September 30, 1998
NevStar Gaming & Entertainment Corporation
P.O. Box 96807
Las Vegas, NV 89193-6807
Attention: Xx. Xxxxxxx Xxxxxxxxxx, Chairman of the Board
Re: Permanent First Mortgage Loan (the "Loan")
Hotel/Casino in Mesquite, Nevada
Dear Xx. Xxxxxxxxxx:
This letter constitutes the Commitment (the "Commitment Letter") of CNB
Capital, Inc. (the "Lender") to make one real estate first mortgage loan to
the entity described below as the borrower (the "Borrower"). On the terms and
conditions of this Commitment Letter, the commitment made herein, is as
follows:
1. Borrower: A single purpose and asset bankruptcy remote entity to
be formed and wholly owned by NevStar Gaming & Entertainment Corp., a Nevada
corporation and publicly held company which Xxxxxxx Xxxxxxxxxx is the Chairman
of the Board.
2. Purpose of Loan. The purpose of the Loan is to refinance the
current indebtedness of the collateral property as described below and payoff
the following:
(a) To the extent of not more than $5,450,000, a payoff of unpaid
principal balance of Xxxxxxxx's existing first mortgage loan
on the Real Estate (as hereinafter defined), the existing
first mortgage loan being held by First Credit Bank; and
(b) To the extent of not more than $7,285,000, a payoff of unpaid
promissory notes due, to Xxxxxx-Xxx, (as hereinafter
defined), the Xxxxxx-Xxx Notes; and
(c) To the extent of not more than $1,099,000, a payoff of unpaid
promissory notes due, to PMJ, (as hereinafter defined), the
PMJ Notes; and
(d) To the extent of not more than $854,000, a payoff of the
construction payables (as hereinafter defined), the existing
payable being owed to A.F. Construction; and
(e) To the extent of not more than $1,215,000, a payoff of the
commitment note due, to Xxxxxx-Xxx, plus deferred interest,
(as hereinafter defined), the Xxxxxx-Xxx Commitment Notes;
and
(f) To the extent of not more than $250,000, a payoff of the
commitment note due, to Mr. Xxx, (as hereinafter defined),
the Hon Commitment Notes; and
(g) The extent of not more than $2,547,000, reimbursement to
Borrower for the construction and pre-opening expenses set
forth in Schedule #1 hereto (any balance thereof not used for
such purpose to be applied to the interest reserve account);
and
(h) To the extent that additional debt exists with other secured
or unsecured creditors, the balance of the loan amount can be
applied to said debt (including any interest accrued on the
principal amount of any of the above loans) once all closing
costs associated with this commitment have been paid.
The proceeds of the Loan (the "Loan Proceeds") may not be used for any
purposes other than as set forth above. In no event shall the Loan Proceeds
be used for personal, family or household purposes.
3. Principal Amount of Loan: The least of the following:
(a) Up to a maximum of Twenty Million Dollars ($20,000,000.00);
(b) 65% of the fair market value of the Real Estate as disclosed by
the Appraisal, including business and service income. The scope
of work for said appraisal shall treat the Collateral (as defined
below) as a business on-going concern;
(c) That maximum loan amount determined in accordance with Xxxxxx's
underwriting guidelines to be (in the exercise of reasonable
commercial banking judgment) justified by Xxxxxxxx's net operating
income from the Real Estate (net operating income being Borrower's
gross income from the Real Estate less all costs and expenses of
owning and operating the Real Estate, including business and
service income);
(d) The maximum loan amount determined in accordance with Xxxxxx's
underwriting guidelines to be (in the exercise of reasonable
commercial banking judgment) justified by a Debt Service Coverage
Ratio of not less than 1.40 to 1; or
(e) The actual amount required to pay all of the sums set forth in
paragraph 2 above.
4. Term, Maturity Date and Amortization:
(a) Initially, the term of the Loan shall be approximately three (3)
years commencing on the date of the Closing of the Loan and ending
on the first day of the calendar month next following the third
anniversary date of the Closing of the Loan (the "Maturity Date").
Until the Maturity Date, interest only shall be paid monthly in
arrears on the first day of each calendar month until the Maturity
Date. On the Maturity Date, the entire unpaid principal balance
of Loan, together with all interest and other charges then accrued
or due but unpaid, shall be paid in full in a single Balloon
Payment.
(b) If the Collateral achieves a stabilized twelve (12) month Debt
Service Coverage Ratio of 1 to 1.40 (determined on a trailing
basis) prior to the Maturity Date, and provided that the Borrower
is not then in default under any of the Loan Documents (as defined
below), the Borrower, at Borrowers option, will have the right to
convert the Loan to a fixed term amortizing first mortgage loan on
the Collateral upon and subject to the following general terms and
conditions as the Lender customarily uses for loans of similar
size, quality and type:
Term: 10 years
Amortization: 20 year
Interest Rate: 275 basis points over the corresponding treasury fixed
as of the date of closing of the conversion.
Principal Xxxxxx: Equal to the unpaid principal balance of the Loan as
of the date of closing of the conversion.
Loan to Value: Loan to Value Ratio of not greater than 60%.
Conversion Fee: 1% of the principal amount of the converted loan in
lieu of the exit fee provided for in paragraph 7(d)below.
Prepayment: Years 1-2, no prepayment allowed; Years 3-9, greater
of 1% or Yield Maintenance (as defined below).
Year 10, no premium or penalty for any prepayment.
Collateral: The Collateral.
5. Interest Rate. As otherwise provided in this paragraph, that fixed
rate of per annum interest which as of the date of the Closing of the Loan is
equal to 3.5 points over the published 6 month LIBOR rate as published
electronically at the time of determination thereof by Xxxxxx on either of
the Dow Xxxxx Telerate, Inc. or Bloomberg Financial Markets (collectively, the
"Financial News Wires"), or is such Financial News Wires no longer publish
such information, in another authoritative source selected by the Lender.
However, if within a forty (40) days of Xxxxxx's execution of this Commitment
Letter, the Lender has not received all documentation and other information
required to satisfy each of the Conditions Precedent, other than those to be
satisfied by Borrower only as of the date of the Loan Closing, the Lender, in
its sole and absolute discretion, may:
(a) extend the expiration date of this Commitment Letter with such
changes, modifications and/or additions to the terms, covenants,
conditions and other provisions hereof as the Lender, in its sole
discretion, shall determine are necessary to insure that the Loan
provides a yield to the Lender equivalent to interest at that
annual rate equal to 3.5% over the LIBOR rate; or
(b) extend the expiration date of this Commitment Letter with no
changes or additions to the terms, covenants, conditions and other
provisions hereof.
Interest shall be charged and accrued daily on the unpaid principal balance of
the Loan. Interest for each day shall be calculated by multiplying the unpaid
principal balance of the Loan at the end of such day by the interest rate in
effect at the end of such day and then dividing the product thereof by three
hundred sixty (360).
6. Principal and Interest Payments: Interest only shall be paid
monthly in arrears commencing on the first day of the calendar month next
succeeding the date of Closing and so continuing on the first day of each
month thereafter until the Loan is paid in full. Principal shall be paid in
full in a single Balloon Payment due and payable on the Maturity Date.
7. Commitment Fee, Break-Up Fee, Report Deposit Fee and Exit Fee:
(a) Break-Up Fee: In the event that the Loan does not close due to any
material failure of the Borrower or the Guarantor to comply with the
terms of this Commitment Letter or by reason of any
misrepresentation (intentional or unintentional) of the Borrower or
the Guarantor, the Borrower shall forthwith pay the Lender a break-
up fee equal to seventy-five one hundredths of one percent (.75%) of
the Loan Amount.
(b) Origination Fee: At the Closing of the Loan, the Borrower shall pay
the Lender an Origination Fee in an amount equal to two percent
(2.0%) of the Loan Amount (the "Origination Fee"). The Origination
Fee is in addition to the Report Deposit Fee.
(c) Report Deposit Fee: Simultaneously with the Borrower's execution and
delivery of this Commitment Letter to the Lender, the Borrower will
pay to the Lender a Report Deposit Fee in the amount of $25,000.00
(the "Report Deposit Fee") to cover, among other things, the costs
and expenses incurred by the Lender in conducting its due diligence
necessary to underwrite the Loan. Should the Loan not close for any
reason other than Borrower's or Guarantor's failure to comply with
the terms of this Commitment Letter in any material respect or any
misrepresentation (intentional or unintentional) of Borrower or
Guarantor, the Report Deposit Fee remaining after the deduction
therefrom by the Lender of the reasonable costs incurred by Xxxxxx
in preparing, negotiating and issuing this Commitment Letter and
preparing to close the Loan (including, but not limited to, legal
fees and expenses of Xxxxxx's Counsel and fees in connection with
the Appraisal, the Environmental Report, the A&E Report, the
preparation and delivery of releases or assignments of existing
mortgages or liens, title insurance premiums, survey charges,
mortgages and documentary stamp taxes and recording fees) and the
costs and expenses incurred by Lender in connection with its said
due diligence (including, but not limited to underwriting expense,
expense incurred by Lender for site inspections and travel time and
expenses) shall be refunded by Lender to the Borrower. If the Loan
does not close by reason of Xxxxxxxx's or Guarantor's failure to
comply with the terms of this Commitment Letter in any material
respect or by reason of any misrepresentation (intentional or
unintentional) of Borrower or Guarantor, then:
(i) the Borrower shall pay all costs and expense incurred by the
Lender in connection with this Commitment Letter and/or the
Loan, including, but not limited to, legal fees and expenses
and fees and costs in connection with the Appraisal, the
Environmental Report, the A&E Report, site inspections, due
diligence, surveys, title insurance premiums, survey charges,
underwriting expenses, travel expenses, recording or filing
fees and documentary taxes;and
(ii) the then unexpended balance of the Report Deposit Fee shall be
applied first against and in reduction of Xxxxxx's said costs
and expenses in connection with this Commitment Letter and/or
the Loan and, second, the remainder, if any, against and in
reduction of the Break-Up Fee.
If the Loan closes, the Report Deposit Fee shall be accounted for
at the Closing and credited to Xxxxxxxx's closing costs.
(d) Exit Fee: Subject to the provisions of paragraph 4(b) above, the
Borrower shall pay to the Lender on the date the Loan is paid in
full (but not later than the Maturity Date) an exit fee equal to
one percent (1%) of the original principal amount of the Loan (the
"Exit Fee").
8. Collateral Security: The Collateral Security for the Loan shall
be:
(a) A perfected first priority mortgage and lien (or, if applicable,
deed of trust) on the real estate, together with the 220 room
hotel/casino in Mesquite, Nevada and other improvements now or
hereafter located thereon (the "Improvements"), and commonly known
as The Mesquite Star Hotel & Casino, Mesquite Blvd. & I-15
Freeway, Mesquite, Nevada, and being more particularly described
as set forth in Exhibit A-1 attached hereto (selectively, the
"Land" and the Land and Improvements being hereinafter on occasion
referred to collectively as the "Real Estate").
(b) Except for any such personal property as is currently leased or
leased prior to Closing subject to an installment purchase
contract or otherwise financed by Borrower from independent third
party lessors (including, normal replacements, substitutions and
improvements of such items), a perfected first priority security
interest in and to all fixtures, equipment, inventory in excess
owed the wholesaler, contract rights, instruments, documents,
accounts and general intangibles of Borrower, whether now owned or
existing or hereinafter arising or acquired, affixed or to be
affixed to or arising out of, as a result of or incidental to or
acquired or to be acquired for use in connection with or otherwise
pertaining to all or any part of the Real Estate, or the use,
ownership, management, development or occupancy of all or any part
thereof or the repair, restoration, replacement or improvement of
all or any part thereof; any and all replacements, substitutions,
exceptions or additions to or for any of the foregoing and all
products and cash and non-cash proceeds of any or all of the
foregoing (selectively, the "Personal Property Collateral"):
(c) Perfected first priority assignment of all the leases, rental
agreements and other occupancy or rental arrangements now or
hereafter in effect with respect to all or any part of the other
Collateral (as hereinafter defined), all guarantees and security
for any thereof and all rents, issues, other revenues, and profits
payable or to become payable thereunder (selectively, the "Leases
and Rents"); and
(d) A first priority assignment of any management agreement in effect
with respect to all or any part of the Collateral, each such
management contract to be in form and substance acceptable to
Lender subordinate to the Loan Documents, the liens thereof and
the rights of Lender hereunder and Xxxxxx to have the right to
terminate any such management agreement upon any default by
Borrower under any one or more or all of the Loan Documents
Borrower may change management company with Lender's prior written
approval. Lender may not unreasonably withhold such approval.
The Real Estate, the Personal Property Collateral, the Leases and
Rents and said management contract(s) are hereinafter referred to
collectively as the "Collateral."
9. Guarantor: The following: NevStar Gaming & Entertainment Corporation
and Xxxxxxx X. Xxxxxxxxxx (individually and jointly and severally)
(collectively, the "Guarantor") but only with respect to the "Recourse
Obligations" described in paragraph 15 below and the Obligations of Borrower
and Guarantor to Lender under the Hazardous Materials Indemnity Agreement to
be executed by them pursuant to the provisions of paragraph 12(f) below.
10. Legal Matters:
(a) Quality of Documents and Items: Each document and item required to
be submitted to the Lender or Xxxxxx's Counsel pursuant to the
terms of this Commitment Letter shall be in form and substance
satisfactory to the Lender and Xxxxxx's Counsel and for all
purposes shall be deemed submitted to them for their respective
approvals.
(b) Xxxxxx's Counsel. Xxxxxx's Legal Counsel is Xxxxxx X. Xxxxxx,
Esquire of the Manchester, New Hampshire office of the Law Firm of
Peabody & Brown. The address of the Manchester, New Hampshire
office of said law firm is 000 Xxx Xxxxxx, Xxxxxxxxxx, XX 00000
(telephone number (000) 000-0000).
(c) Cost of Xxxxxx's Counsel: In addition to all other fees, costs and
expenses payable by Borrower pursuant hereto, by reasonable cost o
Lender's Counsel, counsel for Xxxxxx's Repurchaser and any local or
special counsel engaged by Xxxxxx or Xxxxxx's Counsel and all
reasonable expenses charged to Lender by such counsel shall be
charged to, and paid by, the Borrower. Xxxxxx, however, agrees
that the fees of Xxxxxx's Counsel shall not exceed $25,000.00 in
the aggregate if the transaction contemplated hereby does not
involve any exceptional or unusual problems or unexpected delays in
closing.
11. Loan Closing: The Closing (selectively, the "Closing" or the
"Closing Date") shall take place thirty (30) days following the date all
Conditions Precedent (as defined below) required to be satisfied prior to the
Closing have, to the sole judgment of a Lender and Xxxxxx's Counsel, been
fully satisfied and/or waived or on such earlier date as the Lender and
Borrower may hereafter agree upon in writing, time being of the essence
hereof. The Closing shall take place at such location as the parties may
agree upon in writing.
12. Loan Documents. Loan Documents shall consist of the following
(collectively the "Loan Documents");
(a) Loan Agreement: Including provisions for the following:
(i) Reserves shall be deposited by Borrower with the Lender at
Closing (or Lender may withhold from the Loan Proceeds) in
an amount equal to one hundred twenty-five percent (125%) of
the cost of any other immediately needed repairs or
maintenance to the Improvements disclosed by the A&E Report
(as hereinafter defined), such reserves to be released to
Borrower for reimbursement for such maintenance and repair
expenses on terms acceptable to Lender and Xxxxxx's Counsel:
(ii) Borrower will submit to Lender within thirty (30) days of
all county, state and municipal taxes and special
assessments, invoices and bills received by Borrower with
respect to the Real Estate or any of the other Collateral
then having been due and payable have been paid in full;
(iii) Borrower will submit to Lender within thirty (30) days of
taxes and insurance becoming due and payable, evidence that
said insurance and tax payments then having become due and
payable, have been paid in full;
(iv) Subject to Xxxxxxxx's satisfaction of certain conditions as
provided in the Loan Documents (including payment of a 1%
fee prior to sale and securitization of the Loan, or $10,000
fee after sale or securitization), Borrower has a one time
right to transfer title to the Real Estate and the other
Collateral. Otherwise, any sale, transfer or conveyance of
all or part of the Real Estate or the other Collateral shall
give Lender the right to declare the balance of the Loan
immediately due and payable;
(v) Designation and specifications of events of default
satisfactory to Lender and Xxxxxx's Counsel;
(vi) The senior management, control and ownership of Borrower
shall not change without the prior written consent of the
Lender and Borrower shall continue to be a single asset
entity. Lender shall not unreasonably withhold such written
consent;
(vii) Lender shall have the right to conduct an environmental
audit at any time during the term of the Loan and, in
addition, such environmental audit shall be conducted at
Borrower's expense in the event Lender has received notice
of an environmental enforcement action, notice, or lien;
(viii)Lender shall have the right, in the exercise of reasonable
commercial banking judgment, to adjust the monthly
contributions to all escrow and/or reserve accounts to such
amounts as Lender deems reasonably prudent to account for
actual or projected increases or decreases in the amounts of
the items to be paid therefrom (such right to be exercisable
by Lender as often as the occasion therefore shall arise but
only after affording Borrower thirty (30)days to cure any
circumstances necessitating any such adjustment that will
result in any increase in such monthly contribution unless
such circumstances are of a nature whose cure is
impossible);
(ix) Borrower shall submit to Lender within one hundred twenty
(120) days following the close of each calendar year
financial statements with respect to the Real Estate in form
and substance satisfactory to Lender prepared by Xxxxxxxx's
independent certified public accountants. Borrower shall
also submit to Lender such other and further information
with respect to Xxxxxxxx, Guarantor, the Real Estate or the
business or financial affairs of any of them as the Lender
may reasonably require from time to time; and
(x) A prohibition against any change, modification or
termination to any management agreement in effect with
respect to the Real Estate without prior written consent of
the Lender and a prohibition against any liens on all or
part of the Collateral (whether junior or senior to the Loan
Documents) without the prior written consent of the Lender.
Lender shall not unreasonably withhold such written consent.
The Lender will furnish the Borrower with copies of the Loan Documents for
review within fifteen (15) days following that date Lender completes its
underwriting and receives the approval of its credit committee for the Loan.
(b) Promissory Note: Including provisions for the following:
(i) The Promissory Note shall allow the Lender to collect late
payment charges up to 4% of the amount of any late payment
on that Note;
(ii) After any acceleration of the Maturity Date, the interest
rate in effect at such time shall be increased by the annual
rate of 4%; and
(iii) During the term of the Loan, the Borrower may prepay the
principal amount of the Loan in whole or in part provided
Borrower pays Lender a premium equal to one percent (1%) of
the amount so prepaid;
(c) Guaranty: Direct, unconditional guaranty by the Guarantors of the
complete payment, performance and satisfaction of all the Recourse
Obligations (as hereinafter defined);
(d) Security Instruments: Including the following (all of which may
be combined into one or any other number of documents):
(i) Mortgage Instrument: The Mortgage Instrument shall be a
perfected first priority lien and mortgage (fee or leasehold
where and when it is applicable) and, consistent with the
terms hereof, shall include provisions as to required
insurance, prohibitions on transfer, future mortgaging,
selling, conveying, leasing, and voluntary and involuntary
liens, all as the Lender may require as well as other
provisions reasonably required by Lender or Lender's
Counsel;
(ii) Security Agreement and Financing Statements: The Security
Agreement and Financing Statements shall provide a perfected
first priority security interest in all of the Personal
Property Collateral;
(iii) Assignment of Leases and Rents: A perfected, first priority
assignment of Xxxxxxxx's interest in all of the Leases and
Rents (including the rights to receive rents); and
(iv) Assignment of Management Contracts. A perfected first
priority assignment of Xxxxxxxx's rights and interest in all
management agreements in effect with respect to the Real
Estate with the consent of each franchiser, concessionaire
and property manager to the same and also to contain full
and complete subordination and standstill of each such
management agreement and right of the property manager
thereunder to the Loan Documents and the right of the Lender
conditions set forth in Paragraph 12(d) above. Initially,
the property manager shall be the Borrower.
(e) Intentionally Omitted.
(f) Hazardous Materials Indemnity Agreement: An indemnity agreement
executed by Xxxxxxxx and Guarantor, jointly and severally
indemnifying Lender for any and all liability of the Lender under
any and all state and federal environmental or hazardous materials
laws.
(g) Other Documents: Such other and further documents, instruments
and agreements as the Lender, Xxxxxx's Counsel, the Lender's Loan
Repurchaser or its counsel may reasonably require consistent with
the nature of the Loan, the Collateral, the borrowing entity and
prudent and reasonable practices which are not inconsistent with
this Commitment Letter or the transactions contemplated hereby.
13. Availability of Funds: Except for any thereof to be held as a
reserve for the Initial Repairs, the Loan Proceeds should be made available at
the Closing, the recordation and/or filing of the Loan Documents and such
other documents or instruments requiring such filing or recordation and
Xxxxxx's receipt of the Loan Proceeds from its funding source for the Loan
less any amounts which Lender, at its sole discretion, may retain therefrom to
pay amounts by Borrower to others as a result of the Closing, including, but
not limited to, those third party expenses described in Paragraph 14 below.
Lender shall have no liability with regard to the time at which its fund wire
transfers are received, and shall not be responsible for any charges incurred,
interest lost, or any other liability due to timing of the wire transfer.
14. Fees and Expenses:
(a) Generally: Borrower will pay, at the Closing, any and all
reasonable, documented charges and fees incurred by Xxxxxxxx
and/or Lender in connection with the Loan including, but not
limited to title examination and title insurance, surveys,
recording and filing fees, documentary stamps, mortgage recording
taxes and other taxes imposed by reason of the execution and/or
delivery and/or recording of any of the Loan Documents and all
other taxes (other than income taxes of Lender) applicable to the
Loan, legal, engineering, environmental, due diligence, architect,
insurance consultant, appraisal fees and expenses, escrow, license
and permit fees and expenses, insurance premiums, flood search
fees, site inspection, travel time and expenses and such other
expenses as reasonably may be incurred in connection with the
Loan.
(b) Survival. The provisions of this Paragraph 14 shall survive the
Closing and any termination or expiration of this Commitment
Letter.
15. Non-Recourse Feature: Notwithstanding anything contained in this
Commitment Letter to the contrary, the Lender agrees and (except as
hereinafter set forth) the Loan Documents shall provide, that the Borrower
shall have no personal liability for the repayment of the Loan or the
performance of any of the Borrower's obligations under any of the Loan
Documents except for the following (the "Recourse Obligations"):
(a) The obligation to pay fees and expenses provided for in Paragraph
14 and 7 above;
(b) Misapplication of insurance proceeds, condemnation proceeds, or
tenant security deposits;
(c) Rents collected more than one month in advance not applied to the
repayment of the Loan or the operating expense of the Real Estate;
(d) Rents collected after the occurrence of any event of default under
any of the Loan Documents not applied to the repayment of the Loan
or operating expenses of the Real Estate;
(e) Failure to pay (or deposit into reserves held by the Lender funds
sufficient to pay) taxes or insurance on the Collateral or any part
thereof, any other cost or expense related to the Collateral for
which the Borrower is required to escrow funds hereunder or under
any of the Loan Documents or any liens with priority over any of
the liens created under any one or more all of the Loan Documents;
(f) Damages arising from any fraud or misrepresentation of the
Borrower;
(g) Intentional damage to all or any part of the Collateral;
(h) The obligations of the Borrower to Lender under the Hazardous
Materials Indemnity Agreement be executed by the Borrower and the
Guarantor or any of the provisions of any of the Loan Documents
dealing with hazardous or toxic substances or materials; or
(i) The failure by the Borrower to comply with any applicable federal,
state, county or municipal environmental laws, statutes, codes,
ordinances or regulations.
16. Conditions Precedent: The obligations of Lender hereunder to
close the Loan and disburse the Loan Proceeds are expressly contingent upon
the full and complete satisfaction by the Borrower of each of the following
conditions (collectively, the "Conditions Precedent" and, on occasion
individually as a "Condition Precedent"):
(a) Pre-closing Business Conditions Precedent. Lender shall have
received not more than twenty (20) days after receipt by the
Lender of all of Borrower's Pre-Closing Business Documents (as
hereinafter defined) an agreement from a purchaser of Lender's
choice ("Lender's Repurchaser") to purchase the Loan from the
Lender at the Closing upon terms and conditions satisfactory to
the Lender, in its sole discretion, (the "Loan Repurchase
Agreement"), and Lender shall have completed its underwriting, and
received its Credit Committee's approval, for the Loan not more
than twenty (20) days after the date the Lender receives all of
the Borrower's Pre-Closing Business Documents and the Pre-Closing
Document Notice and such underwriting shall have disclosed the
Loan and the Collateral meet all of Lender's guidelines (whether
underwriting or other). Also, Xxxxxx shall have received not more
than thirty (30) days after the Effective Date of this Commitment
Letter each of the following (the "Borrower Pre-Closing Business
Documents") from the Borrower and a notice in writing from the
Borrower to Lender in the form of Exhibit B attached hereto (the
"Pre-Closing Document Notice") which shall be deemed received by
Lender upon the next business day of Lender after Borrower
deposits the same, properly addressed, by Federal Express or other
equally recognized overnight courier:
(i) Current financial statement from the Borrower and Guarantor
prepared and certified by Borrower and Guarantor;
(ii) Complete copies of any tax returns filed by the Borrower
and/or Guarantor with any federal, state or local tax
authority during the past three (3) years together with the
schedules to each thereof;
(iii) Financial, Income and Cash Flow Statements for the
Collateral for fiscal years ending December 31, 1995,
December 31, 1996, December 31, 1997 and the six (6) month
period ending June 30, 1998, prepared and certified by
Xxxxxxxx's Certified Public Accountant;
(iv) A copy of the Deed to the Real Estate by which Xxxxxxxx
acquired title thereto and tax identification numbers for
the Borrower and social security number for the Guarantor;
(v) A true and complete copy of each lease, vendor contract and
other contract or agreement effecting all or any part of
the Collateral;
(vi) A policy of hazard insurance with respect to the
Improvements and Personal Property (or certificates
thereof) in an amount equal to the lessor of the full
replacement value of said Improvements and Personal Property
Collateral or the Loan Amount and such policy to:
(a) contain a standard "Mortgagee" clause or endorsement
with respect to the Improvements and a standard
"lender's loss payable" or "lender's loss payee"
clause or endorsement acceptable to Lender and
Xxxxxx's Counsel and provisions for a minimum thirty
(30) day advanced written notice to Lender of any
intended policy cancellation or non-renewal,
(b) be issued by an insurer satisfactory to the Lender and
rated "A" or better in the most recent A.M. Best's
Insurance Report and,
(c) be accompanied with proof of full payment of all
premiums (non-financed) for a period to extend at
least one year beyond Closing and a certification
from the insurer in the event Lender obtains title to
the Collateral or otherwise obtains control thereof,
the insurance premiums will be at the same rate as
would have been otherwise paid by the Borrower;
(vii) The policy of general liability insurance (or certificate
thereof) as to the Borrower, with such policy to:
(a) contains coverage types and amounts satisfactory to
Lender and Xxxxxx's insurance consultant,
(b) be issued by an insurer satisfactory to the Lender and
Xxxxxx's insurance consultant and rated "A" or better
in the most current A.M. Best's Insurance Report and,
(c) be accompanied by proof of full payment of all
premiums (non-financed)for a period to extend at
least one year beyond Closing;
(viii) Evidence satisfactory to Lender and Xxxxxx's Counsel as to
whether or not any material part of the Real Estate is
located within an area identified pursuant to the Flood
Disaster Protection Act of 1973 as having special flood
hazards, with the certification that is required with the
surveys required by this Commitment Letter to be permitted
to constitute such evidence, and Lender hereby reserving the
right to make this Commitment Letter void or to require
flood insurance policy naming Lender as Mortgagee if any
Improvements are or will be located in a special flood
hazard zone;
(ix) Policies or certificates with respect to such other and
further insurance as the Lender or Lender's insurance
consultant may specify in writing, each such policy to be
in such amounts and cover such risks as the Lender or its
insurance consultant may reasonably require and issued by an
insurer satisfactory to Lender, be accompanied by proof of
full payment of all premiums (non-financed) for a period to
extend to at least one year beyond Closing and be otherwise
in a form and substance satisfactory to Lender and
Lender's insurance consultant;
(x) A copy of each real estate tax bill for the Real Estate and
each part thereof for the then current real estate tax year
(if available);
(xi) Engineering report (selectively, the "A&E Report") in form
and substance acceptable to Lender with respect to the
structural soundness, condition and state of repair of the
Improvements and the major systems and facilities serving
the same (which report shall be ordered by the Lender, but
paid for the Borrower) and any defects disclosed thereby
(the "Disclosed Structural Defects");
(xii) Phase I Environmental Report with respect to the Real Estate
prepared by duly licensed or registered environmental
engineer satisfactory to Lender (which report shall be
ordered by Xxxxxx but paid for by the Borrower) disclosing
the Real Estate to be free from any environmental defects
except as expressly otherwise disclosed thereby (the
"Environmental Report" and the "Disclosed Environmental
Defects" respectively);
(xiii) Evidence satisfactory to the Lender that all Disclosed
Structural Defects and Disclosed Environmental Defects have
been fully and completed remediated or, in the case of any
Disclosed Environmental or Structural Defect which the
Lender (in its sole discretion) permits to be remediated
post-Closing by a date specified in writing by the Lender
for the completion of such remediation, evidence
satisfactory to the Lender and Xxxxxx's Counsel that
formal written contractual arrangements of such remediation
approved by the Lender and the Lender's Counsel are in
place, funds are available (by escrow or otherwise specified
by Lender) to pay all of the costs and expenses of
such remediation, and that such remediation can reasonably
be expected to be completed by the completion date for the
same specified by the Lender in its sole discretion;
(xiv) A written appraisal of the Real Estate (the "Appraisal")
prepared by a certified M.A.I. state appraiser licensed in
the State of Nevada satisfactory to the Lender (which
appraisal shall be ordered by the Lender and paid for by
the Borrower), certifying to the Lender and dated not more
than 60 days prior to the Closing Date that the Real Estate
has fair market value that will support a Loan to Value
Ratio ("LTV") of not greater that 65%, it being
expressly agreed that:
(a) if the appraisal shows a fair market value of less
than the amount necessary to achieve an LTV of 65% or
less either Borrower or Lender may terminate this
Commitment Letter within ten (10) days after receipt
of such Appraisal by written notice delivered to the
other; and
(b) Borrower shall order and pay the cost thereof;
(xv) Intentionally Omitted;
(xvi) A detailed description of the Initial Repairs together with
a complete copy of such contract for the installation and
completion thereof;
(xvii) From and after the date hereof and until the date of
Closing, monthly operating statements for the Collateral
prepared and certified by Borrower's management (each
thereof being submitted to Lender for its review and
approval);
(xviii Intentionally Omitted;
(xix) Evidence satisfactory to the Lender that the operating
income from the Real Estate is and will continue to be
sufficient to pay all operating expenses of the Collateral
and all sums payable to Lender on or on account of the Loan
as they become due and payable;
(xx) Complete credit reports for the Borrower and Guarantor for
Xxxxxx's review and approval (such credit reports to be
ordered by the Lender and paid for by the Borrower); and
(xxi) Such additional information which may be reasonably required
by Lender or Xxxxxx's Counsel evaluating the Borrower, the
Guarantor, the Collateral and/or the Loan contemplated
hereby.
(b) Pre-Closing Legal Conditions: Not later than thirty (30) days
following the Effective Date of this Commitment Letter or at such
other time as is specified with respect to any particular item,
Xxxxxx's Counsel shall have received the following from Borrower
or Borrower's Counsel (the "Pre-Closing Legal Documents"):
(i) A Commitment for a policy of Xxxxxx's Title Insurance (the
"Title Commitment") effective as of a date not more than
forty (40) days prior to the Closing Date issued by
Fidelity National Title or other title insurer satisfactory
to Xxxxxx and Xxxxxx's Counsel (the "Title Insurer") naming
the Lender as the proposed insured and Borrower as the owner
of the Real Estate, disclosing that the Borrower is the
owner of fee simple title thereto subject only to such
liens, charges and exceptions (whether general or special),
if any, as are acceptable to Lender and Xxxxxx's Counsel in
their sole discretion (the "Approved Exceptions") and
pursuant to which the Title Insurer irrevocably agrees to
issue, subject only to exceptions and conditions acceptable
to Xxxxxx and Xxxxxx's Counsel, a policy of Xxxxxx's Title
Insurance in an amount equal tothe Loan Amount to Lender
insuring, with such endorsements as Lender or Xxxxxx's
Counsel may require (the "Insurance Policy") or, in lieu of
the Title Commitment a Preliminary Report on Title
containing the same assurances, that:
(a) Borrower is the owner of good, marketable, insurable
and indefeasible fee simple title to the Real Estate
and the Leases and Rents and/or leasehold title when
and where applicable,
(b) The Mortgage constitutes a valid, enforceable and
perfected first priority mortgage and lien on the
Real Estate, and
(c) The Assignment of Leases and Rents constitutes a
valid, enforceable and perfected first priority
assignment of the Leases and Rents and that there are
no leases other than the leases set forth in the
certified rent roll (each of which shall be subject to
and subordinate to the Mortgage);
(ii) Copies of all instruments effecting the title to the Real
Estate referred to in the Title Commitment;
(iii) Three copies of an "as built" survey of the Real Estate
prepared by a surveyor licensed in the state wherein the
Real Estate is located in accordance with the Minimum
Street Detail Requirements for ALTA/ACSM Land Title Survey
as adopted by the American Land Title Association on October
17, 1992 in the American Congress in Surveying and Mapping
on November 11, 1992(including such optional Survey
responsibilities and Specifications as may be reasonably
required by Lender) and any other survey requirements of the
Lender, Lender's Counsel or the Title Insurer, dated not
more than thirty (30) days prior to the Closing Date,
certified by said surveyor in the manner set forth in
Exhibit C hereto, showing (among other things) the Real
Estate to be free of encroachments, overlaps and other
survey defects and otherwise conforming with the
requirements of Exhibit E attached hereto and also being
in form and substance satisfactory to the Lender, Xxxxxx's
Counsel and the Title Insurer;
(iv) A Surveyor's Report prepared and certified by the surveyor
described in "(iii)" above with respect to the Real Estate
in form and substance satisfactory to the Lender, Xxxxxx's
Counsel and the Title Insurer;
(v) Evidenced reasonably satisfactory to the Lender and Xxxxxx's
Counsel that the Real Estate is in compliance with all
applicable federal, state, county and municipal laws,
statutes, codes, regulations, ordinances and other similar
requirements of all applicable governmental and quasi
governmental authorities, agencies, departments and
inspection organizations, including, but not limited to,
zoning regulations, building restrictions, environmental
requirements, the Americans with Disabilities Act and
occupational safety and health requirements and that the
Real Estate consists of a separate tax lot so that it is
assessed separate and apart from any other property owned by
Borrower or any other person or entities;
(vi) Permanent Certificate of Occupancy acceptable to Lender's
Counsel and such other certificates, approvals, permits,
licenses and approvals of each regulatory and inspection
organization or authority (whether governmental or
private)that is required (or customarily procured)
concerning the construction, use, occupancy or operation of
the Real Estate or any other Collateral, all the foregoing
to be in full force and effect, final and non-appealable;
(vii) Evidence reasonably satisfactory to Xxxxxx and Xxxxxx's
Counsel that:
(a) There is no outstanding conditional sales contracts,
chattel mortgages, security agreements, mortgages,
deeds of trust, options, financing statements or
other title instruments or lien documents or legal
impediments, mechanics or materialsmen liens or other
encumbrances affecting any of the Collateral, except
as set forth in Schedule #2 hereto, that will not be
repaid at Closing and fully released;
(b) No circumstances or events have occurred at or prior
to the Closing Date which subsequent to the Closing
Date could give rise to an encumbrance on the
Collateral or any part thereof other than those held
by the Lender; and
(c) Except for furniture and equipment leases and
installment contracts listed on Schedule #2 hereto,
that the Personal Property Collateral is owned by the
Borrower free of any and all liens, encumbrances,
security interests, pledges, hypothecations or other
adverse claims;
(viii) Certified copies of Xxxxxxxx's organizational
documents and all action taken by Xxxxxxxx to
authorize the procurement of the Loan, the execution,
delivery and performance of the Loan Documents,
together with a Certificate of Good Standing or
Existence from the appropriate governmental authority
in the jurisdiction where Borrower was organized
and each jurisdiction wherein any of the Collateral is
located or wherein the Borrower conducts any material
part of Borrower's business, all of the foregoing to
be issued not more than thirty (30) days prior to the
Closing Date;
(ix) A written opinion from Xxxxxxxx's Counsel addressed to
Xxxxxx and to be provided at the Closing concerning the
following:
(a) The Security Instruments executed by Xxxxxxxx and
delivered to Lender create a first priority perfected
security interest in favor of the Lender in the
Personal Property Collateral;
(b) Execution of the Loan Documents has been duly
authorized by all necessary actions of Borrower and
Guarantor and such executions have been performed by
the persons authorized to do so;
(c) Each of the Loan Documents are valid, binding and
legal obligations of the Borrower and the Guarantor
and are enforceable against them in accordance with
their respective terms;
(d) Borrower and Guarantor are duly organized and existing
and in good standing under the laws of their
respective jurisdictions of organization and are in
good standing under the laws of each jurisdiction
wherein any part of the Collateral is located or in
which either of them conduct any material part of
their respective businesses;
(e) Neither Borrower or Guarantor is a party to any
pending litigation nor is any litigation threatened
against either of them, which, if adversely
determined, would impair the ability of them to meet
their respective obligations under any of the Loan
Documents;
(f) The fees and interest charged or to be charged by the
Lender in connection with the Loan do not violate any
usury or other similar laws of the State of Nevada;
and
(g) That the Real Estate is in compliance with all
applicable federal, state, county and municipal laws,
statutes, codes, ordinances and regulations and other
similar requirements as contemplated by Paragraph(iv)
above;
(x) A Certificate from Borrower in form and substance acceptable
to Lender and Xxxxxx's Counsel and to be provided by
Borrower to Lender at the Closing, certifying that to the
best of Xxxxxxxx's knowledge and after due diligence and
appropriate inquiry:
(a) No hazardous substances (including, but not limited to
asbestos and the group of organic compounds known as
polychlorinated biphenols) have been generated,
treated, stored or disposed of, or otherwise deposited
in or located on the Real Estate (including, without
limitation, the surface or subsurface waters of the
Real Estate) nor have any activities been undertaken
on the Real Estate which would cause (1) the Real
Estate to become a hazardous waste treatment, storage
or disposal facility within the meaning of, or
otherwise bring the Real Estate into the ambit of, the
Resource Conservation and Recovery Act of 1986
("RCRA"), 42 U.S.C. 6901 et seq., or any similar state
law or local ordinance, (2) a release or threatened
release of hazardous waste from the Real Estate within
the meaning, or otherwise bring the Real Estate within
the ambit of, the Comprehensive Environmental Response
and Liability Act of 1980 ("CERCLA") 42 U.S.C.
9601-9650, or similar state law or local ordinance or
any part other environmental aws, or (3) the
discharge of pollutants or affluence into any water
source or system, the discharge into the air of any
omissions, which would require a permit under the
Federal Water Pollution Control Act, 33 U.S.C. 1251 et
seq. or the Clean Air Act, 42 U.S.C. 7401 et seq. or
any similar state law or local ordinance, (4) there
are no substances or materials on the Real Estate
which would support a claim or cause of action under
RCRA, CERCLA or any other federal, state, county or
local environmental statutes, regulations, ordinances
or other environmental or regulatory requirements and
(5) no underground storage tanks or underground
deposits are located on the Real Estate, except as may
be disclosed in a report prepared by Lender's
environmental consultant and may be normally used in
the operation of the Real Estate at a level or in a
condition so as to have been determined not to
constitute an environmental hazard;
(xi) A Loan Information Form supplied by Xxxxxx xxxx completed;
(xii) A Subordination Agreement from each principal of, or
investor in, the Borrower ("Inside Creditor") who holds
debt from the Borrower subordinating any and all
indebtedness of Borrower to such Inside Creditor to the
payment and performance of the indebtedness, liabilities,
obligations and undertakings of the Borrower to the Lender
under the Loan Documents, and otherwise to be in form and
substance satisfactory to the Lender and Xxxxxx's Counsel;
(xiii) Letter from the appropriate county and municipal authorities
certifying that the Real Estate is in compliance with all
applicable zoning and other land use ordinances,
regulations and codes applicable thereto for the use,
occupancy, operation or management thereof;
(xiv) Borrower and, if required by Xxxxxx, Xxxxxxxx's general
partner(s), managing member(s) or principal shareholder(s)
shall be a "Single Purpose Entity."For purposes hereof, a
Single Purpose Entity shall mean a United States
corporation, partnership or other legal business
organization which does not and cannot by virtue of its
organizational documents engage in any business other than
owning and operating the Collateral or acquire or own
material assets other than the Collateral and incidental
personal property, and which(a) maintains its assets in a
way which segregates and identifies such assets separate and
apart from the assets of any other person or entity, (b)
holds itself out to the public as a separate legal entity
from any other person or entity, (c) conducts business
indebtedness other than the Loan and other indebtedness
incurred in the ordinary business provided such other
indebtedness is not evidenced by a note or similar
instrument and, (e) otherwise complies with rating agency
standards for a single purpose entity. Xxxxxxxx's
organizational documents and the loan documents will
require the unanimous vote of directors and/or members of
Borrower in connection with the filing of a bankruptcy
petition, and other standard bankruptcy remoteness
provisions. The Lender may require such non-consolidation
opinions from Xxxxxxxx's counsel as it may request;
(xv) Certificate from the Borrower and dated not more than forty-
five (45) days prior to the Closing Date, certifying to the
Lender that the Real Estate and the use, occupancy,
operation and management thereof comply in all respects
with all federal, state, county and municipal laws,
statutes, ordinances, regulations, codes and similar
requirements applicable hereto;
(xvi) Evidence satisfactory to Lender and Xxxxxx's Counsel of
Borrower's compliance with the Environmental Clean Up
Responsibility Act and that no action is pending or liens
imposed or threatened under any Spill Compensation and/or
Control Acts;
(xvii) Evidence satisfactory to Lender and Xxxxxx's Counsel that
all easements necessary for utilities, public road access,
parking and otherwise are in place and that all necessary
utilities are available on the Land;
(xviii) UCC, litigation and tax lien search acceptable to Lender and
its counsel; and
(xix) A letter addressed to Xxxxxx in the form of Exhibit "D"
attached hereto or duly executed by the Borrower (the "Pre-
Closing Legal Conditions Letter").
(c) Closing Date Documentary Conditions: At or before the Closing,
Lender and Xxxxxx's Counsel shall have received, or at the
direction of Lender or Xxxxxx's Counsel the Title Insurer shall
have received, the following from Borrower or Xxxxxxxx's Counsel:
(i) The Loan Documents duly executed by the Borrower and
Xxxxxxxxx and all others whose execution is required and,
where appropriate, duly filed or recorded or accepted by the
Title Insurer;
(ii) The Origination Fee and all other amounts required to be
paid by Borrower or third parties to or for the benefit of
the Lender pursuant to the terms of this Commitment Letter
(the same to be paid from the Loan Proceeds, if there are
such proceeds available for such purposes);
(iii) The original, fully executed releases of all mortgages,
liens and other encumbrances to be discharged in connection
with the Closing, original fully executed UCC-3 Termination
Statements of all financing statements terminated in
connection with Closing and any other appropriate release
documents fully executed by the holders of the instruments
released, together with wiring instructions for the payoff
of each such mortgage, lien, encumbrance, financing
statement or other instrument;
(iv) The Title Insurance Policy conforming with the provisions of
Paragraph 16(b)(1) and Exhibit "F" attached hereto; and
(v) Evidence acceptable to Xxxxxx and Xxxxxx's Counsel that the
transferor of any real estate involved in the transaction as
contemplated by this Commitment Letter either (a) is not a
foreign entity or (b) if such transferor is a foreign
entity, evidence to assure Xxxxxx that transfer of such
property was accomplished in accordance with all applicable
tax codes, especially Section 1445 of the Internal Revenue
Code.
(d) Other Closing Date Conditions: As of the Closing Date:
(i) There shall have been no material adverse changes in the
business condition (financial or otherwise) of the Borrower
or the Guarantor which, in the sole discretion of Lender,
would materially impair either the value of the Collateral
or Borrower's, or Guarantor's ability to perform their
respective obligations under the Loan Documents to any
material extent;
(ii) The Collateral shall be undamaged by fire or other cause and
there shall be no condemnation or eminent domain proceedings
threatened or pending against the Collateral or any part
thereof;
(iii) Borrower's Debt Service Coverage Ratio shall not be less
than 1.40 to 1 [because the final interest rate will not be
set until the business day of Lender next preceding the date
of Closing, should the index rate increase to a level that
causes the Debt Service Coverage Ratio to be below the
minimum Debt Service Coverage Ratio, the Lender may, at its
option, reduce the amount of the Loan to an amount which
will cause the Debt Service Coverage Ratio to be equal to
the minimum Debt Service Coverage Ratio. If pursuant to the
terms hereof, the Lender chooses to reduce the loan amount
to a level unacceptable to the Borrower, the Borrower will
have the option of terminating this commitment and shall be
liable for all Lender's expenses as set forth in Paragraph
7(c)];
(iv) Borrower shall have paid all fees and expenses payable by it
pursuant to this Commitment Letter, including, but not
limited to, third party fees and expenses described in
Paragraph 14 of this Commitment Letter;
(v) No event shall exist or circumstances have occurred which,
with the passage of time or giving notice or both, would
constitute an event of default under any of the Loan
Documents;
(vi) There shall have been no change in the senior management,
ownership or control of the Borrower, without the prior
written consent of the Lender (a provision to this effect to
be included in the Loan Documents);
(vii) Borrower shall be the owner of good, marketable, insurable,
and indefeasible fee simple title to the Real Estate and the
other Collateral and such title shall be unencumbered but
for the Approved Exceptions;
(viii) All of the information, representations, exhibits and
other materials submitted with or in support of the
Loan request are accurate in all material respects and
there must be no adverse change in the set of facts
prior to the disbursement of funds or during the term
of the Loan;
(ix) The Loan and the Closing thereof shall in all respects be
legal and not violate any applicable law or other
requirements of any governmental authority; and
(x) No litigation shall be pending or threatened by, against or
with respect to Borrower, Guarantor or any of the Collateral
which, in the sole judgment of Lender, has or might
reasonably be expected to have a material adverse effect on
the Borrower, the Guarantor or any of the Collateral;
(xi) Lender shall have inspected the Real Estate prior to Closing
and shall have approved the same;
(xii) Lender's Loan Repurchaser completes its purchase of the Loan
pursuant to the Loan Repurchase Agreement, Borrower and
Guarantor hereby expressly acknowledging that Xxxxxx has
informed them, and they understand, that Lender will be
unable to close and fund the Loan unless Xxxxxx's Loan
Repurchaser funds the same pursuant to the Loan Repurchase
Agreement; and
(xiii) Xxxxxx's credit committee shall have approved the Loan by
the time provided for such approval above and Lender shall
have notifies the Borrower in writing of such approval and
any additional terms and conditions required by said
approval; and Borrower shall have accepted the same and
complied with each thereof; and
(xiv) The borrowing entity has conduit acceptable bankruptcy
remoteness language.
17. Advice As to Deficiencies: Upon Xxxxxx's receipt of the
Borrower's Pre-Closing Document Notice and the receipt by Xxxxxx's Counsel of
the Pre-Closing Legal Conditions Letter described in Paragraph 16(b)(xviii),
Lender and Xxxxxx's Counsel shall review all documentation thereto submitted
to them under Paragraphs 16(a) and 16(b) of this Commitment Letter and,
following said review, shall notify the Borrower in writing of any
deficiencies in such documentation.
18. Acceptance By Borrower: This Commitment Letter must be accepted by
Xxxxxxxx and Guarantor by executing and returning to the Lender a copy of this
Commitment Letter (together with the Report Deposit Fee) on or before 5:00
p.m., local time, on the seventh day following the date hereof, failing which
this Commitment Letter shall be void without recourse to the parties hereto,
time being of the essence. The Effective Date of this Commitment Letter shall
be the date on which the Lender receives such executed copy and the Report
Deposit Fee.
19. General Provisions:
(a) Upon its acceptance of the Commitment Letter by the Borrower and
Guarantor, as, when and in the manner provided for above, this
Commitment Letter and all the terms, covenants, conditions and
other provisions hereof shall be binding upon, and inure to the
benefit of, the parties and their respective executors,
administrators, personal representatives, heirs, successors and,
in the case of Xxxxxx, assigns and, in the case of Xxxxxxxx and
Guarantor, permitted assigns;
(b) Borrower represents and warrants that the statements contained
herein and in all documentation provided to Lender and all other
representations and statements made by or on behalf of Borrower or
Guarantors to Lender in connection with the application for and
closing of the Loan are true and complete and do not omit any fact
or information material to Lender's evaluation of said application
and of Xxxxxxxx's and Guarantor's credit worthiness or compliance
with the conditions for the closing of the Loan. Borrower
acknowledges that Lender will rely on this warranty and
representation in making the Loan if Borrower or Guarantor has
made any material misrepresentation in connection with this
Commitment for and/or closing of the Loan, and such shall be a
default under the Loan Documents entitling the Lender to exercise
any and all rights upon a default under the Loan Documents. In
addition, if the Loan has not closed and Lender elects to
terminate its commitment to make the Loan due to any material
misrepresentation as provided above, then notwithstanding any
other provision of this Commitment Letter to the contrary, the
Report Deposit Fee shall be retained by Lender as reasonable
liquidated damages and as its sole remedy, other than the right to
collect from Borrower and Guarantors the out-of-pocket costs and
expenses for which Borrower is responsible under the terms of this
Commitment Letter;
(c) Lender reserves the right to waive, in whole or in part, any of
the covenants and obligations on the Borrower's part to be
performed hereunder and any Conditions Precedent to the
obligations of Lender contained herein, all of which have been
inserted for the benefit of the Lender. Borrower shall permit
Lender and its representatives (including, without limitation,
environmental audit agents to inspect the Collateral from time to
time upon reasonable notice to the Borrower) and shall provide
Lender and its representatives with information and documentation
reasonably requested;
(d) This Commitment Letter shall be deemed to contain all of the terms
and understandings between Lender, Borrower and Guarantors with
respect to the Loan and shall supersede any and all prior
understandings, instruments and agreements, written or oral,
relating thereto. The foregoing notwithstanding, this Commitment
Letter is intended to serve only as a substantive outline of the
documentation required by the Lender prior to and at Closing. It
is also possible that substantive terms of this transaction may be
changed in order to reflect or account for changes in the
statutory or regulatory authorities governing the subject matter
of the transaction;
(e) The Lender shall not be bound by any modification, amendment or
change in the terms hereof, and shall not be deemed to have waived
any of its rights or the conditions to its obligations hereunder
unless the same shall be in writing, signed by the Lender and sent
or delivered to the Borrower;
(f) All notices and communications required or permitted to be given
hereunder shall be in writing and sent by certified mail,
overnight courier or facsimile to Borrower and Xxxxxx as follows:
Lender: CNB Capital, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Closing Department
with copy to: Xxxxxx X. Xxxxxx, Esquire
PEABODY & BROWN
000 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
Borrower: NevStar Gaming & Entertainment Corporation
P.O. Box 96807
Las Vegas, NV 89193-6807
Attn: Xxxxxxx Xxxxxxxxxx
with copy to: Xxxxxxx X. Xxxxx, Xxxxxxx
XXXXXX, XXXXXX, XXXXXXX, XxXXXXXX, XXXXXX
& XXXXXXX, L.L.P.
000 Xxxx Xxxxxxxx
Xxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
(g) This Commitment Letter shall be governed by, and construed,
interpreted and enforced in accordance with, the laws of the State
of New Hampshire without reference to its principles of conflicts
of laws. The parties hereto further agree that they and all such
disputes to this commitment, and any costs relating to such
disputes, shall be subject to the exclusive jurisdiction of the
courts of the State of New Hampshire. The Mortgage and other Loan
Documents and any subordination agreements and estoppel letters
shall be governed by, and construed, interpreted and enforced in
accordance with the laws of the state in which the Real Estate is
located without reference to its principles of conflicts of laws,
and any disputes regarding the Loan Documents shall be subject to
the exclusive jurisdiction of the courts of the state in which the
Real Estate is located;
(h) Whenever this Commitment Letter or any of the Loan Documents
provide for an election, approval, acceptance or consent by Lender
or that matters shall be satisfactory or acceptable to Lender,
such election, approval, acceptance or consent and such
satisfaction or acceptability may be given, withheld or determined
by Xxxxxx or Xxxxxx's Counsel in their sole and absolute
discretion unless a different standard (e.g., Lender's reasonable
opinion) is specifically and expressly provided;
(i) In the event of any material default by Borrower and Guarantor
during the term of this Commitment Letter, the Lender, in addition
to all other rights and remedies, may terminate this Commitment
Letter and all rights and obligations of the Lender thereunder;
(j) This Commitment Letter may also be terminated by Xxxxxx in the
event of any of the following:
(i) If Borrower or Guarantor shall fail to comply with any of
the terms or conditions hereof;
(ii) In the event of a sale, conveyance or other disposition of
any of the Collateral except as otherwise expressly provided
for herein; or
(iii)In the event of a materially adverse change in the financial
condition of Borrower or the Guarantor;
(k) Borrower and Guarantor expressly acknowledge that this commitment
has been issued before the Lender has had an opportunity to
complete its business, credit and legal analysis of the loan.
Borrower and Guarantor expressly agree that the Lender, in
Xxxxxx's sole and absolute discretion, may, as a result of further
investigation, decide to modify any one or more or all of the
terms, conditions, and other provisions hereof or not to proceed
with the loan, that any such decision shall be binding and
conclusive on the Borrower and the Guarantor;
(l) The term "Debt Service Coverage Ratio" shall mean the ratio of the
total of all payments becoming due on the Loan (whether for
principal, interest or other sums or charges for any period to
Borrower's Net Operating Income from the Collateral during the
same period. Net Operating Income for any period is determined by
subtracting the following from gross income:
(i) Reserves for capital expenditures;
(ii) Income from occupied space exceeding the average market rent
and/or average occupancies for the local market in which
this Real Estate is located;
(iii) Required reserves and escrow payments;
(iv) Nonrecurring income and expense items;
(v) Operating and ownership costs for the Collateral for the
period in question;
(vi) Market or standard required underwriting vacancies (normally
5%);
(vii) A reserve for management fees if existing fees are below
market or if there is no third party manager (normally 3%);
(m) Borrower acknowledges that Xxxxxx intends to sell the Loan and
securitize the Loan through a real estate mortgage investment
conduit or similar securitization vehicle. All certificates,
opinions, reports, documents and other information supplied to
Lender is deemed to run in favor of any successors and assigns of
the Loan, and any underwriter or purchaser of or any trustee with
respect to securities issued in connection with the sale of this
Loan, or any rating agency responsible for rating such securities
from time to time. At Lender's request, any such documents or
information shall state that they run in favor of such successors
and assigns and Xxxxxxxx agrees to be bound by any additional
requirements Lender may impose to complete such sale and
securitization; and
(n) All appraisals, reports or opinions to be submitted to the Lender
pursuant to this Commitment Letter shall be addressed to "CNB
Capital, Inc. and its successors and assigns."
Very truly yours,
CNB CAPITAL, INC.
By:
Xxxx X. Xxxxx
Its Duly Authorized President
The foregoing Commitment Letter with all of the exhibits and schedules thereto
are hereby accepted and agreed to and the undersigned expressly agree to be
bound by all of the terms, covenants, conditions and other provisions thereof
this day of September, 1998.
NevStar Gaming & Entertainment NevStar Gaming & Entertainment
Corporation Corporation
By://Xxxxx Xxxxxx By://Xxxxxxx Xxxxxxxxxx
Witness Treasurer and Xxxxxxx Xxxxxxxxxx, its
Chief Financial Officer Chairman of the Board
By: By:
Witness Xxxxx Xxxxxx Xxxxxxx Xxxxxxxxxx (Individually)
