June 19, 1995
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ILX Incorporated
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Tammac Financial Corp. ("Tammac")
to: ILX Incorporated ("ILX" or "Borrower")
Resort: ▇▇▇▇'▇ Ranch Resort
Payson, Arizona
Dear ▇▇. ▇▇▇▇▇▇▇:
Pursuant to our various discussions, you have requested that Tammac
make a loan to ILX in the amount of up to $10,000,000.00 (the "Loan"), which is
to be secured by Acceptable Contracts (as that phrase is hereinafter defined)
and certain other assets owned by ILX.
After reviewing ILX's request for financing as hereinabove set forth,
Tammac is pleased to confirm its proposal to make the Loan subject to the
execution and delivery of the loan documentation in form and substance as is
satisfactory to Tammac and its counsel and subject to the following terms and
conditions:
I. THE LOAN:
▇. ▇▇▇▇▇▇▇▇: ILX Incorporated, an Arizona
-------- Corporation.
B. Amount of Loan: Up to $10,000,000.00 (sometimes
-------------- hereinafter referred to as the
"Advance Limit").
C. Advances: Advances shall be made on the basis of eighty-
-------- five (85%) percent multiplied by the aggregate
remaining principal balance of the Acceptable
Contracts (as herein defined), or such greater
or lesser (but only as may be necessary so the
Advance request does not cause the aggregate
amount of all Advances to exceed the Advance
Limit) percentage as Tammac shall, from time
to time, establish, provided, however, that
the aggregate amount of Advances outstanding
shall not exceed $10,000,000.00 and the sums
advanced pursuant to the Loan, even if in
excess of the Advance Limit, shall be secured
by the Collateral (as hereinafter defined).
Provided no event of default under the Loan
Documents or any obligations due and owing by
▇▇▇▇▇▇▇▇ to Tammac, whether presently existing
or thereafter arising, exists or is
continuing, and provided further that no
Advances will be made to Borrower if the
aggregate amount of all Advances (including
the Advance requested) exceeds or would exceed
the Advance Limit, Advances will be made
during the period commencing from the closing
date of the Loan and ending twenty-four (24)
months thereafter (the "Draw Period"). The
request for an Advance must be at least in the
amount of $50,000.00.
For purposes of this letter, an Acceptable
Contract shall be a consumer contract or
agreement and all related documents
("Contract" or "Contracts") entered into
between the Borrower as seller and/or lender
and a consumer ("Consumer") as the purchaser
and/or borrower of (or relating to) a
timeshare interest (a "Unit Week" or
"Timeshare Estate"), defined in and created by
the project documents relating to ▇▇▇▇'▇ Ranch
Resort located in Payson, Arizona (the
"Resort" or the "Project"), together with all
amendments, supplements and modifications
thereto, which satisfy the following
requirements, and which are in all other
respects acceptable to Tammac: (i) Borrower is
the seller of a Unit Week under a Contract to
a Consumer who is a United States resident;
(ii) the purchase price under the terms of the
Contract is payable in not more than 84 equal
monthly installments of principal and interest
in U.S. currency, except that up to fifteen
(15%) percent of the aggregate principal sums
advanced to Borrower under the Loan may
provide for the purchase price under the
Contracts to be payable in up to one hundred
and twenty (120) equal monthly installments of
principal and interest 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 Tammac) 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 Tammac 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 Tammac;
(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 is at least
fourteen (14%) percent per annum, on a simple
interest basis; (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) any applicable statutory or contractual
"cooling off" or recision period has expired;
(xi) under which no single Consumer has a
balance due Borrower in excess of $15,000.00
unless specifically approved in writing by
Tammac; (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 instrumentalities thereof; (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 repossession or foreclosure, and (xiv)
the Contract shall be valid, enforceable and
legally binding upon the Consumer.
D. Maturity of the Loan: Unless accelerated pursuant to the terms and
-------------------- conditions of the Loan Documents, the maturity
of the Loan shall be six (6) years from the
date of the expiration of the Draw Period, at
which time the Borrower shall pay to Tammac
the unpaid principal balance of the Loan,
together with all accrued and unpaid interest
thereon and all other unpaid fees and
expenses.
E. Interest Rate: (i) Interest shall be payable monthly on so
------------- much of the principal of the Loan as
shall have been advanced to the
Borrower and be unpaid at a floating
rate of four (4%) percentage points
above the highest prime rate as
announced, from time to time, in The
Wall Street Journal. The rate of
interest may change from time to time
without notice to the Borrower and each
such change shall be effective on the
date such change occurs. In no event,
however, shall the rate of interest
exceed the maximum allowable by law.
All computations of interest shall be
based on a calendar year having 360
days.
(ii) Upon the occurrence and during the
continuance of an Event of Default, the
rate used to calculate the interest
rate due on the Loan may, at the option
of Tammac, increase by five (5%)
percentage points per annum above the
then applicable interest rate referred
to above (the "Default Rate").
(iii) In the event Tammac receives a payment
of interest or principal more than
fifteen (15) days after the date due,
such payment shall be subject to a late
charge of five (5%) percent of such
payment (the "Late Charge"). The Late
Charge represents the cost to Tammac in
processing late payments and shall not
be deemed to constitute additional
interest.
F. Mandatory Payments: Unless accelerated pursuant to the
------------------ terms and conditions of the Loan
Documents or paid before the scheduled
maturity date, the Borrower shall pay
to Tammac ninety-six (96) consecutive
minimum monthly payments each in an
amount equal to ninety-four (94%)
percent of the scheduled monthly
payments of principal and interest due
on the Acceptable Contracts comprising
the collateral security for the Loan.
All mandatory payments as hereinabove
provided shall be applied first to the
payment of accrued and unpaid interest
and the balance shall be applied to the
payment of 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 (1st) day of
the month next following the date of
the Loan closing and shall continue
until such time as the full principal
sum, together with all amounts owing
under the Loan have been paid in full.
The aforesaid payments shall be payable
out of the monthly collections received
under the Acceptable Contracts. In the
event the monthly collections from the
Acceptable Contracts are insufficient
to pay 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.
If, at any time during the term of the
Loan, any of the Acceptable Contracts
fail to continue to be Acceptable
Contracts and, as a result, the amount
advanced exceeds the Advance Limit, the
Borrower will be required to
immediately prepay an amount equal to
the excess borrowing. If at any time
the aggregate outstanding amount of the
Loan shall exceed the Advance Limit,
Borrower shall immediately notify
Tammac of such fact and make a
mandatory prepayment in such amount
necessary (including accrued interest)
to reduce the outstanding principal
amount of the Loan to the Advance
Limit. If a mandatory prepayment is
required as herein provided, the
Borrower shall have the right, during
the Draw Period, in lieu of payments to
eliminate all, or any part, of the
excess borrowing and thereby avoid the
obligation to make a mandatory
prepayment by: (a) promptly notifying
Lender in writing of ▇▇▇▇▇▇▇▇'s
intention to assign new Acceptable
Contracts of equal or greater value to
the required amount and (b) promptly
effectuating the assignment of the new
Acceptable Contracts, but in no event
later than five (5) business days after
notice of the over Advance is sent to
Borrower by Tammac. Any mandatory
prepayments made hereunder shall not
affect the due date or the amount of
any other required payments to be made
under the Loan.
G. Voluntary Prepayment: The Borrower shall have the right to
-------------------- prepay the principal of the Loan at any
time without penalty or premium.
H. Servicing of Acceptable Borrower shall, at its cost and
----------------------- expense, enter into a servicing
Contracts: agreement with a servicing entity
selected by Borrower and approved by
Tammac ("Servicing Agent"), to service
the Acceptable Contracts. The servicing
agreement must be, in all respects
satisfactory to Tammac and its counsel.
The Servicing Agent shall furnish to
Tammac such reports, documentation and
information regarding the Acceptable
Contracts as is reasonably satisfactory
to Tammac.
I. Collection of Monies Borrower and/or the Servicing Agent
-------------------- shall maintain a depository Dominion
Due Under Contracts: Account at an insured financial
------------------- institution selected by Borrower and
acceptable to Tammac into which all
payments due under the Acceptable
Contracts will be made. All proceeds of
the Acceptable Contracts shall be
deposited in the form received by the
Borrower into the aforesaid Dominion
Account. Borrower, Tammac and the
selected and approved financial
institution shall enter into an agency
or lock box agreement ("Agency
Agreement"), the terms of which
agreement shall be acceptable to Tammac
and Tammac's counsel, and which shall
provide, among other things, for the
said financial institution to apply
for, obtain and maintain in Borrower's
name a post office box to which all
payments under the Acceptable Contracts
shall be made and to deposit in the
Dominion Account all funds received in
connection with the Acceptable
Contracts and turn said funds over to
Tammac, all in accordance with the
terms and conditions of the Loan
Agreement to be entered into between
Borrower and Tammac and the Agency
Agreement. The said post office box and
Dominion Account shall be subject to
the exclusive control of Tammac in
accordance with the terms of the Loan
Agreement and Agency Agreement. The
financial institution selected and
approved as agent shall transfer the
funds deposited to the Dominion Account
by wire transfer or check as shall be
directed by Tammac.
Borrower shall instruct all of the
Consumers under the Acceptable
Contracts to direct remittances to a
post office box established by Tammac
in the name of the Borrower. All
proceeds of the Acceptable Contracts
shall be directed to such post office
box, whether in the form of cash,
checks, drafts, notes or other
remittances received by the Borrower in
payment of or on account of any of the
Acceptable Contracts. Upon receipt by
Tammac, all such proceeds shall be
applied to payment in full or in part
of the principal or interest due on the
Loan or to any other obligation of the
Borrower to Tammac in such order as
Tammac may elect.
▇. ▇▇▇▇▇▇▇▇▇▇: (i) A first lien on all of the Acceptable
---------- Contracts and related consumer
documents, which shall be enumerated on
schedules prepared by Borrower and
approved by Tammac.
(ii) A valid third lien on the entire real
property, structures and fixtures
located thereon at the Resort, subject,
however, to an existing first lien on
said Resort in the approximate
principal balance of no more than
$932,250.00 and a second lien in the
approximate principal sum of
$380,000.00 granted to ▇▇▇▇'▇ Ranch
Associates, an Arizona general
partnership. Provided the Borrower is
not in default under the Loan
Documents, upon the Borrower's request,
Tammac shall subordinate its third lien
position on the Resort to one or more
prior liens thereon held by one or more
financial institutions or reputable
funding sources having an aggregate
principal balance of no more than
$2,480,000, which shall include the
remaining principal balance due on the
aforesaid existing first and second
liens, if any. The form and substance
of any agreement providing for the
priority of these lien positions shall
be satisfactory in all respects to
Tammac and its counsel.
(iii) A valid perfected security interest in
all fixtures, furnishings, equipment,
machinery, apparatus, fittings,
building material and articles of
personal property of every kind and
nature whatsoever, now or hereafter
located in or upon any portion of the
Resort used or usable in connection
with any present or future operation of
the Resort and acquired by Borrower.
(iv) A collateral assignment of all leases,
rents and profits relating to the
Resort.
(v) All of the Borrower's (a) accounts and
accounts receivables relating to the
Acceptable Contracts; (b) inventory
located at the resort; (c) machinery,
equipment, furniture and fixtures
located at the Resort or in any way
relating to the Resort, which shall
include, but not be limited to, all
assets and/or rights in and to the
water company (when acquired by
borrower) servicing the Resort; (d)
contract rights relating to the
Acceptable Contracts; (e) general
intangibles relating to the Acceptable
Contracts; (f) interests in marketing
or direct mail agreements relating to
the Resort as same relate to the
Acceptable Contracts; (g) licenses,
contracts, management contracts or
agreements, permits or certificates
relating to the Resort; (h) rights as
declarant, Borrower, owner and/or
otherwise under the governing documents
or restrictive covenants affecting the
Resort; and (i) proceeds and products
of the foregoing, which the Borrower
may have or may hereafter acquire and
relating to or used in connection with
the Resort.
II. CONDITIONS PRECEDENT:
A. Preliminary The closing of the Loan shall be
----------- subject to the receipt, review and
Documentation: approval by Tammac, and Tammac's
------------- counsel, of the following:
True copies of all Consumer
Documentation relating to the Resort,
including, but not limited to, the
Public Offering Statement or similar
documentation;
(ii) 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 statement that the certificate
or articles of incorporation and
by-laws of the Borrower, which are
currently in Tammac's possession, have
not been amended or modified in any
respect;
(iii) The names and titles of all officers
and directors of the Borrower. This
requirement may be satisfied by a
written statement that the aforesaid
information currently in Tammac's
possession has not been modified;
(iv) Certificates of good standing for the
Borrower, or such other documentation
as is reasonably satisfactory to
Tammac, in all jurisdictions in which
it is authorized to do Business;
(v) Corporate franchise tax searches and/or
a certificate from the Director of
Revenue, or such other documentation as
is reasonably satisfactory to Tammac,
that no taxes are due to the taxing
authorities with respect to the
Borrower;
(vi) Continuation uniform commercial code
financing searches for the borrower;
(vii) A completed and signed Environmental
Questionnaire relating to the Resort;
(viii) Federal tax lien, state tax lien, and
judgment searches for the Borrower;
(ix) Evidence of compliance with all
applicable federal, state and local
environmental laws, rules, regulations
and ordinances relating to the Resort;
(x) A listing and copy of all
certificates, permits and licenses
required in connection with the
operation of the Resort and the sale
and financing of Timeshare Estates;
(xi) Evidence that all applicable approvals
for the use and occupancy of the Resort
and the sale of Timeshare Estates
therein have been obtained and remain
valid from all governmental
authorities, agencies or public utility
companies having jurisdiction. All such
approvals and permits shall be legally
valid and shall remain in full force
and effect for so long as any
obligations remain outstanding from the
Borrower to Tammac;
(xii) Any and all agreements with local,
state or federal governmental or quasi-
governmental authorities relating, in
any way, to the use and/or operation of
the Resort;
(xiii) A true copy of any management
agreements relating to the management
of the Resort;
(xiv) If requested by Tammac, a true copy of
all leases relating to or affecting the
Resort;
(xv) A permanent certificate of occupancy or
similar approval certificate issued by
the appropriate governmental
official(s) having jurisdiction over
the Resort;
(xvi) Evidence of compliance and conformity
with all zoning and land use laws and
regulations relating to the Resort;
(xvii) Evidence of the availability of all
utilities, adequate water and sanitary
sewer facilities servicing the Resort;
(xviii)a listing and description of any
pending lawsuits involving the Borrower
in which the Borrower is a defendant or
otherwise defending any claim which is
in excess of $10,000.00;
(xix) Written authorizations and/or waivers
from any creditors authorizing the
transactions contemplated herein if so
required pursuant to said ▇▇▇▇▇▇'s loan
documents.
(xx) A true copy of the deed conveying title
in and to the Resort to the Borrower;
(xxi) A true copy of all deeds of trust or
mortgages, and related documents,
encumbering the Resort;
(xxii) A true copy of the Public Report filed
with the appropriate Arizona
authorities, and evidence of its
acceptance and/or approval by said
authorities;
(xxiii) A true copy of all reports,
correspondence, memoranda and
documentation relating to the
environmental conditions of the Resort,
including, but not limited to, a "Phase
I" audit report, a written proposal,
which has been accepted by the
Borrower, from one or more licensed
engineers relating to any and all
approvals for aquifer protection
permits and the approval of the septic
system now servicing the Resort,
evidence of the water flow rate to the
Resort, correspondence and/or
documentation to or from the Borrower,
the Borrower's counsel and
representatives and the Arizona
Department of Environmental Quality,
which address or relate to the aquifer
protection permit requirements and the
approval of the septic system for the
Resort;
(xxiv) Evidence of ▇▇▇▇▇▇▇▇'s purchase of the
assets of the water company which
service the Resort;
(xxv) Evidence of the Resort's and the
Borrower's compliance with the
American's with Disabilities Act (42
U.S.C. 12101);
(xxvi) Information and documentation relating
to the assignment of the Borrower's
partnership interest in Los Abrigados
Partners, Limited Partnership to
▇▇▇▇▇▇▇ Enterprises, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and all subsequent assignments thereof;
(xxvii) A complete response to the outstanding
documentation requirements noted in
Tammac's counsel's letter to ▇▇▇▇▇▇
▇▇▇▇▇, Esq., dated March 8, 1995,
relating to prior financial
accommodations entered into by and
among ▇▇▇▇▇▇▇▇ and Tammac; and
(xxviii) An opinion letter from the Borrower's
counsel satisfactory to Tammac and
Tammac's counsel.
B. Title Insurance: The Borrower shall furnish Tammac with
--------------- a mortgage title insurance policy in
the amount of $2,000,000.00 covering
the Resort satisfactory to Tammac, the
premium for which shall be payable by
the Borrower insuring the interest of
Tammac to be a valid third lien on the
Resort, free and clear of all defects,
liens, encumbrances and exceptions to
title whatsoever, except for exceptions
that are approved by counsel for
Tammac.
C. Survey: The Borrower shall furnish Tammac
------ with a current boundary and location
survey of the Resort with a seal
certified to Tammac, and/or its
successors and assigns, the Borrower,
the title insurance company, the title
agency, if any, and the closing
attorney representing the Borrower. The
survey must: (i) show the Resort to be
free of encroachments, overlaps and
other survey defects; (ii) show the
courses and distances of the lot lines
for the Resort; (iii) show that all
existing improvements are located
within said lot and building lines; and
(iv) show the location of all above and
below ground easements, improvements,
appurtenances, utilities, rights-of-way
and ingress and egress by reference to
book and page numbers, as appropriate.
D. Insurance: (i) Fire and other hazard insurance
--------- covering the Resort, including, but not
limited to fire and extended coverage,
in such amounts and by such insurance
companies as Tammac shall approve,
together with a standard form insurance
endorsement in form and substance
satisfactory to Tammac showing Tammac's
interest shall be required, together
with the original policies of
insurance, if so requested by Tammac;
(ii) Business and/or rental interruption
insurance in amounts and with insurance
companies that are reasonably
satisfactory to Tammac, naming Tammac
as additional insured and loss payee,
together with a paid premium receipt
evidencing payment of the insurance
premium for a period of one year from
the date of the Loan Closing; and
(iii) Comprehensive general public liability
coverage with respect to the Borrower
against claims for bodily injury,
death, personal injury and property
liability, naming Tammac as an
additional insured, in an amount
determined by Tammac, but in no event
with limits less than: (i)
$3,000,000.00 for death or injury to
any one person; (ii) $1,000,000.00 for
any one occurrence; and (iii)
$1,000,000.00 for property damage. In
addition, a paid premium receipt
evidencing payment of said insurance
premium for a period of one (1) year
from the date of the Loan Closing.
▇. ▇▇▇▇▇ Insurance: If, on the date of the closing of Loan,
--------------- any substantial improvements at the
Resort are in an area that have been
identified by the Secretary of Housing
and Urban Development as having special
flood or mud slide hazards, and on
which the sale of flood insurance has
been made available under the National
Flood Insurance Act of 1968, as
amended, the Borrower will be required
to purchase a flood insurance policy
satisfactory to Tammac. In lieu of a
flood insurance policy as aforesaid, a
certificate confirming that the Resort
is not located within a "special flood
hazard area" shall be furnished to
Tammac.
F. Documentation: (i) The Loan Agreement, Promissory Note,
------------- Deed of Trust covering the Resort, and
related documents, including, but not
limited to, the security agreements,
certifications and opinion letters of
the Borrower's counsel, shall be
executed and delivered by the Borrower
and the Borrower's counsel, as the case
may be, in a form and substance as
shall be satisfactory to Tammac and
its counsel.
(ii) The necessity for, and form and
substance of each and every document
relating to the Loan and the security
therefor, or incident thereto, and any
proceedings incident thereto, title and
evidence thereof, and all questions
relating to the validity and priority
of the mortgages or deeds of trust to
be granted by the Borrower, shall be
determined by and must be satisfactory
to counsel for Tammac.
(iii) ▇▇▇▇▇▇▇▇'s counsel shall provide to
Tammac a legal opinion regarding the
Resort, the Loan, the Contracts and
related documents and various other
matters pertaining to the Loan, the
Acceptable Contract's compliance with
all applicable laws, regulations and
requirements, all in form and substance
satisfactory to Tammac and Tammac's
counsel.
G. Legal Compliance: (i) The Borrower shall, if requested by
---------------- Tammac provide evidence in form and
substance satisfactory to Tammac that
it has: (a) conducted its business in
conformity with all federal, state and
local laws, rules, regulations, orders
and ordinances; and (b) complied in all
respects with the applicable provisions
of the Employment Retirement Income
Security Act of 1974, 29 USC Section
1001, et seq., as amended ("ERISA") and
all regulations issued thereunder by
the United States Treasury Department,
Department of Labor and Pension Benefit
Guaranty Corporation.
(ii) The Borrower shall furnish to Tammac
such evidence as Tammac may require to
demonstrate current full compliance
with all applicable building, zoning,
health, environmental protection and
safety laws, ordinances and regulations
(including approval of board of fire
underwriters and local private or
public sewer or water utilities) from
all authorities having jurisdiction
relating to the Resort. The Borrower
shall provide such evidence as Tammac
may reasonably require to demonstrate
compliance with the Americans with
Disabilities Act, 42 U.S.C. 12101.
(iii) The Borrower shall certify or furnish
to Tammac other satisfactory evidence
at the time of closing that there is no
action or proceeding pending before any
court or administrative agency with
respect to the validity of the mortgage
loans or of any laws, ordinances or
regulations, and any certifications or
permits, issued thereunder, pertaining
to the Resort or any Collateral. The
Borrower shall certify or supply other
evidence satisfactory to Tammac that
the Borrower is not a party to any
existing or pending or threatened
litigation.
(iv) In addition to the foregoing, and
without in anyway limiting the
generality of the foregoing
requirements, if the Resort is being
used for any purpose which has not been
previously disclosed to Tammac, the
Borrower shall produce a letter issued
from the appropriate governmental
officials that the current uses of the
Resort are not in violation of any
applicable zoning requirements or
restrictions.
H. Environmental The Borrower shall provide Tammac
------------- with all representations, warranties
Compliance: and covenants required by Tammac so as
---------- to protect Tammac from the effects of
any environmental law, statute,
ordinance or regulation now or
hereafter promulgated by any federal,
state or local government or agency
thereof.
I. Exchange Group The Borrower shall maintain membership
-------------- in one or more timeshare exchange
Membership: services satisfactory to Tammac, until
---------- such time as the Loan has been paid in
full.
▇. ▇▇▇▇▇▇▇▇ of Proposal: (i) The validity of this proposal will be
-------------------- subject to the accuracy of all
information, representations, exhibits
and other materials submitted with or
in support of the Borrower's request
for the Loan, or other data, and any
change incident thereto shall, at the
option of Tammac, void all obligations
of Tammac under the provisions of said
proposal.
(ii) Tammac reserves the right to continue
its investigations as to the
creditworthiness of the Borrower
subsequent to the delivery of this
letter and in the event Tammac should
discover any information subsequent to
the issuance of this letter which, if
discovered prior to the delivery
hereof, would have resulted in
rejecting the application for the
extension of credit, then and in that
event, Tammac shall have the right to
withdraw this proposal letter.
K. Assignment: This proposal shall not be assignable,
---------- without the prior written consent of
Tammac and any attempt at such
assignment without such consent shall
be void.
III. GENERAL CONDITIONS:
The Loan and related documents are subject to satisfaction by the
Borrower of the Conditions Precedent noted above and the negotiation, execution
and delivery of the loan documentation satisfactory to all parties thereto. This
documentation shall include representations and warranties, the granting of
security interests, covenants and events of default of the kind and nature
generally utilized by Tammac for similar transactions, including without
limitation, the following:
A. Cross Default:
-------------
A default in the Loan and/or any related documents shall be a default
in any other obligations of the Borrower owing to Tammac at any time.
B. Cross-Collateralization
-----------------------
The Loan and any other obligations of the Borrower shall be deemed
collateralized by the Resort and all other Collateral hereinabove
referred to.
C. Representations and Warranties:
------------------------------
The Loan Documents shall contain such representations and warranties to
be made on behalf of the Borrower and shall be satisfactory to counsel
for Tammac and of the kind and nature generally utilized by Tammac in
loan transactions of this type.
D. No Secondary Financing:
----------------------
So long as any obligations are outstanding to Tammac, there shall be no
secondary financing secured by any of the Collateral, nor any transfer
of title of any of the Collateral, except in the ordinary course of the
Borrower's business, without the prior written approval of Tammac.
E. Financial Information:
---------------------
The Borrower will provide Tammac, within sixty (60) days of the close
of each quarter-annual fiscal period, with quarterly financial
statements certified by the Borrower's Chief Financial Officer and
within one hundred twenty (120) days of the close of each fiscal year
audited financial statements. Each such statement shall be in such form
and in such detail as shall be satisfactory to Tammac and shall be
prepared by independent certified public accountants selected by the
Borrower and satisfactory to Tammac. All such statements shall be
prepared in accordance with generally accepted accounting principles
consistently applied.
The Borrower shall also provide to Tammac, on or before the tenth
(10th) day of each month, a detailed aging report setting forth the
amount due and owing on Acceptable Contracts as of the close of the
preceding month, together with a reconciliation report satisfactory to
Tammac showing all collections, payments and adjustments thereto on the
Borrower's books as of the close of the preceding month. Tammac shall
have the right to make test verifications of any and all Acceptable
Contracts in any manner and through any medium Tammac considers
advisable and Borrower shall render any necessary assistance to Tammac
in that regard.
IV. MISCELLANEOUS:
A. Obligations of Tammac: All obligations on the part of Tammac
--------------------- in connection with the subject
transactions, and all matters with
respect to title, covenants,
restrictions, lien searches affecting
the Collateral, as well as with respect
to the validity and priority of the
liens of Tammac, and the form and
substance of all documents necessary to
effect the consummation of the subject
transactions shall be determined by and
must be satisfactory to Tammac and its
counsel.
B. Legal Fees and Expenses: (i) The acceptance of this proposal letter
----------------------- shall constitute the Borrower's
unconditional agreement to pay all
fees, expenses and charges with respect
to the subject transactions as outlined
herein (whether or not the closing of
the transactions ever occurs),
including without limiting the
generality thereof, recording and
filing fees, insurance premiums, search
fees, the fees and expenses of counsel
for Tammac, the fees and expenses of
Tammac's inspectors or appraisers, if
any and other fees or assessments
payable in connection with the
transactions. Notwithstanding anything
contained herein to the contrary, the
Borrower's obligation to pay or
reimburse Tammac for Tammac's legal
fees shall be capped at $5,000.00.
(ii) The interest of the Borrower and Tammac
are or may be different and may
conflict. Tammac's attorneys shall
represent only Tammac and not the
Borrower. The Borrower therefore is
advised to employ an attorney (or
attorneys) of its choice to represent
its interests.
C. Applicable Law: Notwithstanding the place of acceptance
-------------- of this proposal, or the place of
execution of any of the Loan Documents,
this proposal shall be deemed made and
accepted in ▇▇▇▇▇▇-▇▇▇▇▇, Pennsylvania,
and the Borrower agrees by the
acceptance hereof that the validity and
interpretation of this proposal and the
instruments of indebtedness and
instruments of security contemplated
herein shall be governed by the laws of
the Commonwealth of Pennsylvania,
unless such documents shall expressly
provide otherwise.
D. Changes and Amendment: No changes in the provisions of this
--------------------- proposal letter shall be valid or
binding unless acknowledged and
confirmed in writing by the undersigned
officer of Tammac.
E. Closing Date: The closing date of the Loan and all
------------ related documents must occur no later
than ninety (90) days from the date of
the Borrower's acceptance of this
proposal letter.
F. Term of Proposal: Subject to the aforementioned terms and
---------------- conditions, and there being no material
adverse change in the financial
condition of the Borrower prior to
closing, the proposal to make the Loan
shall remain in full force and effect
for a period of up to one hundred five
(105) days from the date of this
proposal letter, provided same is
accepted in full by the Borrower within
fifteen (15) days from the date of this
letter. If not so accepted, this
proposal shall be deemed to have
expired and shall be null and void and
of no effect.
I believe this proposal outlines our conversations and I look forward
to working with you on this transaction. Please indicate your acceptance of this
proposal letter by executing the enclosed copy and returning same to me,
whereupon this proposal letter shall constitute a binding agreement in
accordance with its terms.
Very truly yours,
TAMMAC FINANCIAL CORP.
BY: /s/▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, President
The undersigned authorized representative of ILX Incorporated, an
Arizona corporation, has read the above proposal letter, and on behalf of ILX
Incorporated agrees to and accepts the terms and conditions as outlined. On
behalf of ILX Incorporated, Tammac is authorized to have its counsel commence
the necessary documentation at its earliest convenience.
ILX INCORPORATED, an Arizona Corporation
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇ Dated: 7/6/95
-------------------------------- ------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive
Vice President