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To Whom It May Concern:

I have reviewed the letter from your prospective Lender on a loan for your hotel project. I
found the letters terms and would like to offer the following as an edit.
I have rewritten terms and definitions to match an interpretation of Fidelitys terms with your
needs and acceptable provisions. Moreover, I have added clearer terms for party responsibilities,
party rights in termination, and default remedies. I believe each of these provisions are
necessary to protect Aragon in the event of a dispute. The current offer has very little protection
for Aragon in the event of intentional or unintentional breaches. For example, the offer mentions
title insurance, but no kind of rent insurance.
The Parties and Persons of Interest
The earlier draft had no provisions which explicitly defined the role of Aragon and Fidelity in
this transaction. Different terms carry different legal connotations, and it would be preferable if
the document consistently made reference to both parties.
Borrower. The Borrower shall be Aragon Development Corporation, and they shall be the legal
and equitable owners of the real property securing this Loan.
Lender. The Lender shall be Fidelity Assurance Life, and they shall be the legal Lenders of
funds for the debt incurred constructing, Aragon Resort Hotel. Lender accepts the mortgaging
of Aragon Resort Hotel as sufficient collateral and consideration for this loan.
Interim Lender. The interim lender shall be selected by the Borrower. The Interim Lender
will provide Borrower with construction funds for the construction of the hotel. Lender agrees
to enter into a note purchase or buy-sell agreement with Interim Lender in form satisfactory
to Lender and its counsel at the request of the Interim Lender. Due execution and delivery of
all documents and instruments shall be supported by such corporate resolutions and opinions of
counsel for Lender. Borrower At its request Lender
Architectural Firm. Messrs. Tassie, Elrod & Lewis shall provide all plans and specifications
for the construction.
Charges and Fees Not Related to Construction
Fidelitys offer did not include clear terms for taxes and fees incidental to construction. I intend
to reassure Fidelity that its responsibility extends to everything but the risks of construction. The
converse Interim Lenders agreement will contrast with terms which expressly apply only to the
Interim Lender. These provisions should make clear the costs which go to the Lender and
which to the Borrower leaving the Interim Lender the rest of the considerations.
Loan costs. All costs of making this Loan, including but not limited to costs of appraisal, title
fees, attorneys fees, and financial statements shall be the responsibility of the Borrower.

Taxes and Impositions. The Loan documents shall provide that, Borrower shall pay all federal,
state, and municipal taxes, assessments, water and sewer charges, and any other impositions
imposed upon Borrower or the Property (the "Impositions"). Provided Borrower is not then in
default, Borrower shall have the right to contest the validity or amount of any Imposition,
provided that
a. Security satisfactory to Lender is deposited with Lender;
b. The contest operates to suspend collection and is maintained and prosecuted with
diligence; and
c. Borrower pays the contested Imposition and all costs and penalties and delivers evidence
of the payment to Lender at least thirty (30) days before the sale or other transfer of the
Borrower shall also have the right to pay any Imposition under protest.
Fidelitys offer only mentioned title insurance. As you know, title insurance will not cover either
party for the myriad of things which can go wrong even after construction. As such, these
provisions are not geared toward assuring the
Rent insurance. This coverage shall be maintained if required by Lender, covering against the
loss of rents in the event the improvements on the property are damaged and any tenants are
thereby excused from paying rent, or in the event that damage delays the completion of the
improvements and Borrower's receipt of anticipated rents. The amount of coverage shall equal
or exceed the actual or projected annual rent roll for the insured improvements. The policy shall
show Lender as the loss payee and shall include an excess value endorsement covering losses
due to renting the improvements at a lower rate after a casualty related cancellation of leases that
provided for a higher rental rate.
Title policy. At Lenders cost and expense, Borrower shall provide title insurance with respect
to the mortgage document. The policy shall establish the mortgage stands of record as a valid
first lien encumbrance, insured under extended coverage Lenders form policies of title
insurance, with co-insurance satisfactory to Lender. The title insurers shall be of sufficient
financial standing and reputation to meet Borrower and Lenders requirements. The title
insurance shall be based upon a survey acceptable to Lender and Borrower and prepared by a
surveyor of whom they approve.
Upon completion the title to the property shall be transferred to the Aragon Holding Company, a
limited liability partnership, which shall have been formed and capitalized to Lenders
satisfaction, based on Lenders sole discretion.

I have also added a provision conceding that Aragon will pay Fidelitys counsel fees for the
document review, but only as far as is necessary, reasonable, and documented.
Required Documents. Opinion letter from Borrower's counsel opining that Borrower is
authorized to do business in the state of Gotham, that the Borrower is authorized to execute the
required loan documents at closing, that the loan documents are valid and enforceable according
to their terms, that the loan is not usurious, and such additional matters as may be required by
counsel for Lender.
Approval of Loan Papers. All documentation for the loan shall be in a form satisfactory to
Lenders counsel, Messrs. Thatcher & Voit. Borrower agrees to pay all necessary, reasonable
and documented fees of said counsel.
Approval of Plans and Specifications. All of the improvements shall have been completed in
accordance with final plans and specifications prepared by Messrs. Tassie, Elrod & Lewis
pursuant to its Job Order No. 15728. No change in plans and specifications shall occur without
Lender and Borrowers prior written consent, which both parties reserve the right to refuse.
Completion in accordance with all the plans and specifications shall be deemed to have occurred
and it has been certified to Lender in form satisfactory to them that:
a. The premises have been accepted as complete by Host International Hotels;
b. Host International Hotels has taken possession of the premises pursuant to a
management contract.
c. A Certification of Completions shall have been issued by the building inspector and all
other officials of the City and County of Gotham whose certification is required to
establish completion of the building in accordance with the plans and specifications; and
d. Completion shall have been certified by Lenders architectural supervisor and
respresentative, Ms. Lucia Del Roggia of Messrs. Handy, Gordon, Stockwell &
Lindeman of Gotham.
Loan documents. Copies of all Loan documents, including but not limited to, the Note, Deed of
Trust or Mortgage, Development Loan Agreement, and Participation Agreement shall be
submitted to Lender prior to the closing of the Loan and shall be subject to the final approval of
The Loan
I could interpret the terms of repayment in the offer in two ways:
1. The loan is for 20 million dollars over 20 years. Interest does not become part of the
principal. Payments are calculated as if for a 25 year loan with a 10.25% interest rate per
annum. All remaining principal is due on the 20th anniversary of the note. All payments
are made monthly, and only apply to the interest for the first ten years. Payments would

equal $170,833.73 per month for the first ten years. After this the payment of interest and
principal are based on a cumbersome and ambiguous calculation involving penalty fees.
It is unclear whether having principal and interest payable in level monthly payments of
principal means the principal will be paid after the first 10 years or if no principal can be
paid without penalty until maturity.
2. The loan is for 20 million dollars over 20 years. Payments are calculated as if for a 25
year loan with a 10.25% interest rate per annum. All remaining principal is due on the
20th anniversary of the note. Payments go toward the interest for the first 10 years, but
nothing goes toward the principal. After ten years, you may elect to pay the principal
only in full with a prepayment penalty. At maturity, the entire principal and any
remaining interest comes due.
I have segregated the loan terms for clarity and simplicity. I have also mad distinctions between
interest, principal, and penalty payments which should be easier to follow. Under the new
payment terms, Aragon will pay $20,000,000 in principal, $27,118,882.58 in interest over two
hundred-forty (240) payments of $157,062 per month. The final balloon payment being
Loan amount. The loan shall be in the principal amount of $20,000,000.
Term. The term of the Loan shall be 240 months, at which time the full amount of the Loan
shall be due and payable. Payments are due monthly.
Interest rate. The Loan shall bear interest at the rate of 10.25% per annum on the principal
balance outstanding. Interest shall be a simple annual interest rate, not a compounding interest
Payment: Payments shall be scheduled as if the loan were for twenty-five (25) years instead of
twenty (20). For the first ten (10) years payments shall go toward the interest only. After this
period, Borrower may choose to pay a penalty and prepay the entire principal and use the
remaining time to pay the remaining interest OR the Borrower may choose to continue making
payments on interest until the entire loan is due and payable on its twentieth (20th) anniversary.
Prepayment: No prepayment of Principal may be made during the first ten (10) years after the
date on which amortization of Principal begins. Thereafter, the Loan may be prepaid in full upon
payment of an initial prepayment charge in the amount of 3% of the unpaid principal balance if
such prepayment is made in the eleventh loan year after amortization begins. The said percentage
shall decline at the rate of 0.25% in each succeeding loan year until the loan reaches maturity.
Installments shall be applied first to interest at the rate specified in this Commitment Letter and
the balance in reduction of principal.
Remedies. Each party hereto shall be entitled to specific performance of the covenants,
agreements, rights, and options contained in this Agreement. It is the express intent of all parties

hereto that the remedies of Lender under the Commitment Letter and the rights of Lender to
resort to specific performance as herein provided shall be cumulative and that the remedies set
forth in the Commitment Letter, including the provision for retaining the commitment fee
which is consideration for the issuance of the Commitment Letter, shall not constitute the only
remedies available to Lender in the case of any breach of this Agreement by Lender or
Borrower. Time is of the essence in this Agreement.
Notices. All notices, demands, and requests hereunder shall be in writing and shall be deemed to
have been properly given if hand delivered or sent by U.S. Registered or Certified Mail, return
receipt requested, postage prepaid, addressed to the parties at their respective addresses.
Termination. This Agreement will terminate upon:
a. Full payment of the loan and its interest by the Borrower.
b. The mutual agreement of Borrower and Lender expressed in writing.
Modification. This Agreement may not be changed or modified in any manner other than by an
agreement in writing signed by all of the parties hereto.
Consents Not to Be Unreasonably Delayed. Whenever any party's consent or approval is
required, such consent or approval shall not be unreasonably delayed.
Governing Law. All disputes as to legality, interpretation, application or performance of this
Agreement or any of its terms shall be governed by the laws of the State of Gotham.
No Waiver. No waiver of any of the terms or conditions of this Agreement shall constitute a
waiver of any other term or condition of this Agreement.
Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors and assigns subject,
however, to any restrictions on assignment contained in the Commitment Letter, the
Construction Loan Agreement and the Loan Papers.
Commitment fee. This commitment will be void unless it is funded in accordance with its terms
on or before the expiration of two years from its date. This commitment is good for a period of
fifteen (15) days. To accept, Lender must sign and return an executed copy of it. Borrower
agrees to a non-refundable commitment fee of $100,000 except where Borrower is entitled to a
credit of up to Seventy-Five Thousand Dollars ($75,000) on closing costs in the event the loan is
consumated. The fee shall be delivered to the Lender upon receipt of the executed copy of this
commitment letter and shall be deemed fully earned by the Lender at that time.