default Rate is
applicable. The Adjusted Prime Rate shall be the "Applicable Rate", except that the Adjusted
LIBOR Rate shall be the "Applicable Rate" with respect to portions of the Loan as to which a
LIBOR Rate Option is then in effect. Borrower shall pay interest in arrears on the first day of
every calendar month in the amount of all interest accrued and unpaid in accordance with the
terms of any Note.
Provided that no Event of Default exists, Borrower shall have the option (the
(b)
"LIBOR Rate Option") to elect from time to time in the manner and subject to the conditions
hereinafter set forth an Adjusted LIB OR Rate as the Applicable Rate for all or any portion of any
Project Loan which would otherwise bear interest at the Adjusted Prime Rate.
(c)
The only manner in which Borrower may exercise the LIBOR Rate Option is by
giving Lender irrevocable notice (which may be verbal notice provided that Borrower delivers to
Lender facsimile confirmation in the form of Exhibit C attached hereto within twenty~four (24)
hours) of such exercise not later than 11:00 a.m. Cincinnati time on the second LIBOR Business
Day prior to the proposed commencement of the relevant LIBOR Rate Interest Period, which
written notice shall specify: (i) the particular Project Loan and the portion of such Project Loan
with respect to which Borrower is electing the LIBOR Rate Option, (ii) the LIBOR Business Day
upon which the applicable LIBOR Rate Interest Period is to commence and (iii) the duration of
the applicable LIBOR Rate Interest Period. The Applicable Rate for any portion of any Project
Loan with respect to which Borrower has elected the LIBOR Rate Option shall revert to the
Adjusted Prime Rate as of the last day of the LIBOR Rate Interest Period applicable thereto
(unless Borrower again exercises the LIB OR Rate Option for such portion of such Project Loan).
Lender shall be under no duty to notify Bonower that the Applicable Rate on any portion of any
Project Loan is about to revert from an Adjusted LIBOR Rate to the Adjusted Prime Rate. The
LIB OR Rate Option may be exercised by Borrower only with respect to any portion of a Project
Loan equal to or in excess of $250,000.00. At no time may there be more than four (4) LIBOR
Rate Interest Periods in effect with respect to any Project Loan.
-22-

(d)
If Lender determines (which determination shall be conclusive and binding upon
Borrower, absent manifest error) (i) that Dollar deposits in an amount approximately equal to the
portion of the Project Loan for which Borrower has exercised the LIBOR Rate Option for the
designated LIBOR Rate Interest Period are not generally available at such time in the London
interbank market for deposits in Dollars, (ii) that the rate at which such deposits are being
offered will not adequately and fairly reflect the cost to Lender of maintaining a LIB OR Rate on
such portion of the Project Loan or of funding the same for such LIB OR Rate Interest Period due
to circumstances atTecting the London interbank market generally, (iii) that reasonable means do
not exist for ascertaining a LIBOR Rate, or (iv) that an Adjusted LIBOR Rate would be in excess
of the maximum interest rate which Borrower may by law pay, then, in any such event, Lender
shall so notify Borrower and all portions of any Project Loan bearing interest at an Adjusted
LIBOR Rate that are so affected shall, as of the date of such notification with respect to an event
described in clause (ii) or [j_yj_ahove, or as of the expiration of the applicable UBOR Rate
Interest Period with respect to an event described in clause (i) or (ililahove, hear interest at the
Adjusted Prime Rate until such time as the situations described above are no longer in effect or
can be avoided by Borrower exercising a LIBOR Rate Option for a different LIBOR Rate
Interest Period.
(e)
Interest at the Applicable Rate (or Default Rate) shall he calculated for the actual
number of days elapsed on the basis of a 360-day year, including the first date of the applicable
period to, but not including, the date of repayment.
(f)
A Borrower shall pay all Breakage Costs relating to the Project Loan incurred
from time to time by Lender upon demand.

(g)
If the introduction of or any change in any Law, regulation or treaty, or in the
interpretation thereof by any Governmental Authority charged with the administration or
interpretation thereof: shall make it unlawful for Lender to maintain the Applicable Rate at an
Adjusted LIBOR Rate with respect to any Project Loan or any portion thereof, or to fund any
Project Loan or any portion thereof in Dollars in the London interbank market, or to give effect
to its obligations regarding the LIBOR Rate Option as contemplated by any Project Documents,
then (1) Lender shall notify Borrower that Lender is no longer able to maintain the Applicable
Rate at .an Adjusted LIBOR Rate, (2) the LIBOR Rate Option shall immediately terminate,
(3) the Applicable Rate for any portion of any Project Loan for which the Applicable Rate is then
an Adjusted LIBOR Rate shall automatically be converted to the Adjusted Prime Rate, and
(4) each Borrower of each converted Project Loan shall pay to Lender the amount of Breakage
Costs (if any) incurred in connection with such conversion. Thereafter, each Borrower shall not
be entitled to exercise the LIBOR Rate Option until such time as the situation described herein is
no longer in etTect or can be avoided by Borrower exercising a LIBOR Rate Option for a LIBOR
Rate Interest Period.

-23-

5.2

Interest Rate Agreements.

(a)
If any or all Borrowers or Developer purchase an Interest Rate Protection Product
from Lender, such party(ies) shall enter into Lender's customary form of agreement ("Interest
Rate Agreement") relating to such Interest Rate Protection Product. Any indebtedness incurred
pursuant to an Interest Rate Agreement entered into by such party(ies) and Lender shall
constitute indebtedness evidenced by the Note and secured by the Mortgage for each such
applicable Project Loan and the other Project Documents to the same extent and ctTect as if the
terms and provisions of such Interest Rate Agreement were set forth herein, whether or not the
aggregate of such indebtedness, together with the disbursements made by Lender of the proceeds
ofthe Loan, shall exceed the face amount ofthe aggregate amount of all ofthe Notes.
(b)
Each such Borrower hereby collaterally assigns to agent for the benefit of Lender
any and all rnterest Rate Protection Products purchased or to be purchased by each such
Borrower in connection with a Project Loan, as additional security for such Project Loan, and
agrees to provide Lender with any additional documentation requested by Lender in order to
confirm or perfect such security interest during the term of such Project Loan. If a Borrower
obtains an Interest Rate Protection Product from a party other than Lender, such Borrower shall
deliver to Lender such third party's consent to such collateral assignment. No Interest Rate
Protection Product purchased from a third party may be secured by an interest in a Borrower or a
Project.
(c)
E~ach Borrower shall, as a condition to the Opening of a Project Loan if required
by Lender and otherwise within five (5) Business Days after Lender's request, institute an
interest rate hedging program through the purchase of an interest rate swap, cap or such other
interest rate protection product ("Interest Rate Protection Product") with respect to such Project
Loan. The Interest Rate Protection Product, the portion of the Project Loan (if less than the
entire amount of the Project Loan) to which such Interest Rate Protection Product shall apply,
and the financial institution providing the Interest Rate Protection Product, shall be subject to
Lender's prior written approval in its sole discretion. Borrower shall afford Lender a right of first
opportunity to provide all Interest Rate Protection Products but shall not be required to purchase
such Interest Rate Protection Product from Lender.

ARTICLE 6
COSTS OF MAINTAINING LOAN
6.1

Increased Costs and Capital Adequacy.

(a)
Each Borrower recognizes that the cost to Lender of maintaining a Project Loan
or any portion thereof may fluctuate and, Borrower agrees to pay Lender additional amounts to
compensate Lender for any increase in its actual costs incurred in maintaining a Project Loan or
any portion thereof outstanding or for the reduction of any amounts received or receivable from
Borrower as a result of:
(i)

any change after the date hereof in any applicable Law, regulation or treaty, or in
the interpretation or administration thereof, or by any domestic or foreign court,

-24-

(A) changing the basis of taxation of payments under this Agreement to Lender
(other than taxes imposed on all or any portion of the overall net income or
receipts of Lender), or (B) imposing, modifying or applying any reserve, special
deposit or similar requirement against assets of, deposits with or for the account
of. credit extended by, or any other acquisition of funds for loans by Lender
(which includes the Loan, a Project Loan or any applicable portion thereof)
(provided, however, that Borrower shall not be charged again the Reserve
Percentage already accounted for in the definition of the Adjusted LIBOR Rate),
or (C) imposing on Lender, or the London interbank market generally, any other
condition affecting the Loan or a Project Loan, provided that the result of the
f~Hegoing is to increase the cost to Lender of maintaining the Loan, a Project
Loan or any portion thereof or to reduce the amount of any sum received or
receivable from Borrower by Lender under the Project Documents for the Project
Loan pursuant to which Borrower is a borrower; or
(ii)

the maintenance by Lender of reserves in accordance with reserve requirements
promulgated by the Board of Governors of the Federal Reserve System of the
United States with respect to "Eurocurrency Liabilities" of a similar term to that
of the applicable portion of a Project Loan (without duplication for reserves
already accounted for in the calculation of a LIBOR Rate pursuant to the terms
hereof).

(b)
If the application of any Law, rule, regulation or guideline adopted or arising out
of the July, 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital Standards", or
the adoption after the date hereof of any other Law, rule, regulation or guideline regarding
capital adequacy, or any change after the date hereof in any of the foregoing, or in the
interpretation or administration thereof by any domestic or foreign Governmental Authority,
central bank or comparable agency charged with the interpretation or administration thereat: or
compliance by Lender, with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable agency, has the effect
of reducing the rate of return on Lender's capital to a level below that which Lender would have
achieved but for such application, adoption, change or compliance (taking into consideration the
policies of Lender with respect to capital adequacy), then, from time to time Borrower shall pay
to Lender such additional amounts as will compensate Lender for such reduction with respect to
any portion of the Project Loan relating to such Borrower outstanding.
(c)
Any amount payable by Borrower under subsection (a) or subsection (b) of this
Section 6.1 shall be paid within five (5) days of receipt by Borrower of a certificate signed by an
authorized officer of Lender setting forth the amount due and the basis for the determination of
such amount, which statement shall be conclusive and binding upon Borrower, absent manifest
error. Failure on the part of Lender to demand payment from Borrower for any such amount
attributable to any particular period shall not constitute a waiver of Lender's right to demand
payment of such amount for any subsequent or prior period. Lender shall use reasonable efforts
to deliver to Borrower prompt notice of any event described in subsection (a) or .(hl_above, of the
amount of the reserve and capital adequacy payments resulting therefrom and the reasons
therefor and of the basis of calculation of such amount; provided, however, that any failure by

-25-

Lender to so notify Borrower shall not affect Borrower's obligation to pay the reserve and capital
adequacy payment resulting therefrom.

6.2

Borrower Withholding.

If by reason of a change in any applicable Laws occtming after the date hereof, Borrower
is required by Law to make any deduction or withholding in respect of any taxes (other than
taxes imposed on or measured by the net income of Lender or any franchise tax imposed on
Lender), duties or other charges from any payment due under the Note to the maximum extent
permitted by law, the sum due from Borrower in respect of such payment shall be increased to
the extent necessary to ensure that, after the making of such deduction or withholding, Lender
receives and retains a net sum equal to the sum which it would have received had no such
deduction or withholding been required to be made.

ARTICLE 7
LOAN EXPENSE AND ADVANCES
7.1

Loan and Administration Expenses.

Each Borrower unconditionally agrees to pay all expenses of the Project Loan borrowed
by such Borrower, including all amounts payable pursuant to Sections 7.2 and 7.3 and any and
all other fees owing to Lender pursuant to the applicable Project Documents, and also including,
without limiting the generality of the foregoing, all recording, filing and registration fees and
charges, mortgage or documentary taxes, all insurance premiums, title insurance premiums and
other charges of the Title Insurer, printing and photocopying expenses, survey fees and charges,
cost of certified copies of instruments, cost of premiums on surety company bonds and the Title
Policy, charges of the Title Insurer or other escrowee for administering disbursements, all fees
and disbursements of Lender's Consultant, all appraisal fees, insurance consultant's fees,
environmental consultant's fees, travel related expenses and all costs and expenses incurred by
Lender in connection with the determination of whether or not Borrower has performed the
obligations undertaken by Borrower hereunder or has satisfied any conditions precedent to the
obligations of Lender hereunder and, if any default or Event of Default occurs hereunder or
under any of such Project Documents or if the Project Loan or applicable Note or any portion
thereof is not paid in full when and as due, all costs and expenses of Lender (including, without
limitation, court costs and counsel's fees and disbursements and fees and costs of paralegals)
incurred in attempting to enforce payment of the Project Loan and expenses of Lender incurred
(including court costs and counsel's fees and disbursements and fees and costs of paralegals) in
attempting to realize, while a default or Event of Default exists, on any security or incurred in
connection with the sale or disposition (or preparation for sale or disposition) of any security for
the Project Loan. Borrower agrees to pay all brokerage, finder or similar fees or commissions
payable in connection with the transactions contemplated hereby and shall indemnify and hold
Lender harmless against all claims, liabilities, costs and expenses (including attorneys' fees and
expenses) incurred in relation to any claim by broker, finder or similar person.

-26-

1

I
'

7.2

Loan Fee; Commitment Fee.

Developer shall pay to Lender upon the date of this Agreement a Loan Fee of $31 ,250.00.
Each Borrower shall pay to Lender with respect to a Project Loan on or before the date of Project
Closing for such Project Loan a commitment fee in the amount of .5% of the maximum principal
amount of such Project Loan. Such f'ee when paid shall be deemed fully earned and nonrefundable.
7.3

Exit Fee.

Upon the repayment of the Loan (v.rhcther at Maturity or at any other date). Borrower will
pay to Lender an exit f'ee equal to .5%> percent of the maximum principal amount of such Project
Loan borrowed by such Borrower (the "Exit Fee"); unless (a) the Loan is repaid with permanent
loan from Lender or an aniliate of Lender. or (b) the Loan is repaid by the acquisition of the
Project by a bona fide arms-length purchaser, whether or not such purchaser is arranged by
Lender or an affiliate of Lender. The Exit Fee shall be deemed to be earned upon Maturity
unless the events described in subparts (a) and (b) of this Section 7.3 occur.

7.4

Lender's Attorneys' Fees and Disbursements.

Developer and Borrower agree to pay Lender's attorney fees and disbursements incurred
in connection with this Loan and each Project Loan, including (i) the preparation of this
Agreement, any intercreditor agreements and the other Project Documents for each Project Loan
and the preparation of the closing binders, (ii) the disbursement, syndication and administration
of the Loan and each Project Loan and (iii) the enforcement of the terms of this Agreement and
all Project Documents.

7.5

Time of Payment of Fees and Expenses.

Borrower shall pay all expenses and fees incurred as of the Project Loan Opening on the
Loan Opening Date for the Project Loan (unless sooner required herein). At the time of the
Opening of the Loan, Lender may pay from the proceeds of the initial disbursement of the
Project Loan (to the extent provided for in the Budget) all Project Loan expenses and all fees
payable to Lender. Lender may require the payment of outstanding fees and expenses as a
condition to any disbursement of the Project Loan. Lender is hereby authorized, without any
specific request or direction by Borrower, to make disbursements from time to time in payment
of or to reimburse Lender for all Project Loan expenses and fees (whether or not, at such time,
there may be any undisbursed amounts of the Project Loan allocated in the Budget for the same).

7.6

Expenses and Advances Secured by Project Documents.

Any and all advances or payments made by Lender under this Article 7 from time to
time, and any amounts expended by Lender pursuant to Section 20.1 (a), shall, as and when
advanced or incurred, constitute additional indebtedness evidenced by the Note and secured by
the Mortgage and the other Project Documents.

-27-

'
I
.

~

7. 7

Right of Lender to Make Advances to Cure Borrower's Defaults.

In the event that Borrower fails to perform any of Borrower's covenants, agreements or
obligations contained in this Agreement or any of the other Project Documents (after the
expiration of applicable grace periods, except in the event of an emergency or other exigent
circumstances), Lender may (but shall not be required to) perform any of such covenants,
agreements and obligations, and any amounts expended by Lender in so doing and shall
constitute additional indebtedness evidenced by the Note and secured by the Mortgage and the
other Project Documents and shall bear interest at a rate per annum equal to the Applicable Rate
(or Def~mlt Rate following an Event of Default).

ARTICLE 8
NON-CONSTRUCTION REQUIREMENTS PRECEDENT
TO THE OPENING OF A PROJECT LOAN
8.1

Non-Construction Conditions Precedent.

.
!
.

By acceptance of a Project Loan, Borrower agrees that Lender's obligation to open the
Project Loan and thereafter to make further disbursements of proceeds thereof is conditioned
upon Borrower's delivery, performance and satisfaction of the following conditions precedent in
form and substance satisfactory to Lender in its reasonable discretion:
(a)
Equity: Borrower shall have provided evidence reasonably satisfactory to Lender
that Borrower's cash equity invested in the Project is not less than the difference between the
total Project cost as set forth in the Budget and the maximum amount of the Project Loan;
provided, however, in no event shall Borrower's cash equity in the Project be less than 20% of
the total cost of the Project as set out in the Budget approved by Lender hereunder; provided if
the Project includes acquisition of an outlot, Borrower's cash equity in the Project with respect to
the cost of such outlot shall be 40%. Borrower's cash equity must be either (i) deposited with the
Lender on or prior to the date of the Project Agreement and disbursed prior to the first
disbursement of Project Loan proceeds or (ii) used to pay direct Project costs approved by
Lender with evidence of payment delivered to Lender prior to the first disbursement of Project
Loan proceeds; provided, however, that the appraised value of the Land as approved by Lender
hereunder in excess of the Borrower's cost shall be included in the determination of minimum
equity hereunder.
(b)
Required Leases: Borrower shall have provided to Lender for Lender's written
approval in Lender's sole discretion the Required Leases. The financial condition of all Tenants
under Required Leases and all terms under the Required Leases (including, without limitation the
term of the lease and any co-tenancy provisions) must be acceptable to Lender and Borrower
shall have obtained guarantees of Leases from acceptable guarantors where required by Lender.
The only cotenancy provisions acceptable to Lender shall be the presence and occupancy of the
Super Wal-Mart store and the Required Leases shall all require openings within the same 30-day
period;
(c)

Tenant Estoppels: Intentionally Omitted;

-28-

.

!

(d)
SNDA: Borrower shall have furnished to Lender subordination, non-disturbance
and attornment agreements from the Tenants under the Required Leases in form acceptable to
Lender;
(e)
Title and Other Documents: Borrower shall have furnished to Lender the Title
Policy together with legible copies of all title exception documents cited in the Title Policy and
all other legal documents affecting the Project or the use thereof;

(t)
Survey: Borrower shall have furnished to Lender an ALTA/ACSM "Class A"
Land Title Survey of the Project. Said survey shall be dated no earlier than ninety (90) days
prior to the Project Loan Opening, shall be made (and certified to have been made) as set forth in
E.:xhibit B attached hereto and made a part hereof. Such survey shall be sufficient to permit
issuance of the Title Policy in the form required by this Agreement. Such survey shall include
the legal description of the land on which the Project shall be constructed;

(g)
Insurance Policies: Borrower shall have furnished to Lender not less than ten ( 10)
days prior to the date of the Project Agreement policies or binders evidencing that insurance
coverages are in effect with respect to the Project and Bon-ower, in accordance with the
Insurance Requirements attached hereto as Exhibit D, for which the premiums have been fully
prepaid with endorsements satisfactory to Lender.
(h)
No Litigation: Borrower shall have furnished evidence that no litigation or
proceedings shall be pending or threatened which could or might cause a Material Adverse
Change with respect to Borrower, any Guarantor or Tenant, or the Project;
(i)
Utilities: Borrower shall have furnished to Lender (by way of utility letters or
otherwise) evidence establishing to the satisfaction of Lender that the Project when constructed
will have adequate water supply, storm and sanitary sewerage facilities, telephone, gas,
electricity, fire and police protection, means of ingress and egress to and from the Project and
public highways and any other required public utilities and that the Project is benefited by
insured easements as may he required for any of the foregoing;

(j)
Attorney Opinions: Borrower shall have furnished to Lender an opinion from
counsel for Borrower and Guarantor covering due authorization, execution and delivery and
enforceability of the Project Documents and also containing such other legal opinions as Lender
shall require:
(k)
Appraisal: Lender shall have obtained an Appraisal in an amount indicating that
the Loan Amount is not greater than 75% of the appraised value (hased upon the Project's
stabilized value upon completion of construction) which Appraisal is satisfactory to Lender in all
respects;
(I)
Searches: Borrower shall have furnished to Lender current bankruptcy, federal
tax lien and judgment searches and searches of all Uniform Commercial Code financing
statements filed in each place UCC Financing Statements are to be filed hereunder,
demonstrating the absence of adverse claims;

-29-

(m)
Financial Statements: Borrower shall have furnished to Lender current annual
financial statements of Borrower, the Guarantors, the General Contractor (provided, however, if
a Bond is provided by General Contractor, Borrower need not furnish Lender with General
Contractor's current annual financial statements) and such other persons or entities connected
with the Loan as Lender may request, each in form and substance and certified by such
individual as acceptable to Lender. Borrower and the Guarantors shall provide such other
additional financial information Lender reasonably requires;
Pro Forma Projection: Borrower shall have furnished to Lender a Pro Forma
(n)
Projection covering the succeeding five year period;
If such agreements have been entered into by
(o)
Management Agreements:
Borrower, Borrower shall have delivered to Lender executed copies of any leasing, management
and development agreements entered into by Borrower in connection with the Construction
and/or the operation of the Project;
( p)
Flood Hazard: Lender has received evidence that the Project is not located in an
area designated by the Secretary of Housing and Urban Development as a special flood hazard
area, or flood hazard insurance acceptable to Lender in its sole discretion;
(q)
Zoning: If the Title Policy does not include a zoning endorsement, Borrower
shall have furnished to Lender a legal opinion or zoning letter as to compliance of the Project
with zoning and similar laws;
(r)
Organizational Documents: Borrower shall have furnished to Lender proof
satisfactory to Lender of authority, formation, organization and good standing in the state of its
incorporation or formation and, if applicable, qualification as a foreign entity in good standing in
the state of its incorporation or formation, of all corporate, partnership, trust and limited liability
company entities (including Borrower and each Guarantor) executing any Project Documents,
whether in their own name or on behalf of another entity. Borrower shall also provide certified
resolutions in form and content satisfactory to Lender, authorizing execution, delivery and
performance of the Project Documents, and such other documentation as Lender may reasonably
require to evidence the authority of the persons executing the Project Documents;
(s)
No Default: There shall be no uncured Event of Default by Borrower hereunder
nor any event, circumstance or condition which with notice or passage of time or both would be
an Event of Default;
(t)
Easements: Borrower shall have furnished Lender all easements reasonably
required for the construction, maintenance or operation of the Project and such easements shall
be insured by the Title Policy; and
(u)
Additional Documents: Borrower shall have furnished to Lender such other
materials, documents, papers or requirements regarding the Project, Borrower and any Guarantor
or Tenant as Lender shall reasonably request

-30-

(v)
Debt Service Coverage RatjQ: Lender shall have received evidence reasonable
satisfactory to Lender that the D!Q forma Debt Service Coverage ratio for the Project, set forth in
the Pro Forma Projection, is greater than or equal to 1.25: I.
(w)
Financial Covenants: Jeff H. Fanner, Jr. shall, as a continuing obligation
throughout the term of the Loan: (i) maintain on an ongoing basis a minimum net worth of
$10,000,000.00 and a minimum net cash tlow of $1 ,000,000.00; and (ii) maintain a minimum
liquidity level of $1 ,500,000.00. The Borrower shall have furnished to Lender proof, satisfactory
to Lender, which shall be updated on, and as of~ each anniversary of the date of this Agreement,
that Jeff H. Farmer. Jr. is maintaining the foregoing financial requirements at the required levels
throughout the term of the Loan.

ARTICLE 9
CONSTRUCTION REQUIREMENTS PRECEDENT
TO THE OPENING OF THE PRO.JECT LOAN
9.1

Required Construction Documents.

With respect to a Project Loan, Borrower shall cause to be furnished to Lender the
following, in form and substance satisfactory to Lender and Lender's Consultant in all respects,
for Lender's approval in its reasonable discretion prior to the Opening of the Project Loan:
(a)
Fully executed copies of the following, each satisfactory to Lender and Lender's
Consultant in all respects: (i) a fixed or guaranteed maximum price General Contract with the
General Contractor; and (ii) all contracts with architects and engineers;
(b)
A schedule of values, including a trade payment breakdown, setting forth a
description of all contracts let by Borrower and/or the General Contractor for the design,
engineering, construction and equipping of the Improvements;
(c)
An initial sworn statement of the General Contractor, approved by Borrower and
the Architect covering all work done and to be done, together with lien waivers covering all
work and materials for which payments have been made by Borrower prior to the Loan Opening;
(d)
Bonds in favor of Lender guaranteeing all of the obligations of General
Contractor under the General Contract and the obligations of such Major Subcontractors as are
designated by Lender;
Copies of each of the Required Permits, except for those Required Permits which
(e)
cannot be issued until completion of Construction, in which event such Required Permits will be
obtained by Borrower on a timely basis in accordance with all recorded maps and conditions, and
applicable building, land use, zoning and environmental codes, statutes and regulations and will
be delivered to Lender at the earliest possible date. In all events the Required Permits required to
be delivered prior to the Opening of the Project Loan shall include full building permits.

-31-

I
~
r

(f)
Full and complete detailed Plans and Specifications for the Improvements
duplicate, prepared by the Architect;
(g)

The Construction Schedule;

(h)

111

The Soil Report;

(i)
The Environmental Report; The Environmental Report shall, at a mm1mum,
(A) demonstrate the absence of any existing or potential Hazardous Material contamination or
violations of environmental Laws at the Project, except as acceptable to Lender in its sole and
absolute discretion, (B) include the results of all sampling or monitoring to confirm the extent of
existing or potential Hazardous Material contamination at the Project, including the results of
leak detection tests for each underground storage tank located at the Project, if any, (C) describe
response actions appropriate to remedy any existing or potential Hazardous Material
contamination, and report the estimated cost of any such appropriate response, (D) confirm that
any prior removal of Hazardous Material or underground storage tanks from the Project was
completed in accordance with applicable Laws, and (E) confirm whether or not the Project Site is
located in a wetlands district;
(j)
At Lender's discretion, a report fi:om Lender's Consultant which contains an
analysis of the Plans and Specifications, the Budget, the Construction Schedule, the General
Contract, all subcontracts then existing and the Soil Report. Such report shall be solely for the
benefit of Lender and contain (i) an analysis satisfactory to Lender demonstrating the adequacy
of the Budget to complete the Project and (ii) a confirmation that the Construction Schedule is
realistic. Lender's Consultant shall monitor construction of the Project and shall visit the Project
whenever requested by Lender, and shall certify as to amounts of construction costs for all
requested fundings. Notwithstanding the foregoing, Lender shall charge Borrower for only three
(3) visits to the Project during construction as contemplated by the immediately preceding
sentence, except such limit shall not apply upon the occurrence of an Event of Default. It is
anticipated that Lender's consultant will visit and inspect the Project at foundation completion,
shell completion and substantial completion.

(k)

The Architect's Certificate;

(I)
Certification from an engineer or other professional reasonably acceptable to
Lender in a form acceptable to Lender confirming that any wetlands located on the Land will not
preclude the development of the Project;

(m)

A Notice of Commencement complying with applicable state or local law; and

Such other papers, materials and documents as Lender may require with respect to
(n)
the Construction.

-32-

I

Case 2:15-cv-02247-STA-cgc Document 65-1 Filed 01/29/16 Page 38 of 81

PageID 3318

ARTICLE 10
BlJDGET AND CONTINGENCY FUND
I 0.1

Budget.

Disbursement of the Project Loan shall be governed by the Budget f~)f the Project, in
l'orm and substance acceptable to Lender in Lender's reasonable discretion. The Budget shall
specify the amount of cash equity invested in the Project, and all costs and expenses of every
kind and nature whatever to be incurred by Borrower in connection with the Project. The Budget
shall include, in addition to the Budget Line Items described in Section 10.2 below, the
Contingency Fund described in Section 10.3 below, and amounts satisfactory to Lender f~)r soft
costs and other reserves acceptable to Lender. Once the Budget is approved by Lender all
changes to the Budget shall in all respects be subject to the prior written approval of Lender.
10.2

Budget Line Items.

The Budget shall include as line items ("Budget Line Items"), to the extent determined to
be applicable by Lender in its reasonable discretion, the cost of all labor, materials, equipment,
fixtures and furnishings needed for the completion of the Construction, and all other costs, fees
and expenses relating in any way whatsoever to the Construction of the Improvements, leasing
commissions, tenant improvements and tenant allowances, operating deficits, real estate taxes,
and all other sums due in connection with Construction and operation of the Project, the Project
Loan, and this Agreement. Borrower agrees that all Project Loan proceeds disbursed by Lender
shall be used only for the Budget Line Items for which such proceeds were disbursed.
Borrower shall have the right to reallocate cost savings effected by final Change Order or
other appropriate final documentation to other Budget Line Items subject to Lender's prior
written consent not to be unreasonably withheld.
Lender shall not be obligated to disburse any amount for any category of costs set forth as
a Budget Line Item which is greater than the amount set forth for such category in the applicable
Budget Line Item. Borrower shall pay as they become due all amounts set forth in the Budget
with respect to costs to be paid for by Borrower. The developer fee of $100,000.00 in the
Budget will he advanced as follows: (i) 50% shall be disbursed to Borrower at the time all the
tenants under the Required Leases have taken occupancy and begun to pay their base rent; and
(ii) the remaining 50% shall be disbursed to Borrower at the time Borrower has obtained and
accepted a take-out commitment that would repay the Loan in full or closed the sale of the
Project to a third party.
10.3

Contingency Fund.

The Budget shall contain a Budget Line Item designated for the Contingency Fund.
Borrower may from time to time request that the Contingency Fund be reallocated to pay needed
costs of the Project. Such requests shall be subject to Lender's written approval in its reasonable
discretion.
Borrower agrees that the decision with respect to utilizing portions of the Contingency
Fund in order to keep the Project Loan In Balance shall be made by Lender in its reasonable
discretion, and that Lender may require Borrower to make a Deficiency Deposit even if funds
-33-

remain in the Contingency Fund. Once the Project begins to generate Net Operating Income,
Borrower may only borrow from the Loan interest in excess of the Net Operating Income so
generated.
10.4

Optional Method for Payment of Interest.

For Borrower's benefit, the Budget includes a Budget Line Item for interest payments on
the Project I ,oan and, at Lender's option, amounts due from Borrower under any Interest Rate
Agreement with respect to the Project Loan. Borrower hereby authorizes Lender from time to
time, for the mutual convenience or Lender and Borrower, to disburse Project Loan proceeds to
pay all the then accrued interest on the Note and to pay amounts due from Borrower under any
Interest Rate Agreement with respect to the Project Loan, regardless of whether Borrower shall
have specifically requested a disbursement of such amount. Any such disbursement, if made,
shall be added to the outstanding principal balance of the Note and shall, when disbursed, bear
interest at the Adjusted Prime Rate. The authorization hereby granted, however, shall not
obligate Lender to make disbursements of the Project Loan for interest payments or any amount
due under any Interest Rate Agreement (except upon Borrower's qualifying for and requesting
disbursement of that portion of the proceeds of the Project Loan allocated for such purposes in
the Budget) nor prevent Borrower from paying accrued interest or amounts due under any
Interest Rate Agreement from its own funds.

ARTICLE ll
SUFFICIENCY OF PROJECT LOAN
11.1

Project Loan In Balance.

'
I
;

Anything contained in this Agreement to the contrary notwithstanding, it is expressly
understood and agreed that each Project Loan shall at all times be "In Balance", on a Budget
Line Item and an aggregate basis. A Budget Line Item shall be deemed to be "In Balance" only
if Lender in its reasonable discretion determines that amount of such Budget Line Item is
sufficient for its intended purpose. The Project Loan shall be deemed to be "In Balance" in the
aggregate only when the total of the undisbursed portion of the Project Loan less the
Contingency Fund (subject to Borrower's reallocation rights under Section 10.3), equals or
exceeds the aggregate of (a) the costs required to complete the construction of the Project in
accordance with the Plans and Specifications and the Budget, including, without limitation, all
Tenant Work required to be performed by Borrower or tenant allowances to be paid for by
Borrower under Leases or reasonably anticipated for unleased space; (b) the amounts to be paid
as retainages to persons who have supplied labor or materials to the Project; (c) the amount in
excess of the projected Net Operating Income required to pay interest on the Project Loan
through the Maturity Date; and (d) all other hard and soft costs not yet paid for in connection
with the Project, as such costs and amounts described in clauses (a), (b), (c) and (d) may be
estimated and/or approved in writing by Lender from time to time. Borrower agrees that if for
any reason, in Lender's reasonable discretion, the amount of such undistributed Project Loan
proceeds shall at any time be or become insufficient for such purpose regardless of how such
condition may be caused, Borrower will, within ten (I 0) days after written request by Lender,
deposit the deficiency with Lender ("Deficiency Deposit"). The Deficiency Deposit shall first be

-34-

~

exhausted before any further disbursement of Project Loan proceeds shall be made. Lender shall
not be obligated to make any Project Loan disbursements if and for as long as the Project Loan is
not In Balance.

ARTICLE 12
CONSTRUCTION PAYOUT REQUIREMENTS
12.1

Applicability of Sections.

The provisions contained in this Article 12 shall apply to the Opening of the Project Loan
and to all disbursements of proceeds during Construction.
I 2.2

Monthly Payouts.

After the Opening of the Project Loan, further disbursements shall be made during
Construction from time to time as the Construction progresses, but no more frequently than once
in each calendar month. At Lender's option, disbursements may be made by Lender into an
escrow and subsequently disbursed to Borrower by the Title Insurer. If such option is exercised,
those Project Loan proceeds shall be deemed to be disbursed to Borrower from the date of
deposit into that escrow and interest shall accrue on those proceeds from that date, regardless of
the date such proceeds are released by the Title Insurer.
12.3

Documents to be Furnished for Each Disbursement.

As a condition precedent to each disbursement of the Project Loan proceeds (including
the initial disbursement at the Opening of the Project Loan), Borrower shall furnish or cause to
be furnished to Lender the following documents covering each disbursement, in fonn and
substance satisfactory to Lender:
(a)
A completed Borrower's Certificate in the form of Exhibit G attached hereto and
made a part hereof and a completed Soft and Hard Cost Requisition Form in the form of
Exhibit I attached hereto and made a part hereof, each executed by the Authorized
Representative of Borrower;
(b)
A completed standard AlA Form G702 and Form G703 signed by the General
Contractor, subcontractors, and the Project engineer, together with General Contractor's sworn
statements and unconditional waivers of lien, and all subcontractors', material suppliers' and
laborers' conditional waivers of lien, covering all work, paid with the proceeds of the prior draw
requests, together with such invoices, contracts or other supporting data as Lender may require to
evidence that all costs for which disbursement is sought have been incurred;
(c)
Paid invoices or other evidence satisfactory to Lender that fixtures and equipment,
if any, have been paid for and are free of any lien or security interest therein;
(d)
An endorsement to the Title Policy issued to Lender covering the date of
disbursement and showing the Mortgage as a first, prior and paramount lien on the Project
subject only to the Permitted Exceptions and real estate taxes that have accrued but are not yet

-35-

I
r

clue and payable and particularly that nothing has intervened to affect the validity or priority of
the Mortgage;
Copies of any proposed or executed Change Orders on standard AlA G701 form
(c)
which have not been previously furnished to Lender and which require and are not valid without
the signatures of the General Contractor, Borrower and Architect;
(f)
Copies of all construction contracts (including subcontracts) which have been
executed since the last disbursement, together with any Bonds obtained or required to be
obtained with respect thereto;

(g)

All Required Permits;

(h)
Satisfactory evidence that all Government Approvals have been obtained for
development of the Project; and
(i)
Such other instruments, documents and information as Lender or the Title Insurer
may reasonably request.
Disbursements shall be made approximately ten (10) days after receipt of all information
required by Lender to approve the requested disbursements.
12.4

Retainages.

At the time of each disbursement of Project Loan proceeds, ten percent ( 10%) of the total
amount then due the General Contractor and the various contractors, subcontractors and material
suppliers for costs of the Construction shall be withheld from the amount disbursed. The
retained Loan amounts for the Construction costs will be disbursed only at the time of the final
disbursement of Loan proceeds under Article 13 below; provided, however, upon the satisfactory
completion of one hundred percent (1 00%) of the work with respect to any trade (including any
trade performed by the General Contractor) or the delivery of all materials pursuant to a purchase
order in accordance with the Plans and Specifications as certified by the Architect and the
Lender's Consultant, Lender may decide on a case by case basis (but shall not be obligated) to
permit retainages with respect to such trade or order, as the case may be, to be disbursed to
Borrower upon the Lender's Consultant's approval of all work and materials and Lender's receipt
of a final waiver of lien with respect to such completed work or delivered materials.

12.5

Disbursements for Materials Stored On-Site.

Any requests for disbursements which in whole or in part relate to materials, equipment
or fhrnishings which Borrower owns and which are not incorporated into the Improvements as of
the date of the request for disbursement, but are to be temporarily stored at the Project, shall be
made in an aggregate amount not to exceed $25,000.00. Any such request must be accompanied
by evidence satisfactory to Lender that (i) such stored materials are included within the
coverages of insurance policies carried by Borrower, (ii) the ownership of such materials is
vested in Borrower free of any liens and claims of third parties, (iii) such materials are properly
insured and protected against theft or damage, (iv) the materials used in the Construction are not
commodity items but are uniquely fabricated for the Construction, (v) the Lender's Consultant

-36-

I

has viewed and inspected the stored materials, and (vi) in the opinion of the Lender's consultant
the stored materials are physically secured and can be incorporated into the Project within forty
five (45) days. Lender may require separate Uniform Commercial Code financing statements to
cover any such stored materials.

12.6

Disbursements for Offsitc Materials.

Lender may in its sole discretion, but shall not be obligated to, make disbursements for
materials stored off-site. in which event all of the requirements of Section 12.5 shall be
applicable to such disbursement as well as any other requirements which Lender may, in its sole
discretion, determine are appropriate under the circumstances.

12.7

Disbursements For Tenant Worl< and Allowances.

(a)
Lender shall make disbursements for tenant allowances or Tenant Work based on
the percentage of the Construction complete at the time of the disbursement request, subject to
the retainages set forth in Section 12.4.
The first request for disbursement for Tenant Work in connection with a specific
(b)
leased space in the Project shall be accompanied by the following, all of which shall be subject to
the approval of Lender:
(i)

copies of all contracts, if not previously delivered to Lender, for the performance
of such Tenant Work;

(ii)

a cost breakdown for each trade performing Tenant Work in such leased space,
and an estimated commencement and completion date;

(iii)

an estimate of all direct costs ofthe Tenant Work to be performed in such leased
space which has not been contracted for or made subject to a work order or order
to proceed;

(iv)

plans and specifications for the leased space, together with a certificate from an
architect acceptable to Lender that such plans and specifications comply with all
Laws affecting the Project and the lease covering such leased space; and

.Cv)

a fully executed Lease approved by Lender covering such leased space.

ARTICLE l3
FINAL DISBURSEMENT FOR CONSTRUCTION
13.1

Final Disbursement for Construction.

Lender wi 11 advance to Borrower the final disbursement for the cost of the Construction
for a particular Project (including retainages) when the following conditions have been complied
with, provided that all other conditions in this Agreement for disbursements have been complied
with:

-37-

(a)
The Improvements have been fully completed and equipped in accordance with
the Plans and Specifications free and clear of mechanics' liens and security interests and are
ready for occupancy;
(b)
Borrower shall have furnished to Lender "all risks" casualty insurance in form and
amount and with companies satisfactory to Lender in accordance with the requirements
contained herein;
(c)
Borrower shall have furnished to Lender copies of all licenses and permits
required by any Ciovernmental Authority having jurisdiction for the occupancy of the
Improvements and the operation thereof including a certificate of occupancy from the
municipality in which the Project is located, or a letter from the appropriate Governmental
Authority that no such certificate is issued;
(d)
A II Tenants shall have executed acknowledgments of acceptance of their
respective premises in form and substance acceptable to Lender;
Borrower shall have furnished a plat of survey covering the completed
(e)
Improvements in compliance with Section 8.1 (f);

I

I
.

l

.

(f)
All fixtures, furnishings, furniture, equipment and other property required for the
operation of the Project shall have been installed free and clear of all liens and security interests,
except in favor of Lender;
(g)
Borrower shall have furnished to Lender copies of all final waivers of lien and
sworn statements from contractors, subcontractors and material suppliers and an affidavit from
the General Contractor in accordance with the mechanic's lien law of the State or as otherwise
established by Lender;
(h)
Borrower shall have furnished to Lender a certificate from the Architect or other
evidence satisfactory to Lender dated at or about the Completion Date stating that (i) the
Improvements have been completed in accordance with the Plans and Specifications, and (ii) the
Improvements as so completed comply with all applicable Laws; and
(i)
Lender shall have received a certificate from the Lender's Consultant for the sole
benefit of Lender that the Improvements have been satisfactorily completed in accordance with
the Plans and Specifications.

If Borrower fails to comply with and satisfy any of the final disbursement conditions
contained in this Section 13.1 within sixty ( 60) days after the Completion Date, such failure shall
constitute an Event of Default hereunder.

ARTICLE 14
RESERVED

-38-

ARTICLE 15
OTHER COVENANTS
15.1

Borrower further covenants and agrees as follows:

(a)
.Opening of Project Loan on or Prior to PrQj_ect Loan Opening Date. All
conditions precedent to the Opening ofthe Project Loan shall be complied with on or prior to the
Project Loan Opening Date. If the Project Loan Opening Date has not occurred on or before
ninety (90) days from the date of the applicable Project Agreement, Lender may at its sole option
terminate Lender's obligation to fund the Loan or any Project Loan by written notice to
Borrower.
Construction of Improvements. The Improvements shall be constructed and fully
(b)
equipped in a good and workmanlike manner with materials of high quality, strictly in
accordance with the Plans and Specifications (or in accordance with any changes therein that
may be approved in writing by Lender or as to which Lender's approval is not required), and
such construction and equipping will be commenced on or before the Construction
Commencement Date and prosecuted with due diligence and continuity in accordance with the
Construction Schedule and fully completed not later than the Completion Date. The Completion
Date shall be extended in writing by Lender by the number of days resulting from any
Unavoidable Delay in the construction of the Project, (but under no circumstances shall Lender
be obligated to extend the Completion Date beyond thirty (30) days), provided that Lender shall
not be obligated to grant any such extension unless (a) Borrower gives notice of such delay to
Lender within ten (I 0) days of learning of the event resulting in such delay, (b) after giving
effect to the consequences of such delay, the Project Loan shall remain "In Balance" and (c) such
delay is permitted under each of the Leases, or Borrower obtains a written extension from each
Tenant whose Lease does not permit such delay.
(c)
Changes in Plans and Specifications. No changes will be made in the Plans and
Specifications without the prior written approval of Lender; provided, however, that Borrower
may make changes to the Plans and Specifications if (i) Borrower notifies Lender in writing of
such change within seven (7) days thereafter; (ii) Borrower obtains the approval of all parties
whose approval is required, including any Tenants under Leases, sureties, and any Governmental
Authority to the extent approval from such parties is required; (iii) the structural integrity of the
Improvements is not impaired; (iv) no material change in architectural appearance is effected;
(v) the performance of the mechanical, electrical, and life safety systems of the Improvements is
not affected; (vi) the cost of or reduction resulting from such change (x) does not exceed $25,000
and (y) when added to all other changes which have not been approved in writing by Lender, the
resulting aggregate cost or reduction does not exceed $25,000. Changes in the scope of
construction work or to any construction related contract must be documented with a change
order on the AlA Form G701 or equivalent form.
(d)
Inspection by Lender. Borrower will cooperate with Lender in arranging for
inspections by representatives of Lender of the progress of the Construction from time to time
including an examination of (i) the Improvements, (ii) all materials to be used in the
Construction, (iii) all plans and shop drawings which are or may be kept at the construction site,
(iv) any contracts, bills of sale, statements, receipts or vouchers in connection with the

-39-

I
~

Improvements, (v) all work done, labor performed, materials furnished in and about the
Improvements, (vi) all books, contracts and records with respect to the Improvements. and
(vii) any other documents relating to the Improvements or the Construction. Borrower shall
cooperate with Lender's Consultant to enable him to perform his functions hereunder and will
promptly comply with Lender's requirements and remove any dissatisfaction regarding the
Construction of the Improvements or the progress thereof.
Mechanics' Liens and Contest Thereof. Borrower will not suffer or permit any
(e)
mechanics' lien claims to be filed or otherwise asserted against the Project or any funds due to
the General Contractor, and will promptly discharge the same in case of the filing of any claims
for lien or proceedings for the enforcement thereof, nrovided, however, that Borrower shall have
the right to contest in good faith and with reasonable diligence the validity of any such lien or
claim provided that Borrower posts a statutory lien bond which removes such lien from title to
the Project within twenty (20) days of written notice by Lender to Borrower of the existence of
the lien.) Lender will not be required to make any further disbursements of the proceeds of the
Loan until any mechanics' lien claims have been removed and Lender may, at its option, restrict
disbursements to reserve sufficient sums to pay 150% ofthe lien.

(1)
Settlement of Mechanics' Lien Claims. If Borrower shall fail promptly either
(i) to discharge any such lien, or (ii) post a statutory lien bond in the manner provided in
Section 15.l(e) Lender may, at its election (but shall not be required to), procure the release and
discharge of any such claim and any judgment or decree thereon and, further, may in its sole
discretion effect any settlement or compromise of the same, or may furnish such security or
indemnity to the Title Insurer, and any amounts so expended by Lender, including premiums
paid or security furnished in connection with the issuance of any surety company bonds, shall be
deemed to constitute disbursement of the proceeds of the Project Loan hereunder. In settling,
compromising or discharging any claims for lien, Lender shall not be required to inquire into the
validity or amount of any such claim.
(g)
Renewal of Insurance. Borrower shall cause insurance policies to be maintained
in compliance with Exhibit D at all times. Borrower shall timely pay all premiums on all
insurance policies required hereunder, and as and when additional insurance is required, from
time to time, during the progress of Construction, and as and when any policies of insurance may
expire, furnish to Lender, premiums prepaid, additional and renewal insurance policies with
companies, coverage and in amounts satisfactory to Lender in accordance with Section 8.1 (g).
Payment of Taxes. Borrower shall pay all real estate taxes and assessments and
(h)
charges of every kind upon the Project before the same become delinquent, provided, however,
that Borrower shall have the right to pay such tax under protest or to otherwise contest any such
tax or assessment, but only if (i) such contest has the effect of preventing the collection of such
taxes so contested and also of preventing the sale or forfeiture of the Project or any part thereof
or any interest therein, (ii) Borrower has notified Lender of Borrower's intent to contest such
taxes, and (iii) Borrower has deposited security in form and amount satisfactory to Lender, in its
sole discretion, and has increased the amount of such security so deposited promptly after
Lender's request therefor. If Borrower fails to commence such contest or, having commenced to
contest the same, and having deposited such security required by Lender for its full amount, shall
thereafter fail to prosecute such contest in good faith or with due diligence, or, upon adverse

-40-

~

~'

conclusion of any such contest, shall fail to pay such tax, assessment or charge, Lender may, at
its election (but shall not be required to), pay and discharge any such tax, assessment or charge,
and any interest or penalty thereon, and any amounts so expended by Lender shall be deemed to
constitute disbursements of the Project Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note). Borrower shall furnish to Lender
evidence that taxes are paid at least five (5) days prior to the last date for payment of such taxes
and before imposition of any penalty or accrual of interest.
(i)
Tax and Insurance Escrow Accounts. Borrower shall, following the written
request of Lender or upon the occurrence of any Event of Default, make insurance and tax
escrow deposits, in amounts reasonably determined by Lender from time to time as being needed
to pay taxes and insurance premiums when due, in an interest bearing escrow account held by
Lender in Lender's name and under its sole dominion and control. All payments deposited in the
escrow account, and all interest accruing thereon, are pledged as additional collateral for the
Project Loan. Notwithstanding Lender's holding of the escrow account, nothing herein shall
obligate Lender to pay any insurance premiums or real property taxes with respect to any portion
of the Project unless the Event of Default has been cured to the satisfaction of Lender. If the
Event of Default has been satisfactorily cured, Lender shall make available to Borrower such
funds as may be deposited in the escrow account from time to time for Borrower's payment of
insurance premiums or real property taxes due with respect to the Project.
(j)
Personal Property. All of Borrower's personal property, fixtures, attachments and
equipment delivered upon, attached to or used in connection with the Construction or the
operation of the Project shall always be located at the Project and shall be kept free and clear of
all liens, encumbrances and security interests.

(k)
Leasing Restrictions. Without the prior written consent of Lender, Borrower and
Borrower's agents shall not (i) enter into any additional Leases, (ii) modify, amend or terminate
any Lease, or (iii) accept any rental payment in advance of its due date. The terms of all Leases,
whether now existing or hereafter executed (including, without limitation, the term of the leases
and any co-tenancy provisions) musts be acceptable to Lender. Borrower shall provide Lender
with a copy of all Leases no less than ten (I 0) days prior to execution of such Leases. Borrower
shall provide Lender with a copy of the fully executed original of all Leases promptly following
their execution.
(I)
Defaults Under Leases. Borrower will not suffer or permit any breach or default
to occur in any of Borrower's obligations under any of the Leases nor suffer or permit the same
to terminate by reason of any failure of Borrower to meet any requirement of any Lease
including those with respect to any time limitation within which any of Borrower's work is to be
done or the space is to be available for occupancy by the lessee. Borrower shall notify Lender
promptly in writing in the event a Tenant commits a material default under a Lease.

(m)
Lender's Attorneys' Fees for Enforcement of Agreement. In case of any default or
Event of Default hereunder, Borrower (in addition to Lender's attorneys' fees, if any, to be paid
pursuant to Section 7.4) will pay Lender's attorneys' and paralegal fees (including, without
limitation, any attorney and paralegal fees and costs incurred in connection with any litigation or
bankruptcy or administrative hearing and any appeals therefrom and any post-judgment

-41-

enforcement action including, without limitation, supplementary proceedings) in connection with
the enforcement of this Agreement; without limiting the generality of the foregoing, if at any
time or times hereafter Lender employs counsel (whether or not any suit has been or shall be
filed and whether or not other legal proceedings have been or shall be instituted) for advice or
other representation with respect to the Project, this Agreement, or any of the other Project
Documents, or to protect, collect, lease. sell, take possession oC or liquidate any of the Project.
or to attempt to enforce any security interest or lien in any portion of the Project, or to enforce
any rights of Lender or Borrower's obligations hereunder, then in any of such events all of the
attorneys' fees arising hom such services, and any expenses, costs and charges relating thereto
(including fees and costs of paralegals), shall constitute an additional liability owing by
Borrower to Lender, payable on demand.
(n)
Appraisals. Lender shall have the right to obtain a new or updated Appraisal of
the Project from time to time. Borrower shall cooperate with Lender in this regard. If the
Appraisal is obtained to comply with this Agreement or any applicable law or regulatory
requirement, or bank policy promulgated to comply therewith, or if an Event of Default exists.
Bonower shall pay for any such Appraisal upon Lender's request.
(o)
Furnishing Information. Borrower shall deliver or cause to be delivered to
Lender: (i) annual financial statements and a completed Certificate of Compliance in the form of
Exhibit H attached hereto within one hundred and twenty ( 120) days after the end of each
calendar year with respect to the Borrower and the Guarantors (other than Jeff H. Farmer, Jr.,),
and (ii) with respect to Jeff H. Farmer, Jr., updated personal financial statements and a completed
Certificate of Compliance in the form of Exhibit H attached hereto every twelve ( 12) months
from the date that such information was last provided to the Lender. All such financial
statements shall be in a format approved in writing by Lender in Lender's reasonable sole
discretion. Each financial statement shall be certified as true, complete and correct by its
preparer and by Borrower or, in the case of each of the Guarantors' financial statements, by the
Guarantor to whom it relates. Borrower shall deliver to Lender with respect to Borrower and
Guarantor annual Federal Income Tax Returns within ten (1 0) days after timely tiling. In
addition, prior to the Project Loan Opening and then not later than sixty (60) days before the end
of each fiscal year of Borrower, Borrower shall deliver to Lender the Project's updated annual
operating budget for the following fiscal year. Within fifteen (15) days following the end of
each month, Borrower shall deliver to Lender: (i) monthly unaudited operating cash flow
statements for the Project, certified as true, complete and correct by Borrower showing actual
sources and uses of cash during the preceding month, and (ii) a current rent roll and a summary
of all leasing activity then taking place with respect to the Project, particularly describing the
status of all pending non-residential lease negotiations, if any. Borrower shall deliver to Lender
upon the Completion Date and then not later than forty-five (45) days after the end of each
calendar quarter operating statements for the Project, in form acceptable to Lender. Borrower
and the Guarantor shall provide such additional financial information as Lender reasonably
requires. Borrower shall during regular business hours permit Lender or any of its agents or
representatives to have access to and examine all of its books and records regarding the
development and operation of the Project. If any such financial statement or other report or
information described in this subsection is not delivered to Lender as provided above, Borrower
agrees to pay a late charge to Lender in the amount of $500 per item per day.

-42-

I
I

(p)
~ign and Publici_ty. Upon Lender's request, Borrower shall promptly erect a sign
approved in advance by Lender in a conspicuous location on the Project during the Construction
indicating that the financing for the Project is provided by Lender. Lender reserves the right to
publicize the making of the Project Loan.
( q)
Lost Note. Upon Lender's furnishing to Borrower an affidavit to such effect,
Borrower shalL if the Note is mutilated. destroyed, lost or stolen, deliver to Lender. 111
substitution therefor, a new note containing the same terms and conditions as the Note.
(r)
Indemnification. Developer and Borrower shall indemnify Lender. including
each party owning an interest in the Loan and their respective omcers, directors. employees and
consultants (each. an "Indemnified Party") and defend and hold each Indemnified Party harmless
from and against all claims, injury, damage, loss and liability, cost and expense (including
attorneys' fees, costs and expenses) of any and every kind to any persons or property by reason
of (i) the Construction; (ii) the operation or maintenance of the Project; (iii) any breach of
representation or warranty, default or Event of Default under this Agreement or any other Project
Document or Related Document; or (iv) any other matter arising in connection with the Loan, the
Project Loan, Borrower, Guarantor or Tenant, or the Project. No Indemnified Party shall be
entitled to be indemnified against its own gross negligence or willful misconduct. The foregoing
indemnification shall survive repayment of the Project Loan and shall continue to benefit Lender
following any assignment of the Project Loan with respect to matters arising or accruing prior to
such assignment.
(s)
No Additional Debt. Except for the Project Loan, Borrower shall not incur any
indebtedness (whether personal or nonrecourse, secured or unsecured) other than customary
trade payables paid within sixty (60) days after they are incurred.
(t)
~~ompliance With Laws. Borrower shall comply with all applicable requirements
(including applicable Laws) of any Governmental Authority having jurisdiction over Borrower
or the Project.

Organizational Documents. Borrower shall not, without the prior written consent
(u)
of Lender, permit or suffer (i) a material amendment or modification of its organizational
documents, (ii) the admission of any new member, partner or shareholder, or (iii) any dissolution
or termination of its existence.
(v)
Furnishing Reports. Upon Lender's request, Borrower shall provide Lender with
copies of all inspections, reports, test results and other information received by any Borrower,
which in any way relate to the Project or any part thereof.
Management Contracts. Borrower shall not enter into, modify, amend, terminate
(w)
or cancel any management contracts for the Project or agreements with agents or brokers,
without the prior written approval of Lender.
(x)
Furnishing Notices. Borrower shall provide Lender with copies of all material
notices pertaining to the Project received by Borrower from any Tenant, Governmental Authority
or insurance company within seven (7) days after such notice is received.

-43-

i

l
'

',

(y)
Construction Contracts. Borrower shall not enter into, modify, amend, terminate
or cancel any contracts for the Construction, without the prior written approval of Lender, which
approval shall not be unreasonably withheld. Borrower will furnish Lender promptly after
execution thereof executed copies of all contracts between Borrower, architects, engineers and
contractors and all subcontracts between the General Contractor or contractors and all of their
subcontractors and suppliers, which contracts and subcontracts may not have been furnished
pursuant to Section 9.1 (a) at the time of the Opening of the Project Loan.
(z)
Correction of Defects. Within tive (5) days after Borrower acquires knowledge of
or receives notice of a defect in the Improvements or any departure from the Plans and
Specifications, or any other requirement of this Agreement, Borrower will proceed with
diligence to correct all such defects and departures.
(aa)
Hold Disbursements in Trust. Borrower shall receive and hold in trust for the sole
benefit of Lender (and not for the benefit of any other person, including, but not limited to,
contractors or any subcontractors) all advances made hereunder directly to Borrower, for the
purpose of paying costs of the Construction in accordance with the Budget. Borrower shall use
the proceeds of the Project Loan solely for the payment of costs as specified in the Budget.
Borrower will pay all other costs, expenses and fees relating to the acquisition, equipping, use
and operation of the Project.
(bb)
Foundation Survey. Not later than thirty (30) days after completion of the
foundation with respect to the Improvements, Borrower shall furnish to Lender a survey of the
land underlying the Project with the foundation of the Improvements located thereon, and also
satisfying the requirements set forth in Section 8.1 (f).
(cc)
Alterations. Without the prior written consent of Lender, Borrower shall not
make any material alterations to the Project (other than completion of the Construction in
accordance with the Plans and Specifications).
Cash Distributions. Borrower shall not make any distributions to partners,
(dd)
members or shareholders, provided that after completion of Construction and achievement of
breakeven operations Borrower may so distribute Monthly Excess Cash Flow not needed to pay
Operating Expenses or amount payable under the Project Documents.
(ee)
Net Cash Flow Deposit. All Net Cash Flow from the Project shall be deposited
with Lender in a demand deposit account in Borrower's name but under Lender's sole dominion
and control. Funds deposited into such account shall be applied against the monthly payments of
interest and principal on the Project Loan and Project Loan proceeds will be disbursed from the
interest reserve set out in the Budget only to the extent the Net Cash Flow is not sufficient to
make the payments.
Conduit Program. Lender shall have the right to make the first offer, and .to
(ff)
match Borrower's best offer, with respect to placing the Project Loan into a conduit program.
(gg)
Project Sale. Developer shall use its best efforts to obtain, on or before December
31, 2005, in form and substance reasonably satisfactory to Lender, either (i) a bona fide thirdparty arms-length offer for the sale of 28 properties listed on the engagement letter with the
-44-

(iv) no material Leases in effect at the time of such casualty or condemnation are or will be
terminated nor rent decreased as a result of such casualty or condemnation, (v) if the cost of
restoration exceeds ten percent ( 10%) of the Loan Amount, in Lender's sole determination after
completion of restoration the Loan Amount will not exceed 75% of the fair market value of the
Project (vi) in Lender's reasonable determination, the Project can be restored to an
architecturally and economically viable project in compliance with applicable Laws, (vii) each
Guarantor reaffirms its Guaranty in writing. and (viii) in Lender's reasonable determination. such
restoration is likely to be completed not later than three months prior to the Maturity Date.

16.2

Borrower's Obligation to Rebuild and Usc of Proceeds Therefor.

In case Lender docs not elect to apply or does not have the right to apply the Proceeds to
the indebtedness, as provided in Section 16.1 above, a Borrower shall:
Proceed with diligence to make settlement with insurers or the appropriate
(a)
governmental authorities and cause the Proceeds to be deposited with Lender;
(b)
In the event of any delay in making settlement with insurers or the appropriate
governmental authorities or effecting collection of the Proceeds, deposit with Lender the full
amount required to complete construction as aforesaid;
(c)
In the event the Proceeds and the available proceeds of the Project Loan are
insufficient to assure the Lender that the Project Loan will be In Balance, promptly deposit with
Lender any amount necessary to place the Project Loan In Balance; and
(d)
Promptly proceed with the assumption of construction of the Improvements,
including the repair of all damage resulting from such fire, condemnation or other cause and
restoration to its former condition.

I
.

'

.

Any request by Borrower for a disbursement by Lender of Proceeds and funds deposited
by Borrower shall be treated by Lender as if such request were for an advance of the Project
Loan hereunder, and the disbursement thereof shall be conditioned upon Borrower's compliance
with and satisfaction of the same conditions precedent as would be applicable under this
Agreement tor an advance of the Project Loan.

ARTICLE 17
ASSIGNMENTS BY LENDER AND BORROWER
17.1

Assignments and Participations.

Lender may from time to time sell the Loan or any or all of the Project Loans and the
Project Documents (or any interest therein) relating thereto and may grant participations in the
Loan or any or all of the Project Loans. Borrower agrees to cooperate with Lender's efforts to do
any of the foregoing and to execute all documents reasonably required by Lender in connection
therewith which do not materially adversely affect Borrower's rights under the Project
Documents.

-46-

17.2

Prohibition of Assignments and Transfers by Borrower.

Borrower shall not assign or attempt to assign its rights under this Agreement, the Project
Agreement and any Project Documents and any purported assignment shall be void. Without the
prior written consent of Lender, in Lender's sole discretion, Borrower shall not sutler or permit
(a) any change in the management (whether direct or indirect) of the Project, or (b) any Transfer.
17.3

Prohibition of Transfers in Violation of ERISA.

In addition to the prohibitions set forth in Section 17.2 above, neither Developer nor
Borrower shall assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of its
interest or rights in this Agreement, the Project Agreement or in the Project, or attempt to do any
of the foregoing or suffer any of the foregoing, nor shall any party owning a direct or indirect
interest in Borrower or Developer assign, sell, pledge, mortgage, encumber, transfer, hypothecate
or otherwise dispose of any of its rights or interest (direct or indirect) in Borrower or Developer,
attempt to do any of the foregoing or suffer any of the foregoing, if such action would cause the
Loan, any Project Loan or the exercise of any of Lender's rights in connection therewith, to
constitute a prohibited transaction under ERISA or the Internal Revenue Code or otherwise result
in Lender being deemed in violation of any applicable provision of ERISA. Borrower and
Developer, jointly and severally, agree to indemnify and hold Lender free and harmless from and
against all losses, costs (including attorneys' fees and expenses), taxes, damages (including
consequential damages) and expenses Lender may suffer by reason of the investigation, defense
and settlement of claims and in obtaining any prohibited transaction exemption under ERISA
necessary or desirable in Lender's sole judgment or by reason of a breach of the foregoing
prohibitions. The foregoing indemnification shall be a recourse obligation of Borrower and
Developer and shall survive repayment of the Note, notwithstanding any limitations on recourse
contained herein or in any of the Project Documents.
17.4

Successors and Assigns.

Subject to the foregoing restrictions on transfer and assignment contained in this
Article 17, this Agreement shall inure to the benefit of and shall be binding on the parties hereto
and their respective successors and permitted assigns.

ARTICLE 18
TIME OF THE ESSENCE
18.1

Time is of the Essence.
Borrower and Developer agree that time is of the essence under this Agreement.

-47-

ARTICLE 19
EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
as said term is used herein:

"E~vent

of Def~wlt"

(a)
Failure of any Borrower (i) (A) to make any principal payment when due, (B) to
pay any interest within ten (I 0) days after the date when due or (C) to observe or perform any of
the other covenants or conditions by any Borrower to be performed under the terms of this
Agreement, the Project Agreement or any other Project Document concerning the payment of
money, for a period of ten (10) days after written notice from Lender that the same is due and
payable; or (ii) for a period of thirty (30) days after written notice from Lender, to observe or
perform any non-monetary covenant or condition contained in this Agreement, the Project
Agreement or any other Project Documents; provided that if any such failure concerning a
non-monetary covenant or condition is susceptible to cure and cannot reasonably be cured within
said thirty (30) day period, then such Borrower shall have an additional sixty (60) day period to
cure such failure and no Event of Default shall be deemed to exist hereunder so long as
(Y) Borrower commences such cure within the initial thirty (30) day period and diligently and in
good faith pursues such cure to completion within such resulting ninety (90) day period from the
date of Lender's notice, and (Z) the existence of such default will not result in any Tenant having
the right to terminate its Lease due to such default; and provided further that if a different notice
or grace period is specified under any other subsection of this Article 19 with respect to a
particular breach, or if another subsection of this Article 19 applies to a particular breach and
does not expressly provide for a notice or grace period the specific provision shall control.
(b)
The disapproval by Lender or Lender's Consultant at any time of any construction
work and failure of any Borrower to cause the same to be corrected to the satisfaction of Lender
within the cure period provided in Section 19.1 (a)(ii) above.
(c)
A delay in the Construction of any Project or a discontinuance for a period of
fifteen ( 15) days aHer written notice from Lender concerning such delay or discontinuance (other
than Unavoidable Delays), or in any event a delay in the Construction of any Project so that the
same is not, in Lender's judgment (giving due consideration to the assessment of Lender's
Consultant), likely to be completed on or before the Completion Date for such Project.
(d)
The bankruptcy or insolvency of any General Contractor and failure of a
Borrower to procure a contract with a new contractor satisfactory to Lender within thirty (30)
days from the occurrence of such bankruptcy or insolvency.
(e)

Any Transfer or other disposition in violation of Sections 17.2 or 17.3.

(f)
Any material default by any Borrower, as lessor, under the terms of any Lease
following the expiration of any applicable notice and cure period, provided that if the Lease does
not provide a notice and cure period, then the notice and cure period provided in (a)(i) above will
apply to any such monetary default, and the notice and cure period provided in (a)(ii) will apply
to any such non-monetary default (which respective periods shall commence upon written notice
of default from Lender or the applicable Tenant, whichever occurs first).

-48-

(g)
If any warranty, representation, statement, report or certificate made now or
hereafter by any Borrower or any Guarantor is untrue or incorrect at the time made or delivered,
provided that if such breach is reasonably susceptible of cure, then no Event of Default shall
exist so long as such Borrower cures said breach (i) within the notice and cure period provided in
(a)(i) above for a breach that can be cured by the payment of money or (ii) within the notice and
cure period provided in (a)(ii) above for any other breach.
(h)
Any Borrower or any Guarantor shall commence a voluntary case concerning
Borrower or such Guarantor under the Bankruptcy Code; or an involuntary proceeding is
commenced against any Borrower or any Guarantor under the Bankruptcy Code and relief is
ordered against such Borrower or such Guarantor, or the petition is controverted but not
dismissed or stayed within sixty (60) days after the commencement of the case, or a custodian
(as defined in the Bankruptcy Code) is appointed for or takes charge of all or substantially all of
the property of any Borrower or any Guarantor; or any Borrower or any Guarantor commences
any other proceedings under any reorganization, arrangement, readjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar Law of any jurisdiction whether now or
hereafter in effect relating to any Borrower or any Guarantor; or there is commenced against any
Borrower or any Guarantor any such proceeding which remains undismissed or unstayed for a
period of sixty (60) days; or any Borrower or any Guarantor fails to controvert in a timely
manner any such case under the Bankruptcy Code or any such proceeding, or any order of relief
or other order approving any such case or proceeding is entered; or any Borrower or any
Guarantor by any act or failure to act indicates its consent to, approval of, or acquiescence in any
such case or proceeding or the appointment of any custodian or the like of or for it for any
substantial part of its property or suffers any such appointment to continue undischarged or
unstayed for a period of sixty (60) days.
(i)
Any Borrower or any Guarantor shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as they become due, or
shall consent to the appointment of a receiver or trustee or liquidator of all of its property or the
major part thereof or if all or a substantial part of the assets of any Borrower or any Guarantor
are attached, seized, subjected to a writ or distress warrant, or are levied upon, or come into the
possession of any receiver, trustee, custodian or assignee for the benefit of creditors.

(j)
ff any Borrower is enjoined, restrained or in any way prevented by any court
order from constructing or operating its Project.

(k)
Failure by any Borrower to make any Deficiency Deposit with Lender within the
time and in the manner required by Article II hereof.
One or more final, unappealable judgments are entered (i) against any Borrower
in amounts aggregating in excess of $1 00,000 or (ii) against any Guarantor in amounts
aggregating in excess of $250,000, and said judgments are not stayed or bonded over within
thirty (30) days after entry.
(I)

If any Borrower or any Guarantor shall fail to pay any debt owed by it or is in
(m)
default under any agreement with Lender or any other party (other than a failure or default for
which Borrower's maximum liability does not exceed $100,000 and Guarantor's maximum

-49-

~

I

liability does not exceed $250,000) and such failure or default continues after any applicable
grace period specified in the instrument or agreement relating thereto.
(n)
If a Material Adverse Change occurs with respect to any Borrower, any Project or
any Guarantor or any material Tenant.
(o)
The occurrence of any other event or circumstance denominated as an Event of
Default in this Agreement, any Project Agreement or under any of the other Project Documents
and the expiration of any applicable grace or cure periods, if any, specified for such Event of
De1~mlt herein or therein, as the case may be.
(p)
Failure of the Guarantor to meet the minimum net worth test and the minimum
liquidity test set forth in 8.1 (w) on each anniversary of the date of this Agreement occurring
during the term of the Loan.

ARTICLE 20
LENDER'S REMEDIES IN EVENT OF DEFAlJLT
20.1

Remedies Conferred Upon Lender.

Upon the occurrence of any Event of Default, Lender may pursue any one or more of the
following remedies concurrently or successively with respect to one or any combination of
Borrowers and Projects, it being the intent hereof that none of such remedies shall be to the
exclusion of any other and that an Event of Default by one Borrower under its Project
Documents shall be an Event of Default with respect to all Borrowers:
(a)
Take possession of any or all of the Projects (at Lender's sole discretion and sole
determination) and complete the Construction with respect thereto and do anything which is
necessary or appropriate in its sole judgment to fulfill the obligations of any Borrower under this
Agreement, any Project Agreement and the other Project Documents, including either the right to
avail itself of and procure performance of existing contracts or let any contracts with the same
contractors or others. Without restricting the generality of the foregoing and for the purposes
aforesaid, Borrower hereby appoints and constitutes Lender its lawful attorney-in-fact with full
power of substitution in its Project to complete the Construction in the name of Borrower; to use
unadvanced funds remaining under the Note or which may be reserved, escrowed or set aside for
any purposes hereunder at any time, or to advance funds in excess of the face amount of the
Note, to complete the Construction; to make changes in the Plans and Specifications which shall
be necessary or desirable to complete the Construction in substantially the manner contemplated
by the Plans and Specifications; to retain or employ new general contractors, subcontractors,
architects, engineers and inspectors as shall be required for said purposes; to pay, settle or
compromise all existing bills and claims, which may be liens or security interests, or to avoid
such bills and claims becoming liens against the Project; to execute all applications and
certificates in the name of Borrower prosecute and defend all actions or proceedings in
connection with the Improvements or Project; and to do any and every act which the Borrower
might do in its own behalf; it being understood and agreed that this power of attorney shall be a
power coupled with an interest and cannot be revoked;

-50-

'
I
.

(b)
Withhold further disbursement of the proceeds of any or all of the Project Loans
and/or terminate Lender's obligations to make further disbursements hereunder;
(c)
Declare the indebtedness evidenced by any or all of the Notes to be immediately
due and payable;
(d)
Use and apply any monies or letters of credit deposited by any Borrower with
Lender. regardless of the purposes for which the same was deposited, to cure any such default or
to apply on account of any indebtedness under this Agreement which is clue and owing to
I .ender; and
(e)
Exercise or pursue any other remedy or cause of action permitted under this
Agreement, any of the Project Agreements or any other Project Documents, or confened upon
Lender by operation of Law.
Notwithstanding the foregoing, upon the occurrence of any Event of Default under
Section 19.1 (h) with respect to Borrower, all amounts evidenced by the Notes shall automatically
become due and payable, without any presentment, demand, protest or notice of any kind to any
Borrower.

ARTICLE 21
GENERAL PROVISIONS
21.1

Captions.

The captions and beadings of various Articles, Sections and subsections of this
Agreement and Exhibits pertaining hereto are for convenience only and are not to be considered
as defining or limiting in any way the scope or intent of the provisions hereof.

21.2

Modification; Waiver.

No modification, waiver, amendment or discharge of this Agreement, the Project
Agreements or any other Project Document shall be valid unless the same is in writing and
signed by the party against which the enforcement of such modification, waiver, amendment or
discharge is sought.

21.3

Governing Law.

Irrespective of the place of execution and/or delivery, this Agreement shall be governed
by, and shall be construed in accordance with, the laws ofthe State of Ohio.

21.4

Acquiescence Not to Constitute Waiver of Lender's Requirements.

Each and every covenant and condition for the benefit of Lender contained in this
Agreement may be waived by Lender, provided, however, that to the extent that Lender may
have acquiesced in any noncompliance with any construction or nonconstruction conditions
precedent to the Opening of the Project Loan or to any subsequent disbursement of Project Loan

-51-

I
.
.

proceeds, such acquiescence shall not be deemed to constitute a waiver hy Lender of such
requirements with respect to any future disbursements of Loan proceeds.
21.5

Disclaimer by Lender.

This Agreement is made for the sole benefit of Developer, each Borrower and Lender,
and no other person or persons shall have any bendits, rights or remedies under or by reason of
this Agreement, or by reason of any actions taken by Lender pursuant to this Agreement. Lender
shall not be I iable to any contractors, subcontractors, supplier, architect, engineer, tenant or other
party for labor or services performed or materials supplied in connection with the Construction.
I ,ender shall not be liable for any debts or claims accruing in favor of any such parties against
any Borrower or others or against any Project. Lender, by making the Loan and the Project
Loans or taking any action pursuant to any of the Project Documents, shall not be deemed a
partner or a joint venturer with any Borrower or fiduciary of any Borrower. No payment of
funds directly to a contractor or subcontractor or provider of services shall be deemed to create
any third-party beneficiary status or recognition of same by the Lender. Without limiting the
generality of the foregoing:
(a)
Lender shall have no liability, obligation or responsibility whatsoever with respect
to the Construction. Any inspections of the Construction made by or through Lender are for
purposes of administration of a Project Loan only and neither any Borrower nor any third party is
entitled to rely upon the same with respect to the quality, adequacy or suitability of materials or
workmanship, conformity to the Plans and Specifications, state of completion or otherwise~
(b)
Lender neither undertakes nor assumes any responsibility or duty to any Borrower
to select, review, inspect, supervise, pass judgment upon or inform any Borrower of any matter
in connection with any Project, including matters relating to the quality, adequacy or suitability
of: (i) the Plans and Specifications, (ii) architects, contractors, subcontractors and material
suppliers employed or utilized in connection with the Construction, or the workmanship of or the
materials used by any of them, or (iii) the progress or course of Construction and its conformity
or nonconformity with the Plans and Specifications; Borrower shall rely entirely upon its own
judgment with respect to such matters, and any review, inspection, supervision, exercise of
judgment or supply of information to any Borrower by Lender in connection with such matters is
for the protection of Lender only, and neither any Borrower nor any third party is entitled to rely
thereon; and
(c)
Lender owes no duty of care to protect any Borrower, Guarantor, or any Tenant
against negligent, hmlty, inadequate or defective building or construction.
21.6

I
'
.

'

•

!
·.
L···

F

Partial Invalidity; Severability.

If any of the provisions of this Agreement, or the application thereof to any person, party
or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision or provisions to persons, parties or
circumstances other than those as to whom or which it is held invalid or unenforceable, shall not
be affected thereby, and every provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

-52-

21.7

Definitions Include Amendments.

Definitions contained in this Agreement which identify documents, including, but not
Iimited to, the Project Documents, shall be deemed to include all amendments and supplements
to such documents from the date hereof, and all future amendments, modifications, and
supplements thereto entered into from time to time to satisfy the requirements of this Agreement
or otherwise with the consent of Lender. Reference to this Agreement contained in any of the
foregoing documents shall be deemed to include all amendments and supplements to this
Agreement.
21.8

f;~xecution

in Counterparts.

This Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement.
21.9

Entire Agreement.

This Agreement, taken together with all of the other Project Documents and all
certificates and other documents delivered by Borrower to Lender, embody the entire agreement
and supersede all prior agreements, written or oral, relating to the subject matter hereof.
21.10 Waiver of Damages.

In no event shall Lender be liable to any Borrower for pumt1ve, exemplary or
consequential damages, including, without limitation, lost profits, whatever the nature of a
breach by Lender of its obligations under this Agreement or any of the Project Documents, and
Borrower for itself and its Guarantors waive all claims for punitive, exemplary or consequential
damages.
21.11

Claims Against Lender.

Lender shall not be in default under this Agreement, or under any other Project
Documents, unless a written notice specifically setting forth the claim of Borrower shall have
been given to Lender within three (3) months after Borrower first had knowledge of the
occurrence of the event which Borrower alleges gave rise to such claim and Lender does not
remedy or cure the default, if any there be, promptly thereafter. Borrower waives any claim,
set-off or defense against Lender arising by reason of any alleged default by Lender as to which
Borrower does not give such notice timely as aforesaid. Borrower acknowledges that such
waiver is or may be essential to Lender's ability to enforce its remedies without delay and that
such waiver therefore constitutes a substantial part of the bargain between Lender and Borrower
with regard to the Loan. No Guarantor or Tenant is intended to have any rights as a third-party
beneficiary of the provisions of this Section 21. I I.
21.12 Jurisdiction.

TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
W AlVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY
LENDER. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO
THIS AGREEMENT (EACH, A "PROCEEDING"), BORROWER IRREVOCABLY
-53-

(A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS HAVING JURISDICTION IN TI-IE COUNTY OF HAMILTON AND
STATl~ OF OHIO. AND (B) WAIVES ANY OBJECTION WHICH IT MAY I-lAVE AT ANY
TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH
COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND FURTIIER WAIVES THE RIGHT TO OBJECT. WITH
RESPECT TO SUCH PROCEEDING. 'TTIAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER SUCH PARTY.
NOTHING IN THIS AGREEMENT SHALL
PRECLUDE LENDER FROM BRINGING !\ PROCEEDING IN ANY OTHER
JURISDICTION NOR WILL 'TliE BRINGING OF A PROCEEDING IN ANY ONE OR
MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY
OTHER JURISDICTION. BORROWER FURTHER AGREES AND CONSENTS THAT. IN
ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY OHIO
STATE OR UNITED STATES COURT SlTTJNG IN THE CO'lJNTY OF HAMILTON MAY
BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE
SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF BORROWER
SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE
FIVE (5) DAYS AFTER 'TI-IE SAME SHALL HAVE BEEN SO MAILED.

21.13 Set-Offs.
After the occurrence and during the continuance of an Event of Default, Borrower hereby
irrevocably authorizes and directs Lender from time to time to charge Borrower's accounts and
deposits with Lender (or its Affiliates), and to pay over to Lender an amount equal to any
amounts from time to time due and payable to Lender hereunder, under the Note or under any
other Project Document. Borrower hereby grants to Lender a security interest in and to all such
accounts and deposits maintained by the Borrower with Lender (or its Affiliates).

ARTICLE 22
NOTICES
Any notice. demand, request or other communication which any party hereto may be
required or may desire to give hereunder shall be in writing and shall be deemed to have been
properly given (a) if hand delivered. when delivered; (b) if mailed by United States Certified
Mail (postage prepaid, return receipt requested), three Business Days after mailing (c) if by
Federal Express or other reliable overnight courier service, on the next Business Day after
delivered to such courier service or (d) if by telecopier on the day of transmission so long as
copy is sent on the same day by overnight courier as set forth below:

-54-

'.•
1
'

.
I
.

.

'

If' to Developer and Borrower:
Spectra Group, Inc.
5851 Ridge Bend Road
Memphis, Tennessee 38120
Attention: JetT I-I. Fa~m~r,__Jr.
/
Telephone: 'l c I · ~'_,;)__-_,_...,'? 3i c''
Facsimile:
>'( / -f.: S~.:.J ·.!2}/)t..;
With a copy to:

Attention:
----------------Telephone: ______________
Facsimile:

If to Lender:
KeyBank National Association
580 Walnut Street, 211 d Floor
Cincinnati, Ohio 45202
Attention: Kmi L. Reiber
Telephone: [phone]
Facsimile: [phone]

j

I
'

With a copy to:
Thompson Hine LLP
312 Walnut Street
Suite 1400
Cincinnati, Ohio 45202
Attention: Stephen M. King
Telephone: [phone]
f<'acsimile: [phone]

or at such other address as the party to be served with notice may have furnished in writing to the
party seeking or desiring to serve notice as a place for the service of notice.
Lender shall send to each Guarantor (at its notice address set forth in each respective
Guaranty) a copy of any notice which is required to be sent to Borrower under Section I 9 prior
to the occurrence of an Event of Default, and Lender shall accept a cure by any Guarantor within
the time periods set forth in Section 19 as a cure by Borrower.

-55-

ARTICLE 23
WAIVER OF .JURY TRIAL
BORROWER AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY
.JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR RELATING
THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE
SlJB.JECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A .JlJRY.

ARTICLE 24
OHIO PROVISIONS
24.1

Lender's Attorneys' Fees.

With respect to any agreement by Borrower in this Agreement or in any other Project
Document to pay Lender's attorneys' fees and disbursements incurred in connection with the
Loan, BotTO\ver agrees that each Loan Document is a "contract of indebtedness" and that the
attorneys' fees and disbursements referenced are those which are a reasonable amount, all as
contemplated by Ohio Revised Code Section 1301.21, as such Section may hereafter be
amended. Borrower further agrees that the indebtedness incurred in connection with the Loan is
not incurred for purposes that are primarily personal, family or household and confirms that the
total amount owed on the contract of indebtedness exceeds One Hundred Thousand and No/1 00
Dollars ($I 00,000.00).

24.2

I
'
'

Notice of Commencement.

'

Borrower shall file an appropriate Notice of Commencement pursuant to Section 131 I .04
or the Ohio Revised Code in the office of the county recorder in the county where the Project
Site is located after the recording of the Mortgage and other Project Documents prior to the
commencement of any construction, demolition or renovation activities on or to the Project.

-56-

EXECUTED as ofthe date first set forth above.

DEVELOPER:
corporatio

LENDER:

·rf /-

'""~

-57-

SCHEDULE 1

CONSTRUCTION TRANCHE
Project
Mustang Shopping Center
Marshalltown Shopping Center
Alice Shopping Center
Belton Shopping Center
Keokuk Shopping Center
Tell City Shopping Center
Pampa Shopping Center
Shelbyville Shopping Center
Uvalde Shopping Center
Bloomington Shopping Center
Wauseon Shopping Center
Bad Axe Shopping Center
Cortez Shopping Center
Douglas Shopping Center
Ville Platte Shopping Center
Eden Shopping Center
Yukon Shopping Center
Total

Project
Loan Amount
$2,ROO,OOO
$2,640,000
$4,087,500
$3,000,000
$1,333,000
$2,587,500
$1,685,000
$1,875,000
$3,025,500
$2,732,000
$1,612,500
$2,898,000
$2,100,000
$3,413,000
$2,510,000
$2,512,500
$3,570,000
$44,3 81 ,500

.
I
.

1

STABILIZED TRANCHE
Project
Newton Shopping Center
Perry Shopping Center
Ottumwa Shopping Center
Newcastle Shopping Center
Oskaloosa Shopping
LaJuta Shopping Center
Plainview Shopping Center
Total

Project
Loan Amount
$1,612,500
$1,425,000
$2,625,000
$1,350,000
$1,762,500
$1 '987 ,500
$3,618,750
$14,381 ,250

.

'

I

L
I
[
!
!..
,
!

r

!
l

EXHIBIT A
Title Requirements
I.

Jitle Insurance Company Req!:!jrcments. The maximum single risk (i.e., the amount
insured under any one policy) by a title insurer may not exceed 25% of that insurer's
surplus and statutory reserves. Reinsurance must be obtained by closing for any policy
exceeding such amount.

2.

J,oan Policy Forms. Standard 1992 American Land Title Association ("ALTA") form of
loan title insurance policy, or the 1970 (amended October 17, 1970) ALTA loan form
policies must be used.

3.

Insurance Amount. The amount insured must equal
ofthe Project Loan.

4.

Named Insured. The named insured under the Title Policy must be substantially the same
as the following: "KeyBank National Association, and its respective successors and
assigns."

5.

Creditors' Righlli. Any "creditors' rights" exception or other exclusion from coverage for
voidable transactions under bankruptcy, fraudulent conveyance, or other debtor
protection laws or equitable principles must be removed by either an endorsement or a
written waiver.

6.

Arbitration. In the event that the form policy which is utilized includes a compulsory
arbitration provision, the insurer must agree that such compulsory arbitration provisions
do not apply to any claims by or on behalf of the insured. Please note that the 1987 and
1992 ALTA form loan policies include such provisions.

7.

Date of Policy. The effective date of the Title Policy must be as of the date and time of
the closing.

8.

Legal Description. The legal description of the property contained in the Title Policy
must conform to (a) the legal description shown on the survey ofthe property, and (b) the
legal description contained in the Mortgage. In any event, the Title Policy must be
endorsed to provide that the insured legal description is the same as that shown on the
survey.

9.

Easements. Each Title Policy shall insure, as separate parcels: (a) all appurtenant
easements and other estates benefiting the property, and (b) all other rights, title, and
interests of the borrower in real property under reciprocal easement agreements, access
agreements, operating agreements, and agreements containing covenants, conditions, and
restrictions relating to the Project.

ill~ast

the original principal amount

I

I 0.

ExceRtions to Coverage. With respect to the exceptions, the

f~)llowing

applies:

a)

Each Title Policy shall afford the broadest coverage available in the state in which
the subject property is located.

b)

The "standard" exceptions (such as for parties in possession or other matters not
shown on public records) must be deleted.

c)

The "standard" exception regarding tenants in possession under residential leases,
should also be deleted. For commercial properties, a rent roll should be attached
in lieu ofthe general exception.

d)

·rhe standard survey exception to the Title Policy must be deleted.
survey reading rd1ecting the CUITent survey should be incorporated.

e)

Any exception for taxes, assessments, or other lienable items must expressly
insure that such taxes, assessments, or other items are not yet due and payable.

f)

Any lien, encumbrance, condition, restriction, or easement of record must he
listed in the Title Policy, and the Title Policy must affirmatively insure that the
improvements do not encroach upon the insured easements or insure against all
loss or damage due to such encroachment

g)

The Title Policy may not contain any exception for any filed or unfiled
mechanics' or materialmen's liens.

h)

In the event that a comprehensive endorsement has been issued and any
Schedule B exceptions continue to be excluded from the coverage provided
through that endorsement, then a determination must be made whether such
exceptions would be acceptable to Bank. In the event that it is determined that
such exception is acceptable, a written explanation regarding the acceptability
must be submitted as part of the delivery of the loan documents.

Instead, a

'
I
.

'

'

If Schedule B indicates the presence of any easements that are not located on the survey, the
Title Policy must provide affirmative insurance against any loss resulting from the exercise by
the holder of such easement of its right to use or maintain that easement. ALTA Form 103. I or
an equivalent endorsement is required for this purpose.
I I.

Endorsements. With respect to endorsements, the following applies:
a)

Each Title Policy must include an acceptable environmental protection lien
endorsement on ALTA Form 8.1. Please note that Form 8.1 may take exception
for an entire statute which contains one or more specific sections under which
environmental protection liens could take priority over the Mortgage; provided,
however, that such specific sections under which the lien could arise must also be
referenced.

-2-

I
I
r.
~.1

b)

Each Title Policy must contain an endorsement which provides that the insured
legal description is the same as shown on the survey.

c)

Each Title Policy must contain a comprehensive endorsement (ALTA Form 9) if a
lien, encumbrance, condition, restriction, or easement is listed in Schedule B to
the title insurance policy.

d)

Lender may require the following endorsements where applicable and available:
-access
-address
-assessments
-assignment of leases and rents
-assignment of loan documents
-contiguity
-doing business

12.

-single tax lot
-subdivision
-tie in
-usury

Other Coverages. Each Title Policy shall insure the following by endorsement or
affirmative insurance to the extent such coverage is not afforded by the ALTA Form 9 or
its equivalent in a particular jurisdiction:
a)

that no conditions, covenants, or restrictions of record affecting the property:
(i)
(i i)

(iii)
(iv)

b)

13.

-clue execution
-first loss
-last dollar
-leasehold
-mineral rights
-mortgage tax
-reverter

have been violated,
create lien rights which prime the insured mortgage,
contain a right of reverter or forfeiture, a right of reentry, or power of
termination, or
if violated in the future would result in the lien created by the insured
mortgage or title to the property being lost, forfeited, or subordinated; and

that except for temporary interference resulting solely from maintenance, repair,
replacement, or alteration of lines, facilities, or equipment located in easements
and rights of way taken as certain exceptions to each Title Policy, such exceptions
do not and shall not prevent the use and operation of the Property or the
improvements as used and operated on the effective date ofthe Title Policy.

Informational Matters. The Policy must include, as an infonnational note, the following:
a)
b)

14.

The recorded plat number together with recording information; and
The property parcel number or the tax identification number, as applicable.

Delivery of Copies. Legible copies of all easements, encumbrances, or other restrictions
shown as exceptions on the Title Policy must be delivered with the first draft of the title
commitment.

-3-

I
.

.
.
.
.

EXHIBIT B
Form of Survey Certification

CERTIFICATION FOR SURVEYS
I hereby certify to KeyBank National Association, its successors and assigns, and
and First
-----·---~-------·LLC, Thompson Hine LLP, _ _ _ _ __
American Title Insurance Company that the survey prepared by me entitled
_____________ '' was actually made upon the ground, that the property has
unrestricted ingress and egress to and from
and
and such streets are completed, dedicated and accepted for public maintenance and use by the
public body having jurisdiction over the same; that the property does not lie within flood hazard
areas in accordance with the documents entitled "Department of Housing and Urban
Development, Federal Insurance Administration - Special Flood Hazard Area Maps"; and that
the survey is made in accordance with the "Minimum Standard Detail Requirements for Land
Title Surveys" _jointly established and adopted by ALTA and ACSM in 1999 for Class A Urban
Survey and includes Items l-4, 6-11 and 13 ofTable A.

EXHIBIT C
LIBOR NOTICE ELECTION
NOTICE OF LIBOR FUNDING ELECTION
.John Bertleff
KeyBank National Association
I 27 Public Square. Rth Floor
OH-0 I -27-0R::\()
Cleveland, Ohio 44 I 14
Date:
Mr. Bertleff:
Reference is made to the Promissory Note dated as of ~---' 20 _ made by
_ _ _ _ _ , in favor or KeyBank National Association (the "Note"). The undersigned hereby
gives notice pursuant to Section 5.1 of the Loan Agreement referenced in the Note of its desire
for a LIBOR FUNDING ELECTION of a portion of the proceeds of the loan evidenced by the
Note. As set forth in Section 2.lofthc Loan Agreement, the LIBOR Rate Interest Period shall be
a period of one, two or three months.
The Following are the details of the LIBOR funding election to be set up as of the
commencement date specified below:
I.
(select one)

The LIBOR Rate Interest Period is: One month, two months, or three months

2.

The LIBOR funding commencement date is:

3.

The LIBOR funding period expires:

4.

The LIBOR funding principal amount is:

5.

·rhc LIBOR funding rate is LIBOR plus J.S5%, or

The sources for the above LIBOR are as follows (Choose as appropriate):
Prime Note Outstanding Balance:
Draw#
Advance:
Interest due:
Current LIBOR maturing
Current LIBOR maturing ____ :
Total:

~
~

The next LJBOR FUNDING ELECTION NOTIFICATION date is

By:

JHF Property Holdings LLC,
a Delaware limited liability
company, its Manager

EXHIBIT D

-~.~

Insurance Requirements

Borrower shall obtain and keep in full force and effect either builder's risk insurance (the
"Builder's Risk Insurance policy") coverage or permanent All Perils insurance coverage as
appropriate, satisfactory to Lender, on the Project. All insurance policies shall be issued by
carriers with a Best's Insurance Reports policy holder's rating of A and a financial size category
of Class X and shall include a standard mortgage clause (without contribution) in favor of and
acceptable to Lender. The policies shall provide for the following, and any other coverage that
Lender may !'rom time to time deem necessary:
Coverage Against All Peril and/or Builders Risk in the amount of I Oo<Yo of the
a)
replacement cost of all Improvements located or to be located on the Land. If the policy is
written on a CO-INSURANCE basis, the policy shall contain an AGREED AMOUNT
ENDORSEMENT as evidence that the coverage is in an amount sufficient to insure the full
amount of the mortgage indebtedness. "KeyBank National Association and its successors and
assigns" shall be named as the "Mortgagee" and "Loss Payee".
Public liability coverage in a minimum amount of not less than $2,000,000 per
b)
occurrence and $5,000,000 in the aggregate. "KeyBank National Association and its successors
and assigns" shall be named as an "Additional Insured".
c)
Rent loss or business interruption coverage in a minimum amount approved by
Lender of not less than the appraised rentals for a minimum of six months.
d)
Flood hazard coverage in a minimum amount available, if the premises are
located in a special llood hazard area ("Flood Hazard Area") as designated by the F'ederal
Emergency Management Agency on its Flood Hazard Boundary Map and Flood Insurance Rate
Maps, and the Department of Housing and Urban Development, Federal Insurance
Administration, Special Flood Hazard Area Maps.
e)

I
.
.

.
'

Workers Compensation and Disability insurance as required by law.

f)
Such other types and amounts of insurance with respect to the premises and the
operation thereof which are commonly maintained in the case of other property and buildings
similar to the premises in nature, use, location, height, and type of construction, as may ti·om
time to time be required by the mortgagee.

Each policy shall provide that it may not be canceled, reduced or terminated without at least
thirty (30) days prior written notice to Lender.

t

[
r

i

EXHIBITE
Architect's Certificate
The firm of
benefit of Key Bank National Association that:

hereby certifies for the

pursuant
The firm has been employed by _____
to a contract dated
to provide architectural and engineering services
commonly
known
as
which
1s
located
at

·rhc contract provides Cor the following services:
preparation of plans and specifications
Pre-qualification of contractors
Contract administration and supervision of
construction
Tenant space design

The firm is duly licensed and in good standing under laws of the state of - - - - - License No.
The foundations were designed in accordance with the recommendations contained in a
soil report dated
which was prepared by
The following are all of the permits or governmental agency approvals required for the
construction and occupancy of the building:

Issuing Agency
Excavation Permit
Foundation Permit
Building Permit
EPA- Water
EPA- Sewer
EPA- Air
Cert. Of Occupancy Bldg.
Cert. Of Occupancy - Tenant
Other (Specify)

Date Issued

I
~
'

All utilities necessary for the operation of the project are available with suHicient
capacity at the boundaries of the project. If utility services must be brought to site, please
explain:

The plans listed on the attached Schedule I comprise all of the plans which will be
necessary for the complete construction ofthe project, excepting tenant space designs, and when
the project is bui It in accordance therewith the project will (excepting completion of tenant
improvements) be ready for occupancy. The plans are complete and contain all detail necessary
for construction. Calculations of the gross building and the net rentable building area are
attached as Schedule II. The plans (and the project will, when constructed in accordance
therewith) comply with all applicable building, zoning, land use, subdivision, environmental,
fire, safety and other applicable governmental laws, statutes, codes, ordinances, rules and
regulations.
The attached Schedule III, establishing a timetable for completion of the project and
showing on a monthly basis the anticipated progress of the work, is realistic and can be adhered
to.

The following design drawings or plans have been or will be prepared by other designers
or contractors.
Type of Plans

Name of Preparing Firm

The Specifications are: _ _ _ _ _ _ _ _ _ _ _ _ _ _ shown on plans
_ _ _ _ _ _ _ _ _ _ _ _ _ _ Bound separately

By: _ _ _ _ _ _ _ _ _ _ _ _ __
Title: _ _ _ _ _ _ _ _ _ _ _ _ __
Date: _ _ _ _ _ _ _ _ _ _ _ _ __

-2-

I
.

'

EXHIBIT F
Borrower's Certificate

KeyBank National Association
580 Walnut Street
2 11 d Floor
Cincinnati. Ohio 45202
ATTN: REAL ESTATE CAPITAL SERVICES
RE:

Application for Disbursement or confirmation of equity contribution in connection with a
loan (#
) to
("Borrower").
I.

Pursuant to that certain Project Agreement dated
, 200 _(the
"Construction Loan Agreement") between Borrower and KeyBank National
Association ("Lender"), Borrower
(a)

hereby requests a Loan disbursement as indicated on the Soft and Hard
Cost Requisition attached hereto. We acknowledge that this amount is
subject to inspection, verification, and available funds.

(b)

acknowledges and confirms an equity contribution as indicated on the Soft
and l-Iard Cost Requisition attached hereto.
Funding Instructions

2.

This Borrower's Certificate is to be utilized only in satisfaction of costs and
charges with respect to the Project and Improvements thereon as shown on the
Soft and Hard Cost Requisition Form, dated
, attached
hereto.

3.

The Borrower agrees to provide, if requested by Lender, a Vendor Payee Listing
showing the name and the amount currently due each party to whom Borrower is
obligated for labor, material and/or services supplies. This information would be
provided in support of the disbursements set forth in paragraph 2(a) hereof.

4.

The Borrower also certifies and agrees that:
(a)

It has complied with all duties and obligations required to date to be
carried out and performed by it pursuant to the terms of the Construction
Loan Agreement;

I
l

(b)

(c)

All Change Orders or changes to the Schedule of Values have been
submitted to and approved by Lender to the extent required under the
Construction Loan Agreement;

(d)

All funds previously disbursed have been used for the purposes as set
forth in the Construction Loan Agreement;

(e)

All outstanding claims for labor, materials and/or services furnished prior
to this draw period have been paid or will be paid from the proceeds of
this disbursement;

(1)

All construction prior to the date of this Borrower's Certificate has been
accomplished in accordance with the Plans and Specifications approved
by Lender;

(g)

All sums advanced by Lender will be used solely for the purpose of
paying costs of the Project owing as shown on the attached Soft and Bard
Cost Requisition and no disbursement requested hereunder has been the
basis for any prior disbursement of the Loan;

(h)

There are no liens outstanding against the subject project or its equipment
except for Lender's liens and security interests as agreed upon in the
Construction Loan Agreement;

(i)

The amount of undisbursed Loan proceeds and/or approved equity
requirement remaining is sufficient to pay the cost of completing the
Project in accordance with the Plans and Specifications and Budget
approved by Lender as modified by Lender in approved Changed Orders;

(j)

All representations and warranties contained in the Construction Loan
Agreement are true and correct as of the date hereof.

(k)

5.

No Event of Default as defined in the Construction Loan Agreement, nor
any event, circumstance or condition which with notice or the passage of
time or both would be an Event of Default, has occurred and is continuing
and;

The undersigned understands that this certification is made for the purpose
of inducing Lender to make a disbursement to Borrower and that, in
making such disbursement, Lender will rely upon the accuracy of the
matters stated in this Certificate.

Disbursement of the loan proceeds hereby requested are subject to the receipt by
Lender, in those states where applicable, of a certificate from the issuing title
company stating that no claims have been filed of record which adversely affects
the title of Borrower to the Project, subsequent to the filing of the Lender's
Mortgage.

-2-

6.

The terms used in this Borrower's Certificate have the same meaning and
delinitions as those set forth in the Loan Agreement.

7.

The Borrower, or authorized signer, certifies that the statements made in this
Borrower's Certificate and any documents submitted herewith and identified
herein are true and has duly caused this Borrower's Certificate to be signed on its
behalf by the undersigned Authorized Representative.
DATE: - - - - - - - BORROWER:

a Delaware limited liability company
By:

,a
Delaware limited liability company,
its Manager

By: ----'t~-~--.Ht-tir-+----1Name:
Its: M

-3-

EXHIBIT(!_
Soft And Hard Cost Requisition Form

I
!'

EXHIBIT H

Certificate of Compliance

KeyBank National Association
580 Walnut Street
2nd r:loor
Cincinnati, Ohio 45202
Re: Construction Loan Agreement dated as of
, 200_ (as amended,
modified, supplemented. restated, or renewed, from time to time, the "Agreement"), between __
- - - - - - - - - - - - - LLC (the "Borrower"), and KEYBANK NATIONAL
ASSOCIATION ("Lender").
Reference is made to the Agreement. Capitalized terms used in this Certificate (including
schedules and other attachments hereto, this "Certificate") without definition have the meanings
specified in the Agreement.
Pursuant to applicable provisions of the Agreement, the undersigned, being the Authorized
Representative designated in the Agreement, hereby certifies to the Lender that the information
furnished in the attached schedules, including, without limitation, each of the calculations listed
below are true, correct and complete in all material respects as of the last day of the fiscal
periods subject to the financial statements and associated covenants being delivered to the
Lender pursuant to the Agreement together with this Certificate (such statements the "Financial
Statements" and the periods covered thereby the "reporting period") and for such reporting
periods.
The undersigned hereby further certifies to the Lender that:
Compliance with Financial Covenants. As shown below, the Borrower
I.
compliance with the Financial Covenants contained in the Agreement.
A.

IS 111

full

Covenant: Jeff H. Fanner, Jr. shall, as a continuing obligation throughout the term of the
Loan: (i) maintain, on an ongoing basis, a minimum net worth of $10,000,000.00 and a
minimum net cash flow of $1 ,000,000.00; and (ii) maintain a minimum liquidity level of
I ,500,000.00.
Calculation: Guarantor Net Worth= Total Assets- Total Liabilities
Note: Potentially listed on guarantor financial statement as Net Worth, Shareholder
Equity, Retained Earnings or Member Equity.

See attached financial statement
Compliance? (Yes or No)

2.
Review of Condition. The undersigned has reviewed the terms of the Agreement,
including, but not limited to, the representations and warranties of the Borrower and Guarantors
set forth in the Agreement and the covenants of the Borrower set forth in the Agreement, and has
made, or caused to be made under his or her supervision, a review in reasonable detail of the
transactions and condition of the Borrower and Guarantors through the reporting periods.
To the undersigned's actual knowledge, the
3.
Representations and WarraQties~
representations and warranties of the Borrower and Guarantors contained in the Project
Documents, including those contained in the Agreement, arc true and accurate in all material
respects as of the date hereof and were true and accurate in all material respects at all times
during the reporting period except as expressly noted on Schedule A hereto.
4.
Covenants.
To the undersigned's actual knowledge, during the reporting period, the
Borrower observed and performed all of the respective covenants and other agreements under the
Agreement and the Project Documents, and satisfied each of the conditions contained therein to
be observed, performed or satisfied by the Borrower, except as expressly noted on Schedule A
hereto.
5.
No Event of Default. To the undersigned's actual knowledge, no Event of Default exists
as of the date hereof or existed at any time during the reporting period, except as expressly noted
on Schedule A hereto.
IN WITNESS WHEREOF, this Certificate

IS

executed by the undersigned this _ _ day of

- - - - - - - - ' 200
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ LLC,
a Delaware limited liability company
By: JHF Property Holdings LLC, a
Delaware limited liability company,
its Manager

!IXBIBIT I
PROJECT AGREEMENT

TIHS PROJECT AGREEMENT is made as of
, 200_ by and among
SPECTRA GROUP, INC., a Delaware corporation and JEFF H. FARMER, JR., jointly and
severally ("Developer"), KEYBANK NATIONAL ASSOCIATION, a national banking
association ("Lender"), and
, a limited liability company ("Borrower").
RECITALS

A.
Lender and Developer entered into a certain Master Construction Loan
Agreement, dated as of September _ _ , 2005 (the "Master Loan Agreement"), pursuant to
which Lender agreed to make credit available, not exceeding the principal amount specified in
Section 4.1 thereof to certain entities designated by the Developer (such credit facility being
referred to in the Master Loan Agreement and this Agreement as the "Loan").
B.
Borrower is contemporaneously acquiring approximately ___ acres of real
estate located in
County, State of
, which real estate is more
particularly described in Exhibit A attached hereto and incorporated herein by reference (for the
purposes of the Master Loan Agreement and this Project Agreement (the "Project Site").
Borrower intends to construct a _ _ square foot retail shopping center with
C.
_ _ parking spaces known as
upon the
Project Site (the "Improvements") (for the purposes of the Master Loan Agreement and this
Project Agreement, the Project Site, all easements benefiting the Project Site and all
Improvements located or to be located thereon, being sometimes hereinafter collectively referred
to as the "Project").
D.
Borrower desires to arrange the financing which will enable it to acquire the
Project Site and to construct the Improvements.
F
Borrower has been designated by the Developer as "Borrower" under the terms of
the Master Loan Agreement.
Dollars ($ _ __
F
Lender is willing to make ___
of the Loan avai !able to Borrower (for the purposes of the Master Loan Agreement and this
Project Agreement the amount of the Loan being made available to Borrower hereunder being
referred to as the "Project Loan"), all subject to the terms, provisions and conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the several covenants and
conditions herein contained, Developer, Borrower and Lender agree as follows:
1.
Definitions. All capitalized terms used herein, but not defined herein, shall have
the meanings ascribed thereto in the Master Loan Agreement.

2.
Budget; Required Leases. The Borrower and the Lender agree that the Budget for
the Project is attached hereto as Exhibit B and made a part hereoC which sets forth the
13orrower's equity ($ _______) and Borrower's developer's fee ($____
). For
purposes of the Master Loan Agreement, the Required Leases are set forth on Exhibit C attached
hereto and made a part hereof.

3.

P_rQject Loan. The Developer hereby designates the Borrower as a "Borrower"
under the Master I ,oan Agreement. Lender agrees to make credit available to Borrower in the
principal amount of the Project Loan pursuant to the terms of the Master Loan Agreement, which
Master Loan Agreement by reference thereto is hereby deemed to be fully incorporated herein.
·rhc Borrower agrees to be subject to and comply with all terms, conditions and provisions of the
Master Loan Agreement governing or applicable to a Project Loan.
4.

Completion Date.

The Completion Date for the Project shall be no later than

- - - - - - - ' 200_
5.
Initial Advance. The initial Advance of the Project Loan (the "Initial Advance")
shall be limited to funds in the amount of$
for the purchase of the Project Site and
soft costs (including the reimbursement of the Borrower of
previously expended
for the purchase of a portion of the Project Site).
6.
Conditions to Advances. Lender's obligation to advance any amounts under the
Project Loan shall be subject to satisfaction of all conditions for advances under the Master Loan
Agreement.
KEYBANK NATIONAL ASSOCIATION

SPECTRA GROUP, INC., a Delaware
corporation

By: _ _ _ _ _ _ _ _ _ __
Name: _ _ _ _ _ _ _ _ _ _ __

Its: _ _ _ _ _ _ _ _ _ _ _ __

By: _ _ _ _ _ _ _ _ _ __
Jts: _ _ _ _~-------Name: _ _ _ _ __

EXHIBIT B
Budget

EXHIBIT C

Required Leases

i
~

PROJECT AGREEMENT

_1_,

THIS PROJECT AGREEMENT is made as of August
2006 by and among
SPECTRA GROUP, INC., a Delaware corporation and JEFF H. FARMER, JR., jointly and
severally ("Developer"), KEYBANK NATIONAL ASSOCIATION, a national banking
association ("Lender"), and CEDARTOWN LLC, a Delaware limited liability company
("Borrower").
RECITALS

A.
Lender and Developer entered into a certain Master Construction Loan
Agreement, dated as of December 8, 2005, as amended (the "Master Loan Agreement"), pursuant
to which Lender agreed to make credit available, not exceeding the principal amount specified in
Section 4.1 thereof, to certain entities designated by the Developer (such credit facility being
referred to in the Master Loan Agreement and this Agreement as the "Loan").
B.
Borrower has acquired 7.62 acres of real estate located in Polk County, Georgia,
which real estate is more particularly described in Exhibit A attached hereto and incorporated
herein by reference (for the purposes of the Master Loan Agreement and this Project Agreement
(the "Project Site")).
C.
Borrower intends to construct a 30,600 square foot retail shopping center known
as Cedartown Shopping Center upon the Project Site (the "Improvements") (for the purposes of
the Master Loan Agreement and this Project Agreement, the Project Site, all easements
benefiting the Project Site and all Improvements located or to be located thereon, being
sometimes hereinafter collectively referred to as the "Project").
D.
Borrower desires to arrange the financing which will enable it to acquire the
Project Site and to construct the Improvements.
E.
Borrower has been designated by the Developer as "Borrower" under the terms of
the Master Loan Agreement.
F.
Lender is willing to make Three Million Eight Hundred Thousand and 0011 00
Dollars ($3,800,000.00) of the Loan available to Borrower (for the purposes of the Master Loan
Agreement and this Project Agreement, the amount of the Loan being made available to
Borrower hereunder being referred to as the "Project Loan"), which shall be evidenced by two
promissory notes: (i) a $3,590,000.00 note (the "A Note") and (ii) a $210,000.00 note (the "B
Note"), all subject to the terms, provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the several covenants and
conditions herein contained, Developer, Borrower and Lender agree as follows:
1.
Definitions. All capitalized terms used herein, but not defined herein, shall have
the meanings ascribed thereto in the Master Loan Agreement.

EXHIBIT 2
Project Agreement

Cedartown

2.
Budget; Required Leases. The Borrower and the Lender agree that the Budget for
the Project is attached hereto as Exhibit B and made a part hereof, which sets forth the
Borrower's equity ($837,568.00), an interest reserve ($115,000.00) and Borrower's developer's
fee ($1 00,000.00). For purposes of the Master Loan Agreement, the Required Leases are set
forth on Exhibit C attached hereto and made a part hereof.
3.
Project Loan. The Developer hereby designates the Borrower as a "Borrower"
under the Master Loan Agreement. Lender agrees to make credit available to Borrower in the
principal amount of the Project Loan pursuant to the terms ofthe Master Loan Agreement, which
Master Loan Agreement by reference thereto is hereby deemed to be fully incorporated herein.
The Borrower agrees to be subject to and comply with all terms, conditions and provisions of the
Master Loan Agreement governing or applicable to a Project Loan.
4.
Completion Date. The Completion Date for the Project shall be no later than
twelve (12) months after the date of this Project Agreement.
5.
Conditions to Advances. Lender's obligation to advance any amounts under the
Project Loan shall be subject to satisfaction of all conditions for advances under the Master Loan
Agreement.
6.
Project Loan. Notwithstanding anything contained in such documents to the
contrary, the term "Loan" used in the following documents executed in connection with the
Project, the Project Loan and this Project Agreement shall be deemed to mean and solely refer to
the Project Loan defined in Recital F of this Project Agreement: The A Note, the B Note, the
Mortgage, Assignment of Rents, Security Agreement and Fixture Filing, the Assignment of
Leases and Rents, the Performance and Completion Guaranty, the Guaranty by Jeff H. Farmer,
Jr., the Guaranty by The Spectra Group, Inc., the Conditional Assignment of Architect's
Contract, the Assignment of Management and Leasing Agreement, the Environmental and
Hazardous Substances Indemnity Agreement and the Conditional Assignment of Contractor
Contract and Subcontract.
7.
Loan Agreement. Notwithstanding anything contained in such documents to the
contrary, the term "Loan Agreement", "Construction Loan Agreement" and the phrase
"Construction Loan Agreement of even date herewith" and "Loan Agreement of even date
herewith" used in the following documents executed in connection with the Project, the Project
Loan and this Project Agreement shall be deemed to mean and solely refer to this Project
Agreement and the Master Loan Agreement: The A Note, the B Note, the Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing, the Assignment of Leases and
Rents, the Performance and Completion Guaranty, the Guaranty by Jeff H. Farmer, Jr., the
Guaranty by The Spectra Group, Inc., the Conditional Assignment of Architect's Contract, the
Assignment of Management and Leasing Agreement, the Environmental and Hazardous
Substances Indemnity Agreement and the Conditional Assignment of Contractor Contract and
Subcontract.
8.
Loan Documents. Notwithstanding anything contained in such documents to the
contrary, the term "Loan Documents" used in the following documents executed in connection
with the Project, the Project Loan and this Project Agreement shall be deemed to mean and

Project Agreement

2

Cedartown

solely refer to "Project Documents" as such term is defined in the Master Loan Agreement: The
A Note, the B Note, the Mortgage, Assignment of Rents, Security Agreement and Fixture Filing,
the Assignment of Leases and Rents, the Performance and Completion Guaranty, the Guaranty
by Jeff H. Farmer, Jr., the Guaranty by The Spectra Group, Inc., the Conditional Assignment of
Architect's Contract, the Assignment of Management and Leasing Agreement, the
Environmental and Hazardous Substances Indemnity Agreement and the Conditional
Assignment of Contractor Contract and Subcontract.
9.
Applicable Rate and Term. This Paragraph 9 has been included solely for the
purpose of administrative convenience and is not intended to in any way amend or modify the
terms of the Master Loan Agreement. In the event of a conflict between the provisions of this
Paragraph 9 and the provisions of the Master Loan Agreement, the Master Loan Agreement shall
control.
(i} The Project Loan will bear interest at the Applicable Rate, unless the Default
Rate is applicable. The Adjusted Prime Rate shall be the "Applicable Rate", except that the
Adjusted LIB OR Rate shall be the "Applicable Rate" with respect to portions of the Project Loan
as to which a LIBOR Rate Option is then in effect.
(ii) The "Adjusted Prime Rate" means: A rate per annum equal to the sum of
(a) the Prime Rate Margin and (b) the greater of (i) the Prime Rate or (ii) zero percent (0%) in
excess of the Federal Funds Effective Rate. Any change in the Adjusted Prime Rate shall be
effective immediately from and after such change in the Adjusted Prime Rate.
(iii) The "Adjusted LIBOR Rate" means: For any LIBOR Rate Interest Period, an
interest rate per annum equal to the sum of (A) the rate obtained by dividing (x) the LIBOR Rate
for such LIBOR Rate Interest Period by (y) a percentage equal to one hundred percent (100%)
minus the Reserve Percentage for such LIBOR Rate Interest Period and (B) the LIBOR Rate
Margin.
(iv) The "LIBOR Rate" means: For any LIBOR Rate Interest Period, the average
rate (rounded upwards to the nearest l/16th) as shown in Dow Jones Markets (formerly Telerate)
(Page 3750} at which deposits in U.S. dollars are offered by first class banks in the London
Interbank Market at approximately 11 :00 a.m. (London time) on the day that is two (2) LIBOR
Business Days prior to the first day of such LIBOR Rate Interest Period with a maturity
approximately equal to such LIBOR Rate Interest Period and in an amount approximately equal
to the amount to which such LIBOR Rate Interest Period relates, adjusted for reserves and taxes
if required by future regulations. If Dow Jones Markets no longer reports such rate or Lender
determines in good faith that the rate so reported no longer accurately reflects the rate available
to Lender in the London Interbank Market, Lender may select a replacement index.
(v) The "LIBOR Rate Interest Period" means: With respect to each amount
bearing interest at a LIBOR based rate, a period of one, two or three months, to the extent
deposits with such maturities are available to Lender, commencing on a LIBOR Business Day, as
selected by Borrower provided, however, that (i) any LIBOR Rate Interest Period which would
otherwise end on a day which is not a LIBOR Business Day shall continue to and end on the next
succeeding LIBOR Business Day, unless the result would be that such LIBOR Rate Interest

Project Agreement

3

Cedartown

Period would be extended to the next succeeding calendar month, in which case such LIBOR
Rate Interest Period shall end on the next preceding LIBOR Business Day and (ii) any LIBOR
Rate Interest Period which begins on a day for which there is no numerically corresponding date
in the calendar month in which such LIBOR Rate Interest Period would otherwise end shall
instead end on the last LIBOR Business Day of such calendar month.
(vi) The "LIBOR Rate Margin" means: (a) For Project Loans (except as
hereinafter described in (b) of this definition) 1.75 percent (175 basis points) per annum,
provided that if an Interest Rate Agreement in form and substance acceptable to Lender in its
sole discretion is in effect with respect to all Project Loans outstanding hereunder and no Event
of Default has occurred and is continuing, then 1.65 percent (165 basis points) per annum; and
(b) for those portions of Project Loans designated an Outlot Loan, 2.25 percent (225 basis points)
per annum provided that if an Interest Rate Agreement in form and substance acceptable to
Lender in its sole discretion is in effect with respect to all Project Loans outstanding hereunder
and no Event of Default has occurred and is continuing, then 2.15 percent (215 basis points) per
annum.
(vii) The "Prime Rate" means: That interest rate established from time to time by
Lender as Lender's Prime Rate, whether or not such rate is publicly announced; the Prime Rate
may not be the lowest interest rate charged by Lender for commercial or other extensions of
credit;
(viii) The "Prime Rate Margin" means: 0% (0 basis points) per annum, except
for an Outlot Loan, .50% (50 basis points) per annum.
(ix) The Initial Term ofthis Loan is eighteen (18) months.
10.
Repayment of Outlot Loans. Notwithstanding anything contained in the Master
Loan Agreement, the Note or Notes, or any of the Loan Documents to the contrary, if this Project
Loan includes an Outlot Loan, the following repayment limitations shall apply. All principal
payments made by Borrower towards the Project Loan shall first be applied to reduce the
principal under any promissory note evidencing any Outlot Loan. Only after the entire principal
accruing under any promissory note evidencing an Outlot Loan has been repaid in full will any
principal payments made by Borrower be applied towards promissory notes evidencing any other
portion of the Project Loan.
11.
Tax-Deferred Exchange Provisions. If this Project is part of a tax-deferred
exchange benefiting the Developer, then notwithstanding anything in the Master Loan
Agreement to the contrary, so long as the Borrower under any Project Loan is Building
Exchange Properties I, LP, a Virginia limited partnership, Building Exchange Properties II, LLC,
a Virginia limited liability company, or Building Exchange Company, a Virginia corporation, or
a limited liability owned entirely by any of the foregoing, then Jeff H. Farmer, Jr. shall not be
required to control at least 50% of the membership in the Borrower or control the managing
member or general partner of the Borrower, but there shall be a management agreement in place
between an entity controlled by Jeff H. Farmer, Jr. and such exchange entity. Building Exchange
Properties I, LP, Building Exchange Properties II, LLC, and Building Exchange Company agree
that they shall not invest in or hold any assets or property that is not related to Developer's 1031

Project Agreement

4

Cedartown

exchange activities and shall not engage in any transactions or business that is not related to
Developer's I 031 exchange activities.
12.
Holdback. Notwithstanding anything in the Loan Documents to the contrary, the
Lender shall be permitted to holdback, and not obligated to disburse, any portion of the Loan to
the extent the Debt Service Coverage Ratio set forth in Section 4.2( c) of the Loan Agreement is
not met. In the event the Debt Service Coverage Ratio set forth in Section 4.2(c) of the Loan
Agreement is not met, and the entire Project Loan is not in balance, on the date of substantial
completion of the shell of the Improvements, Borrower shall deposit an amount with the Lender
to be treated as equity for the Loan in order that such Debt Service Coverage Ratio is met and the
Loan is in balance.
[The remainder of this page is intentionally left blank]

Project Agreement

5

Cedartown

BORROWER:
CEDARTOWN LLC,
a Delaware limited liability company,
By:

Building Exchange Company,
a Virginia corporation

Its:

Sole~er

By:
Its:

~

Carla Polkmho
Vice President

DEVELOPER:
THE SPECTRA GROUP, INC.,
a Tennessee corporation

By:
JeffH. Farmer, III
President
Its:
Address:
5851 Ridge Bend Road
Memphis, Tennessee 38120

LENDER:
KEYBANK NATIONAL ASSOCIATION

By: _ _ _ _ _ _ _ _ _ _ __
Name:

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

BORROWER:
CEDARTOWN LLC,
a Delaware limited liability company,
By:
Its:

Building Exchange Company,
a Virginia corporation
Sole Member

By:
Its:

Carla Polkinhom
Vice President

DEVELOPER:
THE SPECTRA GRO

By:
Its:
r sid nt
Address:
5 51 Ridge Bend Road
Memphis, Tennessee 38120

LENDER:
KEYBANK NATIONAL ASSOCIATION

EXHIBIT A

LEGAL DESCRIPTION OF THE PROJECT SITE

All that tract or parcel of land lying and being in Land Lots I 075 and I 086 of the 2nd District,
4th Section, Polk County, Georgia, and being more particularly described as follows:
Commencing at the northwest comer of Land Lot I075, said comer being common to Land Lots
I 013, I 014, I 075 and I 076; thence along the westerly land lot line of Land Lot 1075 the
following courses and distances South 00 degrees 27 minutes 05 seconds West, 99.88 feet to a
point; South 00 degrees 40 minutes 37 seconds West, 112.89 feet to a point; South 01 degrees 41
minutes 15 seconds West, 617.55 feet to a 5/8" capped rebar found, said point being the TRUE
POINT OF BEGINNING; thence leaving said westerly land lot line South 73 degrees 13 minutes
13 seconds East, 89.54 feet to a 5/8" capped rebar found; thence North 16 degrees 45 minutes 46
seconds East, 46.21 feet to a 5/8" capped rebar found; thence South 73 degrees 17 minutes 27
seconds East, 71.38 feet to a 5/8" capped rebar found; thence along a curve to the left, an arc
distance of 122.11 feet, said curve having a radius of 76.50 feet and being subtended by a chord
of 109.55 feet, at North 61 degrees 10 minutes 20 seconds East, to a 5/8" capped rebar found;
thence North 17 degrees 09 minutes 12 seconds East, 19.32 feet to a 5/8" capped rebar found;
thence along a curve to the right, an arc distance of 107.60 feet, said curve having a radius of
68.50 feet and being subtended by a chord of96.87 feet, at North 61 degrees 50 minutes 01
seconds East, to a 5/8" capped rebar found; thence South 73 degrees 09 minutes 17 seconds East,
605.78 feet to a 5/8" capped rebar found; thence South 16 degrees 51 minutes 11 seconds West,
29.38 feet to a 5/8" capped rebar found; thence South 73 degrees 10 minutes 30 seconds East,
140.35 feet to a 5/8" capped rebar found; thence South 18 degrees 41 minutes 23 seconds West,
149.68 feet to a 5/8" capped rebar found; thence South 64 degrees 46 minutes 57 seconds East,
208.97 feet to a 5/8" capped rebar found on the westerly right-of-way of U.S. Highway 27
(variable right-of-way); thence along said westerly right-of-way and a curve to the right, an arc
distance of 148.67 feet, said curve having a radius of 4842.60 feet and being subtended by a
chord of 148.67 feet, at South 28 degrees 40 minutes 10 seconds West, to a 5/8" capped rebar
found; thence leaving said westerly right-of-way North 60 degrees 30 minutes 25 seconds West,
84.67 feet to a 5/8" capped rebar found; thence North 73 degrees 10 minutes 24 seconds West,
1107.27 feet to a 5/8" capped rebar found on the westerly land lot line of Land Lot 1075; thence
along said westerly land lot line North 01 degrees 38 minutes 29 seconds East, 128.51 feet to a
5/8" capped rebar found, said point being the TRUE POINT OF BEGINNING;
Said tract or parcel ofland contains 7.620 acres and is more accurately depicted on a plat of
survey prepared by GeoSurvey, Ltd., dated January 31, 2006, job number 20052638.

EXHIBIT B

BUDGET

EXHIBITC
REQUIRED LEASES
Tenant
Dollar Tree
Cato
Shoe Show
Los Arcos
Nail Salon
Cingular Wireless
VACANT

Square Feet
8,000
3,900
3,500
4,000
1,200
1,200
8,800

TOTAL

30,600

Total Leased
Vacant
TOTAL PROJECT

21,800
8,800
30,600

PROMISSORY NOTE
("A Note")

u.s. $3,590,000.00

As of August

_!J_, 2006

FOR VALUE RECEIVED, CEDARTOWN LLC, a Delaware limited liability
company, having an address at 5851 Ridge Bend Road, Memphis, Tennessee 38120 ("Maker"),
hereby promises to pay to the order of KEYBANK NATIONAL ASSOCIATION, a national
banking association ("Payee"), having an address at 580 Walnut Street, 2nd Floor, Cincinnati,
Ohio 45202, the principal sum of Three Million Five Hundred Ninety Thousand and 00/100
Dollars ($3,590,000.00) or so much thereof as may be advanced from time to time, and interest
from the date hereof on the balance of principal from time to time outstanding, in United States
currency, at the rates and at the times hereinafter described.
This note (the "A Note") is issued by Maker pursuant to that certain Project Agreement of
even date herewith (the "Loan Agreement") entered into between Payee and Maker. This A
Note, together with the B Note, evidences the Loan (as defined in the Loan Agreement).
Payment of this A Note is governed by the Loan Agreement, the terms of which are incorporated
herein by express reference as if fully set forth herein. Capitalized terms used and not otherwise
defined herein shall have the meanings given to them in the Loan Agreement.

1.
Interest. The principal amount hereof outstanding from time to time shall
bear interest until paid in full at the Applicable Rate.
2.
Monthly Payments. Interest only shall be payable in arrears on the first
(I ) day of each calendar month after the date hereof commencing on the first day of the second
calendar month after the date hereof up to and including the Maturity Date in the amount of all
interest accrued during the immediately preceding calendar month. Notwithstanding the
foregoing, in the event the Extension Option is exercised, during the Extension Term, on the first
(I 51) day of every calendar month Borrower shall make monthly principal and interest payments
based on a term of thirty (30) years and the assumed interest rate used in determining the Debt
Service Coverage Ratio in connection with the exercise of the Extension Option. All payments
on account of the indebtedness evidenced by this A Note shall be made to Payee not later than
11 :00 a.m. Cincinnati, Ohio time on the day when due in lawful money of the United States and
shall be first applied to late charges, costs of collection or enforcement and other similar amounts
due, if any, under this A Note and any of the other Loan Documents, then to interest due and
payable hereunder and the remainder to principal due and payable hereunder.
51

Maturity Date. The indebtedness evidenced hereby shall mature on the
3.
Maturity Date. On the Maturity Date, the entire outstanding principal balance hereof, together
with accrued and unpaid interest and all other sums evidenced by this A Note, shall, if not sooner
paid, become due and payable.
4.

General Provisions.

(a)
Regardless of whether an Adjusted LIBOR Rate would otherwise then be
in effect, in the event (i) the principal balance hereof is not paid when due whether by

Note A

EXHIBIT 3

Cedartown

acceleration or upon the Maturity Date or (ii) an Event of Default exists, then the
principal balance hereof shall bear interest from and after the Default Rate. In addition,
for any installment (exclusive of the payment due upon the Maturity Date) which is not
paid within ten (1 0) days after the due date thereof a late charge equal to the greater of
(a) ten percent (10%) of the amount of such installment or (b) $25 shall be due and
payable to the holder of this A Note on demand to cover the extra expense involved in
handling delinquent payments.
(b) Maker agrees that the obligation evidenced by this A Note is an exempt
transaction under the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq.
(c)
The parties hereto intend and believe that each provision in this A Note
comports with all applicable local, state and federal laws and judicial decisions.
However, if any provision or provisions, or if any portion of any provision or
provisions, in this A Note is found by a court of law to be in violation of any applicable
local, state or federal ordinance, statute, law, administrative or judicial decision, or
public policy, and if such court should declare such portion, provision or provisions of
this A Note to be illegal, invalid, unlawful, void or unenforceable as written, then it is
the intent of all parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable, that the
remainder of this A Note shall be construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained therein, and that the
rights, obligations and interest of Maker and the holder or holders hereof under the
remainder of this A Note shall continue in full force and effect. All agreements herein
are expressly limited so that in no contingency or event whatsoever, whether by reason
of advancement of the proceeds hereof, acceleration of maturity of the unpaid principal
balance hereof, or otherwise, shall the amount paid or agreed to be paid to the holders
hereof for the use, forbearance or detention of the money to be advanced hereunder
exceed the highest lawful rate permissible under applicable usury laws. If, from any
circumstances whatsoever, the fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall involve transcending the limit of
validity prescribed by law which a court of competent jurisdiction may deem applicable
hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such
validity and if from any circumstance the holder hereof shall ever receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the unpaid principal balance due
hereunder and not to the payment of interest.
(d) This A Note and all provisions hereof shall be binding upon Maker and all
persons claiming under or through Maker, and shall inure to the benefit of Payee,
together with its successors and assigns, including each owner and holder from time to
time of this A Note.
(e)

Time is of the essence as to all dates set forth herein.

Maker agrees that its liability shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver, or modification granted or consented to
(f)

Note A

2

Cedartown

by Payee; and Maker consents to any indulgences and all extensions of time, renewals,
waivers, or modifications that may be granted by Payee with respect to the payment or
other provisions of this A Note, and to any substitution, exchange or release of the
collateral, or any part thereof, with or without substitution, and agrees to the addition or
release of any makers, endorsers, guarantors, or sureties, all whether primarily or
secondarily liable, without notice to Maker and without affecting its liability hereunder.
(g) Maker hereby waives and renounces for itself, its successors and assigns,
all rights to the benefits of any statute of limitations and any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption, appraisement, or
exemption and homestead laws now provided, or which may hereafter be provided, by
the laws of the United States and of any state thereof against the enforcement and
collection of the obligations evidenced by this A Note.
(h) If this A Note is placed in the hands of attorneys for collection or is
collected through any legal proceedings, Maker promises and agrees to pay, in addition
to the principal, interest and other sums due and payable hereon, all costs of collecting
or attempting to collect this A Note, including all reasonable attorneys' fees and
disbursements.
(i)
All parties now or hereafter liable with respect to this A Note, whether
Maker, principal, surety, guarantor, endorsee or otherwise hereby severally waive
presentment for payment, demand, notice of nonpayment or dishonor, protest and notice
of protest. No failure to accelerate the indebtedness evidenced hereby, acceptance of a
past due installment following the expiration of any cure period provided by this A
Note, any Loan Document or applicable law, or indulgences granted from time to time
shall be construed (i) as a novation of this A Note or as a reinstatement of the
indebtedness evidenced hereby or as a waiver of such right of acceleration or of the
right of Payee thereafter to insist upon strict compliance with the terms of this A Note,
or (ii) to prevent the exercise of such right of acceleration or any other right granted
hereunder or by any Laws. Maker hereby expressly waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing.
(j)
Maker hereby expressly acknowledges that the loan evidenced by this A
Note is a "business loan" within the meaning of Chapter 1343 of the Ohio Revised
Code.
(k)
With respect to any agreement by Borrower in this A Note or in any other
Loan Document to pay Payee's attorneys' fees and disbursements incurred in connection
with the Loan, Borrower agrees that each Loan Document is a "contract of
indebtedness" and that the attorneys' fees and disbursements referenced are those which
are a reasonable amount, all as contemplated by Ohio Revised Code Section 1301.21, as
such Section may hereafter be amended. Borrower further agrees that the indebtedness
incurred in connection with the Loan is not incurred for purposes that are primarily
personal, family or household and confirms that the total amount owed on the contract
of indebtedness exceeds One Hundred Thousand and Noll 00 Dollars ($1 00,000.00).

Note A

3

Cedartown

(l)
THIS A NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
OHIO AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

(m)
MAKER AND PAYEE EACH WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS A NOTE AND THE OTHER LOAN
DOCUMENTS OR RELATING THERETO OR ARISING FROM THE
LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS A NOTE
AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
5.
Tax-Deferred Exchange Provisions. This is a nonrecourse note and the
Maker assumes no personal liability for the payment of any sums due hereunder. The holder, by
acceptance of this note, waives any such personal liability and agrees to look solely to the
foreclosure of the Mortgage and enforcement of its security interest in any property securing this
note and any third party guaranties for payment for such sums. At such time as the Borrower
transfers its interest in the Property to any of the Guarantors or to an entity that is an "affiliate" of
any of the Guarantors, the provisions of this Section 5 shall become null and void and of no
further force and effect. As used in this Section 5, the term "affiliate" shall mean any person or
entity directly or indirectly controlling, controlled by, or under common control with, or
otherwise directly or indirectly under common ownership or otherwise related to any of the
Guarantors.
Maker has delivered this A Note as of the day and year first set forth above.

MAKER:
Cedartown LLC,
a Delaware limited liability company
By:
Its:

Building Exchange Company
a Virginia corporation
Sole Member

By:
Its:

Note A

4

Cedartown

PROMISSORY NOTE
("B Note")
As of August Ji_, 2006

U.S. $210,000.00

FOR VALUE RECEIVED, CEDARTOWN LLC, a Delaware limited liability
company, having an address at 5851 Ridge Bend Road, Memphis, Tennessee 38120 ("Maker"),
hereby promises to pay to the order of KEYBANK NATIONAL ASSOCIATION, a national
banking association ("Payee"), having an address at 580 Walnut Street, 2nd Floor, Cincinnati,
Ohio 45202, the principal sum ofTwo Hundred Ten Thousand and 00/100 Dollars ($210,000.00)
or so much thereof as may be advanced from time to time, and interest from the date hereof on
the balance of principal from time to time outstanding, in United States currency, at the rates and
at the times hereinafter described.
This note (the "B Note") is issued by Maker pursuant to that certain Project Agreement of
even date herewith (the "Loan Agreement") entered into between Payee and Maker. This B
Note, together with the A Note, evidences the Loan (as defined in the Loan Agreement).
Payment of this B Note is governed by the Loan Agreement, the terms of which are incorporated
herein by express reference as if fully set forth herein. Capitalized terms used and not otherwise
defined herein shall have the meanings given to them in the Loan Agreement.
1.
Interest. The principal amount hereof outstanding from time to time shall
bear interest until paid in full at the Applicable Rate.
2.
Monthly Payments. Interest only shall be payable in arrears on the first
(1st) day of each calendar month after the date hereof commencing on the first day of the second
calendar month after the date hereof up to and including the Maturity Date in the amount of all
interest accrued during the immediately preceding calendar month. All payments on account of
the indebtedness evidenced by this B Note shall be made to Payee not later than 11:00 a.m.
Cincinnati, Ohio time on the day when due in lawful money of the United States and shall be
first applied to late charges, costs of collection or enforcement and other similar amounts due, if
any, under this B Note and any of the other Loan Documents, then to interest due and payable
hereunder and the remainder to principal due and payable hereunder.
3.
Maturity Date. The indebtedness evidenced hereby shall mature on the
Maturity Date. On the Maturity Date, the entire outstanding principal balance hereof, together
with accrued and unpaid interest and all other sums evidenced by this B Note, shall, if not sooner
paid, become due and payable.
4.

General Provisions.

(a)
Regardless of whether an Adjusted LIBOR Rate would otherwise then be
in effect, in the event (i) the principal balance hereof is not paid when due whether by
acceleration or upon the Maturity Date or (ii) an Event of Default exists, then the
principal balance hereof shall bear interest from and after the Default Rate. In addition,
for any installment (exclusive of the payment due upon the Maturity Date) which is not
paid within ten ( 10) days after the due date thereof a late charge equal to the greater of

Note B

EXHIBIT 4

Cedartown

(a) ten percent ( 10%) of the amount of such installment or (b) $25 shall be due and
payable to the holder of this B Note on demand to cover the extra expense involved in
handling delinquent payments.
(b) Maker agrees that the obligation evidenced by this B Note is an exempt
transaction under the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq.
(c)
The parties hereto intend and believe that each provision in this B Note
comports with all applicable local, state and federal laws and judicial decisions.
However, if any provision or provisions, or if any portion of any provision or
provisions, in this B Note is found by a court of law to be in violation of any applicable ·
local, state or federal ordinance, statute, law, administrative or judicial decision, or
public policy, and if such court should declare such portion, provision or provisions of
this B Note to be illegal, invalid, unlawful, void or unenforceable as written, then it is
the intent of all parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable, that the
remainder of this B Note shall be construed as if such illegal, invalid, unlawful, void or
unenforceable portion, provision or provisions were not contained therein, and that the
rights, obligations and interest of Maker and the holder or holders hereof under the
remainder of this B Note shall continue in full force and effect. All agreements herein
are expressly limited so that in no contingency or event whatsoever, whether by reason
of advancement of the proceeds hereof, acceleration of maturity of the unpaid principal
balance hereof, or otherwise, shall the amount paid or agreed to be paid to the holders
hereof for the use, forbearance or detention of the money to be advanced hereunder
exceed the highest lawful rate permissible under applicable usury laws. If, from any
circumstances whatsoever, the fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall involve transcending the limit of
validity prescribed by law which a court of competent jurisdiction may deem applicable
hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such
validity and if from any circumstance the holder hereof shall ever receive as interest an
amount which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the unpaid principal balance due
hereunder and not to the payment of interest.
(d) This B Note and all provisions hereof shall be binding upon Maker and all
persons claiming under or through Maker, and shall inure to the benefit of Payee,
together with its successors and assigns, including each owner and holder from time to
time ofthis B Note.
(e)

Time is of the essence as to all dates set forth herein.

Maker agrees that its liability shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver, or modification granted or consented to
by Payee; and Maker consents to any indulgences and all extensions of time, renewals,
waivers, or modifications that may be granted by Payee with respect to the payment or
other provisions of this B Note, and to any substitution, exchange or release of the
collateral, or any part thereof, with or without substitution, and agrees to the addition or
(f)

release of any makers, endorsers, guarantors, or sureties, all whether primarily or
secondarily liable, without notice to Maker and without affecting its liability hereunder.
(g) Maker hereby waives and renounces for itself, its successors and assigns,
all rights to the benefits of any statute of limitations and any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption, appraisement, or
exemption and homestead laws now provided, or which may hereafter be provided, by
the laws of the United States and of any state thereof against the enforcement and
collection of the obligations evidenced by this B Note.
(h) If this B Note is placed in the hands of attorneys for collection or is
collected through any legal proceedings, Maker promises and agrees to pay, in addition
to the principal, interest and other sums due and payable hereon, all costs of collecting
or attempting to collect this B Note, including all reasonable attorneys' fees and
disbursements.
(i)
All parties now or hereafter liable with respect to this B Note, whether
Maker, principal, surety, guarantor, endorsee or otherwise hereby severally waive
presentment for payment, demand, notice of nonpayment or dishonor, protest and notice
of protest. No failure to accelerate the indebtedness evidenced hereby, acceptance of a
past due installment following the expiration of any cure period provided by this B
Note, any Loan Document or applicable law, or indulgences granted from time to time
shall be construed (i) as a novation of this B Note or as a reinstatement of the
indebtedness evidenced hereby or as a waiver of such right of acceleration or of the
right of Payee thereafter to insist upon strict compliance with the terms of this B Note,
or (ii) to prevent the exercise of such right of acceleration or any other right granted
hereunder or by any Laws. Maker hereby expressly waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing.

G)
Maker hereby expressly acknowledges that the loan evidenced by this B
Note is a "business loan" within the meaning of Chapter 1343 of the Ohio Revised
Code.
(k) With respect to any agreement by Borrower in this B Note or in any other
Loan Document to pay Payee's attorneys' fees and disbursements incurred in connection
with the Loan, Borrower agrees that each Loan Document is a "contract of
indebtedness" and that the attorneys' fees and disbursements referenced are those which
are a reasonable amount, all as contemplated by Ohio Revised Code Section 1301.21, as
such Section may hereafter be amended. Borrower further agrees that the indebtedness
incurred in connection with the Loan is not incurred for purposes that are primarily
personal, family or household and confirms that the total amount owed on the contract
of indebtedness exceeds One Hundred Thousand and No/1 00 Dollars ($1 00,000.00).

(1)
THIS B NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
OHIO AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

(m)
MAKER AND PAYEE EACH WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS B NOTE AND THE OTHER LOAN
DOCUMENTS OR RELATING THERETO OR ARISING FROM THE
LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS B NOTE
AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
5.
Tax-Deferred Exchange Provisions. This is a nonrecourse note and the
Maker assumes no personal liability for the payment of any sums due hereunder. The holder, by
acceptance of this note, waives any such personal liability and agrees to look solely to the
foreclosure of the Mortgage and enforcement of its security interest in any property securing this
note and any third party guaranties for payment for such sums. At such time as the Borrower
transfers its interest in the Property to any of the Guarantors or to an entity that is an "affiliate" of
any of the Guarantors, the provisions of this Section 5 shall become null and void and of no
further force and effect. As used in this Section 5, the term "affiliate" shall mean any person or
entity directly or indirectly controlling, controlled by, or under common control with, or
otherwise directly or indirectly under common ownership or otherwise related to any of the
Guarantors.
[The remainder of this page is intentionally left blank]

Maker has delivered the B Note as of the day and year first set forth above.

MAKER:
CEDARTOWN LLC,
a Delaware limited liability company
By:
Its:

Building Exchange Company
a Virginia corporation
Sole Member
•""\2)

By:
Its:

Note B

5

Cedartown

BOOK

REC: J3S93
DATE: Z- 9-ol..
CHECK: 03/~
TT:

1.17 2 PAGE 0 0 0 J

PT:
Prepared by: Tracy L. Hawkins, Esq., Thompson Hine LLP, 312 Walnut Street, 14th Floor, Cincinnati, OH 45202, Ph 513-352-6644

NOTICE: This Mortgage secures credit in the amount of $3,800,000.00. Loans and
advances up to the amount, together with interest, are senior to indebtedness to other
creditors under subsequently, recorded or filed mortgages and liens.
This mortgage encumbers both real and personal property, contains an afteracquired property clause and secures present and future loans and advances.
MORTGAGE
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING
MADE BY

CEDARTOWN LLC, ADELA WARE LIMITED LIABILITY COMPANY

AFi ER RECOADINQ Al!'fUf1N l u
GEORGE C. CALlOWA.~ l:i!!IO
SPECIAUZEO TITU! SI!:AVICI.!!~ INC
6133 PEACHTREE OUNWOOoY ROAo
ATLANTA, GA 30328
'

(770) 39+7000 STS Fll.til No._JJ}J.

as Mortgagor
NE

c;

3_!__ 1

to

KEYBANK NATIONAL ASSOCIATION
as Mortgagee

Dated as of: August Jf__, 2006
'2008

EXHIBIT 5

BOOK

117 2 P.6GE 0 0 0 2
MORTGAGE
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING
Project Common Known As
"Cedartown Shopping Center"

THIS MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (this "Mortgage") is made as of the _!}_ day of August, 2006, by
CEDARTOWN LLC, a Delaware limited liability company ("Mortgagor"), whose address is
5851 Ridge Bend Road, Memphis, Tennessee 38120, in favor of KEYBANK NATIONAL
ASSOCIATION, its successors and assigns ("Mortgagee"), whose address is 580 Walnut Street,
Second Floor, Cincinnati, Ohio 45202.
1.

Grant and Secured Obligations.

1.1
Grant. For the purpose of securing payment and performance of the Secured
Obligations defined and described in Section 1.2 below, MORTGAGOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY GRANTS, BARGAINS, SELLS, CONVEYS,
MORTGAGES AND WARRANTS TO MORTGAGEE, WITH POWER OF SALE AND
WITH RIGHT OF ENTRY AND POSSESSION, ALL ESTATE, RIGHT, TITLE AND
INTEREST WHICH MORTGAGOR NOW HAS OR MAY LATER ACQUIRE IN AND TO
THE FOLLOWING PROPERTY (all or any part of such property, or any interest in all or any
part of it, as the context may require, the "Property"):
(a)
The real property located in the City Of Cedartown, County of Polk, State
of Georgia, as described in Exhibits A, A-1 and A-2, together with all existing and future
easements and rights affording access to it (the "Premises"); together with
(b)
All buildings, structures and improvements now located or later to be
constructed on the Premises (the "Improvements"); together with
(c)
All existing and future appurtenances, privileges, easements, franchises
and tenements of the Premises, including all minerals, oil, gas, other hydrocarbons and
associated substances, sulphur, nitrogen, carbon dioxide, helium and other commercially
valuable substances which may be in, under or produced from any part of the Premises,
all development rights and credits, air rights, water, water rights (whether riparian,
appropriative or otherwise, and whether or not appurtenant) and water stock, and any
Premises lying in the streets, roads or avenues, open or proposed, in front of or adjoining
the Premises and Improvements; together with
(d)
All existing and future leases, subleases, subtenancies, licenses, occupancy
agreements and concessions ("leases") relating to the use and enjoyment of all or any part
of the Premises and Improvements, and any and all guaranties and other supporting
obligations or other agreements relating to or made in connection with any of such leases;
together with

BOOK

117 2 PAGE 0 0 0 4

with the construction of the Improvements, including causes of action arising in tort,
contract, fraud or concealment of a material fact; together with
(k)

All of Mortgagor's rights in and to all Interest Rate Agreements;

All books and records pertaining to any and all of the property described
above, including computer-readable memory and any computer hardware or software
necessary to access and process such memory ("Books and Records"); together with
(l)

(m)
All proceeds of, additions and accretions to, substitutions
replacements for, and changes in any of the property described above.

and

Capitalized terms used above and elsewhere in this Mortgage without definition have the
meanings given them in the Loan Agreement referred to in Subsection l.2(a)(iii) below.
1.2

Secured Obligations.

(a)
Mortgagor makes the grant, conveyance, and mortgage set forth in
Section 1.1 above, and grants the security interest set forth in Section 3 below for the
purpose of securing the following obligations (the "Secured Obligations") in any order of
priority that Mortgagee may choose:
(i)
Payment of all obligations at any time owing under two promissory
notes evidencing the loan in the amount of Three Million Eight Hundred
Thousand and 001100 Dollars $3,800,000.00 (the "Project Loan"), bearing even
date herewith, payable by Mortgagor as maker to the order of Mortgagee which
mature on the Maturity Date of
v- .;-:,;J ._3
, 2008, as defined in the Loan
Agreement (one note being in the sQted principal amount of Three Million Five
Hundred Ninety Thousand and 001100 Dollars ($3,590,000.00) (the "A Note"),
and the other note being in the stated principal amount of Two Hundred Ten
Thousand and 001100 Dollars ($210,000,00) (the "B Note")). Collectively the A
Note and B Note are hereinafter referred to as the "Note" or "Notes."

A

(ii)
Payment and performance of all obligations of Mortgagor under
this Mortgage; and
Payment and performance of all obligations of Mortgagor under a
(iii)
Construction Loan Agreement bearing even date herewith between Mortgagor as
"Borrower" and Mortgagee as "Lender" (the "Loan Agreement"); and
(iv)
Payment and performance of any obligations of Mortgagor under
any Loan Documents which are executed by Mortgagor; and
(v)
Payment and performance of all obligations of Mortgagor arising
from any Interest Rate Agreements. Interest Rate Agreements shall mean an
interest rate hedging program through the purchase by Mortgagor from Mortgagee
of an interest rate swap, cap or such other interest rate protection product with
respect to the Notes; and

Mortgage

3

Cedartown

BOOK

J J7 2 P/\GE 0 0 0 ~j

(vi)
Payment and performance of all future advances and other
obligations that Mortgagor or any successor in ownership of all or part of the
Property may agree to pay and/or perform (whether as principal, surety or
guarantor) for the benefit of Mortgagee, when a writing evidences the parties'
agreement that the advance or obligation be secured by this Mortgage; and
(vii) Payment and performance of all modifications, amendments,
extensions, and renewals, however evidenced, of any of the Secured Obligations;
and
(viii) Payment of any and all amounts advanced by Mortgagee with
respect to the Property for the payment of taxes, assessments, insurance premiums
or costs incurred for the protection of the Property, together with interest at the
Default Rate.
(b)
All persons who may have or acquire an interest in all or any part of the
Property will be considered to have notice of, and will be bound by, the terms of the
Secured Obligations and each other agreement or instrument made or entered into in
connection with each of the Secured Obligations. Such terms include any provisions in
the Notes or the Loan Agreement which permit borrowing, repayment and reborrowing,
or which provide that the interest rate on one or more of the Secured Obligations may
vary from time to time.
2.

Assignment of Rents.

2.1
Assignment.
Mortgagor hereby irrevocably, absolutely, presently and
unconditionally assigns to Mortgagee all rents, royalties, issues, profits, revenue, income,
accounts, proceeds and other benefits of the Property, whether now due, past due or to become
due, including all prepaid rents and security deposits (some or all collectively, as the context may
require, "Rents"). This is an absolute assignment, not an assignment for security only.
Mortgagee hereby confers upon Mortgagor a license
2.2
Grant of License.
("License") to collect and retain the Rents as they become due and payable, so long as no Event
of Default, as defined in Section 6.2 below, shall exist and be continuing. If an Event of Default
has occurred and is continuing, Mortgagee shall have the right, which it may choose to exercise
in its sole discretion, to terminate this License without notice to or demand upon Mortgagor, and
without regard to the adequacy of Mortgagee's security under this Mortgage.
2.3
Collection and Application of Rents. Subject to the License granted to Mortgagor
under Section 2.2 above, Mortgagee has the right, power and authority to collect any and all
Rents. Mortgagor hereby appoints Mortgagee its attorney-in-fact to perform any and all of the
following acts, if and at the times when Mortgagee in its sole discretion may so choose:
(a)
(b)

Mortgage

Demand, receive and enforce payment of any and all Rents; or
Give receipts, releases and satisfactions for any and all Rents; or

4

Cedartown

BOOK

11 7 ~PAGE 0 0 0 ()

(c)
Sue either in the name of Mortgagor or in the name of Mortgagee for any
and all Rents.
Mortgagee and Mortgagor agree that the mere recordation of the assignment granted herein
entitles Mortgagee immediately to collect and receive rents upon the occurrence of an Event of
Default, as defined in Section 6.2, without first taking any acts of enforcement under applicable
law, such as, but not limited to, providing notice to Mortgagor, filing foreclosure proceedings, or
seeking and/or obtaining the appointment of a receiver. Further, Mortgagee's right to the Rents
does not depend on whether or not Mortgagee takes possession of the Property as permitted
under Subsection 6.3(c). In Mortgagee's sole discretion, Mortgagee may choose to collect Rents
either with or without taking possession of the Property. Mortgagee shall apply all Rents
collected by it in the manner provided under Section 6.6. If an Event of Default occurs while
Mortgagee is in possession of all or part of the Property and is collecting and applying Rents as
permitted under this Mortgage, Mortgagee and any receiver shall nevertheless be entitled to
exercise and invoke every right and remedy afforded any of them under this Mortgage and at law
or in equity.
2.4
Mortgagee Not Responsible. Under no circumstances shall Mortgagee have any
duty to produce Rents from the Property. Regardless of whether or not Mortgagee, in person or
by agent, takes actual possession of the Premises and Improvements, unless Mortgagee agrees in
writing to the contrary, Mortgagee is not and shall not be deemed to be:
(a)
(b)
lease; or

A "mortgagee in possession" for any purpose; or
Responsible for performing any of the obligations of the lessor under any

(c)
Responsible for any waste committed by lessees or any other parties, any
dangerous or defective condition of the Property, or any negligence in the management,
upkeep, repair or control of the Property; or
(d)
Liable in any manner for the Property or the use, occupancy, enjoyment or
operation of all or any part of it.
2.5
Leasing. Mortgagor shall not accept any deposit or prepayment of rents under the
leases for any rental period exceeding one (1) month without Mortgagee's prior written consent.
Mortgagor shall not lease the Property or any part of it except strictly in accordance with the
Loan Agreement.
3.

Grant of Security Interest.

3.1
Security Agreement. The parties intend for this Mortgage to create a lien on the
Property, and an absolute assignment of the Rents, all in favor of Mortgagee. The parties
acknowledge that some of the Property and some or all of the Rents may be determined under
applicable law to be personal property or fixtures. To the extent that any Property or Rents may
be determined to be personal property, Mortgagor as debtor hereby grants Mortgagee as secured
party a security interest in all of Mortgagor's right, title and interest in all such Property and
Rents, whether now owned or existing or hereafter acquired, to secure payment and performance

Mortgage

5

Cedartown

BOOK

117 2 PAGE 0 0 0 7

of the Secured Obligations. This Mortgage constitutes a security agreement under the Uniform
Commercial Code of the State in which the Property is located, covering all such Property and
Rents.
3.2
Financing Statements. Mortgagor shall execute, or in the alternative, hereby
authorizes Mortgagee to file, on behalf of Mortgagor and without its signature, one or more
financing statements and such other documents as Mortgagee may from time to time require to
perfect or continue the perfection of Mortgagee's security interest in any Property or Rents. As
provided in Section 5.9 below, Mortgagor shall pay all fees and costs that Mortgagee may incur
in filing such documents in public offices and in obtaining such record searches as Mortgagee
may reasonably require. In case Mortgagor fails to execute any financing statements or other
documents for the perfection or continuation of any security interest, Mortgagor hereby
irrevocably appoints Mortgagee as its true and lawful attorney-in-fact which power of attorney is
coupled with an interest to execute any such documents on its behalf. If any financing statement
or other document is filed in the records normally pertaining to personal property, that filing
shall never be construed as in any way derogating from or impairing this Mortgage or the rights
or obligations of the parties under it.
4.

Fixture Filing.

This Mortgage constitutes a financing statement filed as a fixture filing under Article 9 of
the Uniform Commercial Code in the State in which the Property is located, as amended or
recodified from time to time, covering any Property which now is or later may become fixtures
attached to the Premises or Improvements. The description of the Property in this Mortgage
includes goods which are or are to become fixtures on the Premises and/or Improvements of
which Mortgagor is the record owner. For this purpose, the respective addresses of Mortgagor, as
debtor, and Mortgagee, as secured party from which information concerning the security interest
may be obtained, are as set forth in the preambles of this Mortgage.
5.

Rights and Duties of the Parties.

5.1

Representations and Warranties. Mortgagor represents and warrants that:

(a)
Mortgagor lawfully possesses and holds fee simple title to all of the
Premises and Improvements and has not encumbered or assigned any of its business
interests and rights under, in and to the Premises and Improvements;
(b)
Mortgagor has or will have good title, and is and will be the sole owner of,
all Property other than the Premises and Improvements;
(c)
Mortgagor has the full and unlimited power, right and authority to
encumber the Property and assign the Rents;
(d)

This Mortgage creates a first and prior lien on the Property;

(e)
The Property includes all property and rights which may be reasonably
necessary or desirable to promote the present and any reasonable future beneficial use
and enjoyment of the Premises and Improvements;

Mortgage

6

Cedartown

BOOK

117 2 PAGE 0 0 0 8

(f)
Mortgagor owns any Property which is personal property free and clear of
any security agreements, reservations of title or conditional sales contracts, and there is
no financing statement affecting such personal property on file in any public office; and

(g)
Mortgagor is a limited liability company formed under the laws of the
State of Delaware and will not change the state of its formation or transfer the Collateral,
or any portion thereof (except as permitted by Section 6.1 (b)), to an entity formed in
another state. Mortgagor's exact legal name is as shown in this Mortgage and Mortgagor
will not change its legal name. Mortgagor's organization number is 4063171 and
Mortgagor will not change its organization number.
5.2
Taxes, and Assessments. Mortgagor shall pay prior to delinquency all taxes,
levies, charges and assessments, in accordance with Section 15.l(h) ofthe Loan Agreement.
Performance of Secured Obligations. Mortgagor shall promptly pay and perform
5.3
each Secured Obligation in accordance with its terms.
5.4
Liens, Charges and Encumbrances. Mortgagor shall immediately discharge any
lien on the Property which Mortgagee has not consented to in writing in accordance with the
terms of Section 15.1 (c) of the Loan Agreement.
5.5
Damages and Insurance and Condemnation Proceeds. In the event of any
casualty or condemnation of the Property, the provisions of Article 16 of the Loan Agreement
shall govern.
5.6

Maintenance and Preservation ofProperty.

(a)
Mortgagor shall insure the Property as required by the Loan Agreement
and keep the Property in good condition and repair.
(b)
Mortgagor shall not remove or demolish the Property or any part of it, or
alter, restore or add to the Property, or initiate or allow any change or variance in any
zoning or other Premises use classification which affects the Property or any part of it,
except as permitted or required by the Loan Agreement or with Mortgagee's express prior
written consent in each instance.
(c)
If all or part of the Property becomes damaged or destroyed, Mortgagor
shall promptly and completely repair and/or restore the Property in a good and
workmanlike manner in accordance with sound building practices, regardless of whether
or not Mortgagee agrees to disburse Proceeds or other sums to pay costs of the work of
repair or reconstruction under Article 16 of the Loan Agreement.
(d)
Mortgagor shall not commit or allow any act upon or use of the Property
which would violate: (i) any applicable Laws or order of any Governmental Authority,
whether now existing or later to be enacted and whether foreseen or unforeseen; or
(ii) any public or private covenant, condition, restriction or equitable servitude affecting
the Property. Mortgagor shall not bring or keep any article on the Property or cause or
allow any condition to exist on it, if that could invalidate or would be prohibited by any

Mortgage

7

Cedartown

BOOK

t 17 2 Pi\GE 0 0 0 !)

insurance coverage required to be maintained by Mortgagor on the Property or any part
of it under the Loan Agreement.
(e)
Mortgagor shall not commit or allow waste of the Property, including
those acts or omissions characterized under the Loan Agreement as waste which arises
out of Hazardous Material.
(f)
Mortgagor shall perform all other acts which from the character or use of
the Property may be reasonably necessary to maintain and preserve its value.
5.7
Releases, Extensions, Modifications and Additional Security. From time to time,
Mortgagee may perform any of the following acts without incurring any liability or giving notice
to any person:
(a)

Release any person liable for payment of any Secured Obligation;

(b)
Extend the time for payment, or otherwise alter the terms of payment, of
any Secured Obligation;
(c)
Accept additional real or personal property of any kind as security for any
Secured Obligation, whether evidenced by deeds of trust, mortgages, security agreements
or any other instruments of security;
(d)

Alter, substitute or release any property securing the Secured Obligations;

(e)

Consent to the making of any plat or map of the Property or any part of it;

(f)
Property; or

Join in granting any easement or creating any restriction affecting the

(g)
Join in any subordination or other agreement affecting this Mortgage or
the lien of it; or
(h)

Release the Property or any part of it.

5.8
Release. When all of the Secured Obligations relating to the B Note have been
paid in full and all fees and other sums relating to the B Note and owed by Mortgagor under this
Mortgage and the other Loan Documents have been received, Mortgagee shall partially release
this Mortgage, but only with respect to the portion of the real property described on Exhibit A-2
attached hereto. When all of the Secured Obligations (whether relating to the A Note or the B
Note) have been paid in full and all fees and other sums relating to the A Note and the B Note
and owed by Mortgagor under this Mortgage and the other Loan Documents have been received,
Mortgagee shall release this Mortgage with respect to the real property described on Exhibit A -1
attached hereto, the lien created by this Mortgage and all notes and instruments evidencing the
Secured Obligations. Mortgagor shall pay any costs of preparation and recordation of such
releases.

Mortgage

8

Cedartown

BOOK
5.9

117 2 PAGE 0 0 1 0

Compensation, Exculpation, Indemnification.

(a)
Mortgagor agrees to pay fees in the maximum amounts legally permitted,
or reasonable fees as may be charged by Mortgagee when the law provides no maximum
limit, for any services that Mortgagee may render in connection with this Mortgage,
including Mortgagee's providing a statement of the Secured Obligations or providing the
release pursuant to Section 5.8 above. Mortgagor shall also pay or reimburse all of
Mortgagee's costs and expenses which may be incurred in rendering any such services.
Mortgagor further agrees to pay or reimburse Mortgagee for all costs, expenses and other
advances which may be incurred or made by Mortgagee in any efforts to enforce any
terms of this Mortgage, including any rights or remedies afforded to Mortgagee under
Section 6.3, whether any lawsuit is filed or not, or in defending any action or proceeding
arising under or relating to this Mortgage, including attorneys' fees and other legal costs,
costs of any Foreclosure Sale (as defined in Subsection 6.3(i) below) and any cost of
evidence of title. If Mortgagee chooses to dispose of Property through more than one
Foreclosure Sale, Mortgagor shall pay all costs, expenses or other advances that may be
incurred or made by Mortgagee in each of such Foreclosure Sales. In any suit to
foreclose the lien hereof or enforce any other remedy of Mortgagee under this Mortgage
or the Note, there shall be allowed and included as additional indebtedness in the decree
for sale or other judgment or decree all expenditures and expenses which may be paid or
incurred by or on behalf of Mortgagee for reasonable attorneys' costs and fees (including
the costs and fees of paralegals), survey charges, appraiser's fees, inspecting engineer's
and/or architect's fees, fees for environmental studies and assessments and all additional
expenses incurred by Mortgagee with respect to environmental matters, outlays for
documentary and expert evidence, stenographers' charges, publication costs, and costs
(which may be estimated as to items to be expended after entry of the decree) of
procuring all such abstracts of title, title searches and examinations, title insurance
policies, Torrens certificates and similar data and assurances with respect to title as
Mortgagee may deem reasonably necessary either to prosecute such suit or to evidence to
bidders at any sale which may be had pursuant to such decree the true condition of the
title to, the value of or the environmental condition of the Property. All expenditures and
expenses of the nature in this Subsection mentioned, and such expenses and fees as may
be incurred in the protection of the Property and maintenance of the lien of this
Mortgage, including the fees of any attorney (including the costs and fees of paralegals)
employed by Mortgagee in any litigation or proceeding affecting this Mortgage, the Note
or the Property, including probate and bankruptcy proceedings, or in preparation for the
commencement or defense of any proceeding or threatened suit or proceeding, shall be
immediately due and payable by Mortgagor, with interest thereon at the Default Rate and
shall be secured by this Mortgage.
(b)
Mortgagee shall not be directly or indirectly liable to Mortgagor or any
other person as a consequence of any of the following:
(i)
Mortgagee's exercise of or failure to exercise any rights, remedies
or powers granted to Mortgagee in this Mortgage;

Mortgage

9

Cedartown

BOOK

117 2 PAGE 0 0 1l

(ii)
Mortgagee's failure or refusal to perform or discharge any
obligation or liability of Mortgagor under any agreement related to the Property or
under this Mortgage; or
(iii)
Any loss sustained by Mortgagor or any third party resulting from
Mortgagee's failure to lease the Property, or from any other act or omission of
Mortgagee in managing the Property, after an Event of Default, unless the loss is
caused by the willful misconduct and bad faith of Mortgagee.
~"""

1

,'Mortgagor hereby expressly waives and releases all liability of the types described above,
and agrees that no such liability shall be asserted against or imposed upon Mortgagee.
(c)
Mortgagor agrees to indemnify Mortgagee against and hold it harmless
from all losses, damages, liabilities, claims, causes of action, judgments, court costs,
attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of
value, and other costs and expenses which it may suffer or incur:
(i)
In performing any act required or permitted by this Mortgage or
any of the other Loan Documents or by law;
(ii)
Because of any failure of Mortgagor to perform any of its
obligations; or
(iii)
Because of any alleged obligation of or undertaking by Mortgagee
to perfonn or discharge any of the representations, warranties, conditions,
covenants or other obligations in any document relating to the Property other than
the Loan Documents.
This agreement by Mortgagor to indemnify Mortgagee shall survive the release and
cancellation of any or all of the Secured Obligations and the full or partial release of this
Mortgage.
(d)
Mortgagor shall pay all obligations to pay money ansmg under this
Section 5.9 immediately upon demand by Mortgagee. Each such obligation shall be
added to, and considered to be part of, the principal of the Note, and shall bear interest
from the date the obligation arises at the Default Rate.

5.10 Defense and Notice of Claims and Actions. At Mortgagor's sole expense,
Mortgagor shall protect, preserve and defend the Property and title to and right of possession of
the Property, and the security of this Mortgage and the rights and powers of Mortgagee created
under it, against all adverse claims. Mortgagor shall give Mortgagee prompt notice in writing if
any claim is asserted which does or could affect any such matters, or if any action or proceeding
is commenced which alleges or relates to any such claim.
5.11
Subrogation. Mortgagee shall be subrogated to the liens of all encumbrances.
whether released of record or not, which are discharged in whole or in part by Mortgagee in
accordance with this Mortgage or with the proceeds of any loan secured by this Mortgage.

Mortga?,e

10

Cedartown

BOOK

:117 2 PAGE 0 0 12

5.12 Site Visits, Observation and Testing.
Mortgagee and its agents and
representatives shall have the right at any reasonable time to enter and visit the Property for the
purpose of performing appraisals, observing the Property, taking and removing soil or
groundwater samples, and conducting tests on any part of the Property. Mortgagee has no duty,
however, to visit or observe the Property or to conduct tests, and no site visit, observation or
testing by Mortgagee, its agents or representatives shall impose any liability on any of
Mortgagee, its agents or representatives. In no event shall any site visit, observation or testing
by Mortgagee, its agents or representatives be a representation that Hazardous Material are or are
not present in, on or under the Property, or that there has been or shall be compliance with any
law, regulation or ordinance pertaining to Hazardous Material or any other applicable
governmental law. Neither Mortgagor nor any other party is entitled to rely on any site visit,
observation or testing by any of Mortgagee, its agents or representatives. Neither Mortgagee, its
agents or representatives owe any duty of care to protect Mortgagor or any other party against, or
to inform Mortgagor or any other party of, any Hazardous Material or any other adverse
condition affecting the Property. Mortgagee shall give Mortgagor reasonable notice before
entering the Property. Mortgagee shall make reasonable efforts to avoid interfering with
Mortgagor's use of the Property in exercising any rights provided in this Section 5.12.
5.13 Notice of Change. Mortgagor shall give Mortgagee prior written notice of any
change in: (a) the location of its place of business or its chief executive office if it has more than
one place of business; (b) the location of any of the Property, including the Books and Records;
and (c) Mortgagor's name or business structure. Unless otherwise approved by Mortgagee in
writing, all Property that consists of personal property (other than the Books and Records) will
be located on the Premises and all Books and Records will be located at Mortgagor's place of
business or chief executive office if Mortgagor has more than one place of business.
6.

Accelerating Transfers, Default and Remedies.
6.1

Accelerating Transfers.

(a)
"Accelerating Transfer" means any Transfer not expressly permitted under
Article 17 ofthe Loan Agreement.
(b)
Mortgagor acknowledges that Mortgagee is making one or more advances
under the Loan Agreement in reliance on the expertise, skill and experience of
Mortgagor; thus, the Secured Obligations include material elements similar in nature to a
personal service contract. In consideration of Mortgagee's reliance, Mortgagor agrees
that Mortgagor shall not make any Accelerating Transfer, unless the transfer is preceded
by Mortgagee's express written consent to the particular transaction and transferee.
Mortgagee may withhold such consent in its sole discretion. If any Accelerating Transfer
occurs, Mortgagee in its sole discretion may declare all of the Secured Obligations to be
immediately due and payable, and Mortgagee may invoke any rights and remedies
provided by Section 6.3 ofthis Mortgage.
6.2
Events of Default. Mortgagor will be in default under this Mortgage upon the
occurrence of any one or more of the following events (some or all collectively, "Events of
Default;" any one singly, an "Event of Default").

Mortgage

11

Cedartown

BOO!\

f 1 2 P.~GE () 0 "{ :~

(a)
Failure of Mortgagor (i) (x) to pay any of the principal of the Loan when
due, (y) to pay interest within ten (1 0) days after the date when due or (z) to observe or
perform any of the other covenants or conditions by Mortgagor to be performed under the
terms of this Mortgage or any of the other Loan Documents concerning the payment of
money for a period of ten (1 0) days after written notice from Mortgagee that the same is
due and payable; or (ii) for a period of thirty (30) days after written notice from
Mortgagee, to observe or perform any non-monetary covenant or condition contained in
this Mortgage or any of the other Loan Documents; provided that if any such failure
concerning a non-monetary covenant or condition is susceptible to cure but cannot
reasonably be cured within said thirty (30) day period, then Mortgagor shall have an
additional sixty (60) day period to cure such failure and no Event of Default shall be
deemed to exist hereunder so long as (x) Mortgagor commences such cure within the
initial thirty (30) day period and diligently and in good faith pursues such cure to
completion within such resulting ninety (90) day period from the date of Mortgagee's
notice, and (y) the existence of such uncured default will not result in any tenant under a
Lease having the right to terminate such Lease due to such uncured default; and provided
further that if a different notice or grace period is specified under Article 19 of the Loan
Agreement (or elsewhere in this Mortgage or the Loan Agreement) in which such
particular breach will become an Event of Default, the specific provision shall control; or
(b)
An "Event of Default" occurs under the Loan Agreement or any other
Loan Document.
6.3
Remedies. At any time after an Event of Default, Mortgagee shall be entitled to
invoke any and all of the rights and remedies described below, in addition to all other rights and
remedies available to Mortgagee at law or in equity. All of such rights and remedies shall be
cumulative, and the exercise of any one or more of them shall not constitute an election of
remedies.
(a)
Acceleration.
Mortgagee may declare any or all of the Secured
Obligations to be due and payable immediately.
(b)
Receiver. Mortgagee shall, as a matter of right, without notice and
without giving bond to Mortgagor or anyone claiming by, under or through Mortgagor,
and without regard for the solvency or insolvency of Mortgagor or the then value of the
Property, or the existence or waiver of any deficiency, to the extent permitted by
applicable law, be entitled to have a receiver appointed for all or any part of the Property
and the Rents, and the proceeds, issues and profits thereof, with the rights and powers
referenced below and such other rights and powers as the court making such appointment
shall confer, and Mortgagor hereby consents to the appointment of such receiver and
shall not oppose any such appointment. Such receiver shall have all powers and duties
prescribed by applicable law, all other powers which are necessary or usual in such cases
for the protection, possession, control, management and operation of the Property, and
such rights and powers as Mortgagee would have, upon entering and taking possession of
the Property under subsection (c) below.

Mortgage

12

Cedartown

BOOK

117 ~PAGE 0 0 14

(c)
Entry. Mortgagee, in person, by agent or by court-appointed receiver,
may enter, take possession of, manage and operate all or any part of the Property, and
may also do any and all other things in connection with those actions that Mortgagee may
in its sole discretion consider necessary and appropriate to protect the security of this
Mortgage. Such other things may include: taking and possessing all of Mortgagor's or
the then owner's Books and Records; entering into, enforcing, modifying or canceling
leases on such terms and conditions as Mortgagee may consider proper; obtaining and
evicting tenants; fixing or modifying Rents; collecting and receiving any payment of
money owing to Mortgagee; completing any unfinished construction; and/or contracting
for and making repairs and alterations. If Mortgagee so requests, Mortgagor shall
assemble all of the Property that has been removed from the Premises and make all of it
available to Mortgagee at the site of the Premises. Mortgagor hereby irrevocably
constitutes and appoints Mortgagee as Mortgagor's attorney-in-fact to perform such acts
and execute such documents as Mortgagee in its sole discretion may consider to be
appropriate in connection with taking these measures, including endorsement of
Mortgagor's name on any instruments. Mortgagee's power of attorney shall be coupled
with an interest.
(d)
Cure; Protection of Security. Mortgagee may cure any breach or default
of Mortgagor, and if it chooses to do so in connection with any such cure, Mortgagee
may also enter the Property and/or do any and all other things which it may in its sole
discretion consider necessary and appropriate to protect the security of this Mortgage,
including, without limitation, completing construction of the improvements at the
Property contemplated by the Loan Agreement. Such other things may include:
appearing in and/or defending any action or proceeding which purports to affect the
security of, or the rights or powers of Mortgagee under, this Mortgage; paying,
purchasing, contesting or compromising any encumbrance, charge, lien or claim of lien
which in Mortgagee's sole judgment is or may be senior in priority to this Mortgage, such
judgment of Mortgagee or to be conclusive as among the parties to this Mortgage;
obtaining insurance and/or paying any premiums or charges for insurance required to be
carried under the Loan Agreement; otherwise caring for and protecting any and all of the
Property; and/or employing counsel, accountants, contractors and other appropriate
persons to assist Mortgagee. Mortgagee may take any of the actions permitted under this
Subsection 6.3(d) either with or without giving notice to any person. Any amounts
expended by Mortgagee under this Subsection 6.3(d) shall be secured by this Mortgage.
(e)
Uniform Commercial Code Remedies. Mortgagee may exercise any or all
of the remedies granted to a secured party under the Uniform Commercial Code in the
State in which the Property is located.
(f)
Foreclosure; Lawsuits. Mortgagee shall have the right, in one or several
concurrent or consecutive proceedings, to foreclose the lien hereof upon the Property or
any part thereof, for the Secured Obligations, or any part thereof, by any proceedings
appropriate under applicable law, including without limitation, judicial proceedings with
or without redemption or by non-judicial proceedings. Mortgagee or its nominee may bid
and become the purchaser of all or any part of the Property at any foreclosure or other
sale hereunder, and the amount of Mortgagee's successful bid shall be credited on the

Mortgage

13

Cedartown

Secured Obligations, or on Mortgagee's judgment thereon. Without limiting the
foregoing, Mortgagee may proceed by a suit or suits in law or equity, whether for specific
performance of any covenant or agreement herein contained or in aid of the execution of
any power herein granted, or for any foreclosure under the judgment or decree of any
court of competent jurisdiction. In addition to the right provided in Subsection 6.3(a),
upon, or at any time after the filing of a complaint to foreclose this Mortgage, Mortgagee
shall be entitled to the appointment of a receiver of the property by the court in which
such complaint is filed, and Mortgagor hereby consents to such appointment.
Other Remedies. Mortgagee may exercise all rights and remedies
(g)
contained in any other instrument, document, agreement or other writing heretofore,
concurrently or in the future executed by Mortgagor or any other person or entity in favor
of Mortgagee in connection with the Secured Obligations or any part thereof, without
prejudice to the right of Mortgagee thereafter to enforce any appropriate remedy against
Mortgagor. Mortgagee shall have the right to pursue all remedies afforded to a
mortgagee under applicable law, and shall have the benefit of all of the provisions of such
applicable law, including all amendments thereto which may become effective from time
to time after the date hereof
(h)
Sale of Personal Property. Mortgagee shall have the discretionary right to
cause some or all of the Property, which constitutes personal property, to be sold or
otherwise disposed of in any combination and in any manner permitted by applicable law.
(i)
For purposes of this power of sale, Mortgagee may elect to treat as
personal property any Property which is intangible or which can be severed from
the Premises or Improvements without causing structural damage. If it chooses to
do so, Mortgagee may dispose of any personal property, in any manner permitted
by Article 9 of the Uniform Commercial Code of the state in which the Property
is located, including any public or private sale, or in any manner permitted by any
other applicable law.
In connection with any sale or other disposition of such Property,
(ii)
Mortgagor agrees that the following procedures constitute a commercially
reasonable sale: Mortgagee shall mail written notice of the sale to Mortgagor not
later than thirty (30) days prior to such sale. Mortgagee will publish notice of the
sale in a local daily newspaper of general circulation. Upon receipt of any written
request, Mortgagee will make the Property available to any bona fide prospective
purchaser for inspection during reasonable business hours. Without limiting any
other provisions of this Mortgage, Mortgagee shall have the right to conduct any
such sale on Mortgagor's Property, and Mortgagee shall have such right of
possession of the Property as shall be necessary or convenient for such purpose or
any other purpose under this Section 6.3. Mortgagee may sell the Property
without giving any warranties relating to title, possession, quiet enjoyment,
merchantability, fitness or the like as to the Property and may specifically
disclaim any warranties, which shall not be considered to adversely affect the
commercial reasonableness of any sale of the Property. Mortgagee has no
obligation to clean up or otherwise prepare the Property for sale.

Mortgage

14

Cedartown

BOOK

117 2 PAGE 0 0 1 f)

Notwithstanding, Mortgagee shall be under no obligation to consummate a sale if,
in its judgment, none of the offers received by it equals the fair value of the
Property offered for sale. The foregoing procedures do not constitute the only
procedures that may be commercially reasonable.
(i)
Single or Multiple Foreclosure Sales. If the Property consists of more
·
than one lot, parcel or item of property, Mortgagee may:

(i)
Designate the order in which the lots, parcels and/or items shall be
sold or disposed of or offered for sale or disposition; and
(ii)
Elect to dispose of the lots, parcels and/or items through a single
consolidated sale or disposition to be held or made under or in connection with
judicial proceedings, or by virtue of a judgment and decree of foreclosure and
sale; or through two or more such sales or dispositions; or in any other manner
Mortgagee may deem to be in its best interests, to the extent allowed by law (any
such sale or disposition, a "Foreclosure Sale;" and any two or more, "Foreclosure
Sales").
If Mortgagee chooses to have more than one Foreclosure Sale, Mortgagee at its
option may cause the Foreclosure Sales to be held simultaneously or successively,
on the same day, or on such different days and at such different times and in such
order as Mortgagee may deem to be in its best interests, if and to the extent
allowed by law. No Foreclosure Sale shall terminate or affect the liens of this
Mortgage on any part of the Property which has not been the subject of a
foreclosure proceeding under this mortgage, until all of the Secured Obligations
have been paid in full.
6.4
Credit Bids. At any Foreclosure Sale, any person, including Mortgagor or
Mortgagee, may bid for and acquire the Property or any part of it to the extent permitted by then
applicable law. Instead of paying cash for such property, Mortgagee may settle for the purchase
price by crediting the sales price ofthe property against the following obligations:
(a)
First, the portion of the Secured Obligations attributable to the expenses of
sale, costs of any action and any other sums for which Mortgagor is obligated to pay or
reimburse Mortgagee under Section 5.9 of this Mortgage; and
(b)
Second, all other Secured Obligations in any order and proportions as
Mortgagee in its sole discretion may choose.
6.5
Application of Foreclosure Sale Proceeds. Mortgagee shall apply the proceeds of
any Foreclosure Sale in the following manner:
(a)
First, to pay the portion of the Secured Obligations attributable to the
expenses of sale, costs of any action and any other sums for which Mortgagor is obligated
to reimburse Mortgagee under Section 5.9 of this Mortgage;

Mortgat;e

15

Cedartown

BOOK

:117 2 PAGE 0 0 1 7

(b)
Second, to pay the portion of the Secured Obligations attributable to any
sums expended or advanced by Mortgagee under the terms of this Mortgage which then
remain unpaid;
(c)
Third, to pay all other Secured Obligations in any order and proportions as
Mortgagee in its sole discretion may choose; and
(d)

Fourth, to remit the remainder, if any, to the person or persons entitled to

it.
6.6
Application of Rents and Other Sums. Mortgagee shall apply any and all Rents
collected by it, and any and all sums other than proceeds of a Foreclosure Sale which Mortgagee
may receive or collect under Section 6.3 above, in the following manner:
(a)
First, to pay the portion of the Secured Obligations attributable to the costs
and expenses of operation and collection that may be incurred by Mortgagee or any
receiver;
(b)
Second, to pay all other Secured Obligations in any order and proportions
as Mortgagee in its sole discretion may choose; and
(c)

Third, to remit the remainder, if any, to the person or persons entitled to it.

Mortgagee shall have no liability for any funds which it does not actually receive.
7.

Miscellaneous Provisions.

7.1
Additional Provisions. The Loan Documents fully state all of the terms and
conditions of the parties' agreement regarding the matters mentioned in or incidental to this
Mortgage. The Loan Documents also grant further rights to Mortgagee and contain further
agreements and affirmative and negative covenants by Mortgagor which apply to this Mortgage
and to the Property.
7.2

No Waiver or Cure.

(a)
Each waiver by Mortgagee must be in writing, and no waiver shall be
construed as a continuing waiver. No waiver shall be implied from any delay or failure
by Mortgagee to take action on account of any default of Mortgagor. Consent by
Mortgagee to any act or omission by Mortgagor shall not be construed as a consent to any
other or subsequent act or omission or to waive the requirement for Mortgagee's consent
to be obtained in any future or other instance.
If any of the events described below occurs, that event alone shall not:
(b)
cure or waive any breach, Event of Default or notice of default under this Mortgage or
invalidate any act performed pursuant to any such default or notice; or nullify the effect
of any notice of default or sale (unless all Secured Obligations then due have been paid
and performed and all other defaults under the Loan Documents have been cured); or
impair the security of this Mortgage; or prejudice Mortgagee or any receiver in the

Mortgage

16

Cedartown

BOOK

117 2 PAGE 0 0 1 R

exercise of any right or remedy afforded any of them under this Mortgage; or be
construed as an affirmation by Mortgagee of any tenancy, lease or option, or a
subordination of the lien of this Mortgage.
(i)
Mortgagee, its agent or a receiver takes possession of all or any
part of the Property in the manner provided in Subsection 6.3(c).
(ii)
Mortgagee collects and applies Rents as permitted under
Sections 2.3 and 6.6 above, either with or without taking possession of all or any
part of the Property.
(iii)
Mortgagee receives and applies to any Secured Obligation any
proceeds of any Property, including any proceeds of insurance policies,
condemnation awards, or other claims, property or rights assigned to Mortgagee
under Section 5.5 above.
(iv)
Mortgagee makes a site v1s1t, observes the Property and/or
conducts tests as permitted under Section 5.12 above.
(v)
Mortgagee receives any sums under this Mortgage or any proceeds
of any collateral held for any of the Secured Obligations, and applies them to one
or more Secured Obligations.
(vi)
Mortgagee or any receiver invokes any right or remedy provided
under this Mortgage.
7.3

Powers of Mortgagee.

(a)
If Mortgagee performs any act which it is empowered or authorized to
perform under this Mortgage, including any act permitted by Section 5. 7 or
Subsection 6.3(d) of this Mortgage, that act alone shall not release or change the personal
liability of any person for the payment and performance of the Secured Obligations then
outstanding, or the lien of this Mortgage on all or the remainder of the Property for full
payment and performance of all outstanding Secured Obligations. The liability of the
original Mortgagor shall not be released or changed if Mortgagee grants any successor in
interest to Mortgagor any extension of time for payment, or modification of the terms of
payment, of any Secured Obligation. Mortgagee shall not be required to comply with any
demand by the original Mortgagor that Mortgagee refuse to grant such an extension or
modification to, or commence proceedings against, any such successor in interest.
(b)
Mortgagee may take any of the actions permitted under Subsections 6.3(b)
and/or 6.3(e) regardless of the adequacy of the security for the Secured Obligations, or
whether any or all of the Secured Obligations have been declared to be immediately due
and payable, or whether notice of default and election to sell has been given under this
Mortgage, or whether any deficiency exists or has been waived.
(c)
From time to time, Mortgagee may apply to any court of competent
jurisdiction for aid and direction in executing and enforcing the rights and remedies

Mortgage

17

Cedartown

BOOK

11? 2 PAGE 0 0 1 !')

created under this Mortgage. Mortgagee may from time to time obtain orders or decrees
directing, confirming or approving acts in executing and enforcing these rights and
remedies.
7.4
Merger. No merger shall occur as a result of Mortgagee's acquiring any other
estate in or any other lien on the Property unless Mortgagee consents to a merger in writing.
7.5
Joint and Several Liability. If Mortgagor consists of more than one person, each
shall be jointly and severally liable for the faithful performance of all of Mortgagor's obligations
under this Mortgage.
7.6
Applicable Law. The creation, perfection and enforcement of the lien and
security interest of this Mortgage shall be governed by the law of the state in which the Property
is located, except to the extent that the Uniform Commercial Code provides for the application of
the law of another state. Subject to the foregoing, in all other respects, this Mortgage shall be
governed by the substantive laws of the State of Ohio.
7. 7
Successors in Interest. The terms, covenants and conditions of this Mortgage
shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties.
However, this Section 7. 7 does not waive the provisions of Section 6.1 above.
7.8

Interpretation.

(a)
Whenever the context requires, all words used in the singular will be
construed to have been used in the plural, and vice versa, and each gender will include
any other gender. The captions of the sections of this Mortgage are for convenience only
and do not define or limit any terms or provisions. The word "include(s)" means
"include(s), without limitation," and the word "including" means "including, but not
limited to."
(b)
The word "obligations" is used in its broadest and most comprehensive
sense, and includes all primary, secondary, direct, indirect, fixed and contingent
obligations. It further includes all principal, interest, prepayment charges, late charges,
loan fees and any other fees and charges accruing or assessed at any time, as well as all
obligations to perform acts or satisfy conditions.
(c)
No listing of specific instances, items or matters in any way limits the
scope or generality of any language of this Mortgage. The Exhibits to this Mortgage are
hereby incorporated in this Mortgage.
7.9
In-House Counsel Fees. Whenever Mortgagor is obligated to pay or reimburse
Mortgagee for any attorneys' fees, those fees shall include the allocated costs for services of
in-house counsel.

Mortgage

18

Cedartown

BOOK

11 2 P.~GE 0 0 2 0

7.10 Waiver of Statutory Rights. To the extent permitted by law, Mortgagor hereby
agrees that it shall not and will not apply for or avail itself of any appraisement, valuation, stay,
extension or exemption laws, or any so-called "Moratorium Laws," now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this Mortgage, but
hereby waives the benefit of such laws. Mortgagor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising the Property
marshalled upon any foreclosure of the lien hereof and agrees that any court having jurisdiction
to foreclose such lien may order the Property sold as an entirety. Mortgagor hereby waives any
and all rights of redemption from sale under any judgment of foreclosure of this Mortgage on
behalf of Mortgagor and on behalf of each and every person acquiring any interest in or title to
the Property of any nature whatsoever, subsequent to the date of this Mortgage. The foregoing
waiver of right of redemption is made pursuant to the provisions of applicable law.
7.11
Severability. If any provision of this Mortgage should be held unenforceable or
void, that provision shall be deemed severable from the remaining provisions and shall in no way
affect the validity of this Mortgage except that if such provision relates to the payment of any
monetary sum, then Mortgagee may, at its option, declare all Secured Obligations immediately
due and payable.
7.12 Notices. Any notice, demand, request or other communication which any party
hereto may be required or may desire to give hereunder shall be in writing and shall be deemed
to have been properly given (a) ifhand delivered, when delivered; (b) if mailed by United States
Certified Mail (postage prepaid, return receipt requested), three Business Days after mailing
(c) if by Federal Express or other reliable overnight courier service, on the next Business Day
after delivered to such courier service or (d) if by telecopier on the day oftransmission so long as
copy is sent on the same day by overnight courier as set forth below:
Mortgagor:

Cedartown, LLC
5851 Ridge Bend Road
Memphis, Tennessee 38120
Attention: )cfl [t"\--1 n\~T
Telephone
cfo I 6 £~- ;d. .'3oo
Facsimile
I 6f\s"" :J.3Stf

qo

With a copy to:

l La A u
;:q
~~A-41 '""'"~; c:~k
I 7 ~"l y1 Ar'o j.J~tJer- i>riJL.; rnZM 9(~ 1 ~"'tJ
'J\ ·v

Telephone
Facsimile
Mortgagee:

Mortgage

C\

Pn

C:-5, 1:::::.

q{) 1 S37
qo J S37

{0.)0

/6/ l2

'3e 1::2 '-'

KeyBank National Association
580 Walnut Street, 2nd Floor
Cinci1mati, Ohio 45202
Attention: Kurt Reiber
Telephone [phone]
Facsimile [phone]

19

Cedartown

BOOK
With a copy to:

11 7 2 PAGE 0 0 2.1

Thompson Hine LLP
312 Walnut Street
14th Floor
Cincinnati, Ohio 45202
Attention: Stephen M. King, Esq.
Telephone
(513) 3 52-67 46
Facsimile
[phone]

or at such other address as the party to be served with notice may have furnished in writing to the
party seeking or desiring to serve notice as a place for the service of notice.
Any notice or demand delivered to the person or entity named above to accept notices
and demands for Mortgagor shall constitute notice or demand duly delivered to Mortgagor, even
if delivery is refused.
7.13 Future Advances. The total amount of indebtedness secured hereby may increase
or decrease from time to time, but the total unpaid principal balance of indebtedness secured
hereby (including disbursements that the Bank may, but shall not be obligated to, make under
this Mortgage, the Loan Documents or any other document with respect thereto) at any one time
outstanding may be substantially less but shall not exceed Three Million Eight Hundred
Thousand and 001100 Dollars ($3,800,000.00) plus interest thereon, and any disbursements made
for the enforcement of this Mortgage and any remedies hereunder, payment of taxes, special
assessments, utilities or insurance on the Property and interest on such disbursements and all
disbursements by Mortgagee pursuant to applicable law (all such indebtedness being hereinafter
referred to as the maximum amount secured hereby). This Mortgage shall be valid and have
priority to the extent of the maximum amount secured hereby over all subsequent liens and
encumbrances, including statutory liens, excepting solely taxes and assessments levied on the
Property given priority by law.
7.14 Mortgagee's Lien for Service Charge and Expenses. At all times, regardless of
whether any Loan proceeds have been disbursed, this Mortgage secures (in addition to any Loan
proceeds disbursed from time to time) the payment of any and all loan commissions, service
charges, liquidated damages, expenses and advances due to or incurred by Mortgagee not to
exceed the maximum amount secured hereby. For purposes hereof, all obligations of Mortgagor
to Mortgagee under all Interest Rate Agreements and any indebtedness or obligation contained
therein or evidenced thereby shall be considered an obligation of Mortgagor secured hereby.
7.15 WAIVER OF TRIAL BY JURY. MORTGAGOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAlVES ANY RIGHT THAT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANYWAY IN CONNECTION
WITH THIS MORTGAGE, THE NOTES, OR ANY OF THE OTHER LOAN DOCUMENTS,
THE LOAN OR ANY OTHER STATEMENTS OR ACTIONS OF MORTGAGOR OR
MORTGAGEE. MORTGAGOR ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED
IN THE SIGNING OF THIS MORTGAGE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL. MORTGAGOR
FURTHER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS THE

Mortgage

20

Cedartown

BOOK

11 (~PAGE 0 0 2 2

MEANING AND RAMIFICATIONS OF THIS WAIVER, (ii) THIS WAIVER IS A
MATERIAL INDUCEMENT FOR MORTGAGEE TO MAKE THE LOAN, ENTER INTO
THIS MORTGAGE AND EACH OF THE OTHER LOAN DOCUMENTS, AND (iii) THIS
WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH OTHER LOAN DOCUMENTS
AS IF FULLY INCORPORATED THEREIN.
7.16

Inconsistencies.

In the event of any inconsistency between this Mortgage and the Loan Agreement, the
terms hereof shall be controlling as necessary to create, preserve and/or maintain a valid security
interest upon the Property, otherwise the provisions ofthe Loan Agreement shall be controlling.
7.17 Further Assurances. From time to time, as requested by Mortgagee, Mortgagor
shall take such other action and execute and deliver to Mortgagee all other instruments,
supplements, further assurances and security or other agreements as may be required or
requested by Mortgagee in order to perfect and continue Mortgagee's lien and interest in the
Property. Mortgagor hereby irrevocably appoints Mortgagee as its agent and attorney-in-fact to
sign all such instruments, supplements, further assurances and security and other agreements.
7.18 State Specific Provisions. The terms and conditions set forth in Schedule B
attached hereto and made a part hereof are incorporated into this Mortgage by reference. In the
event of any conflict or inconsistency between the terms and conditions of Schedule B and any
other provisions of this Mortgage, the terms and conditions of Schedule B shall govern.
[Remainder ofthis page intentionally left blank]

Mortgage

21

Cedartown

BOOK

! 17 2 PAGE 0 0 2 :J

IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the date first
above written.
MORTGAGOR:
Cedartown LLC,
a Delaware limited liability company
By:
(

it

s)
Its:

Building Exchange Company,
a Virginia corporation
Sole Member

By:
Its:
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES

)
) ss.
)

The foregoing instrument was subscribed, sworn to and acknowledged before me this
day of August, 2006, by Carla Polkinhorn, the Vice President of Building Exchange
-Company, a Virginia corporation, the Sole Member of Cedartown LLC, a Delaware limited
liability company, on behalf of said company.

Notary Public
Printed: ----------------------

(SEAL)
My Commission Expires: ________

Georgia~

My County of Residence: ________

Polk Countv

Filed in Office this-:J_da'!

2!ru., at$ :o Recorder·
Book //1~Page I .
.::5~ WJ.l).

Prepared by: Tracy L. Hawkins, Esq., Thompson lline LLP, 312 Walnut Street, 14th Floor, Cincinnati, OH 45202, Ph 513-352-6644

Mortgage

22

Cedartown

BOOK

117 2 PAGE 0 0 2 4
CALIFORNIA ALL-PURPOSE
CERTIFICATE OF ACKNOWLEDGMENT

(flJ \foCO lC//

State of
County of

On

Lus

)

fto:j--61~

)

(((,{ --r:;(ho« '""" '"~ """,;"'"""'

Awo lA.))-\ 22ff.{:hefore Q'

_ur\u ?o \(/\V\Vo(f\

personally appeared

personally known to me (iW J3roved to me on the basis Of satisfactory evideHee} to be the personf&) whose
is/are subscribed to the within instrument and acknowledged to me that ~/she/they executed the
same in llts/her/tHeir authorized capacity~, and that by .fltsiher/tHeir signature~ on the instrument the
personW, or the entity upon behalf of which the person(.e1' acted, executed the instrument.
name~)

l . ... ::::~~42·1

WITNESSm~yhandandofficialseal.

i~ ~"= j

~ ~!"e":"w"'!"'.""!' ;20~

ff
~~~

(Seal)

ADDITIONAL OPTIONAL INFORMATION
INSTRUCTIONS FOR COMPLETING THIS FORM
DESCRIPTION OF THE ATTACHED DOCUMENT

~~~~~~
(Tit
{)

'tc+

Number of Pages 1).,J? Document DateNO (Mk

~c:tnA t:NJ'\c,yvv-v:
(Additional info~Bn)

CAPACITY CLAIMED BY THE SIGNER
0 Individual (s)

'¥?

corp\tv ?f~-~:~-~(Title)

0
0
0
0

CAPA v 12 10 05

Partner(s)
Attorney-in-Fact
Trustee(s)
Other

;q

by Association of Professional Not;uies & CSA ROO-Sn-086)

\V\V\v

Any acknowledgment completed in California must contain verbiage exactly as
appears above in the notary section or a separate acknowledgment form must be
proper~v completed and attached to that document. The only exception is if a
document is to be recorded outside of California. In such instances, any alternative
acknowledgment verbiage as may be printed on such a document so long as the
verbiage does not require the notary to do something that is illegal for a notary in
California (i.e. certifying the authorized capacity of the signer). Please check the
document carefully for proper notarial wording and attach this form if required.
• State and County information must be the State and County where the document
signer(s) personally appeared before the notary public for acknowledgment.
• Date of notarization must be the date that the signer(s) personally appeared which
must also be the same date the acknowledgment is completed.
• The notary public must print his or her name as it appears within his or her
commission followed by a comma and then your title (notary public).
• Print the name(s) of document signer(s) who personally appear at the time of
notarization.
• Indicate the correct singular or plural fom1s by crossing off incorrect forms (i.e.
!te/she/iliey, is /are) or circling the correct forms. Failure to correctly indicate this
information may lead to rejection of document recording.
• The notary seal impression must be clear and photographically reproducible.
Impression must not cover text or lines. If seal impression smudges, re-seal if a
sufficient area pem1its, otherwise complete a different acknowledgment form.
• Signature of the notary public must match the signature on tile with the office of
the county clerk.
•:•
Additional information is not required but could help to ensure this
acknowledgment is not misused or attached to a ditl'ercnt document.
•:•
Indicate title or type of attached document, number of pages and date.
•!•
Indicate the capacity claimed by the signer. If the claimed capacity is a
corporate officer, indicate the tide (i.e. CEO, C'FO, Secretary).
• Securely attach this document to the signed document

notmyc!asses com

BOOK

117 2 PAGE 0 0 2 ~j

JURAT

State of California
County of l.J))

.f1vl@eJ~

Subscribed and sworn to (or affirmed) before me on
this

~nd
~

Cu '(lc\

by

LhArl"

r-- L

ITl .,..

dayof_~-~+->V\-OL~c..:__ _ _ _ _ _ _ ,20 V!?,
J

,:PO \'?J {lVlO(Y\

personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) who appeared before me .

................. 1

)

~·

KAAtA TORRES
Commission II 16&01.t2

I"~~
•••••••••••
MyComm. . . . . . 11,

(seal)

BOOK

117 2 PAGE 0 0 2 6
EXHIBIT A
LEGAL DESCRIPTION OF THE PREMISES

All that tract or parcel of land lying and being in Land Lots 107 5 and 1086 of the 2nd District,
4th Section, Polk County, Georgia, and being more particularly described as follows:
Commencing at the northwest corner of Land Lot 1075, said corner being common to Land Lots
1013, 1014, 1075 and 1076; thence along the westerly land lot line of Land Lot 1075 the
following courses and distances South 00 degrees 27 minutes 05 seconds West, 99.88 feet to a
point; South 00 degrees 40 minutes 37 seconds West, 112.89 feet to a point; South 01 degrees 41
minutes 15 seconds West, 617.55 feet to a 5/8" capped rebar found, said point being the TRUE
POINT OF BEGINNING; thence leaving said westerly land lot line South 73 degrees 13 minutes
13 seconds East, 89.54 feet to a 5/8" capped rebar found; thence North 16 degrees 45 minutes 46
seconds East, 46.21 feet to a 5/8" capped rebar found; thence South 73 degrees 17 minutes 27
seconds East, 71.38 feet to a 5/8" capped rebar found; thence along a curve to the left, an arc
distance of 122.11 feet, said curve having a radius of 76.50 feet and being subtended by a chord
of 109.55 feet, at North 61 degrees 10 minutes 20 seconds East, to a 5/8" capped rebar found;
thence North 17 degrees 09 minutes 12 seconds East, 19.32 feet to a 5/8" capped rebar found;
thence along a curve to the right, an arc distance of 107.60 feet, said curve having a radius of
68.50 feet and being subtended by a chord of96.87 feet, at North 61 degrees 50 minutes 01
seconds East, to a 5/8" capped rebar found; thence South 73 degrees 09 minutes 17 seconds East,
605.78 feet to a 5/8" capped rebar found; thence South 16 degrees 51 minutes 11 seconds West,
29.38 feet to a 5/8" capped rebar found; thence South 73 degrees 10 minutes 30 seconds East,
140.35 feet to a 5/8" capped rebar found; thence South 18 degrees 41 minutes 23 seconds West,
I 49.68 feet to a 5/8" capped rebar found; thence South 64 degrees 46 minutes 57 seconds East,
208.97 feet to a 5/8" capped rebar found on the westerly right-of-way of U.S. Highway 27
(variable right-of-way); thence along said westerly right-of-way and a curve to the right, an arc
distance of 148.67 feet, said curve having a radius of 4842.60 feet and being subtended by a
chord of 148.67 feet, at South 28 degrees 40 minutes 10 seconds West, to a 5/8" capped rebar
found; thence leaving said westerly right-of-way North 60 degrees 30 minutes 25 seconds West,
84.67 feet to a 5/8" capped rebar found; thence North 73 degrees I 0 minutes 24 seconds West,
1 I07.27 feet to a 5/8" capped rebar found on the westerly land lot line of Land Lot 1075; thence
along said westerly land lot line North 0 I degrees 38 minutes 29 seconds East, I 28.51 feet to a
5/8" capped rebar found, said point being the TRUE POINT OF BEGINNING;
Said tract or parcel of land contains 7.620 acres and is more accurately depicted on a plat of
survey prepared by GeoSurvey, Ltd., dated January 3 I, 2006, job number 20052638.

BOOK

11

~PAGE 0 0 2 7

EXHIBIT A-1
DESCRIPTION OF THE PREMISES
(Shopping Center Parcel)
Approximately 6.61 acres of the land described on Exhibit A, the legal description for which
shall be provided by the Mortgagor in form and substance satisfactory to the Mortgagee in its
sole discretion.

BOOK

117 2 PAGE 0 0 2 8
EXHIBIT A-2
DESCRIPTION OF THE PREMISES
(Outlot Parcel)

Approximately 1.01 acres of the land described on Exhibit A, the legal description for
which shall be provided by the Mortgagor in form and substance satisfactory to the Mortgagee,
in its sole discretion.

Mortgage

25

Cedartown

Gecrrria, Polk County

=

f:1 ~ed-in Ohce tll!s_5_day of
•
..Q.)R, Jtil~Yl- Recarded mDe
20
BookJ! 7 ~F't.gB I

j

BOOK

117 2 PAGE 0 0 2 !}

SCHEDULE B
~ W.Jio, Cler~T ATE SPECIFic PROVISioNs

The following provisions shall govern and control in the event of a conflict with any of
the other provisions of the Mortgage to which this Schedule B is attached.
In case the debt hereby secured shall not be paid when it becomes due by maturity in due
course, or by reason of any Event of Default as herein provided, Grantor hereby grants to
Grantee and assigns, the following irrevocable power of attorney: To sell the said property or
any part thereof at auction, at the usual place for conducting sales at the Court House in the
County where the land or any part thereof lies, in said State, to the highest bidder for cash, after
advertising the time, terms and place of such sale once a week for four weeks immediately
preceding such sale (but without regard to the number of days) in a newspaper published in the
County where the land lies, or in the paper in which the Sheriffs advertisements for such County
are published, all other notice being hereby waived by Grantor, and Grantee or any person on
behalf of Grantee, or assigns, may bid and purchase at such sale and thereupon execute and
deliver to the purchaser or purchasers at such sale a sufficient conveyance of said premises in fee
simple, which conveyance shall contain recitals as to the happening of the default upon which
the execution of the power of sale herein granted depends, and Grantor hereby constitutes and
appoints Grantee and assigns, the agent and attorney in fact of Grantor to make such recitals, and
hereby covenants and agrees that the recitals so to be made by Grantee, or assigns, shall be
binding and conclusive upon Grantor, and the heirs, executors, administrators and assigns of
Grantor, and that the conveyance to be made by Grantee or assigns, shall be effectual to bar all
equity of redemption of Grantor, or the successors in interest of Grantor, in and to said premises,
and Grantee or assigns, shall collect the proceeds of such sale, and after reserving therefrom the
entire amount of principal and interest due, together with the amount of any taxes, assessments
and premiums of insurance or other payments theretofore paid by Grantee, together with all costs
and expenses of sale and 15 per centum of the aggregate amount due for attorney's fees, shall pay
any over-plus to Grantor, or to the heirs or assigns of Grantor as provided by law_
The power and agency hereby granted are coupled with an interest and are irrevocable by
death or otherwise and are granted as cumulative to the remedies for collection of said
indebtedness provided by law.
Grantor hereby waives for itself, its successors and assigns, any rights of homestead
against Grantee, its successors and assigns, and further covenants that it will not avail itself of
any rights of exemption, valuation, stay, marshalling, redemption, appraisal, or moratorium now
or hereafter in force, and acknowledges that it makes this waiver as a material inducement to
Grantee to lend funds to Grantor, and further acknowledges that it has made this waiver
knowingly, intelligently, and after consultation with counsel of its choice.
This deed is intended to be, and should be construed as, a deed passing legal title under
the laws of the State of Georgia regarding conveyances to secure debt, and not as a mortgage,
and is intended as security for the payment of all sums secured hereby.
This deed and the Note or Notes hereby secured shall be deemed and construed to be
contracts executed and to be performed in Georgia.

Mortgage

26

Cedartown

BOOK

11 7 2 PAGE 0 0 3 0

This document prepared by
after recording return to:
Tracy L. Hawki~sq.
Thompson J:litie LLP
312 W_3lkfi:i't Street

l~Fioor

<?lncinnati, Ohio 45202
i·{i:~Ld}·iUiNU f{c. t

Ut'lr-o

TT:
PT:

t

GEORGE C. CAU..OWAY, ESQ.
SPECIAUZED TITLE SERVICES, INC.
6133 PEACHTREE DUNWOODY ROAD, NE
ATLANTA, GA 30328
\
[phone] STS FILE NO.

REC: 13 &13
DATE: &'-1-ofCHECK: o37(:,

\"?'1

2) "'(

"",-J

ASSIGNMENT OF LEASES AND RENTS
Project Commonly Known As
"CEDARTOWN SHOPPING CENTER"

, .I L
THIS ASSIGNMENT OF LEASES AND RENTS (this "Assignment") made as of
the f1+1...- day of August, 2006, is by CEDARTOWN LLC, a Delaware limited liability
company, having an office at 5851 Ridge Bend Road, Memphis, Tennessee 38120 ("Assignor"),
in favor of KEYBANK NATIONAL ASSOCIATION, a national banking association, having
an office at 580 Walnut Street, 2nd Floor, Cincinnati, Ohio 45202 its successors and assigns
("Assignee").
RECITALS
A.
On or about the date hereof, Assignor and Assignee entered into that certain
Construction Loan Agreement ("Loan Agreement") whereby Assignee agreed to make a secured
construction loan (the "Loan") available to Assignor in the maximum aggregate amount at any
time outstanding not to exceed the sum of Three Million Eight Hundred Thousand and 00/100
Dollars ($3,800,000.00), to finance the development and construction of a 30,600 square foot
shadow anchored strip Shopping Center with seven (7) proposed retail spaces (the "Project").
The Project is legally described in Exhibit A attached hereto and made a part hereof. Capitalized
terms used and not otherwise defined herein shall have the meanings given to them in the Loan
Agreement.
B.
In connection with the Loan, Assignor has executed and delivered the A Note and
B Note (collectively the "Note" or "Notes") in favor of Assignee of even date herewith which, in
the aggregate, are for the principal amount of the Loan, payment of which is secured by (i) a
Mortgage made by Assignor in favor of Assignee on the Project, and (ii) the other Loan
Documents.
C.
Assignor is desirous of further securing to Assignee the performance of the terms,
covenants and agreements hereof and of the Note, the Mortgage and the Loan Documents.
AGREEMENTS
NOW, THEREFORE, in consideration of the making of the Loan evidenced by
the Note by Assignee to Assignor and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby irrevocably, absolutely and

Rental Assignment

Cedartown

EXHIBIT 6

BOOK

11 2 PJ\GE 0 0 31

unconditionally transfer, sell, assign, pledge and convey to Assignee, its successors and assigns,
all ofthe right, title and interest of Assignor in and to:
(a)
any and all leases, licenses, rental agreements and occupancy agreements
of whatever form now or hereafter affecting all or any part of the Project and any and all
guarantees, extensions, renewals, replacements and modifications thereof (collectively, the
"Leases"); and
(b)
all issues, profits, security or other deposits, revenues, royalties, accounts,
rights, benefits and income of every nature of and from the Project, including, without limitation,
minimum rents, additional rents, termination payments, bankruptcy claims, forfeited security
deposits, damages following default and all proceeds payable under any policy of insurance
covering loss of rents resulting from untenantability due to destruction or damage to the Project,
together with the immediate and continuing right to collect and receive the same, whether now
due or hereafter becoming due, and together with all rights and claims of any kind that Assignor
may have against any Tenant, lessee or licensee under the Leases or against any other occupant
ofthe Project (collectively, the "Rents").
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns.
IT IS AGREED that, notwithstanding that this instrument is a present, absolute
and executed assignment of the Rents and of the Leases and a present, absolute and executed
grant of the powers herein granted to Assignee, Assignor is hereby permitted, at the sufferance of
Assignee and at its discretion, and is hereby granted a license by Assignee, to retain possession
of the Leases and to collect and retain the Rents unless and until there shall be an "Event of
Default" (as defined herein) under the terms of this Assignment or any of the other Loan
Documents. Upon an Event of Default, the aforementioned license granted to Assignor shall
automatically terminate without notice to Assignor, and Assignee may thereafter, without taking
possession of the Project, take possession of the Leases and collect the Rents. Further, from and
after such termination, Assignor shall be the agent of Assignee in collection of the Rents, and
any Rents so collected by Assignor shall be held in trust by Assignor for the sole and exclusive
benefit of Assignee and Assignor shall, within one (1) business day after receipt of any Rents,
pay the same to Assignee to be applied by Assignee as hereinafter set forth. Furthermore, from
and after such Event of Default and termination of the aforementioned license, Assignee shall
have the right and authority, without any notice whatsoever to Assignor and without regard to the
adequacy of the security therefor, to: (a) make application to a court of competent jurisdiction
for appointment of a receiver for all or any part of the Project, as particularly set forth in the
Mortgage; (b) manage and operate the Project, with full power to employ agents to manage the
same; (c) demand, collect, receive and sue for the Rents, including those past due and unpaid;
and (d) do all acts relating to such management of the Project, including, but not limited to,
negotiation of new Leases, making adjustments of existing Leases, contracting and paying for
repairs and replacements to the Improvements and to the fixtures, equipment and personal
property located in the Improvements or used in any way in the operation, use and occupancy of
the Project as in the sole subjective judgment and discretion of Assignee may be necessary to
maintain the same in a tenantable condition, purchasing and paying for such additional furniture
and equipment as in the sole subjective judgment of Assignee may be necessary to maintain a
proper rental income from the Project, employing necessary managers and other employees,

BOOK

l17 2 Pt\GE 0 0 3 ~!

purchasing fuel, providing utilities and paying for all other expenses incurred in the operation of
the Project, maintaining adequate insurance coverage over hazards customarily insured against
and paying the premiums therefor. Assignee shall apply the Rents received by Assignor from the
Project, after deducting the costs of collection thereof, including, without limitation, attorneys'
fees and a management fee for any management agent so employed, against amounts expended
for repairs, upkeep, maintenance, service, fuel, utilities, taxes, assessments, insurance premiums
and such other expenses as Assignee incurs in connection with the operation of the Project and
against interest, principal, required escrow deposits and other sums which have or which may
become due, from time to time, under the terms of the Loan Documents, in such order or priority
as to any of the items so mentioned as Assignee, in its sole subjective discretion, may determine.
The exercise by Assignee of the rights granted Assignee in this paragraph, and the collection of,
the Rents and the application thereof as herein provided, shall not be considered a waiver by
Assignee of any Event of Default under the Loan Documents or prevent foreclosure of any liens
on the Project nor shall such exercise make Assignee liable under any of the Leases, Assignee
hereby expressly reserving all of its rights and privileges under the Mortgage and the other Loan
Documents as fully as though this Assignment had not been entered into.
Without limiting the rights granted hereinabove, in the event Assignor shall fail to
make any payment or to perform any act required under the terms hereof and such failure shall
not be cured within any applicable grace or cure period, then Assignee may, but shall not be
obligated to, without prior notice to or demand on Assignor, and without releasing Assignor from
any obligation hereof, make or perform the same in such manner and to such extent as Assignee
may deem necessary to protect the security hereof, including specifically, without limitation,
appearing in and defending any action or proceeding purporting to affect the security hereof or
the rights or powers of Assignee, performing or discharging any obligation, covenant or
agreement of Assignor under any of the Leases, and, in exercising any of such powers, paying all
necessary costs and expenses, employing counsel and incurring and paying attorneys' fees. Any
sum advanced or paid by Assignee for any such purpose, including, without limitation, attorneys'
fees, together with interest thereon at the Default Rate from the date paid or advanced by
Assignee until repaid by Assignor, shall immediately be due and payable to Assignee by
Assignor on demand and shall be secured by the Mortgage and by all of the other Loan
Documents securing all or any part of the indebtedness evidenced by the Notes.
IT IS FURTHER AGREED that this Assignment is made upon the following
terms, covenants and conditions:
1.
This Assignment shall not operate to place responsibility for the control, care,
management or repair of the Project upon Assignee, nor for the performance of any of the terms
and conditions of any of the Leases, nor shall it operate to make Assignee responsible or liable
for any waste committed on the Project by any Tenant or any other party or for any dangerous or
defective condition of the Project or for any negligence in the management, upkeep, repair or
control of the Project. Assignee shall not be liable for any loss sustained by Assignor resulting
from Assignee's failure to let the Project or from any other act or omission of Assignee in
managing the Project. Assignor shall and does hereby indemnify and hold Assignee harmless
from and against any and all liability, loss, claim, demand or damage which may or might be
incurred by reason of this Assignment, including, without limitation, claims or demands for
security deposits from Tenants deposited with Assignor, and from and against any and all claims

BOOK

11 2 PAGE 0 0 3 :1

and demands whatsoever which may be asserted against Assignee by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the terms, covenants or
agreements contained in any of the Leases. Should Assignee incur any liability by reason of this
Assignment or in defense of any claim or demand for loss or damage as provided above, the
amount thereof, including, without limitation, costs, expenses and attorneys' fees, together with
interest thereof at the Default Rate from the date paid or incurred by Assignee until repaid by
Assignor, shall be immediately due and payable to Assignee by Assignor upon demand and shall
be secured by the Mortgage and by all of the other Loan Documents securing all or any part of
the indebtedness evidenced by the Notes.
2.
possessiOn.

This Assignment shall not be construed as making Assignee a mortgagee m

3.
Assignee is obligated to account to Assignor only for such Rents as are actually
collected or received by Assignee.
4.
Assignor hereby further presently and absolutely assigns to Assignee subject to
the terms and provisions of this Assignment: (a) any award or other payment which Assignor
may hereafter become entitled to receive with respect to any of the Leases as a result of or
pursuant to any bankruptcy, insolvency or reorganization or similar proceedings involving any
Tenant under such Leases; and (b) any and all payments made by or on behalf of any Tenant of
any part of the Project in lieu of Rent. Assignor hereby irrevocably appoints Assignee as its
attorney-in-fact to appear in any such proceeding and to collect any such award or payment,
which power of attorney is coupled with an interest by virtue of this Assignment and is
irrevocable so long as any sums are outstanding under the loan evidenced by the Note. All
awards or payments so collected shall be applied to the indebtedness secured hereby in such
order as Assignee shall elect.
5.
Assignor represents, warrants and covenants to and for the benefit of Assignee:
(a) that Assignor now is (or with respect to any Leases not yet in existence, will be immediately
upon the execution thereof) the absolute owner of the landlord's interest in the Leases, with full
right and title to assign the same and the Rents due or to become due thereunder; (b) that, other
than this Assignment and any assignment to Assignee pursuant to the Mortgage there are no
outstanding assignments of the Leases or Rents; (c) that no Rents have been anticipated,
discounted, released, waived, compromised or otherwise discharged except for prepayment of
rent of not more than one (I) month prior to the accrual thereof; (d) that there are no material
defaults now existing under any of the Leases by the landlord or any Tenant, and there exists no
state of facts which, with the giving of notice or lapse of time or both, would constitute a default
under any of the Leases by the landlord or any Tenant, except as disclosed in writing to
Assignee; (e) that Assignor has and shall duly and punctually observe and perform all covenants,
conditions and agreements in the Leases on the part of the landlord to be observed and performed
thereunder and (f) the Leases are in full force and effect and are the valid and binding obligations
of Assignor, and, to the knowledge of Assignor, are the valid and binding obligations of each
Tenant thereto.

BOOK

117 2 PAGE 0 0 3 4

6.
Assignor covenants and agrees that Assignor shall, at its sole cost and expense,
appear in and defend any action or proceeding arising under, growing out of, or in any manner
connected with the Leases or the obligations, duties or liabilities of the landlord or any Tenant
thereunder, and shall pay on demand all costs and expenses, including, without limitation,
attorneys' fees, which Assignee may incur in connection with Assignee's appearance, voluntary
or otherwise, in any such action or proceeding, together with interest thereon at the Default Rate
from the date incurred by Assignee until repaid by Assignor.
7.
At any time, Assignee may, at its option, notify any Tenant or other parties ofthe
existence of this Assignment. Assignor does hereby specifically authorize, instruct and direct
each and every present and future tenant, lessee and licensee of the whole or any part of the
Project to pay all unpaid and future Rents to Assignee upon receipt of demand from Assignee to
so pay the same and Assignor hereby agrees that each such present and future Tenant, lessee and
licensee may rely upon such written demand from Assignee to so pay said Rents without any
inquiry into whether there exists an Event of Default hereunder or under the other Loan
Documents or whether Assignee is otherwise entitled to said Rents. Assignor hereby waives any
right, claim or demand which Assignor may now or hereafter have against any present or future
tenant, lessee or licensee by reason of such payment of Rents to Assignee, and any such payment
shall discharge such tenant's, lessee's or licensee's obligation to make such payment to Assignor.
8.
Assignee may take or release any security for the indebtedness evidenced by the
Notes, may release any party primarily or secondarily liable for the indebtedness evidenced by
the Note, may grant extensions, renewals or indulgences with respect to the indebtedness
evidenced by the Notes and may apply any other security therefor held by it to the satisfaction of
any indebtedness evidenced by the Notes without prejudice to any of its rights hereunder.
9.
The acceptance of this Assignment and the collection of the Rents in the event
Assignor's license is terminated, as referred to above, shall be without prejudice to Assignee.
The rights of Assignee hereunder are cumulative and concurrent, may be pursued separately,
successively or together and may be exercised as often as occasion therefor shall arise, it being
agreed by Assignor that the exercise of any one or more of the rights provided for herein shall
not be construed as a waiver of any of the other rights or remedies of Assignee, at law or in
equity or otherwise, so long as any obligation under the Loan Documents remains unsatisfied.
10.
All rights of Assignee hereunder shall inure to the benefit of its successors and
assigns, and all obligations of Assignor shall bind its successors and assigns and any subsequent
owner of the Project. All rights of Assignee in, to and under this Assignment shall pass to and
may be exercised by any assignee of such rights of Assignee. Assignor hereby agrees that if
Assignee gives notice to Assignor of an assignment of said rights, upon such notice the liability
of Assignor to the assignee of the Assignee shall be immediate and absolute. Assignor will not
set up any claim against Assignee or any intervening assignee as a defense, counterclaim or
setoff to any action brought by Assignee or any intervening assignee for any amounts due
hereunder or for possession of or the exercise of rights with respect to the Leases or the Rents.
11.
It shall be an "Event of Default" hereunder (a) if any representation or warranty
made herein by Assignor is determined by Assignee to have been false or misleading in any
material respect at the time made, or (b) upon any failure by Assignor in the performance or

BOOK

117 2 PAGE 0 0 3 fj

observance of any other covenant or condition hereof and the continuance of such failure for
thirty (30) days after written notice thereof from Assignee to Assignor; provided, however, that if
such failure is susceptible of cure but cannot reasonably be accomplished within said thirty (30)
day period, then Assignor shall have an additional sixty (60) day period to cure such failure and
no Event of Default shall be deemed to exist hereunder so long as Assignor commences such
cure within the initial thirty (30) day period and diligently and in good faith pursues such cure to
completion within such resulting ninety (90) day period from the date of Assignee's notice. Any
such default not so cured shall be an "Event of Default" under each of the other Loan
Documents, entitling Assignee to exercise any or all rights and remedies available to Assignee
under the terms hereof or of any or all of the other Loan Documents, and any Event of Default
under the other Loan Documents, or any default under any other Loan Document which is not
cured within any applicable grace or cure period, shall be deemed an Event of Default hereunder
subject to no grace or cure period, entitling Assignee to exercise any or all rights provided for
herein.
12.
Failure by Assignee to exercise any right which it may have hereunder shall not
be deemed a waiver thereof unless so agreed in writing by Assignee, and the waiver by Assignee
of any default hereunder shall not constitute a continuing waiver or a waiver of any other default
or of the same default on any future occasion. No collection by Assignee of any Rents pursuant
to this Assignment shall constitute or result in a waiver of any default then existing hereunder or
under any of the other Loan Documents.
13.
If any provision under this Assignment or the application thereof to any entity,
person or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of
this Assignment and the application of the provisions hereof to other entities, persons or
circumstances shall not be affected thereby and shall be enforced to the fullest extent permitted
by law.
14.
This Assignment may not be amended, modified or otherwise changed except by
a written instrument duly executed by Assignor and Assignee.
15.
This Assignment shall be in full force and effect continuously from the date
hereof to and until the payment, discharge, and performance of any and all indebtedness and
obligations evidenced by the Notes or secured or guaranteed by any of the Loan Documents, and
the release of the Mortgage shall, for all purposes, automatically terminate this Assignment and
render this Assignment null and void and of no effect whatsoever. Any partial release of the
Mortgage shall, for all purposes, automatically terminate this Assigment only with respect to
those portions of real property covered by such partial release.
16.
In case of a conflict between any provision of this Assignment and any provision
of the other Loan Documents, the provision selected by Assignee in its sole subjective discretion
shall prevail and be controlling.
17.
All notices, demands, requests or other communications to be sent by one party to
the other hereunder or required by law shall be given and become effective as provided in the
Loan Agreement.