[LOGO]
POINTE BANK
December 19, 1997
First American Railways, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxx 00000
Re: Loan Agreement dated March 10, 1997 (the "Loan") between First American
Railways, Inc. (The "Borrower" and Pointe Bank (the "Bank")
Gentlemen:
With regard to the Bank's letter of December 10, 1997 (the "Letter"), and for
the consideration described below, the Bank hereby waives any specific default
identified therein. This waiver is not intended to inure to the benefit of any
third party and is not intended to waive any claims or rights that the Bank may
have against anyone other than the Borrower. This waiver is being provided in
consideration for (i) Borrower's consent to the Bank's application of all of the
current balance (approximately $109,000.00) in Borrower's Account No. 00000000
to the balance due on the Loan, (ii) Borrower's agreeing to grant to the Bank a
"blanket" second lien on all of the assets of Borrower (Borrower does not
represent there is any value beyond that securing the senior existing
indebtedness thereon) to the extent permitted pursuant to outstanding
commitments with existing lenders of Borrower, and (iii) Borrower's
representation that it will pay to the Bank on the Loan, 10% of the gross
proceeds of third party financing which is anticipated to be concluded by the
end of April, 1998, and which is expected to raise $5 million in gross proceeds.
The blanket second lien referenced herein is to include all "non Durango" assets
of Borrower and its subsidiaries. The Borrower agrees to cooperate with the Bank
in executing by January 15, 1998 all documents and instruments necessary to
perfect the security interest to be given to Bank.
The Borrower agrees that there will be no further borrowing under the Loan and
that it will not be renewed upon its maturity.
As additional consideration for the waiver of the default referenced in the
Letter the Borrower hereby releases the Bank, its officers, directors,
employees, agents, and attorneys from any claims it has or may have against the
Bank as of the date hereof, acknowledges that the indebtedness due under the
terms of the Loan represents a valid, enforceable, and outstanding obligation of
the Borrower and that the Borrower has no defense, setoff, or counterclaim with
First American Railways, Inc.
December 19, 1997
Page Two
respect to the Loan or the indebtedness represented thereby and to the extent
Borrower may have any such setoff, claim, or counterclaim, they are hereby
waived.
The foregoing waiver and the agreements set forth by the Bank are contingent
upon and subject to Borrower executing and delivering a signed copy of this
letter to the Bank no later than 5:00 P.M., Monday, December 22, 1997.
Yours very truly,
POINTE BANK
/s/ R. Xxxx Xxxxxx
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R. Xxxx Xxxxxx, Jr.
We hereby acknowledge and agree to the foregoing this 22 day of December, 1997.
FIRST AMERICAN RAILWAYS, INC.
By: /s/ Xxx X. Xxxxxxx
-----------------------
Print Name: Xxx X. Xxxxxxx
Title: Vice President and Acting Chief Financial Officer
