FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This First Amendment to Loan and Security Agreement (hereinafter
referred to as the "First Modification Agreement") is made as of the 7th day of
September, 1996 by and among TAMMAC FINANCIAL CORP., a Delaware Corporation,
having its principal office located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the "Lender"), and ILX
INCORPORATED (f/k/a International Leisure Enterprises Incorporated), an Arizona
Corporation, having its principal place of business located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the
"Borrower").
R E C I T A L S:
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A. On or about September 7, 1994, Borrower entered into a certain Loan
and Security Agreement dated as of that date providing for Lender to advance
certain sums to Borrower on a secured basis up to a maximum principal sum of Two
Million ($2,000,000) Dollars (the "Loan Agreement").
B. The obligations of the Borrower as more particularly set forth in
the Loan Agreement, are evidenced by, among other documents, that certain
Promissory Note dated September 7, 1994 executed and delivered by Borrower to
TAMMAC in the principal sum of up to TWO MILLION ($2,000,000) DOLLARS (the
"Note").
C. To secure the payment and performance of the Borrower's obligations
pursuant to the Loan Agreement and the Note, the Borrower executed and delivered
to TAMMAC: (i) that certain Deed of Trust, Security Agreement and Financing
Statement made as of September 7, 1994, designating the Borrower as "Grantor",
the Public Trustee of Larimer County, Colorado as "Trustee", for the benefit of
TAMMAC, as "Beneficiary" (the "Deed of Trust"), which Deed of Trust was recorded
in the Larimer County recording office on September 13, 1994, as Reception
Number 94075818, covering the "Premises" and "Trust Property" more particularly
described therein; and (ii) that certain Collateral Assignment of Lease or
Leases dated September 7, 1994 executed and delivered by Borrower, as "Assignor"
in favor of Lender (the "Assignment of Leases"), which Assignment of Leases was
recorded in the Larimer County recording office on September 13, 1994 as
Reception Number 94075819, covering the Premises as more particularly described
therein.
D. In conjunction with the Loan, and to perfect the security interest
granted by the Borrower to Lender in and to the Collateral described in the Loan
Agreement, the Borrower executed and delivered to TAMMAC certain Uniform
Commercial Code Financing Statements ("UCCs"), which UCCs were filed or recorded
in the Offices of the Secretary of State of Arizona and the Larimer County,
Colorado recording office.
E. In conjunction with the Loan, the Borrower executed and delivered or
caused to be executed and delivered to TAMMAC an Environmental Indemnity
Agreement with respect to the Premises, Incumbency Certificates, Corporate
Resolutions, an Estoppel Certificate, a
Governmental Regulation Compliance Affidavit and related documents (the "Other
Loan Documents").
F. The Loan Agreement, the Note, the Deed of Trust, the Assignment of
Leases, the UCC's and the Other Loan Documents, all as amended, modified,
renewed, substituted or replaced, whether contemporaneously herewith or at any
time hereafter, are hereinafter sometimes collectively referred to as the "Loan
Documents."
G. Contemporaneously with the execution and delivery of the Loan
Documents, the Borrower amended that certain Financing Agreement dated September
11, 1991 (the "Financing Agreement") entered into by and among Borrower and
Lender, setting forth the terms and conditions regarding Borrower's sale and
Lender's purchase of certain consumer installment obligations generated at the
Premises.
H. Pursuant to the term of the Loan Agreement, the Draw Period expires
on September 7, 1996.
I. The Borrower has requested that Lender extend the Draw Period for an
additional eighteen (18) months, increase the Advance Limit and amend and modify
certain additional terms and conditions of the Loan Agreement.
J. The Lender has agreed, subject to the terms and conditions
hereinafter provided, to enter into this First Modification Agreement.
NOW, THEREFORE, in consideration of Lender's present agreement to
modify the Loan Documents as set forth herein, Borrower has agreed to execute
and deliver this First Modification Agreement and in consideration of the mutual
covenants, promises and agreements herein contained, it is agreed as follows:
1. Definitions:
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Unless otherwise defined herein, all capitalized and defined terms used
herein shall have the same meaning set forth in the Loan Documents.
2. Recitals:
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The recitals set forth above are hereby incorporated herein as if set
forth at length. The Borrower acknowledges and confirms that all of the
aforesaid recitals are true, accurate and correct in all respects.
3. Estoppel with Regard to Present Principal Balance Due.
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Borrower acknowledges and agrees that the outstanding unpaid principal
balance remaining due to TAMMAC under the Loan, without offset, defense or
counterclaim, as of the date of this First Modification Agreement, is:
$1,193,627.46.
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4. Continued Validity of Loan Documents:
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Borrower hereby acknowledges, ratifies, confirms and affirms: (i) the
extent and validity of the Loan Documents; (ii) that said Loan Documents are and
remain valid, enforceable in accordance with their respective terms and are and
remain in full force and effect as of the date hereof; (iii) that the Loan
Documents are not subject to any real or personal defenses whatsoever; (iv) that
pursuant to the security interests granted to Lender pursuant to the Loan
Documents, the Loan Documents constitute a valid second mortgage lien upon the
Premises and a continuing valid first perfected lien upon the property described
in the UCC's, which security interest and liens secure the payment and
performance of the Obligations due and owing under the Loan Documents. The
Borrower warrants and represents that all representations contained in the Loan
Documents are true and complete as of the date hereof, no warranty therein
contained has been breached as of the date hereof and it is in full compliance
with all the terms and conditions thereof and has performed all obligations on
its part to be performed therein.
5. Representations, Warrants and Covenants:
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The Borrower hereby represents, warrants and covenants as follows:
A. The Borrower has disclosed its current financial condition and
circumstances to Lender. Any and all substantial and/or material or adverse
changes in its financial condition and circumstances which shall occur after the
date of the disclosure of its financial condition shall be immediately brought
to the attention of Lender by Borrower and Lender shall be promptly notified in
writing of same by Borrower.
B. To the best of Borrower's knowledge, information and reasonable
belief, its execution, delivery and performance in accordance with the terms of
this First Modification Agreement does not violate any applicable law, rule,
regulation or order of any governmental authority or in any way conflict with or
result in a breach of any of the terms, conditions or provisions of any other
agreement or instrument to which it may be bound.
C. The financial disclosures made by the Borrower accurately and fairly
presents its financial condition and circumstances as of the date of this First
Modification Agreement and there had been no further substantial and/or material
adverse changes in its financial condition and circumstances as of the date of
this First Modification Agreement.
D. There are no actions, suits or proceedings pending (nor to the
Borrower's knowledge any actions, suits or proceedings threatened, nor is there
any basis therefore), against or in any way relating adversely to its properties
in any court or before any arbitrator of any kind or before any governmental or
non-government body which, if adversely determined, would singularly or in the
aggregate have a material adverse affect on its financial condition.
E. The Borrower has no knowledge of any material violations of and has
not received written notice from any governmental authority concerning any
environmental, health, fire, safety, building, engineering, or zoning or code
violations with respect to the Premises or any portion thereof.
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6. Modification to All of the Loan Documents:
A. Wherever the sum of TWO MILLION ($2,000,000.00) DOLLARS appears in
the Loan Documents, same shall be deleted and the sum of $2,193,627.46 shall be
inserted in lieu thereof.
B. Wherever the word or words "Note" or "Promissory Note" shall appear,
said term or terms shall be deemed to mean the Amended and Restated Promissory
Note executed contemporaneously with this First Modification Agreement.
7. Modification to the Loan Agreement. From and after the date of this
First Modification Agreement, the Loan Agreement is hereby modified as follows:
A. Section I.1 is deleted and replaced with the following:
1. Acceptable Contract.: For purposes of this Agreement, an
"Acceptable Contract" shall be a consumer contract or agreement and all related
documents entered into between the Borrower as seller and/or lender and a
Consumer as the purchaser and/or borrower of (or relating to) a timeshare
interest defined in and created by the Project Documents, which satisfy the
following requirements, and which are in all other respects acceptable to
Lender: (i) Borrower is the seller of a Unit Week under a Contract to a Consumer
who is a United States resident, which Contract shall have a term of at least
four years, except for non-interest bearing Contracts, which shall have a term
of at least one year; (ii) the purchase price under the terms of the Contract is
payable in not more than 84 equal monthly installments in U.S. currency; (iii)
no monthly installment is more than 30 days contractually delinquent under the
original terms of the Contract, and neither the Borrower nor the Consumer is (in
the sole discretion of Lender) materially in default under the terms of the
Contract; (iv) all documents relating to the Contract and Project have been
executed and delivered and copies are readily available to Lender in the files
of Borrower; (v) none of the Contracts are or shall be subject to any defense,
offset, counterclaim, discount or allowance except as otherwise consented to in
writing by Lender; (vi) the terms of any Contract and all related documents
shall comply in all respects with all applicable laws and regulations
promulgated thereunder, including without limitation, the provisions of the
Federal Consumer Credit Protection Act of 1968, the Federal Consumer Leasing Act
of 1976, the Real Estate Settlement Procedures Act, Regulation X, the
Truth-in-Lending Act and Regulation Z; (vii) a cash down payment has been
received in an amount equal to at least 10% of the purchase price under the
Contract or, if the Consumer is upgrading his Unit Week, the 10% requirement may
be met by aggregating the cash down payment and principal payments under the
prior and current Contracts, prior to any discount; (viii) the rate of interest
thereon applied to the unpaid balance (if said Contract provides for the payment
of interest) is at least five (5) percentage points above the highest prime rate
as announced in The Wall Street Journal on the business day preceding the
closing of the Loan; (ix) the Consumer has immediate access to a Unit Week which
has been developed to the specifications provided in the Project Documents,
approvals and Contract; (x) at least one monthly payment has been made thereon
and any applicable statutory or contractual "cooling off" or recision period has
expired; (xi) under which no single Consumer has a balance due
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Borrower in excess of $15,000.00, unless specifically approved in writing by
Lender; (xii) Borrower is the sole owner of the Contract and has not sold,
assigned, mortgaged, pledged or hypothecated all or any portion thereof, nor is
the Contract subject to any claim, lien or security interest of any person or
entity, including without limitation, the United States, or any agencies or
instrumentality's thereof; and (xiii) an Acceptable Contract shall not include a
contract where the Consumer shall have filed for protection under any bankruptcy
or insolvency laws or shall have been the subject of a prior or existing
judgment, repossession or foreclosure or any charge-off relating to any account;
(xiv) the Contract shall be valid, enforceable and legally binding upon the
Consumer.
B. Section I.4 is deleted and replaced with the following:
4. Advance Limit: The term "Advance Limit" shall mean the
loans or Advances which the Lender may, from time to time when requested by
Borrower make to Borrower, and which shall not in the aggregate at any time
exceed the lesser: (i) $2,193,627.46; or (ii) the product of eighty-five (85%)
percent multiplied by the aggregate remaining principal balance of the
Acceptable Contracts in which Lender is granted a security interest hereunder.
C. Section I.26 is deleted and replaced with the following:
26. Related Documents: "Related Documents" means, as
applicable to each Contract, the credit package, which shall include, but not be
limited to, a credit report relating to each of the Consumers executing said
Contract issued by a nationally recognized credit reporting agency or service,
security agreements, mortgages, mortgage deeds, deeds of trust securing the
Contracts and encumbering the Unit Weeks, guaranty agreements, all records
pertaining to the Contracts, including, but not limited to, all files, closing
or settlement statements, title insurance reports and policies, copies of deeds,
contracts, prospectuses delivered to Consumers, public offering statements,
receipt of said prospectuses and public offering statements, truth-in-lending
disclosure statements, information, documents, records and other writings or
documents of every kind and nature submitted and/or executed by or on behalf of
a Consumer and relating to the Contracts and the Consumer's financing thereof.
D. Section 2.2(a) is deleted and replaced with the following:
2. Advance
(a) At Borrower's request, Advances will be made
by Lender during the period commencing from the date of this First Modification
Agreement and ending eighteen (18) months thereafter (the "Draw Period"),
provided, however, that no Advances will be made to Borrower if an Event of
Default exists, or if the aggregate amount of all Advances (including the
Advance requested), exceeds or would exceed the Advance Limit.
E. Section II.9 is deleted and replaced with the following:
9. Mandatory Payments: Unless accelerated pursuant to
the terms and conditions of this Agreement, or paid before the scheduled
Maturity Date of the Loan, the
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Borrower shall pay to Lender sixty-six (66) consecutive minimum monthly payments
each in an amount equal to ninety-two (92%) percent of the scheduled monthly
payments of principal and interest due on the Acceptable Contracts comprising
the Collateral for the Loan ("Mandatory Payments"). All Mandatory Payments as
herein above provided shall be applied first to the payment of accrued and
unpaid interest and the balance, if any, shall be applied to the payment of the
installments of principal then remaining unpaid. The aforesaid payments shall be
payable in arrears on the first day of each calendar month commencing on the
first day of October, 1996 and shall continue until such time as the full
principal sum, together with all amounts owing under the Loan had been paid in
full. The aforesaid payment shall be made payable out of the monthly collections
received under the Acceptable Contracts. In the event the monthly collections
are in excess of the applicable monthly Mandatory Payments as aforesaid, said
excess shall be applied as a prepayment of the principal balance remaining due
under the Loan. In the event the monthly collections from the Acceptable
Contracts are insufficient to pay the aforesaid monthly principal and/or
interest on the Loan the Borrower shall pay the interest and/or principal
insufficiency on the first of each month as aforesaid.
F. The following Affirmative Covenant is added at the end of
Section V:
24. Conversion of Contracts: Borrower agrees to pay to Lender
a conversion fee equal to one hundred and twenty-five dollars ($125.00) for each
Contract constituting an Acceptable Contract hereunder and pledged to Lender as
security for the Borrower's Obligations, which Contract is converted,
transferred or exchanged to, for, or with an interest in that certain timeshare
condominium project, commonly known as Los Abrigados Resort & Spa, located at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, being developed by Los Abrigados Partners
Limited Partnership, an Arizona Limited Partnership ("LAP"), an affiliate of
Borrower (a "Conversion Contract"). Said fee shall be due and payable
contemporaneously with LAP's acceptance of the Conversion Contract
8. Documentation to be furnished to Lender: Lender's Agreement to enter
into this First Modification Agreement as herein set forth is expressly
conditioned upon Lender's and its counsel's receipt, review and acceptance,
prior to the execution and delivery of this First Modification Agreement (unless
otherwise noted), of the following documentation and information:
A. True copies of the existing Consumer documentation, if same
differs from the Consumer documentation previously approved by Lender and its
counsel or a statement to the effect that the existing Consumer Documentation
has not changed.
B. The filed Certificate or Articles of Incorporation and
By-Laws, as amended to date for the Borrower. This requirement may be satisfied
by a written certification that the Certificate or Articles of Incorporation and
By-Laws of the Borrower, which are currently in Lender's possession, have not
been amended or modified in any respect.
C. The names and titles of all officers and directors of the
Borrower.
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D. A certificate of good standing for the Borrower, or such other
documentation as is reasonably satisfactory to Lender, in all jurisdictions in
which Borrower is authorized or licensed to do business,
E. Corporate franchise tax searches and/or certificate from the
Director of Revenue, or such other documentation as is reasonably satisfactory
to Lender, that no taxes are due to the taxing authorities having jurisdiction
over the Borrower.
F Continuation Uniform Commercial Code financing searches for the
Borrower in all applicable jurisdictions where the Borrower is conducting
business.
G. An updated, completed and signed Environmental Questionnaire
relating to the Resort.
H. Federal tax lien, state tax lien, and judgment searches for
the Borrower.
I. Evidence of continuing compliance with all applicable federal,
state and local environmental laws, rules, regulations and ordinances relating
to the Resort and the Borrower.
J. An updated listing and copy of all certificates, permits and
licenses required in connection with the use and operation of the Resort and the
sale and financing of Timeshare Estates.
K. A listing and description of all pending lawsuits or similar
proceedings involving the Borrower or the Resort, in which the Borrower or the
Resort is a defendant or otherwise defending any claim which is in excess of ten
thousand ($10,000.00) dollars.
L. An opinion letter from Borrower's counsel.
M. An endorsement to the title insurance policy previously issued
to lender increasing the amount of the coverage of title insurance policy to
$2,193,627.46, and which confirms that the modification to the Deed of Trust has
been properly indexed and recorded in the Larimer County recording office and
that there are no exceptions, liens, mortgages, encumbrances, restrictions or
similar or dissimilar clouds on title, except for Permitted Liens or other
exceptions that are approved by its Lender and its counsel.
N. All other documentation and information provided for herein or
which Lender may request or require.
9. Further Assurances: Borrower agrees that it shall execute and/or
deliver to Lender any documents, information or agreements as may be reasonably
requested by Lender or its counsel at any time so long as any sums due or
obligations to be performed under the Loan Documents remain unpaid or
unperformed.
10. Release and Discharge of Lender: Borrower hereby releases and
discharges Lender of and from all claims, causes of action, demands, damages or
suits, at law or in equity, which it may, as of the date of this First
Modification Agreement, have or claim to have against the
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Lender relating to, rising out of or resulting from its lending relationship
with the Lender, or with respect to the Obligations due to Lender as evidenced
by the Loan Documents or the Premises or the other Collateral.
11. Governing Law: This First Modification Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to the principles of conflicts of laws.
12. Binding Effect: This First Modification Agreement is binding upon,
inures to the benefit of and is enforceable by the successor and assigns of the
parties hereto. This First Modification Agreement is not assignable by Borrower.
13. Non-Waiver: No failure or delay on the part of Lender, or its
successors and assigns, in the exercise of any right, power or privilege
pursuant to the Loan Documents or this First Modification Agreement is to be
construed to be or operate as a waiver. Partial exercise of any right, power or
privilege by Lender is not to preclude any further right, or power or privilege
nor be deemed a waiver. Any waiver or modification of this First Modification
Agreement or any other document, instrument or agreement executed by Borrower is
to be in writing signed by the Borrower and Lender. Lender may, in its sole
discretion, release, impair or surrender all or any of the interest granted
hereunder or any other agreement executed by the Borrower without waiving,
exhausting or impairing any of Lender's rights and remedies available pursuant
to the Loan Documents, including this First Modification Agreement.
14. Inconsistent Rights or Remedies: In the event that any of the Loan
Documents, including this First Modification Agreement, contain any inconsistent
rights or remedies otherwise available to Lender, the rights and/or remedies
accorded to Lender giving the Lender the greatest protection and/or affording
Lender the greater rights and remedies shall control, the determination of which
shall be left to the sole and exclusive discretion of Lender.
15. Representation by Counsel; Drafting of Agreement: Borrower acknowledges
that it has had the opportunity to consult independent counsel of its own
selection in connection with the matters covered by this First Modification
Agreement and that it has executed and delivered this First Modification
Agreement (and any other documents referred to herein or in connection herewith)
with the benefit of counsel and of its own free will and volition. Borrower also
acknowledges and agrees that the terms of this First Modification Agreement had
been negotiated in good faith by the parties and that said terms shall be
construed in a neutral fashion without regard to the draftsmanship of this First
Modification Agreement.
16. Severability: In the event that any portion of this First Modification
Agreement is deemed unenforceable by a court of competent jurisdiction, such
provision declared to be unenforceable is to be deemed to have been omitted from
this First Modification Agreement and all such remaining terms and conditions of
this First Modification Agreement are to continue in full force and affect.
17. Continued Effectiveness of Loan Documents: Except as specifically
modified herein, all of the other terms and conditions of the Loan Documents
shall remain in full force and effect and
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the parties hereto expressly confirm and ratify all of their respective
liabilities, obligations, duties and responsibilities under and pursuant to said
Loan Documents, as modified. It is the intention of the parties hereto that this
First Modification Agreement shall not constitute a novation and shall in no way
adversely affect or impair the lien priority of the Deed of Trust, as modified,
and the security interests granted pursuant to the Loan Documents.
IN WITNESS WHEREOF, the parties have executed and delivered this First
Modification Agreement or caused this First Modification Agreement to be duly
executed and delivered by their proper and duly authorized officers or
representatives as of the day and year first above written.
ATTEST: ILX INCORPORATED,
an Arizona Corporation, Borrower
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
WITNESS/ATTEST: TAMMAC FINANCIAL CORP.,
a Delaware corporation, Lender
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Asst. Secretary ▇▇▇▇ ▇. ▇▇▇▇▇, President
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