<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K \ A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: March 29, 1999
Commission File Number: 33-29942-NY
------------------------
NATIONS FLOORING, INC.
[Exact name of registrant as specified in its charter]
Delaware 2836, 2835 11-2925673
(State or Other (Primary Standard (IRS Employer
Jurisdiction Industrial Classification Identification Number)
Of Incorporation or Code Number)
Organization)
100 Maiden Lane
New York, New York 10038
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (212) 898-8888
- --------------------------------------------------------------------------------
<PAGE>
Item 2. Acquisition or Disposition of Assets
(a) Acquisition. On March 29, 1999, the Company acquired the
assets of C.B. Realty of Delaware, Inc. ("Realty")
pursuant to an Agreement and Plan of Merger dated March
23, 1999 in exchange for 59,725.4 shares of the Company's
common stock and the assumption of the mortgage on the
property. Prior to the merger, Realty was owned by four
individuals who also collectively controlled 43.6% of the
preferred and common stock of Nations Flooring, Inc.
("Nations"). The number of shares offered to the
stockholders of Realty was set by Nations' Board of
Directors in an amount that was intentionally set to be a
benefit to the Company and was anitdilutive in nature. The
former stockholders of Realty accepted such offer. The
acquisition was accounted for as a purchase since Nations
and Realty were not under common control. Realty's only
operations consisted of owning and leasing the facility
where the Company's main operations are conducted in Las
Vegas, Nevada.
Credit Arrangement with General Electric Capital Business
Funding Corporation ("G.E. Capital") (formerly MetLife
Capital Financial Corporation ("MetLife")). On May 19,
1998, Realty entered into a credit arrangement with G.E.
Capital consisting of a mortgage note payable of $500,000
secured by the underlying real estate. The mortgage
requires 59 monthly payments of $5,690 with a balloon
payment due on May 18, 2003. The mortgage bears interest
at 9% per annum, payable monthly. On March 31, 1999, G.E.
Capital agreed to allow the Company to assume the mortgage
with identical terms.
(b) The primary asset acquired through the merger is the land
and building where Nations' main operations are conducted
in Las Vegas, Nevada. Nations intends to continue to use
this facility to conduct its Nevada operations.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial statements of business acquired.
(b) Pro forma financial information.
(c) Exhibits.
1. Agreement and Plan of Merger, dated March 23, 1999,
between the Registrant and Realty. Incorporated by
reference from Form 8-K dated March 29, 1999.
2
<PAGE>
2. Promissory Note dated May 19, 1998, between Realty
and MetLife.
3. Commercial Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing
dated May 19, 1998 by Realty in favor of MetLife.
4. Assignment of Rents and Leases dated May 19, 1998
between Realty and MetLife.
5. Loan Modification Agreement dated March 31, 1999
between the Registrant and G.E. Capital.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed by the undersigned
hereunto duly authorized.
NATIONS FLOORING, INC.
By: /s/ Philip A. Herman
--------------------
Philip A. Herman
Chairman of the Board and President
Dated: April 28, 1999
4
<PAGE>
C. B. REALTY OF DELAWARE, INC.
FINANCIAL REPORT
DECEMBER 31, 1998
<PAGE>
C O N T E N T S
INDEPENDENT AUDITOR'S REPORT 10
FINANCIAL STATEMENTS
Balance sheets 2
Statements of income and retained earnings 3
Statements of cash flows 4
Notes to financial statements 5-8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
C. B. Realty of Delaware, Inc.
New York, New York
We have audited the accompanying balance sheets of C. B. Realty of Delaware,
Inc. as of December 31, 1997 and 1998, and the related statements of income,
retained earnings, and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C. B. Realty of Delaware, Inc.
as of December 31, 1997 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
Las Vegas, Nevada
April 8, 1999
1
<PAGE>
C. B. REALTY OF DELAWARE, INC.
BALANCE SHEETS
December 31, 1997 and 1998
<TABLE>
<CAPTION>
ASSETS 1997 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Advances to related party (Note 3) $ 32,768 $ 32,768
Related party note receivable (Note 3) - 500,000
Rental property, net (Notes 1 and 2) 1,023,172 993,432
Loan fees, net of accumulated amortization of $3,894 - 27,678
--------------------------------------
Total assets $ 1,055,940 $ 1,553,878
======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
Related party note payable (Note 3) $ 142,658 $ 79,940
Income taxes payable (Note 4) 13,458 24,387
Deferred tax liability (Note 4) 190,206 188,661
Mortgage note payable (Note 2) - 486,109
--------------------------------------
Total liabilities 346,322 779,097
Commitments and contingencies (Notes 3 and 5)
Stockholders' Equity
Common stock, $.01 par value, 1,000 shares authorized,
100 shares issued and outstanding 1 1
Additional paid-in capital 617,692 617,692
Retained earnings 91,925 157,088
--------------------------------------
Total stockholders' equity 709,618 774,781
--------------------------------------
Total liabilities and stockholders' equity $ 1,055,940 $ 1,553,878
======================================
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
C. B. REALTY OF DELAWARE, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years Ended December 31, 1996, 1997 and 1998
<TABLE>
<CAPTION>
1996 1997 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Related party rental income (Note 3) $ 100,284 $ 100,284 $ 115,071
----------------------------------------------------------
Operating expenses:
Depreciation and amortization 29,740 29,740 33,634
Other 10,088 6,942 6,989
----------------------------------------------------------
39,828 36,682 40,623
Operating income 60,456 63,602 74,448
Other income (expense):
Related party interest income - - 37,000
Related party interest expense (19,722) (10,109) (6,550)
Interest expense - - (23,970)
----------------------------------------------------------
Income before income taxes 40,734 53,493 80,928
Income taxes (Note 4) 6,110 8,373 15,765
----------------------------------------------------------
Net income $ 34,624 $ 45,120 $ 65,163
==========================================================
Basic and dilutive net income per common share $ 346.24 $ 451.20 $ 651.63
==========================================================
Weighted average common shares 100 100 100
==========================================================
RETAINED EARNINGS
Balance, beginning of year $ 12,181 $ 46,805 $ 91,925
Net income 34,624 45,120 65,163
----------------------------------------------------------
Balance, end of year $ 46,805 $ 91,925 $ 157,088
==========================================================
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
C. B. REALTY OF DELAWARE, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1997 and 1998
<TABLE>
<CAPTION>
1996 1997 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $ 34,624 $ 45,120 $ 65,163
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 29,740 29,740 33,634
Decrease in deferred tax liability (5,177) (5,371) (1,545)
Net operating cash flows retained by
related party (Note 3) (65,040) (71,838) (108,181)
Changes in assets and liabilities:
Increase in related party advances (738) (123) -
Increase in income taxes payable 6,591 2,472 10,929
----------------------------------------------------------
Net cash used by
operating activities $ - $ - $ -
----------------------------------------------------------
Cash Flows from Investing Activities
Advances to related parties $ - $ - $ (500,000)
----------------------------------------------------------
Cash Flows from Financing Activities
Proceeds from mortgage note payable $ - $ - $ 500,000
----------------------------------------------------------
Net decrease in cash
Cash, beginning - - -
==========================================================
Cash, ending $ - $ - $ -
==========================================================
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITY
Net operating cash flows retained by related party:
Rental income 100,284 100,284 115,071
Interest income 37,000
Interest expense (19,722) (10,109) (30,520)
Income tax payments (5,434) (11,395) (6,381)
Other (10,088) (6,942) (6,989)
----------------------------------------------------------
65,040 71,838 108,181
Non-cash financing activities funded by related party:
Loan origination fees - - (31,572)
Principal payments on mortgage note payable - - (13,891)
----------------------------------------------------------
Decrease in related party
note payable $ 65,040 $ 71,838 $ 62,718
==========================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
C.B. REALTY OF DELAWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of Business
C. B. Realty of Delaware, Inc. (the Company or Realty) was organized under the
laws of the State of Delaware on May 8, 1995. The Company was formed for the
purpose of acquiring, and leasing to Carpet Barn, Inc. (CBI), a company related
through common ownership, the principal land and building from which CBI
conducts its operations in Las Vegas, Nevada.
A summary of the Company's significant accounting policies follows:
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statement and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Rental property
Rental property is comprised of the land and building leased to CBI. Land is
stated at cost. The building is stated at cost less accumulated depreciation.
Depreciation is computed by the straight-line method over the building's
estimated life of 20 years.
Land and building consist of the following at December 31:
1997 1998
--------------------------------------
Land $ 505,200 $ 505,200
Building 594,800 594,800
--------------------------------------
1,100,000 1,100,000
Less: Accumulated depreciation 76,828 106,568
======================================
$ 1,023,172 $ 993,432
======================================
Fair value of financial instruments
The carrying amounts of the mortgage note payable, the related party note
payable and the related party note receivable approximate fair value because the
notes bear interest at rates that approximate the market rate.
Although management expects a substantial portion of the advances to related
party to be paid in the near term, it is not practicable to estimate the fair
value of these amounts, as they have no stated repayment terms. Management does
not believe the fair value of such amounts, if determined, would differ
materially from their recorded amounts.
5
<PAGE>
C.B. REALTY OF DELAWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies (continued)
Income taxes
The Company provides for deferred taxes on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effect of changes in tax laws and rates on the date of
enactment.
Note 2. Mortgage Note Payable
In 1998, the Company entered into a mortgage note payable with a financial
institution secured by the Company's land and building. The note, which has a
balance due at December 31, 1998 of $486,109, bears interest at 9% and is due in
monthly payments of principal and interest totaling $5,690 with the balance due
May 2003. Aggregate maturities required on this mortgage note as of December 31,
1998 are as follows:
Years ended December 31,
1999 $ 25,570
2000 27,968
2001 30,592
2002 33,462
2003 368,517
===================
$ 486,109
===================
Note 3. Related Party Transactions and Commitments
The Company leases its land and building to CBI under an operating lease
expiring in April 2004. Rental income under the lease totaled $100,284, $100,284
and $115,071 for the years ended December 31, 1996, 1997 and 1998, respectively.
The lease, as amended in April 1998, requires annual minimum rentals of
$120,000.
The Company has a note payable to CBI totaling $142,658 and $79,940 at December
31, 1997 and 1998, respectively. The unsecured note bears interest at 10% and is
payable in equal monthly installments of $9,293.
CBI routinely makes all expenditures and receives all receipts on behalf of the
Company. Such expenditures are added to the note payable to CBI. Rent and
interest income due from CBI are applied against the note payable balance in
lieu of payments.
6
<PAGE>
C.B. REALTY OF DELAWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 3. Related Party Transactions and Commitments (continued)
The Company has a note receivable from Nations Flooring, Inc. (Nations), the
parent company of CBI. The unsecured demand note bears interest at 12% per
annum, with interest only payable monthly.
The Company also has advanced funds to an entity owned by an officer of the
Company totaling $32,768 at December 31, 1997 and 1998. These advances are
unsecured, non-interest bearing, and have no stated repayment terms.
Note 4. Income Taxes
The deferred tax liability at December 31, 1997 and 1998 relates to differences
in tax basis of the Company's rental property.
The provision for income taxes charged to operations for the years ended
December 31, 1996, 1997 and 1998 consists of the following:
<TABLE>
<CAPTION>
1996 1997 1998
---------------------------------------------------------
<S> <C> <C> <C>
Current tax expense $ 11,287 $ 13,744 $ 17,310
Deferred tax (benefit) (5,177) (5,371) (1,545)
=========================================================
$ 6,110 $ 8,373 $ 15,765
=========================================================
</TABLE>
The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate of 34% to pretax income due to the
benefit of income taxed at lower rates.
Note 5. Contingency
The company (Seller) from which Realty purchased the land and building
previously engaged an environmental consultant who informed the Seller that
contaminant levels on its property may exceed maximum levels established by the
Environmental Protection Agency. Management of the Seller believes that it was
not and has not been the source of the contaminants, if any.
The Seller subsequently engaged an environmental consultant who, in a report
dated May 24, 1995, concluded that it was not probable that the Nevada
Department of Environmental Protection would require a cleanup plan to be
initiated. In the absence of a conclusive finding concerning the source of and
the actual level of contamination, no accrual for any potential clean up costs
has been recorded in the accompanying financial statements.
7
<PAGE>
C.B. REALTY OF DELAWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6. Subsequent Event
On March 29, 1999, Nations acquired the net assets of the Company pursuant to an
agreement and plan of merger dated March 23, 1999 whereby 100% of the common
stock of the Company was acquired by Nations in exchange for 59,725 shares of
Nations' common stock.
8
<PAGE>
NATIONS FLOORING, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
These pro forma financial statements reflect the March 29, 1999 acquisition by
Nations Flooring, Inc. (Nations) of C.B. Realty of Delaware, Inc. (Realty)
whereby the stockholders of Realty exchanged 100% of their common shares for
59,725 shares of common stock of Nations. The acquisition is accounted for as a
purchase for financial reporting purposes, and qualifies as a tax free merger
for federal income tax reporting purposes. The pro forma condensed consolidated
balance sheet and income statement are derived from the historical audited
financial statements of both companies as of and for the twelve months ended
December 31, 1998. The balance sheet is presented as if the transaction occurred
on December 31, 1998 and the income statement is presented as if the transaction
occurred on January 1, 1998. The unaudited condensed consolidated financial
statements do not necessarily indicate the financial position or results of
operations which would have occurred had the acquisition been completed at such
times, nor do they necessarily indicate future results that may be expected.
These statements should be read in conjunction with the historical consolidated
financial statements of Nations, including notes thereto, included in its annual
report on Form 10-K, and the historical financial statements of Realty included
elsewhere herein.
A further description of the merger, nature and amount of consideration given
and pro forma adjustments follow the unaudited pro forma condensed consolidated
financial statements.
1
<PAGE>
NATIONS FLOORING, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
Historical Pro forma
Nations Historical Pro forma Nations
Flooring, Inc. C.B. Realty Adjustments Flooring, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accounts receivable $ 4,185,360 $ - $ - $ 4,185,360
Other current assets 1,869,663 32,768 (112,708) (1, 2) 1,789,693
Related party note receivable - 500,000 (500,000) (1) -
800,301 993,432 451,568 (2) 2,245,301
Property and equipment, net
Intangible assets, net 15,155,994 27,678 - 15,183,672
---------------------------------------------------------- -------------------
$ 22,011,288 $ 1,553,878 $ (161,140) $ 23,404,026
Total assets
========================================================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
Note payable $ 3,812,213 $ - $ - $ 3,812,213
Other current liabilities 5,083,655 129,897 (112,708) (1, 2) 5,100,844
Deferred income taxes 355,000 188,661 (3,661) (3) 540,000
Related party advance 500,000 - (500,000) (1) -
Long-term debt 4,035,539 460,539 - 4,496,078
Due to principal stockholder 2,000,000 - - 2,000,000
Stockholders' Equity
5 - - 5
Preferred stock, Nations
- 1 (1) (4) -
Common stock, Realty outstanding
3,670 - 60 (4) 3,730
Common stock, Nations
8,398,143 617,692 612,258 (3, 4) 9,628,093
Additional paid-in capital
Retained earnings
(2,176,937) 157,088 (157,088) (4) (2,176,937)
(deficit)
---------------------------------------------------------- -------------------
6,224,881 774,781 455,229 7,454,891
---------------------------------------------------------- -------------------
Total liabilities and
$ 22,011,288 $ 1,553,878 $ (161,140) $ 23,404,026
stockholders' equity
========================================================== ===================
</TABLE>
2
<PAGE>
NATIONS FLOORING, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Historical Pro forma
Nations Historical Pro forma Nations
Flooring, Inc. C.B. Realty Adjustment Flooring, Inc.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 45,000,387 $ - $ - $ 45,000,387
Cost of sales 33,907,293 - - 33,907,293
--------------------------------------------------------- -------------------
11,093,094 - - 11,093,094
Gross profit
--------------------------------------------------------- -------------------
Related party rental income - 115,071 (115,071) (1) -
--------------------------------------------------------- -------------------
Selling, general and
8,175,710 6,989 (115,071) (1) 8,067,628
administrative expenses
Amortization and depreciation 1,132,331 33,634 9,310 (2) 1,175,275
--------------------------------------------------------- -------------------
9,308,041 40,623 (105,761) 9,242,903
--------------------------------------------------------- -------------------
1,785,053 74,448 (9,310) 1,850,191
Operating income
Other income (expense): (1,450,152) 6,480 - (1,443,672)
--------------------------------------------------------- -------------------
Income before income taxes,
dividends to preferred stock-
holders of subsidiary, and
amortization of discount
on preferred stock of
334,901 80,928 (9,310) 406,519
subsidiary
Income taxes 120,000 15,765 4,235 (3) 140,000
Dividends to preferred stock-
466,000 - - 466,000
holders of subsidiary
Amortization of discount on
1,542,726 - - 1,542,723
preferred stock of subsidiary
--------------------------------------------------------- -------------------
(1,793,825) 65,163 (13,545) (1,742,207)
Net income (loss)
Preferred stock dividends 98,200 - - 98,200
--------------------------------------------------------- -------------------
Net income (loss) available
$ (1,892,025) $ 65,163 $ (13,545) $ (1,840,407)
to common shares
========================================================= ===================
Basic and dilutive earnings
$ (0.52) $ (0.49)
(loss) per common share
=================== ===================
</TABLE>
3
<PAGE>
NATIONS FLOORING, INC. AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Description of Acquisition
Under the terms of an Agreement and Plan of Merger (the Agreement) filed with
the State of Delaware on March 29, 1999, Realty merged with and into Nations. In
accordance with the Agreement, each shareholder of Realty will be issued 597.25
shares of Nations common stock for each share of Realty's common stock, totaling
59,725 shares of Nations common stock.
The acquisition is accounted for as a purchase for financial reporting purposes,
and qualifies as a tax free merger for federal income tax reporting purposes.
Because the transaction qualifies as a nontaxable merger for federal income tax
reporting purposes, the net assets of Realty transfer to Nations at their basis
to Realty for tax purposes. Accordingly, a deferred income tax liability has
been recorded as a component of the purchase price for the difference between
the fair value of the net assets of Realty and their underlying tax basis.
Nature and Amount of Consideration Given
In accordance with generally accepted accounting principals, the purchase should
be recorded at the fair value of either the assets purchased or the stock given
up, whichever is more readily determinable. As Nations stock has not been
actively traded recently, and because the Board of Directors of Nations set the
purchase price offer at an amount that was beneficial to the general
stockholders of Nations and intended to be antidilutive, the purchase
transaction was valued at the fair value of the net assets of Realty. Based on
recent appraisals of the land and building previously held by Realty, the net
assets of Realty were recorded on the financial statements of Nations on the
date of merger at their fair value of approximately $1,230,000.
The preliminary allocation of the purchase price adjusting to fair value the
assets and liabilities of Realty is based upon estimates that are currently
available. This pro forma presentation does not necessarily reflect the results
of operations as if these Companies had operated as a single entity.
The preliminary allocation of purchase price is as follows:
Consideration and liabilities assumed:
Liabilities assumed $ 590,000
Deferred income tax liability 185,000
Stock issued 1,230,000
==================
$ 2,005,000
==================
4
<PAGE>
NATIONS FLOORING, INC. AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Allocated to:
Land and building $ 1,445,000
Related party receivables 532,000
Intangible assets acquired 28,000
===============
$ 2,005,000
===============
Balance Sheet Pro Forma Adjustments and Eliminations as of December 31, 1998
The following is a description and summary of the pro forma adjustments and
eliminations for the consolidated balance sheet:
(1) Related party note payable 79,940
Related party advance 500,000
Current portion of related party note receivable (79,940)
Related party note receivable (500,000)
To offset related party receivables and payables
(2) Due to principal stockholder 32,768
Advances to related party (32,768)
To offset amounts due from Nations' principal stockholder
(3) Property and equipment 345,000
Accumulated depreciation 106,568
Deferred taxes 3,661
Additional paid-in-capital (455,229)
To record land and building at fair value and associated deferred taxes
(4) Realty common stock 1
Realty additional paid-in-capital 617,692
Realty retained earnings 157,088
Nations common stock (60)
Nations additional paid-in-capital (774,721)
</TABLE>
To record issuance of Nations common stock and elimination of Realty equity
5
<PAGE>
NATIONS FLOORING, INC. AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Income Statement Pro Forma Adjustments and Eliminations for the Year Ended
December 31, 1998
The pro forma adjustments associated with the combined income statement are as
follows:
<TABLE>
<S> <C>
(1) Related party rental income 115,071
Related party rent expense (115,071)
To eliminate the rental income received from Nations on Realty's financial statements
(2) Depreciation expense 9,310
To record depreciation expense on the increase in the purchase price of the land
and building over their carrying value on the financial statements of Realty.
(3) Income taxes 4,235
To record additional income tax expense resulting from difference in effective
tax rate.
</TABLE>
6
<PAGE>
EXHIBIT 2
<PAGE>
Loan No. 009-0000979-001
PROMISSORY NOTE
(105 West Charleston Boulevard, Las Vegas, Clark County, Nevada)
$500,000 May 13, 1998
FOR VALUE RECEIVED, C.B. REALTY OF DELAWARE, INC., a Delaware
corporation ("BORROWER"), promises to pay to the order of METLIFE CAPITAL
FINANCIAL CORPORATION ("METLIFE") at METLIFE's office at 10900 Northeast Fourth
Street, Suite 500, Bellevue, Washington 98004, attention: Real Estate
Department, or at such other address as the holder hereof may from time to time
designate in writing, the principal sum of Five Hundred Thousand and no
hundredths Dollars ($500,000.00) together with interest from the date the
proceeds of the loan (the "Loan") evidenced by this Promissory Note (this
"Note") are initially disbursed until maturity on the principal balance from
time to time remaining unpaid hereon at the rate of nine percent (9.0%) per
annum (computed on the basis of a 360-day year of twelve (12) consecutive thirty
(30)-day months) in installments as follows: (i) interest only in advance at the
rate of $125.00 per day shall be due and payable on the date the proceeds of the
Loan are initially disbursed to or for the benefit of BORROWER (including,
without limitation, disbursement into an escrow for the benefit of BORROWER) for
the period beginning on the date of such disbursement and ending on the last day
of the month during which such disbursement occurs, and (ii) fifty-nine (59)
installments of principal and interest in the amount of $5,690.15 each shall be
payable commencing on the first day of the second month following the month in
which funds are advanced and continuing on the first day of each and every
succeeding month until June 1, 2003, at which time all then unpaid principal and
interest hereon shall be due and payable.
If any payment shall not be received by METLIFE when due and
shall not be received within ten (10) days thereafter, BORROWER shall pay an
additional charge equal to five percent (5.00%) of the delinquent payment or the
highest additional charge permitted by law, whichever is less.
Except as is expressly provided for herein, this Note may not
be prepaid in whole or in part without the prior written consent of METLIFE.
Upon not less than thirty (30) days' advance written notice to METLIFE at any
time after the second (2nd) anniversary of the due date of the first monthly
principal and interest payment due under this Note, and upon payment of a
prepayment premium as set forth below (the APrepayment Premium@), BORROWER shall
have the right to prepay all, but not less than all, of the outstanding balance
of this Note on any regularly scheduled principal and interest payment date. The
Prepayment Premium shall be determined by (i) calculating the decrease
(expressed in basis points) in the current weekly average yield of five (5)-year
U.S. Treasury Constant Maturities (as published in Federal Reserve Statistical
Release H.15 [519]) (the "Index") from Friday, February 13, 1998, to the Friday
immediately preceding the week in which the prepayment is made, (ii) dividing
the decrease by 100, (iii) multiplying the result by the following described
applicable premium factor (the "Premium Factor"), and (iv) multiplying the
product by the principal balance to be prepaid. If the Index is unchanged or has
increased from Friday, February 13, 1998, to the Friday immediately preceding
the prepayment date, no Prepayment Premium shall be due. The Premium Factor
shall be the amount shown on the following chart for the month in which
prepayment occurs:
1
<PAGE>
No. Mos. Premium
Remaining (Years) Factor
--------- ------- -------
60 - 49 ( 5) .042
48 - 37 ( 4) .036
36 - 25 ( 3) .029
24 - 13 ( 2) .022
12 - 1 ( 1) .013
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
then the decrease in the weekly average yield of five (5)-year U.S. Treasury
Constant Maturities will be determined from another source designated by
METLIFE. Prepayment prior to the second (2nd) anniversary of the due date of the
first monthly principal and interest payment due under this Note will not be
permitted.
If METLIFE at any time accelerates this Note after an Event of
Default (defined below), then BORROWER shall be obligated to pay the Prepayment
Premium in accordance with the foregoing schedule. The Prepayment Premium shall
not be payable with respect to condemnation awards or insurance proceeds from
fire or other casualty which METLIFE applies to prepayment, nor with respect to
BORROWER's prepayment of the Note in full during the last three (3) months of
the term of this Note unless an Event of Default has occurred. BORROWER
expressly acknowledges that such Prepayment Premium is not a penalty but is
intended solely to compensate METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses incurred
by METLIFE.
BORROWER shall be liable on this Note and on all the
representations, warranties, indemnities and covenants in the Deed of Trust,
Security Agreement, Assignment of Leases and Rents, and Fixture Filing (ADeed of
Trust@) covering the property (the "Property") securing this Note and all other
documents executed or delivered in connection herewith (the "Loan Documents").
Each of the following shall constitute an Event of Default
("Event of Default") hereunder and under the Deed of Trust:
(a) Failure of METLIFE to receive any payment of principal,
interest, or Prepayment Premium upon this Note when due, and such failure shall
continue for ten (10) days after written notice is given by METLIFE to BORROWER
of the same; or
(b) Failure of BORROWER within the time required by the Deed
of Trust to pay any sum secured thereby other than the Note or to make any
payment for taxes, insurance or for reserves for such payments, or any other
payment necessary to prevent filing of or discharge of any lien, and such
failure shall continue for a period of ten (10) days after written notice is
given to BORROWER by METLIFE specifying such failure; or
(c) Failure by BORROWER to observe or perform any obligations
of BORROWER to METLIFE on or with respect to any transactions, debts,
undertakings or agreements other than the transaction evidenced by this Note
prior to the expiration of any applicable cure period set forth therein; or
2
<PAGE>
(d) Failure of BORROWER to make any payment or perform any
obligation under any superior liens or encumbrances on the Property, within the
time required thereunder, or commencement of any suit or other action to
foreclose any superior liens or encumbrances; or
(e) Failure by BORROWER to observe or perform any of its
obligations under any of the lease agreements covering the Property prior to the
expiration of any applicable cure period set forth therein; or
(f) The Property is transferred or any agreement to transfer
any part or interest in the Property in any manner whatsoever is made or entered
into without the prior written consent of METLIFE, except as specifically
allowed under the Deed of Trust, including without limitation creating or
allowing any liens on the Property or leasing any portion of the Property; or
(g) Filing by BORROWER of a voluntary petition in bankruptcy
or filing by BORROWER of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or the seeking, consenting to, or acquiescing by BORROWER in the
appointment of any trustee, receiver, custodian, conservator or liquidator for
BORROWER, any part of the Property, or any of the income or rents of the
Property, or the making by BORROWER of any general assignment for the benefit of
creditors, or the inability of or failure by BORROWER to pay its debts generally
as they become due, or the insolvency on a balance sheet basis or business
failure of BORROWER, or the making or suffering of a preference within the
meaning of federal bankruptcy law or the making of a fraudulent transfer under
applicable federal or state law, or concealment by BORROWER of any of its
property in fraud of creditors, or the imposition of a lien upon any of the
property of BORROWER which is not discharged in the manner permitted by the Deed
of Trust, or the giving of notice by BORROWER to any governmental body of
insolvency or suspension of operations; or
(h) Filing of a petition against BORROWER seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of BORROWER, of
any part of the Property or of any of the income or rents of the Property,
unless such petition shall be dismissed within sixty (60) days after such
filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of BORROWER voluntarily, involuntarily, or by operation of law, or
the death of BORROWER; or
(j) A material adverse change occurs in the assets,
liabilities or net worth of BORROWER from the assets, liabilities or net worth
of BORROWER previously disclosed to METLIFE (the occurrence of such material
adverse change being METLIFE'S reasonable determination based on a review of
BORROWER'S financial condition); or
(k) Any warranty, representation or statement furnished to
METLIFE by or on behalf of BORROWER under this Note, the Deed of Trust, or any
of the Loan Documents shall prove to have been false or misleading in any
material respect; or
3
<PAGE>
(l) Failure of BORROWER to observe or perform any other
covenant or condition contained in the Deed of Trust and such default shall
continue for thirty (30) days after notice is given to BORROWER specifying the
nature of the failure, or if the default cannot be cured within such cure
period, BORROWER fails within such time to commence and pursue curative action
with reasonable diligence or fails at any time after expiration of such cure
period to continue with reasonable diligence all necessary curative actions. No
notice of default and no opportunity to cure shall be required with respect to
defaults under Section 17 of the Deed of Trust or if during the prior twelve
(12) months METLIFE has already sent a notice to BORROWER concerning default in
performance of the same obligation; or
(m) Failure of BORROWER to observe or perform any other
obligation under any other Loan Document when such observance or performance is
due, and such failure shall continue beyond the applicable cure period set forth
in such Loan Document, or if the default cannot be cured within such applicable
cure period, BORROWER fails within such time to commence and pursue curative
action with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months METLIFE has already sent a
notice to BORROWER concerning default in performance of the same obligation; or
(n) Borrower's abandonment of the Property, or the termination
before the end of the stated term of that certain lease between BORROWER and
Carpet Barn, Inc., dated June 1, 1995; or
(o) Any of the foregoing events occur with respect to any
tenant of the Property, with respect to guarantor of any of BORROWER's
obligations in connection with the indebtedness evidenced by this Note or with
respect to any guarantor of any tenant's obligations relating to the Property,
or such guarantor dies or becomes incompetent.
Upon the occurrence of any of the foregoing Events of Default,
METLIFE shall have the option to declare the entire amount of principal and
interest due under this Note immediately due and payable without notice or
demand, and METLIFE may exercise any of its rights under this Note and any
document executed or delivered herewith. After acceleration or maturity,
BORROWER shall pay interest on the outstanding principal balance of this Note at
the rate of five percent (5.00%) per annum above Chase Manhattan Bank's prime
interest rate in effect from time to time, or fifteen percent (15.00%) per
annum, whichever is higher, provided that such interest rate shall not exceed
the maximum interest rate permitted by law.
All payments of the principal and interest on this Note shall
be made in coin or currency of the United States of America which at the time
shall be the legal tender for the payment of public and private debts.
If this Note is placed in the hands of an attorney for
collection, BORROWER agrees to pay reasonable attorneys' fees and costs incurred
by METLIFE in connection therewith, and in the event suit or action is
instituted to enforce or interpret this Note (including without limitation
efforts to modify or vacate any automatic stay or injunction), the prevailing
party shall be entitled to recover all expenses reasonably incurred at, before
or after trial and on appeal, whether or not taxable as costs, or in any
bankruptcy proceeding, or in connection with post-judgment collection efforts,
including, without limitation, attorneys' fees, witness fees (expert and
otherwise), deposition costs, copying charges and other expenses.
4
<PAGE>
This Note shall be governed and construed in accordance with
the laws of the State of Nevada applicable to contracts made and to be performed
therein (excluding choice-of-law principles). BORROWER hereby irrevocably
submits to the jurisdiction of any state or federal court sitting in Nevada in
any action or proceeding brought to enforce or otherwise arising out of or
relating to this Note, and hereby waives any objection to venue in any such
court and any claim that such forum is an inconvenient forum.
This Note is given in a commercial transaction for business
purposes.
This Note may be declared due prior to its expressed maturity
date, all in the events, on the terms, and in the manner provided for in the
Deed of Trust.
BORROWER and all sureties, endorsers, guarantors and other
parties now or hereafter liable for the payment of this Note, in whole or in
part, hereby severally (i) waive demand, notice of demand, presentment for
payment, notice of nonpayment, notice of default, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notices,
and further waive diligence in collecting this Note or in enforcing any of the
security for this Note; (ii) agree to any substitution, subordination, exchange
or release of any security for this Note or the release of any party primarily
or secondarily liable for the payment of this Note; (iii) agree that METLIFE
shall not be required to first institute suit or exhaust its remedies hereon
against BORROWER or others liable or to become liable for the payment of this
Note or to enforce its rights against any security for the payment of this Note;
and (iv) consent to any extension of time for the payment of this Note, or any
installment hereof, made by agreement by METLIFE with any person now or
hereafter liable for the payment of this Note, even if BORROWER is not a party
to such agreement.
All agreements between BORROWER and METLIFE, whether now
existing or hereafter arising and whether written or oral, are hereby limited so
that in no contingency, whether by reason of demand or acceleration of the final
maturity of this Note or otherwise, shall the interest contracted for, charged,
received, paid or agreed to be paid to METLIFE exceed the maximum amount
permissible under the applicable law. If, from any circumstance whatsoever,
interest would otherwise be payable to METLIFE in excess of the maximum amount
permissible under applicable law, the interest payable to METLIFE shall be
reduced to the maximum amount permissible under applicable law; and if from any
circumstance METLIFE shall ever receive anything of value deemed interest by
applicable law in excess of the maximum amount permissible under applicable law,
an amount equal to the excessive interest shall be applied to the outstanding
principal balance hereof, or if such excessive amount of interest exceeds the
unpaid balance of principal hereof, such excess shall be refunded to BORROWER.
All interest paid or agreed to be paid to METLIFE shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread throughout the
full period (including any renewal or extension) until payment in full of the
principal so that the interest hereon for such full period shall not exceed the
maximum amount permissible under applicable law. METLIFE expressly disavows any
intent to contract for, charge or receive interest in an amount which exceeds
the maximum amount permissible under applicable law. This paragraph shall
control all agreements between BORROWER and METLIFE.
5
<PAGE>
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING
ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED
IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY
CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN
AGREEMENT.
IN WITNESS WHEREOF, BORROWER has caused this Note to be
executed by its duly authorized officers under seal as of the year and day first
written above.
BORROWER:
C.B. REALTY OF DELAWARE, INC.,
a Delaware corporation
By:________________________________
Title:_____________________________
Attest:____________________________
Title:_____________________________
Prepared by, recording requested by, and after recording, return to:
Dorothea S. Costrini
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Savannah, Georgia 31401
MetLife Capital Financial Corporation
Loan Number: 009-0000979-001
6
<PAGE>
EXHIBIT 3
<PAGE>
COMMERCIAL DEED OF TRUST,
SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
(105 West Charleston Boulevard, Las Vegas, Clark County, Nevada)
THIS DEED OF TRUST (herein "Instrument"), made as of May 13,
1998, among the Trustor, C.B. REALTY OF DELAWARE, INC., a Delaware corporation,
whose address is 105 West Charleston Boulevard, Las Vegas, Nevada 89102 (herein
"Borrower"), in favor of NATIONAL TITLE CO., whose address is 714 East Sahara
Avenue, Las Vegas, Nevada 89104 (herein "Trustee"), for the benefit of the
Beneficiary, METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation,
whose address is Real Estate Department, 10900 Northeast Fourth Street, Suite
500, Bellevue, Washington 98004 (herein "METLIFE"),
W I T N E S S E T H:
THAT, WHEREAS, Borrower is justly indebted to METLIFE in the
principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000), pursuant to a certain
Promissory Note of even date herewith, having a maturity date of June 1, 2003,
and more particularly described below,
NOW, THEREFORE, Borrower, in consideration of the indebtedness
herein recited and the trust herein created, irrevocably grants, conveys and
assigns to Trustee, in trust, WITH POWER OF SALE, all of Borrower's estate,
right, title and interest, now owned or hereafter acquired, including any
reversion or remainder interest, in the real property located in the City of Las
Vegas, County of Clark, State of Nevada described on Exhibit A attached hereto
and incorporated herein including all heretofore or hereafter vacated alleys and
streets abutting the property, and all easements, rights, appurtenances,
tenements, hereditaments, rents, royalties, mineral, oil and gas rights and
profits, water, water rights, and water stock appurtenant to the property
(collectively "Premises");
TOGETHER with all of Borrower's estate, right, title and
interest, now owned or hereafter acquired, in:
1
<PAGE>
(a) all buildings, structures, improvements, parking areas,
landscaping, equipment, fixtures and articles of property now or hereafter
erected on, attached to, or used or adapted for use in the operation of the
Premises; including but without being limited to, all heating, air conditioning
and incinerating apparatus and equipment; all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, water heaters, ranges,
cooking apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting (excluding carpeting not
installed in the Premises), floor coverings, underpadding, elevators,
escalators, partitions, mantels, built-in mirrors, window shades, blinds,
draperies, screens, storm sash, awnings, signs, furnishings of public spaces,
halls and lobbies, and shrubbery and plants, and including also all interest of
any owner of the Premises in any of such items hereafter at any time acquired
under conditional sale contract, chattel mortgage or other title retaining or
security instrument, all of which property mentioned in this clause (a) shall be
deemed part of the realty covered by this Instrument and not severable wholly or
in part without material injury to the freehold of the Premises (all of the
foregoing together with replacements and additions thereto are referred to
herein as "Improvements"); and
(b) all compensation, awards, damages, rights of action and
proceeds, including interest thereon and/or the proceeds of any policies of
insurance therefor, arising out of or relating to a (i) taking or damaging of
the Premises or Improvements thereon by reason of any public or private
improvement, condemnation proceeding (including change of grade), sale or
transfer in lieu of condemnation, or fire, earthquake or other casualty, or (ii)
any injury to or decrease in the value of the Premises or the Improvements for
any reason whatsoever;
(c) return premiums or other payments upon any insurance any
time provided for the benefit of or naming METLIFE, and refunds or rebates of
taxes or assessments on the Premises;
(d) all the right, title and interest of Borrower in, to and
under all written and oral leases and rental agreements (including extensions,
renewals and subleases; all of the foregoing shall be referred to collectively
herein as the "Leases") now or hereafter affecting the Premises including,
without limitation, all rents, issues, profits and other revenues and income
therefrom and from the renting, leasing or bailment of Improvements and
equipment, all guaranties of tenants' performance under the Leases, and all
rights and claims of any kind that Borrower may have against any tenant under
the Leases or in connection with the termination or rejection of the Leases in a
bankruptcy or insolvency proceeding;
(e) plans, specifications, contracts and agreements relating
to the design or construction of the Improvements; Borrower's rights under any
payment, performance, or other bond in connection with the design or
construction of the Improvements; all landscaping and construction materials,
supplies, and equipment used or to be used or consumed in connection with
construction of the Improvements, whether stored on the Premises or at some
other location; and contracts, agreements, and purchase orders with contractors,
subcontractors, suppliers, and materialmen incidental to the design or
construction of the Improvements;
2
<PAGE>
(f) all contracts, accounts, rights, claims or causes of
action pertaining to or affecting the Premises or the Improvements, including,
without limitation, all options or contracts to acquire other property for use
in connection with operation or development of the Premises or Improvements,
management contracts, service or supply contracts, deposits, bank accounts,
general intangibles (including without limitation trademarks, trade names and
symbols), permits, licenses, franchises and certificates, and all commitments or
agreements, now or hereafter in existence, intended by the obligor thereof to
provide Borrower with proceeds to satisfy the loan evidenced hereby or improve
the Premises or Improvements, and the right to receive all proceeds due under
such commitments or agreements including refundable deposits and fees;
(g) all books, records, surveys, reports and other documents
related to the Premises, the Improvements, the Leases, or other items of
collateral described herein; and
(h) all additions, accessions, replacements, substitutions,
proceeds and products of the real and personal property, tangible and
intangible, described herein.
All of the foregoing described collateral is exclusive of any
inventory, accounts receivable, furniture, furnishings or trade fixtures owned
and supplied by tenants of the Premises. The Premises, the Improvements, the
Leases and all of the rest of the foregoing property are herein referred to as
the "Property."
TO HAVE AND TO HOLD the above-described Property unto Trustee
for the benefit of METLIFE and its successors and assigns forever.
3
<PAGE>
BUT THIS IS A TRUST DEED
TO SECURE TO METLIFE (a) the repayment of the indebtedness
evidenced by that certain Promissory Note dated of even date herewith from
Borrower, as maker, to METLIFE, as payee, in the principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000.00), with interest thereon prior to default at the
rate of nine (9.0%) per annum, and otherwise as set forth therein, having a
maturity date of June 1, 2003, and all renewals, extensions and modifications
thereof (herein "Note"); (b) the repayment of any future advances, with interest
thereon, made by METLIFE to Borrower pursuant to Section 30 hereof (herein
"Future Advances"); (c) the payment of all other sums, with interest thereon,
advanced in accordance herewith to protect the security of this Instrument or to
fulfill any of Borrower's obligations hereunder or under the other Loan
Documents (as defined below); (d) the performance of the covenants and
agreements of Borrower contained herein or in the other Loan Documents; and (e)
the repayment of all sums now or hereafter owing to METLIFE by Borrower pursuant
to any instrument which recites that it is secured hereby. The indebtedness and
obligations described in clauses (a)-(e) above are collectively referred to
herein as the "Indebtedness." The Note, this Instrument, and all other documents
evidencing, securing or guaranteeing the Indebtedness (except any Certificate
and Indemnity Agreement Regarding Hazardous Substances), as the same may be
modified or amended from time to time, are referred to herein as the "Loan
Documents." The terms of the Note secured hereby may provide that the interest
rate or payment terms or balance due may be indexed, adjusted, renewed, or
renegotiated from time to time, and this Instrument shall continue to secure the
Note notwithstanding any such indexing, adjustment, renewal or renegotiation.
Borrower represents and warrants that Borrower has good,
marketable and insurable title to, and has the right to grant, convey and assign
an indefeasible fee simple estate in, the Premises, Improvements, rents and
leases (or, if this Instrument is on a leasehold, good, marketable and insurable
title to, and the right to convey the leasehold estate and that the ground lease
is in full force and effect without modification except as noted above and
without default on the part of either lessor or lessee thereunder), and the
right to convey the other Property, that the Property is unencumbered except as
disclosed in writing to and approved by METLIFE prior to the date hereof, and
that Borrower will warrant and forever defend unto Trustee the title to the
Property against all claims and demands, subject only to the permitted
exceptions set forth in Schedule 1 attached hereto.
4
<PAGE>
Borrower represents, warrants, covenants and agrees for the
benefit of METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly
pay when due the principal of and interest on the Indebtedness, any prepayment
and other charges provided in the Loan Documents and all other sums secured by
this Instrument.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the
occurrence of an Event of Default (hereinafter defined), and at METLIFE's sole
option at any time thereafter, Borrower shall pay in addition to each monthly
payment on the Note, one-twelfth of the annual real estate taxes, insurance
premiums, assessments, water and sewer rates, ground rents and other charges
(herein "Impositions") payable with respect to the Property (as estimated by
METLIFE in its sole discretion), to be held by METLIFE without interest to
Borrower, for the payment of such obligations.
If the amount of such additional payments held by METLIFE
("Funds") at the time of the annual accounting thereof shall exceed the amount
deemed necessary by METLIFE to provide for the payment of Impositions as they
fall due, such excess shall be at Borrower's option, either repaid to Borrower
or credited to Borrower on the next monthly installment or installments of Funds
due. If at any time the amount of the Funds held by METLIFE shall be less than
the amount deemed necessary by METLIFE to pay Impositions as they fall due,
Borrower shall pay to METLIFE any amount necessary to make up the deficiency
within thirty (30) days after notice from METLIFE to Borrower requesting payment
thereof.
Upon Borrower's breach of any covenant or agreement of
Borrower in this Instrument, METLIFE may apply, in any amount and in any order
as METLIFE shall determine in METLIFE's sole discretion, any Funds held by
METLIFE at the time of application (i) to pay Impositions which are now or will
hereafter become due, or (ii) as a credit against sums secured by this
Instrument. Upon payment in full of all sums secured by this Instrument, METLIFE
shall refund to Borrower any Funds held by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides
otherwise, each complete installment payment received by METLIFE from Borrower
under the Note or this Instrument shall be applied by METLIFE first in payment
of amounts payable to METLIFE by Borrower under Section 2 hereof, then to
interest payable on the Note, then to principal of the Note, and then to
interest and principal on any Future Advances in such order as METLIFE, at
METLIFE's sole discretion, shall determine. Upon Borrower's breach of any
covenant or agreement of Borrower in this Instrument, METLIFE may apply, in any
amount and in any order as METLIFE shall determine in METLIFE's sole discretion,
any payments received by METLIFE under the Note or this Instrument. Any partial
payment received by METLIFE shall, at METLIFE's option, be held in a
non-interest bearing account until METLIFE receives funds sufficient to equal a
complete installment payment.
5
<PAGE>
4. CHARGES, LIENS. Borrower shall pay all Impositions
attributable to the Property in the manner provided under Section 2 hereof or,
if not paid in such manner, by Borrower making payment, when due, directly to
the payee thereof, or in such other manner as METLIFE may designate in writing.
If requested by METLIFE, Borrower shall promptly furnish to METLIFE all notices
of Impositions which become due, and in the event Borrower shall make payment
directly, Borrower shall promptly furnish to METLIFE receipts evidencing such
payments. Borrower shall promptly discharge any lien which has, or may have,
priority over or equality with, the lien of this Instrument, and Borrower shall
pay, when due, the claims of all persons supplying labor or materials to or in
connection with the Property. Without METLIFE's prior written permission,
Borrower shall not allow any lien inferior to this Instrument to be perfected
against the Property. If any lien inferior to this Instrument is filed against
the Property without METLIFE's prior written permission and without the consent
of Borrower, Borrower shall, within thirty (30) days after receiving notice of
the filing of such lien, cause such lien to be released of record and deliver
evidence of such release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following
types of insurance upon and relating to the Property:
(a) "All Risk" property and fire insurance (with extended
coverage endorsement including malicious mischief and vandalism) in an amount
not less than the full replacement value of the Property (with a deductible not
to exceed $5,000), naming METLIFE under a lender's loss payee endorsement (form
438BFU or equivalent) and including agreed amount, inflation guard, replacement
cost and waiver of subrogation endorsements;
(b) Comprehensive general liability insurance in an amount not
less than $2,000,000.00 insuring against personal injury, death and property
damage and naming METLIFE as additional insured;
(c) Business interruption insurance covering loss of rental or
other income (including all expenses payable by tenants) for up to six (6)
months; and
(d) Such other types of insurance or endorsements to existing
insurance as may be required from time to time by METLIFE.
6
<PAGE>
Upon the request of METLIFE, Borrower shall increase the
coverages under any of the insurance policies required to be maintained
hereunder or otherwise modify such policies in accordance with METLIFE's
request. All of the insurance policies required hereunder shall be issued by
corporate insurers licensed to do business in the state in which the Property is
located and rated A:X or better by A.M. Best Company, and shall be in form
acceptable to METLIFE. If and to the extent that the Property is located within
an area that has been or is hereafter designated or identified as an area having
special flood hazards by the Department of Housing and Urban Development or such
other official as shall from time to time be authorized by federal or state law
to make such designation pursuant to any national or state program of flood
insurance, Borrower shall carry flood insurance with respect to the Property in
amounts not less than the maximum limit of coverage then available with respect
to the Property or the amount of the Indebtedness, whichever is less.
Certificates of all insurance required to be maintained hereunder shall be
delivered to METLIFE, along with evidence of payment in full of all premiums
required thereunder, contemporaneously with Borrower's execution of this
Instrument. All such certificates shall be in form acceptable to METLIFE and
shall require the insurance company to give to METLIFE at least thirty (30)
days' prior written notice before canceling the policy for any reason or
materially amending it. Certificates evidencing all renewal and substitute
policies of insurance shall be delivered to METLIFE, along with evidence of the
payment in full of all premiums required thereunder, at least fifteen (15) days
before termination of the policies being renewed or substituted. If any loss
shall occur at any time when Borrower shall be in default hereunder, METLIFE
shall be entitled to the benefit of all insurance policies held or maintained by
Borrower, to the same extent as if same had been made payable to METLIFE, and
upon foreclosure hereunder, METLIFE shall become the owner thereof. METLIFE
shall have the right, but not the obligation, to make premium payments, at
Borrower's expense, to prevent any cancellation, endorsement, alteration or
reissuance of any policy of insurance maintained by Borrower, and such payments
shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any
casualty for which insurance was not obtained or obtainable) shall result in
damage to or destruction of the Property (such event being called a "Loss"),
Borrower will give prompt written notice thereof to METLIFE. All insurance
proceeds paid or payable in connection with any Loss shall be paid to METLIFE.
If (i) no Event of Default has occurred and is continuing hereunder, (ii)
Borrower provides evidence satisfactory to METLIFE of its ability to pay all
amounts becoming due under the Note during the pendency of any restoration or
repairs to or replacement of the Property, (iii) the available insurance
proceeds are, in METLIFE's judgment, sufficient to fully and completely restore,
repair or replace the Property and (iv) Borrower provides evidence satisfactory
to METLIFE that none of the tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, Borrower shall have the right to apply all insurance proceeds
received in connection with such Loss either (a) to restore, repair, replace and
rebuild the Property as nearly as possible to its value, condition and character
immediately prior to such Loss, or (b) to the payment of the Indebtedness in
such order as METLIFE may elect. If an Event of Default has occurred and is
continuing hereunder at the time of such Loss, if METLIFE determines that
Borrower will be unable to pay all amounts becoming due under the Note during
the pendency of any restoration or repairs to or replacement of the Property, if
the available insurance proceeds are insufficient, in METLIFE's judgment, to
fully and completely restore, repair or replace the Property or if METLIFE
believes that one or more tenants of the Property will terminate their lease
agreements as a result of either the Loss or the repairs to or replacement of
the Property, then all of the insurance proceeds payable with respect to such
Loss will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available, commence
to restore, repair, replace and rebuild the Property as nearly as possible to
its value, condition, character immediately prior to such Loss. Borrower shall
diligently prosecute any restoration, repairs or replacement of the Property
undertaken by or on behalf of Borrower pursuant to this Section 5. All such work
shall be conducted pursuant to written contracts approved by METLIFE in writing.
Notwithstanding anything
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contained herein to the contrary, in the event the insurance proceeds received
by METLIFE following any Loss are insufficient in METLIFE's judgment to fully
and completely restore, repair or replace the Property, and if Borrower has
complied with all of the other conditions described in this Section 5, Borrower
may elect to restore, repair or replace the Property if it first deposits with
METLIFE such additional sums as METLIFE determines are necessary in order to
fully and completely restore, repair or replace the Property. In the event any
insurance proceeds remain following the restoration, repair or replacement of
the Property, such proceeds shall be applied to the Indebtedness in such order
as METLIFE may elect.
Borrower waives any and all right to claim or recover against
METLIFE or its officers, employees, agents and representatives, for loss of or
damage to Borrower, the Property, Borrower=s property or the property of others
under Borrower's control from any cause insured against or required to be
insured against under this Section 5.
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6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a)
shall not commit waste or permit impairment or deterioration of the Property,
(b) shall not abandon the Property, (c) shall restore or repair promptly and in
a good and workmanlike manner all or any part of the Property to the equivalent
of its original condition, or such other condition as METLIFE may approve in
writing, in the event of any damage, injury or loss thereto, whether or not
insurance proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including all improvements,
fixtures, equipment, machinery and appliances thereon, in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) if all or part of the Property is for rent or lease, then
METLIFE, at its option after the occurrence of an Event of Default, may require
Borrower to provide for professional management of the Property by a property
manager satisfactory to METLIFE pursuant to a contract approved by METLIFE in
writing, unless such requirement shall be waived by METLIFE in writing, (g)
shall generally operate and maintain the Property in a manner to ensure maximum
rentals, and (h) shall give notice in writing to METLIFE of and, unless
otherwise directed in writing by METLIFE, appear in and defend any action or
proceeding purporting to affect the Property, the security of this Instrument or
the rights or powers of METLIFE hereunder. Neither Borrower nor any tenant or
other person, without the written approval of METLIFE, shall remove, demolish or
alter any improvement now existing or hereafter erected on the Property or any
fixture, equipment, machinery or appliance in or on the Property except when
incident to the replacement of fixtures, equipment, machinery and appliances
with items of like kind.
Borrower represents, warrants and covenants that the Property
is and shall be in compliance with the Americans with Disabilities Act of 1990
and all of the regulations promulgated thereunder, as the same may be amended
from time to time.
7. USE OF PROPERTY. Unless required by applicable law or
unless METLIFE has otherwise agreed in writing, Borrower shall not allow changes
in the use for which all or any part of the Property was intended at the time
this Instrument was executed. Borrower shall not, without METLIFE's prior
written consent, (i) initiate or acquiesce in a change in the zoning
classification (including any variance under any existing zoning ordinance
applicable to the Property), (ii) permit the use of the Property to become a
non-conforming use under applicable zoning ordinances, (iii) file any
subdivision or parcel map affecting the Property, or (iv) amend, modify or
consent to any easement or covenants, conditions and restrictions pertaining to
the Property.
8. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to
perform any of the covenants and agreements contained in this Instrument, or if
any action or proceeding is commenced which affects the Property or title
thereto or the interest of METLIFE therein, including, but not limited to,
eminent domain, insolvency, code enforcement, or arrangements or proceedings
involving a bankrupt or decedent, then METLIFE at METLIFE's option may make such
appearances, disburse such sums and take such action as METLIFE deems necessary,
in its sole discretion, to protect METLIFE's interest, including, but not
limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to
make repairs, (iii) procurement of satisfactory insurance as provided in Section
5 hereof, and (iv) if this Instrument is on a leasehold, exercise of any option
to renew or extend the ground lease on behalf of Borrower and the curing of any
default of Borrower in the terms and conditions of the ground lease.
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Any amounts disbursed by METLIFE pursuant to this Section 8,
with interest thereon, shall become additional Indebtedness of Borrower secured
by this Instrument. Unless Borrower and METLIFE agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of disbursement at the highest rate which may be collected from
Borrower under applicable law or, at METLIFE's option, the rate stated in the
Note. Borrower hereby covenants and agrees that METLIFE shall be subrogated to
the lien of any mortgage or other lien discharged, in whole or in part, by the
Indebtedness. Nothing contained in this Section 8 shall require METLIFE to incur
any expense or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable
entries upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE, and will
cause any guarantor of the Indebtedness to furnish METLIFE on request, within
ninety (90) days after the close of its fiscal year (i) annual balance sheet and
profit and loss statements prepared in accordance with generally accepted
accounting principles and practices consistently applied and, if METLIFE so
requires, accompanied by the annual audit report of an independent certified
public accountant reasonably acceptable to METLIFE, (ii) an annual operating
statement, together with a complete rent roll and other supporting data
reflecting all material information with respect to the operation of the
Property and Improvements, and (iii) all other financial information and reports
that METLIFE may from time to time reasonably request, including, if METLIFE so
requires, income tax returns of Borrower and any guarantor of any portion of the
Indebtedness, and financial statements of any tenants designated by METLIFE.
11. CONDEMNATION. If the Property, or any part thereof, shall
be condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE or Trustee,
including reasonable attorneys' fees incurred in connection with collection of
such amounts, and (b) the balance against the Indebtedness; provided, however,
that if (i) no Event of Default shall have occurred and be continuing hereunder,
(ii) Borrower provides evidence satisfactory to METLIFE of its ability to pay
all amounts becoming due under the Note during the pendency of any restoration
or repairs to or replacement of the Property, (iii) METLIFE determines, in its
sole discretion, that the proceeds of such award are sufficient to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking (or, if the proceeds of
such award are insufficient for such purpose, if Borrower provides additional
sums to METLIFE's satisfaction so that the aggregate of such sums and the
proceeds of such award will be sufficient for such purpose), and (iv) Borrower
provides evidence satisfactory to METLIFE that none of the tenants of the
Property will terminate their lease agreements as a result of either the
condemnation or taking or the repairs to or replacement of the Property, the
proceeds of such award, together with additional sums provided by Borrower,
shall be placed in a separate account for the benefit of METLIFE and Borrower to
be used to restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition and character immediately prior to such taking.
All work to be performed in connection therewith shall be pursuant to a written
contract therefor, which contract shall be subject to the prior approval of
METLIFE. To the extent that any funds remain after the Property has been so
restored and repaired, the same shall be applied against the Indebtedness in
such order as METLIFE may elect. To enforce its rights hereunder, METLIFE shall
be entitled to participate in and control any condemnation proceedings and to be
represented therein by counsel of its own choice, and Borrower will deliver, or
cause to be delivered to METLIFE such instruments as may be requested by it from
time to time to permit such participation. In the event METLIFE, as a result of
any such judgment, decree or award, believes
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that the payment or performance of any of the Indebtedness is impaired, METLIFE
may declare all of the Indebtedness immediately due and payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE
may, at METLIFE's option, without giving notice to or obtaining the consent of
Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on METLIFE's part and notwithstanding Borrower's
breach of any covenant or agreement of Borrower in this Instrument, extend the
time for payment of the Indebtedness or any part thereof, reduce the payments
thereon, release anyone liable on any of the Indebtedness, accept an extension
or modification or renewal note or notes therefor, modify the terms and time of
payment of the Indebtedness, release from the lien of this Instrument any part
of the Property, take or release other or additional security, reconvey any part
of the Property, consent to any map or plan of the Property, consent to the
granting of any easement, join in any extension or subordination agreement, and
agree in writing with Borrower to modify the rate of interest or period of
amortization of the Note or change the amount of the monthly installments
payable thereunder. Any actions taken by METLIFE pursuant to the terms of this
Section 12 shall not affect the obligation of Borrower or Borrower's successors
or assigns to pay the sums secured by this Instrument and to observe the
covenants of Borrower contained herein, shall not affect the guaranty of any
person, corporation, partnership or other entity for payment of the
Indebtedness, and shall not affect the lien or priority of the lien hereof on
the Property. Borrower shall pay METLIFE a service charge, together with such
title insurance premiums and attorneys' fees as may be incurred at METLIFE's
option, for any such action if taken at Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by
METLIFE in exercising any right or remedy hereunder, or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any other
right or remedy. The acceptance by METLIFE of payment of any sum secured by this
Instrument after the due date of such payment shall not be a waiver of METLIFE's
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other liens or charges by METLIFE shall not
be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness
secured by this Instrument, nor shall METLIFE's receipt of any awards, proceeds
or damages under Sections 5 and 11 hereof operate to cure or waive Borrower's
default in payment of sums secured by this Instrument.
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14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This
Instrument is intended to be a security agreement pursuant to the Uniform
Commercial Code for any of the items specified above as part of the Property
which, under applicable law, may be subject to a security interest pursuant to
the Uniform Commercial Code, and Borrower hereby grants and conveys to METLIFE a
first and prior security interest in all of the Property that constitutes
personalty, whether now owned or hereafter acquired. Borrower agrees that
METLIFE may file this Instrument, or a reproduction thereof, in the real estate
records or other appropriate index, as a financing statement for any of the
items specified above as part of the Property. Any reproduction of this
Instrument or of any other security agreement or financing statement shall be
sufficient as a financing statement. In addition, Borrower agrees to execute and
deliver to METLIFE, upon METLIFE's request, any financing statements, as well as
extensions, renewals and amendments thereof, and reproductions of this
Instrument in such form as METLIFE may require to perfect a security interest
with respect to the foregoing items. Borrower shall pay all costs of filing such
financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all costs and expenses of any record searches for
financing statements METLIFE may require. Without the prior written consent of
METLIFE, Borrower shall not create or suffer to be created pursuant to the
Uniform Commercial Code any other security interest in said items, including
replacements and additions thereto. Upon Borrower's breach of any covenant or
agreement of Borrower contained in this Instrument, including the covenants to
pay when due all sums secured by this Instrument, METLIFE shall have the
remedies of a secured party under the Uniform Commercial Code, and METLIFE may
also invoke the remedies provided in Section 26 of this Instrument as to such
items. In exercising any of said remedies METLIFE may proceed against the items
of real property and any items of personal property specified above separately
or together and in any order whatsoever, without in any way affecting the
availability of METLIFE's remedies under the Uniform Commercial Code or of the
remedies provided in Section 26 of this Instrument. Within ten (10) days
following any request therefor by METLIFE, Borrower shall prepare and deliver to
METLIFE a written inventory specifically listing all of the personal property
covered by the security interest herein granted, which inventory shall be
certified by Borrower as being true, correct, and complete.
15. LEASES OF THE PROPERTY. As used in this Section 15, the
word "Lease" shall include subleases if this Instrument is on a leasehold.
Borrower shall comply with and observe Borrower's obligations as landlord under
all Leases of the Property or any part thereof. All Leases now or hereafter
entered into will be in form and substance subject to the approval of METLIFE.
All Leases of the Property shall specifically provide that such Leases are
subordinate to this Instrument; that the tenant attorns to METLIFE, such
attornment to be effective upon METLIFE's acquisition of title to the Property;
that the tenant agrees to execute such further evidences of attornment as
METLIFE may from time to time request; that the attornment of the tenant shall
not be terminated by foreclosure; and that METLIFE may, at METLIFE's option,
accept or reject such attornments. Borrower shall not, without METLIFE's written
consent, request or consent to the subordination of any Lease of all or any part
of the Property to any lien subordinate to this Instrument. If Borrower becomes
aware that any tenant proposes to do, or is doing, any act or thing which may
give rise to any right of set-off against rent, Borrower shall (i) take such
steps as shall be reasonably calculated to prevent the accrual of any right to a
set-off against rent, (ii) immediately notify METLIFE thereof in writing and of
the amount of said set-offs, and (iii) within ten (10) days after such accrual,
reimburse the tenant who shall have acquired such right to set-off or take such
other steps as shall effectively discharge such setoff and as shall assure that
rents thereafter due shall continue to be payable without set-off or deduction.
Upon METLIFE's receipt of notice of the occurrence of any default or violation
by Borrower of any of its obligations under the Leases, METLIFE shall have the
immediate right, but not the duty or obligation, without prior written notice to
Borrower or to any third party, to enter upon the Property and to take such
actions as METLIFE may deem necessary to cure the default or violation by
Borrower under the Leases. The costs incurred by METLIFE in taking any such
actions pursuant to this paragraph shall become part of the Indebtedness, shall
bear interest at the rate provided in the Note, and shall be payable by Borrower
to METLIFE on demand. METLIFE shall
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have no liability to Borrower or to any third party for any actions taken by
METLIFE or not taken pursuant to this paragraph.
16. REMEDIES CUMULATIVE. Each remedy provided in this
Instrument is distinct and cumulative to all other rights or remedies under this
Instrument or afforded by law or equity, and may be exercised concurrently,
independently, or successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN
BORROWER; ASSUMPTION. METLIFE may, at its option, declare all sums secured by
this Instrument to be immediately due and payable, and METLIFE may invoke any
remedies permitted by Section 26 of this Instrument, if title to the Property is
changed without the prior written consent of METLIFE, which consent shall be at
METLIFE's sole discretion. Any transfer of any interest in the Property or in
the income therefrom, by sale, lease (except for leases to tenants in the
ordinary course of managing income property which are approved by METLIFE
pursuant to Section 15 of this Instrument), contract, mortgage, deed of trust,
further encumbrance or otherwise (including any such transfers as security for
additional financing of the Property), and any change in the ownership interests
in Borrower (including any transfer, pledge, assignment, or hypothecation of, or
other change in the ownership interests of any legal entities which comprise or
control Borrower), except transfers and changes in ownership by devise or
descent, shall be considered a change of title. METLIFE shall have the right to
condition its consent to any proposed sale or transfer described in this Section
17 upon, among other things, METLIFE's approval of the transferee's
creditworthiness and management ability, and the transferee's execution, prior
to the sale or transfer, of a written assumption agreement containing such terms
as METLIFE may require, including, if required by METLIFE, the imposition of an
assumption fee of one percent (1%) of the then outstanding balance of the
Indebtedness. Consent by METLIFE to one transfer of the Property shall not
constitute consent to subsequent transfers or waiver of the provisions of this
Section 17. No transfer by Borrower shall relieve Borrower of liability for
payment of the Indebtedness. Borrower shall pay any recording tax, recording
cost, title insurance premium, attorneys= fees, or other third-party expenses
incurred by METLIFE in connection with any transfer, whether or not consent is
required.
18. NOTICE. Except for any notice required under applicable
law to be given in another manner, any and all notices, elections, demands, or
requests permitted or required to be made under this Instrument or under the
Note shall be in writing, signed by the party giving such notice, election,
demand or request, and shall be delivered personally, by telegram, or sent by
registered, certified, or Express United States mail, postage prepaid, or by
Federal Express or similar service requiring a receipt, to the other party at
the address stated above, or to such other party and at such other address
within the United States of America as any party may designate in writing as
provided herein. The date of receipt of such notice, election, demand or request
shall be the earliest of (i) the date of actual receipt, (ii) three (3) days
after the date of mailing by registered or certified mail, (iii) one (1) day
after the date of mailing by Express Mail or the delivery (for redelivery) to
Federal Express or another similar service requiring a receipt, or (iv) the date
of personal delivery (or refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
AGENTS; CAPTIONS. The covenants and agreements herein contained shall bind, and
the rights hereunder shall inure to, the respective heirs, successors and
assigns of METLIFE and Borrower, subject to the provisions of Section 17 hereof.
If Borrower is comprised of more than one person or entity, whether as
individuals, partners, partnerships or corporations, each such person or entity
shall be jointly and severally liable for Borrower's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this
Instrument are for convenience only and are not to be used to interpret or
define the provisions hereof.
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20. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives
the right to assert any statute of limitations as a bar to the enforcement of
the lien of this Instrument or to any action brought to enforce the Note or any
other obligation secured by this Instrument.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of
any other security interests in the Property held by METLIFE or by any other
party, METLIFE shall have the right to determine the order in which any or all
of the Property shall be subjected to the remedies provided herein. METLIFE
shall have the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Instrument and any party who now or hereafter acquires a security interest
in the Property and who has actual or constructive notice hereof hereby waives
any and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
22. HAZARDOUS WASTE. Borrower has furnished to METLIFE a Phase
I Environmental Site Assessment Updated Site Investigation dated March 1998,
prepared by Kroll Environmental Enterprises, Inc., and an Environmental
Questionnaire dated May 10, 1998 (collectively, the "Report"). Except as
disclosed to METLIFE in the Report, Borrower has received no notification of any
kind suggesting that the Property or any adjacent property is or may be
contaminated with any hazardous waste or materials or is or may be required to
be cleaned up in accordance with any applicable law or regulation; and Borrower
further represents and warrants that, except as previously disclosed to METLIFE
in writing, to the best of its knowledge as of the date hereof after due and
diligent inquiry, there are no hazardous waste or materials located in, on or
under the Property or any adjacent property, or incorporated in any
Improvements, nor has the Property or any adjacent property ever been used as a
landfill or a waste disposal site, or a manufacturing, handling, storage,
distribution or disposal facility for hazardous waste or materials. As used
herein, the term "hazardous waste or materials" includes any substance or
material defined in or designated as hazardous or toxic wastes, hazardous or
toxic material, a hazardous, toxic or radioactive substance, or other similar
term, by any federal, state or local statute, regulation or ordinance now or
hereafter in effect. Borrower shall promptly comply with all statutes,
regulations and ordinances, and with all orders, decrees or judgments of
governmental authorities or courts having jurisdiction, relating to the use,
collection, treatment, disposal, storage, control, removal or cleanup of
hazardous waste or materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. In the
event that METLIFE at any time believes that the Property is not free of all
hazardous waste or materials or that Borrower has violated any applicable
environmental law with respect to the Property, then immediately, upon request
by METLIFE, Borrower shall obtain and furnish to METLIFE, at Borrower's sole
cost and expense, an environmental audit and inspection of the Property from an
expert satisfactory to METLIFE. In the event that Borrower fails to immediately
obtain such audit or inspection, METLIFE or its agents may perform or obtain
such audit or inspection at Borrower's sole cost and expense. METLIFE may, but
is not obligated to, enter upon the Property and take such actions and incur
such costs and expenses to effect such compliance as it deems advisable to
protect its interest in the Property; and whether or not Borrower has actual
knowledge of the existence of hazardous waste or materials on the Property or
any adjacent property as of the date hereof, Borrower shall reimburse METLIFE as
provided in Section 23 below for the full amount of all costs and expenses
incurred by METLIFE prior to METLIFE acquiring title to the Property through
foreclosure or acceptance of a deed in lieu of foreclosure, in connection with
such compliance activities. Neither this provision nor any of the other Loan
Documents shall operate to put METLIFE in the position of an owner of the
Property prior to any acquisition of the Property by METLIFE. The rights granted
to METLIFE herein and in the other Loan Documents are granted solely for the
protection of METLIFE's lien and security interest covering the Property, and do
not grant to METLIFE the right to control Borrower's actions, decisions or
policies regarding hazardous waste or materials.
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23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within
ten (10) days after written demand from METLIFE all sums advanced by METLIFE and
all costs and expenses incurred by METLIFE in taking any actions pursuant to the
Loan Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Instrument to protect the Property and shall be secured by
and have the same priority as the lien of this Instrument. If Borrower fails to
pay any such advances, costs and expenses and interest thereon, METLIFE may
apply any undisbursed loan proceeds to pay the same, and, without foreclosing
the lien of this Instrument, may at its option commence an independent action
against Borrower for the recovery of the costs, expenses and/or advances, with
interest, together with costs of suit, costs of title reports and guaranty of
title, disbursements of counsel and reasonable attorneys' fees incurred therein
or in any appeal therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and
valuable consideration, the receipt of which is hereby acknowledged, to secure
the Indebtedness, does hereby absolutely and unconditionally grant, bargain,
sell, transfer, assign, convey, set over and deliver unto METLIFE all right,
title and interest of Borrower in, to and under the Leases of the Property,
whether now in existence or hereafter entered into, and all guaranties,
amendments, extensions and renewals of said Leases and any of them, and all
rents, income and profits which may now or hereafter be or become due or owing
under the Leases, and any of them, or on account of the use of the Property.
Borrower represents, warrants, covenants and agrees with
METLIFE as follows:
(a) The sole ownership of the entire lessor's interest in the
Leases is vested in Borrower, and Borrower has not, and shall not, perform any
acts or execute any other instruments which might prevent METLIFE from fully
exercising its rights with respect to the Leases under any of the terms,
covenants and conditions of this Instrument.
(b) The Leases are and shall be valid and enforceable in
accordance with their terms and have not been and shall not be altered,
modified, amended, terminated, canceled, renewed or surrendered except as
approved in writing by METLIFE. The terms and conditions of the Leases have not
been and shall not be waived in any manner whatsoever except as approved in
writing by METLIFE.
(c) Borrower shall not alter the term or the amount of rent
payable under any Lease without prior written notice to METLIFE and METLIFE's
consent.
(d) There are no defaults now existing under any of the
Leases, and, to the best of Borrower=s knowledge, 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.
(e) Borrower shall give prompt written notice to METLIFE of
any notice received by Borrower claiming that a default has occurred under any
of the Leases on the part of Borrower, together with a complete copy of any such
notice.
(f) Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any lessee under any of
the Leases.
(g) Borrower will not permit any Lease to become subordinate
to any lien other than the lien of this Instrument.
15
<PAGE>
The assignment made hereunder is an absolute, present
assignment from Borrower to METLIFE, effective immediately, and is not merely an
assignment for security purposes but is irrevocable by Borrower so long as the
Indebtedness remains outstanding. Notwithstanding the foregoing, until a notice
is sent to the Borrower in writing that an Event of Default (as defined below)
has occurred under the terms and conditions of the Note or any instrument
constituting security for the Note (which notice is hereafter called a
"Notice"), Borrower is granted a license to receive, collect and enjoy the
rents, income and profits accruing from the Property.
If an Event of Default shall occur, METLIFE may, at its
option, after service of a Notice, receive and collect all such rents, income
and profits as they become due, from the Property. METLIFE shall thereafter
continue to receive and collect all such rents, income and profits, until
METLIFE shall otherwise agree in writing. All sums received by Borrower after
service of such Notice shall be deemed received in trust and shall be
immediately turned over to METLIFE.
Borrower hereby irrevocably appoints METLIFE its true and
lawful attorney-in-fact with power of substitution and with full power for
METLIFE in its own name and capacity or in the name and capacity of Borrower,
from and after service of Notice, to demand, collect, receive and give complete
acquittances for any and all rents, income and profits accruing from the
Property, either in its own name or in the name of Borrower or otherwise, which
METLIFE may deem necessary or desirable in order to collect and enforce the
payment of the rents, income and profits and to demand, correct, receive,
endorse, and deposit all checks, drafts, money orders or notes given in payment
of such rents. Such appointment is coupled with an interest and is irrevocable.
METLIFE shall not be liable for or prejudiced by any loss of any note, checks,
drafts, etc., unless such loss is found by a court of competent jurisdiction to
have been due to the gross negligence or willful misconduct of METLIFE.
METLIFE shall apply the rents received from Borrower=s
lessees, to accrued interest and principal under the Note. If no Event of
Default remains uncured, amounts received in excess of the aggregate monthly
payment due under the Note shall be remitted to Borrower in a timely manner.
Nothing contained herein shall be construed to constitute METLIFE as a
mortgagee-in-possession in absence of its physically taking possession of the
Property.
Borrower also hereby irrevocably appoints METLIFE as its true
and lawful attorney-in-fact to appear in any state or federal bankruptcy,
insolvency, or reorganization proceeding in any state or federal court involving
any of the tenants of the Leases. Lessees of the Property are hereby expressly
authorized and directed, from and after service of a Notice to pay any and all
amounts due Borrower pursuant to the Leases to METLIFE or such nominee as
METLIFE may designate in writing delivered to and received by such lessees who
are expressly relieved of any and all duty, liability or obligation to Borrower
in respect of all payments so made.
16
<PAGE>
If an Event of Default shall occur, METLIFE is hereby vested
with full power from and after service of a Notice to use all measures, legal
and equitable, deemed by it necessary or proper to enforce the assignment
granted hereunder and to collect the rents, income and profits assigned
hereunder, including the right of METLIFE or its designee, to enter upon the
Property, or any part thereof, and take possession of all or any part of the
Property together with all personal property, fixtures, documents, books,
records, papers and accounts of Borrower relating thereto, and may exclude the
Borrower, its agents and servants, wholly therefrom. Borrower hereby grants full
power and authority to METLIFE to exercise all rights, privileges and powers
herein granted at any and all times after service of a Notice, with full power
to use and apply all of the rents and other income herein assigned to the
payment of the costs of managing and operating the Property and of any
indebtedness or liability of Borrower to METLIFE, including but not limited to
the payment of taxes, special assessments, insurance premiums, damage claims,
the costs of maintaining, repairing, rebuilding and restoring the improvements
on the Property or of making the same rentable, reasonable attorneys' fees
incurred in connection with the enforcement of the assignment granted hereunder,
and of principal and interest payments due from Borrower to METLIFE on the Note
and this Instrument, all in such order as METLIFE may determine. METLIFE shall
be under no obligation to exercise or prosecute any of the rights or claims
assigned to it hereunder or to perform or carry out any of the obligations of
the lessor under any of the Leases and does not assume any of the liabilities in
connection with or arising or growing out of the covenants and agreements of
Borrower in the leases. It is further understood that the assignment granted
hereunder shall not operate to place responsibility for the control, care,
management or repair of the Property, or parts thereof, upon METLIFE, nor shall
it operate to make METLIFE liable for the performance of any of the terms and
conditions of any of the Leases, or for any waste of the Property by any lessee
under any of the Leases or any other person, or for any dangerous or defective
condition of the Property or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to any
lessee, licensee, employee or stranger.
25. DEFAULT. The following shall each constitute an event of
default ("Event of Default"):
(a) Failure of or refusal by Borrower to make any payment of
principal, interest, or prepayment premium under the Note when due or to pay any
portion of any other sum secured by this Instrument when due, and such failure
or refusal shall continue for a period of ten (10) days after written notice is
given to Borrower by METLIFE specifying such failure; or
(b) Failure of Borrower within the time required by this
Instrument to make any payment for taxes, insurance or for reserves for such
payments, or any other payment necessary to prevent filing of or discharge of
any lien, and such failure shall continue for a period of ten (10) days after
written notice is given to Borrower by METLIFE specifying such failure; or
(c) Failure by Borrower to observe or perform any obligations
of Borrower to METLIFE on or with respect to any transactions, debts,
undertakings or agreements other than the transaction evidenced by the Note,
following the giving of any notice required thereunder and/or the expiration of
any applicable period of grace provided thereby; or
(d) Failure of Borrower to make any payment or perform any
obligation under any superior liens or encumbrances on the Property, within the
time required thereunder, or commencement of any suit or other action to
foreclose any superior liens or encumbrances; or
(e) Failure by Borrower to observe or perform any of its
obligations under any of the Leases, following the giving of any notice required
thereunder and/or the expiration of any applicable period of grace provided
thereby; or
17
<PAGE>
(f) The Property is transferred or any agreement to transfer
any part or interest in the Property in any manner whatsoever is made or entered
into without the prior written consent of METLIFE, except as specifically
allowed under this Instrument, including without limitation creating or allowing
any liens on the Property or leasing any portion of the Property; or
(g) Filing by Borrower of a voluntary petition in bankruptcy
or filing by Borrower of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or the seeking, consenting to, or acquiescing by Borrower in the
appointment of any trustee, receiver, custodian, conservator or liquidator for
Borrower, any part of the Property, or any of the income or rents of the
Property, or the making by Borrower of any general assignment for the benefit of
creditors, or the inability of or failure by Borrower to pay its debts generally
as they become due, or the insolvency on a balance sheet basis or business
failure of Borrower, or the making or suffering of a preference within the
meaning of federal bankruptcy law or the making of a fraudulent transfer under
applicable federal or state law, or concealment by Borrower of any of its
property in fraud of creditors, or the imposition of a lien upon any of the
property of Borrower which is not discharged in the manner permitted by Section
4 of this Instrument, or the giving of notice by Borrower to any governmental
body of insolvency or suspension of operations; or
(h) Filing of a petition against Borrower seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of Borrower, of
any part of the Property or of any of the income or rents of the Property,
unless such petition shall be dismissed within sixty (60) days after such
filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
(i) The institution of any proceeding for the dissolution or
termination of Borrower voluntarily, involuntarily, or by operation of law; or
(j) A material adverse change occurs in the assets,
liabilities or net worth of Borrower from the assets, liabilities or net worth
of Borrower previously disclosed to METLIFE (the occurrence of such material
adverse change being METLIFE'S reasonable determination based on a review of
Borrower's financial condition); or
(k) Any warranty, representation or statement furnished to
METLIFE by or on behalf of Borrower under the Note, this Instrument, any of the
other Loan Documents or the Certificate and Indemnity Agreement Regarding
Hazardous Substances, shall prove to have been false or misleading in any
material respect; or
(l) Failure of Borrower to observe or perform any other
covenant or condition contained herein and such default shall continue for
thirty (30) days after notice is given to Borrower specifying the nature of the
failure, or if the default cannot be cured within such applicable cure period,
Borrower fails within such time to commence and pursue curative action with
reasonable diligence or fails at any time after expiration of such applicable
cure period to continue with reasonable diligence all necessary curative
actions; provided, however, that no notice of default and no opportunity to cure
shall be required with respect to defaults under Section 17 hereof or if during
the prior twelve (12) months METLIFE has already sent a notice to Borrower
concerning default in performance of the same obligation; or
18
<PAGE>
(m) Failure of Borrower to observe or perform any other
obligation under any other Loan Document or the Certificate and Indemnity
Regarding Hazardous Substances when such observance or performance is due, and
such failure shall continue beyond the applicable cure period set forth in such
Loan Document, or if the default cannot be cured within such applicable cure
period, Borrower fails within such time to commence and pursue curative action
with reasonable diligence or fails at any time after expiration of such
applicable cure period to continue with reasonable diligence all necessary
curative actions. No notice of default and no opportunity to cure shall be
required if during the prior twelve (12) months METLIFE has already sent a
notice to Borrower concerning default in performance of the same obligation; or
(n) Borrower's abandonment of the Property, or the termination
before the end of the stated term of that certain Lease between Borrower and
Carpet Barn dated June 1, 1995; or
(o) Any of the foregoing events occur with respect to any
tenant of the Property, with respect to any guarantor of any of Borrower's
obligations in connection with the Indebtedness or with respect to any guarantor
of any tenant's obligations relating to the Property, or such guarantor dies or
becomes incompetent.
26. RIGHTS AND REMEDIES ON DEFAULT.
26.1 Remedies. Upon the occurrence of any Event of Default and
at any time thereafter, Trustee or METLIFE may exercise any one or more of the
following rights and remedies:
(a) METLIFE may declare all sums secured by this Instrument
immediately due and payable, including any prepayment premium which Borrower
would be required to pay.
(b) The Trustee shall have the right to foreclose by notice
and sale, or METLIFE shall have the right to foreclose by judicial foreclosure,
in either case in accordance with applicable law.
(c) In the event of any foreclosure, to the extent permitted
by applicable law, METLIFE will be entitled to a judgment which will provide
that if the foreclosure sale proceeds are insufficient to satisfy the judgment,
execution may issue for any amount by which the unpaid balance of the
obligations secured by this Instrument exceeds the net sale proceeds payable to
METLIFE.
(d) With respect to all or any part of the Property that
constitutes personalty, METLIFE shall have all rights and remedies of secured
party under the Uniform Commercial Code.
(e) METLIFE shall have the right to have a receiver appointed
to take possession of any or all of the Property, with the power to protect and
preserve the Property, to operate the Property preceding foreclosure or sale, to
collect all the rents and revenues from the Property and apply the proceeds,
over and above cost of the receivership, against the sums due under this
Instrument, and to exercise all of the rights with respect to the Property
described in Section 24 above. The receiver may serve without bond if permitted
by law. METLIFE's right to the appointment of a receiver shall exist whether or
not apparent value of the Property exceeds the sums due under this Instrument by
a substantial amount. Employment by METLIFE shall not disqualify a person from
serving as a receiver.
(f) In the event Borrower remains in possession of the
Property after the Property is sold as provided above or METLIFE otherwise
becomes entitled to possession of the Property upon default of Borrower,
Borrower shall become a tenant at will of METLIFE or the purchaser of the
Property and shall pay a reasonable rental for use of the Property while in
Borrower's possession.
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<PAGE>
(g) Trustee and METLIFE shall have any other right or remedy
provided in this Instrument, the Note, or any other Loan Document or instrument
delivered by Borrower in connection therewith, or available at law, in equity or
otherwise.
(h) METLIFE shall have all the rights and remedies set forth
in Sections 23 and 24.
26.2 Sale of the Property. In exercising its rights and
remedies, the Trustee or METLIFE may, at METLIFE's sole discretion, cause all or
any part of the Property to be sold as a whole or in parcels, and certain
portions of the Property may be sold without selling other portions. METLIFE may
bid at any public sale on all or any portion of the Property.
26.3 Notice of Sale. METLIFE shall give Borrower reasonable
notice of the time and place of any public sale of any personal property or of
the time after which any private sale or other intended disposition of the
personal property is to be made. Reasonable notice shall mean notice given in
accordance with applicable law, including notices given in the manner and at the
times required for notices in a nonjudicial foreclosure.
26.4 Waiver; Election of Remedies. A waiver by either party of
a breach of a provision of this Instrument shall not constitute a waiver of or
prejudice the party's right otherwise to demand strict compliance with that
provision or any other provision. Election by METLIFE to pursue any remedy shall
not exclude pursuit of any other remedy, and all remedies of METLIFE under this
Instrument are cumulative and not exclusive. An election to make expenditures or
take action to perform an obligation of Borrower shall not affect METLIFE's
right to declare a default and exercise its remedies under this Instrument.
27. RECONVEYANCE. Upon payment of all sums secured by this
Instrument, METLIFE shall request Trustee to reconvey the Property and shall
surrender this Instrument and all notes evidencing Indebtedness secured by this
Instrument to Trustee. Trustee shall reconvey the Property without warranty to
the person or persons legally entitled thereto. Such person or persons shall pay
Trustee's costs incurred in so reconveying the Property.
28. PROVISIONS REGARDING TRUSTEE. Trustee shall not be liable
for any error of judgment or act done by Trustee, or be otherwise responsible or
accountable under any circumstances whatsoever. Trustee shall not be personally
liable in case of entry by it or anyone acting by virtue of the powers herein
granted it upon the Property for debts contracted or liability or damages
incurred in the management or operation of the Property. All monies received by
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other monies (except to the extent required by law) and Trustee
shall be under no liability for interest on any monies received by it hereunder.
20
<PAGE>
Trustee may resign by giving of notice of such resignation in
writing to METLIFE. If Trustee shall die, resign or become disqualified from
acting, or shall fail or refuse to exercise its powers hereunder when requested
by METLIFE so to do, or if for any reason and without cause METLIFE shall prefer
to appoint a substitute trustee to act instead of the original Trustee named
herein, or any prior successor or substitute trustee, METLIFE shall have full
power to appoint a substitute trustee and, if preferred, several substitute
trustees in succession who shall succeed to all the estate, rights, powers and
duties of the aforenamed Trustee. Upon appointment by METLIFE and upon recording
of the substitution in the land records of Clark County, Nevada, any new Trustee
appointed pursuant to any of the provisions hereof shall, without any further
act, deed or conveyance, become vested with all the estates, properties, rights,
powers and trusts of its predecessor in the rights hereunder with the same
effect as if originally named as Trustee herein.
29. USE OF PROPERTY. The Property is not currently used for
agricultural, farming, timber or grazing purposes. Borrower warrants that this
Instrument is and will at all times constitute a commercial trust deed, as
defined under appropriate state law.
30. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at
METLIFE's option so long as this Instrument secures Indebtedness held by
METLIFE, may make Future Advances to Borrower. Such Future Advances, with
interest thereon, shall be secured by this Instrument when evidenced by
promissory notes stating that said notes are secured hereby.
31. IMPOSITION OF TAX BY STATE.
31.1 State Taxes Covered. The following constitute
state taxes to which this Section applies:
(a) A specific tax upon trust deeds or upon all or any part of
the indebtedness secured by a trust deed.
(b) A specific tax on a grantor which the taxpayer is
authorized or required to deduct from payments on the indebtedness secured by a
trust deed.
(c) A tax on a trust deed chargeable against the
beneficiary or the holder of the note secured.
(d) A specific tax on all or any portion of the indebtedness
or on payments of principal and interest made by a grantor.
31.2 Remedies. If any state tax to which this Section applies
is enacted subsequent to the date of this Instrument, this shall have the same
effect as an Event of Default, and METLIFE may exercise any or all of the
remedies available to it unless the following conditions are met:
(a) Borrower may lawfully pay the tax or charge imposed by
state tax, and
(b) Borrower pays the tax or charge within thirty (30) days
after notice from METLIFE that the tax law has been enacted.
21
<PAGE>
32. ATTORNEYS' FEES. In the event suit or action is instituted
to enforce or interpret any of the terms of this Instrument (including without
limitation efforts to modify or vacate any automatic stay or injunction), the
prevailing party shall be entitled to recover all expenses reasonably incurred
at, before and after trial and on appeal whether or not taxable as costs, or in
any bankruptcy proceeding including, without limitation, attorneys' fees,
witness fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports, title insurance, trustee fees, and other attorney
fees, incurred by METLIFE that are necessary at any time in METLIFE's opinion
for the protection of its interest or enforcement of its rights shall become a
part of the Indebtedness payable on demand and shall bear interest from the date
of expenditure until repaid at the interest rate as provided in the Note. The
term "attorneys' fees" as used in the Loan Documents shall be deemed to mean
such fees as are reasonable and are actually incurred.
33. GOVERNING LAW; SEVERABILITY. This Instrument shall be
governed by the law of the State of Nevada applicable to contracts made and to
be performed therein (excluding choice-of-law principles). In the event that any
provision or clause of this Instrument or the Note conflicts with applicable
law, such conflict shall not affect other provisions of this Instrument or the
Note which can be given effect without the conflicting provision, and to this
end the provisions of this Instrument and the Note are declared to be severable.
34. TIME OF ESSENCE. Time is of the essence of this
Instrument.
35. CHANGES IN WRITING. This Instrument and any of its terms
may only be changed, waived, discharged or terminated by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. Any agreement subsequently made by Borrower
or METLIFE relating to this Instrument shall be superior to the rights of the
holder of any intervening lien or encumbrance.
36. NO OFFSET. Borrower's obligation to make payments and
perform all obligations, covenants and warranties under this Instrument and
under the Note shall be absolute and unconditional and shall not be affected by
any circumstance, including without limitation any setoff, counterclaim,
abatement, suspension, recoupment, deduction, defense or other right that
Borrower or any guarantor may have or claim against METLIFE or any entity
participating in making the loan secured hereby. The foregoing provisions of
this section, however, do not constitute a waiver of any claim or demand which
Borrower or any guarantor may have in damages or otherwise against METLIFE or
any other person, or preclude Borrower from maintaining a separate action
thereon; provided, however, that Borrower waives any right it may have at law or
in equity to consolidate such separate action with any action or proceeding
brought by METLIFE.
37. WAIVER OF JURY TRIAL. THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTELLIGENTLY WAIVES ANY AND ALL RIGHTS THAT EACH PARTY TO THIS
INSTRUMENT MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF
AMERICA OR THE STATE OF NEVADA, TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING
DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT,
THE LOAN DOCUMENTS OR ANY TRANSACTIONS CONTEMPLATED THEREBY OR RELATED THERETO.
IT IS INTENDED THAT THIS WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS,
CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR PROCEEDING.
BORROWER UNDERSTANDS THAT THIS WAIVER IS A WAIVER OF A CONSTITUTIONAL
SAFEGUARD, AND EACH PARTY INDIVIDUALLY BELIEVES THAT THERE ARE SUFFICIENT
ALTERNATE PROCEDURAL AND SUBSTANTIVE
22
<PAGE>
SAFEGUARDS, INCLUDING, A TRIAL BY AN IMPARTIAL JUDGE, THAT ADEQUATELY OFFSET THE
WAIVER CONTAINED HEREIN.
38. MAXIMUM INTEREST CHARGES. Notwithstanding anything
contained herein or in any of the Loan Documents to the contrary, in no event
shall METLIFE be entitled to receive interest on the loan secured by this
Instrument (the "Loan") in amounts which, when added to all of the other
interest charged, paid to or received by METLIFE on the Loan, causes the rate of
interest on the Loan to exceed the highest lawful rate. Borrower and METLIFE
intend to comply with the applicable law governing the highest lawful rate and
the maximum amount of interest payable on or in connection with the Loan. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Loan, or if acceleration of the final
maturity date of the Loan or if any prepayment by Borrower results in Borrower
having paid or demand having been made on Borrower to pay, any interest in
excess of the amount permitted by applicable law, then all excess amounts
theretofore collected by METLIFE shall be credited on the principal balance of
the Note (or, if the Note has been or would thereby be paid in full, such excess
amounts shall be refunded to Borrower), and the provisions of the Note, this
Instrument and any demand on Borrower shall immediately be deemed reformed and
the amounts thereafter collectible thereunder and hereunder shall be reduced,
without the necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for thereunder and hereunder. The right to accelerate the final
maturity date of the Loan does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and METLIFE
does not intend to collect any unearned interest in the event of acceleration.
All sums paid or agreed to be paid to METLIFE for the use, forbearance or
detention of the Loan shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread through the full term of the Loan
until payment in full so that the rate or amount of interest on account of the
Loan does not exceed the applicable usury ceiling. By execution of this
Instrument, Borrower acknowledges that it believes the Loan to be nonusurious
and agrees that if, at any time, Borrower should have reason to believe that the
Loan is in fact usurious, it will give METLIFE written notice of its belief and
the reasons why Borrower believes the Loan to be usurious, and Borrower agrees
that METLIFE shall have ninety (90) days following its receipt of such written
notice in which to make appropriate refund or other adjustment in order to
correct such condition if it in fact exists.
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<PAGE>
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING
ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED
IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY
CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN
AGREEMENT.
24
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Instrument or
has caused the same to be executed under seal by its representatives thereunto
duly authorized.
BORROWER:
C.B. REALTY OF DELAWARE, INC.,
a Delaware corporation
By:_______________________________
Title:____________________________
Attest: __________________________
Title: __________________________
[SEAL]
Exhibits:
- ---------
Exhibit A - Description of Property
Schedule 1 - Permitted Exceptions
25
<PAGE>
STATE OF NEVADA )
) ss
COUNTY OF CLARK )
This instrument was acknowledged before me on May ___, 1998, by ______
___________________ and __________________________, as _____________________ and
______________________, respectively, of C.B. Realty of Delaware, Inc.
--------------------------------------
[stamp]
26
<PAGE>
Loan No: 009-0000979-001
EXHIBIT A
(105 West Charleston Boulevard, Las Vegas, Clark County, Nevada)
Legal Description:
That portion of the Northeast Quarter (NE1/4) of Section 4, Township 21 South,
Range 61 East, M.D.M., City of Las Vegas, Clark County, Nevada, more
particularly described as follows:
Lot Two (2) as shown by Map thereof in File 82 of Parcel Maps, page 14, in the
Office of the County Recorder of Clark County, Nevada.
27
<PAGE>
Loan No: 009-0000979-001
SCHEDULE 1
(105 West Charleston Boulevard, Las Vegas, Clark County, Nevada)
<TABLE>
<CAPTION>
Permitted Exceptions:
<S> <C>
1. A Right of Way and Easement over, under, upon and across a portion of said land
Granted to : Nevada Power Company
For : Transmission and distribution of electricity
Recorded : October 2, 1974
Document No. : 423414 Book No.: 464
Official Records, Clark County, Nevada.
2. A Right of Way and Easement over, under, upon and across a portion of said land
Granted to : Nevada Power Company and Central Telephone Company
For : power and communication purposes
Recorded : October 2, 1974
Document No. : 423415 Book No.: 464
Official Records, Clark County, Nevada.
3. An Electrical Substation Site Easement over, under, upon and across said land
Granted to : Nevada Power Company
Recorded : October 2, 1974
Document No. : 423416 Book No.: 464
Official Records, Clark County, Nevada.
4. A Right of Way and Easement over, under, upon and across a portion of said land
Granted to : Nevada Power Company
For : Transmission and distribution of electricity
Recorded : May 25, 1981
Document No. : 1366315 Book No.: 1407
Official Records, Clark County, Nevada.
5. Right of Way and Easement over, under, upon and across a portion of said land
Granted to : Las Vegas Valley Water District
For : Construction, operation, maintenance,
repair, renewal, reconstruction and removal of pipelines for
conducting water with the right of ingress and egress
Recorded : July 15, 1987
Document No. : 00760 Book No.: 870715
Official Records, Clark County, Nevada.
6 A Grant of Easement
Granted to : Nevada Power Company
For : power and communication purposes
Recorded : May 1, 1995
Document No. : 01026 Book No.: 950501
Official Records, Clark County, Nevada.
</TABLE>
28
<PAGE>
<TABLE>
<C> <S>
7 A Grant of Easement
Granted to : Nevada Power Company
For : power and communication purposes
Recorded : May 9, 1995
Document No. : 00737 Book No.: 950509
Official Records, Clark County, Nevada.
8 An unrecorded lease as disclosed by Memorandum of Lease affecting the premises herein stated, executed
by and between the parties herein, for the term and upon the terms, covenants and conditions therein
provided:
Dated : June 1, 1995
Landlord : C.B. Realty of Delaware, Inc.
Tenant : Carpet Barn Acquisition Corp.
Term : five years, commencing on the date hereof
and expiring on the fifth anniversary of this date
Recorded : June 2, 1995
Document No. : 00913 Book No.,: 950602
Official Records, Clark County, Nevada. (As a subordinate matter only).
</TABLE>
29
<PAGE>
Prepared by, recording requested by, and after recording return to:
Dorothea S. Costrini
HUNTER, MACLEAN, EXLEY & DUNN, P.C.
200 East Saint Julian Street
Savannah, Georgia 31401
MetLife Capital Financial Corporation
Loan No.: 009-0000979-001
30
<PAGE>
EXHIBIT 4
<PAGE>
ASSIGNMENT OF RENTS AND LEASES
(105 West Charleston Boulevard, Las Vegas, Clark County, Nevada)
THIS ASSIGNMENT, made as of May 13, 1998, by C.B. REALTY OF
DELAWARE, INC., a Delaware corporation, with a mailing address of 105 West
Charleston Boulevard, Las Vegas, Nevada 89102 (hereinafter called "Assignor"),
in favor of METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation, with
a mailing address of Real Estate Department, 10900 Northeast Fourth Street,
Suite 500, Bellevue, Washington 98004 (hereinafter called "METLIFE"),
WITNESSETH :
Assignor, for good and valuable consideration, the receipt of
which is hereby acknowledged, does hereby absolutely and unconditionally grant,
bargain, sell, transfer, assign, convey, set over and deliver unto METLIFE all
right, title and interest of Assignor in, to and under all written and oral
leases and rental agreements of the real estate described in Exhibit A attached
hereto and incorporated herein ("Property"), whether now in existence or
hereafter entered into, and all guaranties, amendments, extensions, renewals and
subleases of said leases and any of them, all of which are hereinafter called
the "Leases," all rents, income and profits which may now or hereafter be or
become due or owing under the Leases, and any of them, or on account of the use
of the Property, any award hereafter made in any bankruptcy, insolvency or
reorganization proceeding in any state or federal court involving any of the
tenants of the Leases, and any and all payments made by such tenants in lieu of
rent.
This Assignment is made for the purpose of securing:
A. The payment of the indebtedness (including any
extensions or renewals thereof) evidenced by a
certain Note ("Note") of Assignor of even date
herewith in the principal sum of Five Hundred
Thousand Dollars ($500,000) and secured by a certain
Deed of Trust, Security Agreement, Assignment of
Leases and Rents and Fixture Filing ("Deed of Trust")
of even date herewith encumbering the Property; and
B. The payment of all other sums with interest thereon
becoming due and payable to METLIFE under the
provisions of the Deed of Trust and any other
instrument constituting security for the Note; and
C. The performance and discharge of each and every term,
covenant and condition contained in the Note, Deed of
Trust and any other instrument constituting security
for the Note.
Assignor represents, warrants, covenants and agrees with
METLIFE as follows:
1. The sole ownership of the entire lessor's interest in
the Leases is or shall be vested in Assignor, and
Assignor has not, and shall not, perform any acts or
execute any other instruments which might prevent
METLIFE from fully exercising its rights under any of
the terms, covenants and conditions of this
Assignment.
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2. The Leases are and shall be valid and enforceable in
accordance with their terms and have not been
altered, modified, amended, terminated, canceled,
renewed or surrendered nor have any of the terms and
conditions thereof been waived in any manner
whatsoever except as approved in writing by METLIFE.
3. Assignor shall not alter the term or the amount of
rent payable or the term of any Lease without notice
to METLIFE and METLIFE's consent.
4. There are no defaults now existing under any of the
Leases, 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.
5. Assignor shall give prompt notice to METLIFE of any
notice received by Assignor claiming that a default
has occurred under any of the Leases on the part of
Assignor, together with a complete copy of any such
notice.
6. Each of the Leases shall remain in full force and
effect irrespective of any merger of the interest of
lessor and any lessee under any of the Leases.
7. Assignor will not permit any Lease to become
subordinate to any lien other than the lien of the
Deed of Trust.
8. All existing Leases are described on Exhibit B
attached hereto and incorporated herein. Assignor has
delivered to Assignee true and correct copies of all
existing Leases and all amendments and modifications
thereto.
The parties further agree as follows:
This Assignment is an absolute, present assignment from
Assignor to METLIFE, effective immediately, and is not merely an assignment for
security purposes. Notwithstanding the foregoing, until a notice is sent to the
Assignor in writing that an Event of Default (as defined in the Note and/or Deed
of Trust) has occurred under the terms and conditions of the Note or any other
instrument constituting additional security for the Note (which notice is
hereafter called a "Notice"), Assignor is granted a license to receive, collect
and enjoy the rents, income and profits accruing from the Property.
If an Event of Default (as defined in the Note and Deed of
Trust) shall occur, METLIFE may, at its option, after service of a Notice,
receive and collect all such rents, income and profits as they become due, from
the Property. METLIFE shall thereafter continue to receive and collect all such
rents, income and profits, until METLIFE shall otherwise agree in writing. All
sums received by Assignor after service of such Notice shall be deemed received
in trust and shall be immediately turned over to METLIFE.
Assignor hereby irrevocably appoints METLIFE its true and
lawful attorney-in-fact with power of substitution and with full power for
METLIFE in its own name and capacity or in the name and capacity of Assignor,
from and after service of Notice, to demand, collect, receive and give complete
acquittances for any and all rents, income and profits accruing from the
Property, either in its own name or in the name of Assignor or otherwise, which
METLIFE may deem necessary or desirable in order to collect and enforce the
payment of the rents, income and profits and to demand, correct, receive,
endorse, and deposit all checks, drafts, money orders or notes given in payment
of such rents. Such appointment is coupled with an interest and is irrevocable.
METLIFE shall not be liable for or prejudiced by any loss of
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any note, checks, drafts, etc., unless such loss is due to the gross negligence
or willful misconduct of METLIFE.
METLIFE shall apply the rents received from Assignor=s
lessees, to accrued interest and principal under the Note. If no Event of
Default remains uncured, amounts received in excess of the aggregate monthly
payment due under the Note shall be remitted to Assignor in a timely manner.
Nothing contained herein shall be construed to constitute METLIFE as a
mortgagee-in-possession in absence of its physically taking possession of the
Property.
Assignor also hereby irrevocably appoints METLIFE as its true
and lawful attorney-in-fact to appear in any state or federal bankruptcy,
insolvency, or reorganization proceeding in any state or federal court involving
any of the tenants of the Leases. Lessees of the Property are hereby expressly
authorized and directed, from and after service of a Notice to pay any and all
amounts due Assignor pursuant to the Leases to METLIFE or such nominee as
METLIFE may designate in writing delivered to and received by such lessees who
are expressly relieved of any and all duty, liability or obligation to Assignor
in respect of all payments so made.
If an Event of Default shall occur, METLIFE is hereby vested
with full power from and after service of a Notice to use all measures, legal
and equitable, deemed by it necessary or proper to enforce this Assignment and
to collect the rents, income and profits assigned hereunder, including the right
of METLIFE or its designee, to enter upon the Property, or any part thereof, and
take possession of all or any part of the Property together with all personal
property, fixtures, documents, books, records, papers and accounts of Assignor
relating thereto, and may exclude the Assignor, its agents and servants, wholly
therefrom. Assignor hereby grants full power and authority to METLIFE to
exercise all rights, privileges and powers herein granted at any and all times
after service of a Notice, with full power to use and apply all of the rents and
other income herein assigned to the payment of the costs of managing and
operating the Property and of any indebtedness or liability of Assignor to
METLIFE, including but not limited to the payment of taxes, special assessments,
insurance premiums, damage claims, the costs of maintaining, repairing,
rebuilding and restoring the improvements on the Property or of making the same
rentable, reasonable attorneys' fees incurred in connection with the enforcement
of this Assignment, and of principal and interest payments due from Assignor to
METLIFE on the Note and the Deed of Trust, all in such order as METLIFE may
determine. METLIFE shall be under no obligation to exercise or prosecute any of
the rights or claims assigned to it hereunder or to perform or carry out any of
the obligations of the lessor under any of the Leases and does not assume any of
the liabilities in connection with or arising or growing out of the covenants
and agreements of Assignor in the leases. It is further understood that this
Assignment shall not operate to place responsibility for the control, care,
management or repair of the Property, or parts thereof, upon METLIFE, nor shall
it operate to make METLIFE liable for the performance of any of the terms and
conditions of any of the Leases, or for any waste of the Property by any lessee
under any of the Leases or any other person, or for any dangerous or defective
condition of the Property or for any negligence in the management, upkeep,
repair or control of the Property resulting in loss or injury or death to any
lessee, licensee, employee or stranger.
Waiver of or acquiescence by METLIFE in any default by the
Assignor, or failure of METLIFE to insist upon strict performance by the
Assignor of any covenants, conditions or agreements in this Assignment, shall
not constitute a waiver of any subsequent or other default or failure, whether
similar or dissimilar.
The rights and remedies of METLIFE under this Assignment are
cumulative and are not in lieu of, but are in addition to any other rights or
remedies which METLIFE shall have under the Note or any other instrument
constituting security for the Note, or at law or in equity.
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If any term of this Assignment, or the application thereof to
any person or circumstances, shall, to any extent, be invalid or unenforceable,
the remainder of this Assignment, or the application of such term to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term of this Assignment shall be valid and
enforceable to the fullest extent permitted by law.
Any and all notices, elections, demands, or requests permitted
or required to be made under this Assignment, including without limitation a
Notice, shall be in writing, signed by the party giving such notice, election,
demand or request, and shall be delivered personally, by telegram, or sent by
registered, certified, or Express United States mail, postage prepaid, or by
Federal Express or similar service requiring a receipt, to the other party at
the address set forth above, or to such other party and at such other address
within the United States of America as any party may designate as provided
herein. The date of receipt of such notice, election, demand or request shall be
the earliest of (i) the date of actual receipt, (ii) three (3) days after the
date of mailing by registered or certified mail, (iii) one (1) day after the
date of mailing by Express Mail, or the delivery (for redelivery) to Federal
Express or another similar service requiring a receipt, or (iv) the date of
personal delivery (or refusal upon presentation for delivery).
Assignor hereby authorizes METLIFE to give written notice of
this Assignment, which may include a copy hereof, at any time to any tenant
under any of the Leases.
The terms "Assignor" and "METLIFE" shall be construed to
include the legal representatives, successors and assigns thereof. The gender
and number used in this Assignment are used as a reference term only and shall
apply with the same effect whether the parties are of the masculine or feminine
gender, corporate or other form, and the singular shall likewise include the
plural.
This Assignment may not be amended, modified or changed nor
shall any waiver of any provisions hereof be effective, except only by an
instrument in writing and signed by the party against whom enforcement of any
waiver, amendment, change, modification or discharge is sought.
Notwithstanding anything contained herein to the contrary, in
no event shall this Assignment be deemed to reduce the indebtedness evidenced by
the Note by an amount in excess of the actual amount of cash received by METLIFE
under the Leases, whether before, during or after the occurrence of an Event of
Default, and Assignor acknowledges that in no event shall the indebtedness
secured hereby be reduced by the value from time to time of the rents, income
and profits of or from the Property. In addition, METLIFE reserves the right, at
any time, whether before or after the occurrence of an Event of Default, to
recharacterize this Assignment as merely constituting security for the
indebtedness of Assignor to METLIFE, which recharacterization shall be made by
written notice delivered to Assignor. METLIFE's receipt of any rents, issues,
and profits pursuant to this Assignment after the institution of foreclosure
proceedings, either by court action or by the private power of sale contained in
any mortgage now or hereafter securing the Note, shall not cure an Event of
Default, as defined in the Note, or affect such proceedings or sale.
This Assignment shall be construed and enforced under the laws
of the State of Nevada (excluding choice-of-law principles).
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IN WITNESS WHEREOF, the said Assignor has caused this
Assignment to be signed and sealed by its duly authorized officers as of the
date first above written.
ASSIGNOR:
C.B. REALTY OF DELAWARE, INC.,
a Delaware corporation
By:___________________________________________
Title:________________________________________
Attest:_______________________________________
Title:________________________________________
[SEAL]
Exhibits:
Exhibit A - Legal Description
Exhibit B - List of Leases
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STATE OF NEVADA )
) ss
COUNTY OF CLARK )
This instrument was acknowledged before me on May, 1998, by ______
___________________ and __________________________, as _____________________ and
______________________, respectively, of C.B. Realty of Delaware, Inc.
----------------------------------
[stamp]
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Loan No: 009-0000979-001
EXHIBIT A
(105 West Charleston Boulevard, Las Vegas, Clark County, Nevada)
Legal Description:
That portion of the Northeast Quarter (NE1/4) of Section 4, Township 21 South,
Range 61 East, M.D.M., City of Las Vegas, Clark County, Nevada, more
particularly described as follows:
Lot Two (2) as shown by Map thereof in File 82 of Parcel Maps, page 14, in the
Office of the County Recorder of Clark County, Nevada.
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Loan No: 009-0000979-001
EXHIBIT B
(105 West Charleston Boulevard, Las Vegas, Clark County, Nevada)
List of Leases:
TENANT DATE AMENDED
Carpet Barn, Inc. 6/1/95 8/1/95
4/1/98
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Prepared by, recording requested by, and when recorded, return to:
Dorothea S. Costrini
Hunter, Maclean, Exley & Dunn, P.C.
200 East Saint Julian Street
Savannah, Georgia 31401
General Electric Capital Business
Asset Funding Corporation
Loan No.: 009-0000979-001
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EXHIBIT 5
<PAGE>
LOAN MODIFICATION AGREEMENT
(105 West Charleston Boulevard, Las Vegas, Nevada)
THIS LOAN ASSUMPTION AGREEMENT (this "Agreement") is made and
entered into as of the ___ day of March, 1999, by and between GENERAL ELECTRIC
CAPITAL BUSINESS ASSET FUNDING CORPORATION, a Delaware corporation, whose
address is Real Estate Department, 10900 Northeast Fourth Street, Suite 500,
Bellevue, Washington 98004 ("Lender"), successor by merger to General Electric
Capital Business Asset Financial Corporation, a Delaware corporation formerly
known as MetLife Capital Financial Corporation ("MetLife"), and NATIONS
FLOORING, INC., a Delaware corporation, whose address is 100 Maiden Lane, 17th
Floor, New York, New York 10038 ("New Borrower"), successor by merger to C.B.
Realty of Delaware, Inc., a Delaware corporation ("Original Borrower"), with
reference to the recitals hereinafter set forth.
R E C I T A L S:
A. MetLife has heretofore made to Original Borrower a certain
loan, pursuant to which Borrower executed and delivered to MetLife the following
documents (collectively, the "Loan Documents"), all dated as of May 13, 1998:
1. A Promissory Note (the "Note") in the principal face
amount of $500,000, on which there is currently owing
the principal sum of $482,005.54.
2. A Commercial Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing
(the "Deed of Trust") respecting the Property
recorded in Book No. 980520, Document No. 01663, of
the Official Records of Clark County, Nevada, with
respect to certain real property in the City of Las
Vegas, Clark County, Nevada, commonly known as 105
West Charleston Boulevard, and more particularly
described in Exhibit A attached hereto (the
"Property").
3. An Assignment of Rents and Leases (the "Assignment")
recorded in Book No. 980520, Document No. 01664, in
the Official Records of Clark County, Nevada.
4. An Indemnity Agreement Regarding Hazardous Materials
(the "Indemnity").
B. Lender is the holder of all of the right, title,
and interest originally held by MetLife under the Loan Documents.
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D. Original Borrower has merged with and into New Borrower,
and New Borrower is the successor by merger to Original Borrower. Under the
terms of Section 17 of the Deed of Trust, the sale, transfer or assignment of
any interest in Borrower requires the Lender's prior written consent. Lender is
willing to consent to the merger of Original Borrower into New Borrower on the
terms and subject to the conditions set forth herein.
E. The parties desire to amend the Loan Documents to reflect
the merger of Original Borrower into New Borrower, the merger of MetLife into
Lender, and New Borrower's ratification of the obligations of Original Borrower
under the Loan Documents.
NOW, THEREFORE, in consideration of the above premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, New Borrower and Lender agree as follows:
1. Consent to Transfer. Lender hereby consents to the merger
of Original Borrower into New Borrower. Nothing contained herein shall be
construed to release New Borrower from any liability of Original Borrower under
the Loan Documents.
2. Ratification of Obligations. New Borrower hereby accepts,
assumes, ratifies, and undertakes to perform all covenants, obligations and
liabilities of Original Borrower under the Loan Documents. New Borrower shall
execute such Uniform Commercial Code financing statements and amendments and
such other documentation as Lender may reasonably deem appropriate or necessary
in order to protect its security interest in the Property.
3. Loan Documents. Except as is expressly set forth herein,
the Loan Documents shall remain unmodified and in full force and effect.
4. Notices. The addresses of New Borrower and Lender for
notices pursuant to Section 18 of the Deed of Trust and otherwise under the Loan
Documents shall be their respective addresses shown in the first paragraph
hereof.
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5. Representations and Warranties of New Borrower. New
Borrower hereby represents, warrants and covenants with Lender as follows:
(a) This Agreement is the legally, valid and
binding obligation of New Borrower,
enforceable against it in accordance with
its terms, except as enforcement may be
limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws
or equitable principles relating to or
limiting creditors' rights generally.
(b) There is no action or proceeding pending or
threatened against New Borrower which may
substantially affect New Borrower's ability
to perform under this Agreement or the
validity, priority or enforceability of this
Agreement.
(c) The execution, delivery and performance of
this Agreement have not constituted and will
not constitute a breach, default, or
violation of or under any agreement,
indenture, contract, lease, law, order,
decree, judgment or injunction to which New
Borrower is a party or may be bound.
(d) No representation or warranty of New
Borrower contained in this Agreement
contains any untrue statement of a material
fact, or omits to state a material fact
necessary to make the statements contained
herein or therein not misleading.
(e) There exists no default under any of the
Loan Documents.
(f) All taxes due and payable on the Property
have been paid.
(g) Any and all certificates of occupancy,
permits, licenses, and other authorizations
required for the operation of the Property
are in full force and effect.
6. Incorporation of Exhibits, Etc.. The preamble, recitals and
exhibits hereto are hereby incorporated into this Agreement.
7 . Governing Law. This Agreement, and the transaction
contemplated hereunder, shall be governed by and construed in accordance with
the laws of the State of Nevada applicable to contracts made and to be performed
therein (excluding choice-of-law principles).
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8. Counterparts. This Agreement may be executed in
any number of counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
9. Attorneys' Fees of Lender. Borrower shall reimburse the
Lender for its reasonable out-of-pocket expenses and pay the fees and
disbursements of Hunter, Maclean, Exley & Dunn, P.C., counsel for the Lender, in
connection with the preparation of this Agreement and the exhibits hereto and
any and all other documents and agreements pursuant hereto.
10. Modification. No provision of this Agreement may be
changed, waived, discharged, or terminated except by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge,
or termination is sought. This Agreement shall inure to the benefit and be
binding upon the parties hereto and their respective heirs, successors and
permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers, under seal, as of the day and year
first above written.
LENDER:
GENERAL ELECTRIC CAPITAL BUSINESS
ASSET FUNDING CORPORATION,
a Delaware corporation
By: _________________________________________
Title:________________________________________
Attest:_______________________________________
Title:________________________________________
[SEAL]
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NEW BORROWER:
NATIONS FLOORING, INC.,
a Delaware corporation
By: _________________________________________
Title:________________________________________
Attest:_______________________________________
Title:________________________________________
[SEAL]
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STATE OF __________ )
) ss
COUNTY OF _________ )
This instrument was acknowledged before me on March ___, 1999, by
______ ___________________ and __________________________, as
_____________________ and ______________________, respectively, of Nations
Flooring, Inc.
- --------------------------------------
[stamp]
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STATE OF WASHINGTON )
) ss
COUNTY OF KING )
This instrument was acknowledged before me on March ___, 1999, by
__________________ and __________________________, as _____________________ and
______________________, respectively, of General Electric Capital Business Asset
Funding
Corporation.
- --------------------------------------
[stamp]
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EXHIBIT A
(105 West Charleston Boulevard, Las Vegas, Nevada)
Legal Description:
That portion of the Northeast Quarter (NE1/4) of Section 4, Township 21 South,
Range 61 East, M.D.M., City of Las Vegas, Clark County, Nevada, more
particularly described as follows:
Lot Two (2) as shown by Map thereof in File 82 of Parcel Maps, page 14, in the
Office of the County Recorder of Clark County, Nevada.
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