SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended September 30, 1995 Commission File Number 33-16122
------------------- --------
ILX INCORPORATED
----------------
(Exact name of registrant as specified in its charter)
ARIZONA 86-0564171
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2777 East Camelback Road, Phoenix, AZ 85016
-------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code 602-957-2777
-----------------------------------------------------------------
Former name, former address, and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.
Class Outstanding at September 30, 1995
- ------------------------------- ---------------------------------
Common Stock, without par value 12,587,739 shares
Preferred Stock, $10 par value 412,517 shares
<PAGE>
<TABLE>
ILX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 2,030,209 $ 3,635,587
Notes receivable, net 8,392,462 6,750,896
Resort property held for timeshare sales 18,042,711 9,407,733
Resort property under development 1,045,515 1,735,592
Land held for sale 1,672,168 1,673,168
Deferred assets 834,198 749,999
Property and equipment, net 1,360,473 1,437,227
Deferred income taxes 1,486,846 1,283,179
Other assets 2,129,279 1,730,023
------------ ------------
$ 36,993,861 $ 28,403,404
============ ============
Liabilities and Shareholders' Equity
Accounts payable $ 1,775,538 $ 1,581,659
Accrued and other liabilities 2,649,870 1,488,816
Income taxes payable 103,553 --
Genesis funds certificates 1,366,379 1,612,457
Due to affiliates 478,512 984,534
Deferred income 1,643 365,195
Notes payable 10,621,700 4,881,861
Notes payable to affiliates 2,438,757 2,000,584
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19,435,952 12,915,106
------------ ------------
Minority interests 2,876,855 2,531,169
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Shareholders' Equity
Preferred stock, $10 par value;
10,000,000 shares authorized;
412,517 and 430,313 shares issued
and outstanding; liquidation
preference of $4,125,170 and $4,303,130, respectively 1,523,476 1,648,755
Common stock, no par value;
40,000,000 shares authorized;
12,587,739 issued and 12,567,739 outstanding
at September 30, 1995 and 12,405,325 shares
issued and outstanding at December 31, 1994 9,309,501 8,972,969
Treasury stock, at cost, 20,000 shares (25,032) --
Additional paid in capital 30,160 30,000
Retained earnings 3,842,949 2,305,405
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14,681,054 12,957,129
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$ 36,993,861 $ 28,403,404
============ ============
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
ILX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------ -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Sales of timeshare interests $ 5,930,648 $ 5,828,785 $ 16,548,152 $ 14,094,357
Resort operating revenue 2,321,423 2,156,286 6,358,548 6,193,016
Sales of land -- 125,960 -- 2,184,638
Sales of consumer products 158,537 85,261 437,175 85,261
------------- ------------- ------------- -------------
8,410,608 8,196,292 23,343,875 22,557,272
------------- ------------- ------------- -------------
Cost of sales and operating expenses
Cost of timeshare interests sold 2,286,937 2,076,327 6,089,296 4,862,089
Cost of resort operations 2,729,194 1,954,948 6,569,344 5,596,774
Cost of land sold -- 106,520 -- 1,741,477
Cost of consumer products 120,989 41,733 293,359 41,733
Advertising and promotion 1,804,247 1,612,740 4,819,673 3,983,606
General and administrative 795,356 894,947 2,281,762 1,833,899
Provision for doubtful accounts 347,598 341,893 950,917 808,694
------------- ------------- ------------- -------------
8,084,321 7,029,108 21,004,351 18,868,272
------------- ------------- ------------- -------------
Operating income 326,287 1,167,184 2,339,524 3,689,000
Other income (expense)
Interest expense (380,611) (166,298) (836,850) (466,109)
Interest income 161,562 90,217 446,511 232,288
------------- ------------- ------------- -------------
Income before minority interests 107,238 1,091,103 1,949,185 3,455,179
and income taxes
Minority interest 948 (380,229) (345,686) (1,218,440)
Income taxes 384,727 (241,818) (63,399) (241,818)
------------- ------------- ------------- -------------
Net income $ 492,913 $ 469,056 $ 1,540,100 $ 1,994,921
============= ============= ============= =============
Net income per common and
equivalent share $ 0.04 $ 0.04 $ 0.12 $ 0.16
============= ============= ============= =============
Number of common and equivalent
shares 13,009,355 12,487,878 12,699,419 12,455,004
============= ============= ============= =============
Net income per share assuming
full dilution $ 0.04 $ 0.04 $ 0.12 $ 0.15
============= ============= ============= =============
Number of fully diluted shares 13,493,935 12,996,703 13,187,992 12,964,125
============= ============= ============= =============
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
ILX INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine months ended
September 30,
------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,540,100 $ 1,994,921
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Undistributed minority interest 345,686 538,712
Additions to notes receivable (9,018,079) (6,848,448)
Proceeds from sale of notes receivable 6,425,596 6,842,216
Provision for doubtful accounts 950,917 808,694
Depreciation and amortization 491,086 489,310
Increase in deferred income taxes (203,667) (364,909)
Amortization of guarantee fees 79,100 104,950
Change in assets and liabilities:
(Increase) decrease in resort property held for timeshare sales (5,655,558) 463,525
Increase in resort property under development (344,115) (55,825)
Decrease in land held for sale 1,000 1,401,600
Increase in other assets (408,206) (1,111,796)
Increase (decrease) in accounts payable 193,879 (452,013)
Increase in accrued and other liabilities 1,056,124 409,309
Increase in income taxes payable 103,553 45,488
Decrease in Genesis funds certificates (246,078) (560,683)
Decrease in due to affiliates (506,022) (157,033)
Decrease in deferred income (363,552) (456,899)
------------- -------------
Net cash (used in) provided by operating activities (5,558,236) 3,091,119
------------- -------------
Cash flows from investing activities:
Increase in deferred assets (163,299) (843,304)
Purchases of plant and equipment (112,210) (754,273)
------------- -------------
Net cash used in investing activities (275,509) (1,597,577)
------------- -------------
Cash flows from financing activities:
Proceeds from notes payable to affiliates 900,000 --
Principal payments on notes payable to affiliates (461,827) (502,888)
Proceeds from notes payable 7,715,212 1,254,666
Principal payments on notes payable (3,973,773) (2,840,927)
Proceeds from issuance of common stock 74,181 93,535
Acquisition of treasury stock (25,032) --
Redemption of preferred stock (185) (4,235)
Redemption of common stock (185) (1,786)
Preferred stock dividend payments (24) --
------------- -------------
Net cash provided by (used in) financing activities 4,228,367 (2,001,635)
------------- -------------
Net decrease in cash and cash equivalents (1,605,378) (508,093)
Cash and cash equivalents at beginning of period 3,635,587 2,060,107
------------- -------------
Cash and cash equivalents at end of period $ 2,030,209 $ 1,552,014
============= =============
See notes to consolidated financial statements
</TABLE>
<PAGE>
ILX INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Principles of Consolidation and Business Activities
- ---------------------------------------------------
The Company's significant business activities include developing, operating,
marketing and financing ownership interests in resort properties and, effective
in the third quarter of 1994, marketing of skin and hair care products.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Registration S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments and
reclassifications considered necessary for a fair and comparable presentation
have been included and are of a normal recurring nature. Operating results for
the three and nine month periods ended September 30, 1995, are not necessarily
indicative of the results that may be expected for the year ending December 31,
1995. The accompanying financial statements should be read in conjunction with
the Company's most recent audited financial statements.
The consolidated financial statements include the accounts of ILX Incorporated
and its wholly-owned and majority-owned subsidiaries ("ILX" or the "Company").
All significant intercompany transactions and balances have been eliminated in
consolidation.
Revenue Recognition
- -------------------
Revenue from sales of timeshare interests is recognized in accordance with
Statement of Financial Accounting Standard No. 66, Accounting for Sales of Real
Estate ("SFAS No. 66"). No sales are recognized until such time as a minimum of
10% of the purchase price has been received in cash, the buyer is committed to
continued payments of the remaining purchase price and the Company has been
released of all future obligations for the timeshare interest. Revenue from
sales of timeshare interests in Varsity Clubs of America-Notre Dame were
recognized by the percentage of completion method as development and
construction proceeded and as the costs of development and profit could be
reasonably estimated through August 15, 1995, when the property was complete.
Resort operating revenue represents daily room rentals and revenues from food
and other resort services. Such revenues are recorded as the rooms are rented or
the services are performed.
Statements of Cash Flows
- ------------------------
Cash equivalents are highly liquid investments with an original maturity of
three months or less. During the three and nine month periods ended September
30, 1995 and 1994, the Company paid interest and income taxes and capitalized
interest to resort property held for sale and under development as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
Interest $341,944 $156,598 $924,602 $394,054
Income taxes $ 2,786 $255,237 $136,286 $561,287
Interest Capitalized $ 89,577 $ 9,254 $216,380 $ 20,801
Reclassifications
- -----------------
The financial statements for prior periods have been reclassified to be
consistent with the 1995 financial statement presentation.
Note 2 - Income Taxes
The deferred tax asset valuation allowance decreased by $428,000 and $578,000
for the three and nine month periods ending September 30, 1995 and $0 and
$610,000 for the three and nine month periods ending September 30, 1994 to
reflect management's estimate of the future benefit to be provided from the
utilization of Genesis's net operating loss carryovers in 1995 and Los Abrigados
tax benefits in 1994. The valuation allowance is periodically reduced as
management develops new tax planning strategies to ensure that the Company will
benefit from the loss carryovers and other tax benefits. The decrease in the
valuation allowance reflects management's estimate that the loss carryovers and
tax benefits will more likely than not be utilized.
Note 3 - Notes Payable
In March 1995, the first deed of trust holder on the Golden Eagle Resort loaned
an additional $1,010,075 against its interest in the property and its assignment
of the Company's general partnership interest in LAP and extended the maturity
date through 1998.
During the first six months of 1995, the Company borrowed $4,068,049 on its $5
million construction financing commitment for the Varsity Clubs of America-Notre
Dame facility and paid $644,190 in release payments, bringing the balance
outstanding on the loan to $3,824,643 at September 30, 1995.
Note 4 - Notes Payable to Affiliates
In July 1995, the Company borrowed $900,000 from affiliates, secured by 320
timeshare interests in the Los Abrigados resort. The note bears interest at
13.5%, with interest due monthly and the principal due in full in July 1998.
Note 5 - Shareholders' Equity
During the first nine months of 1995, holders of 7,248 shares of Series C
Preferred Stock exchanged their shares for 12,080 shares of common stock. The
exchanges were recorded as a reduction in preferred stock and an increase in
common stock of $20,004. Shares of stock valued at $2,532 and cash of $24 were
issued in the first nine months of 1995 for the Dividend Arrearage due to the
holders of Series C Preferred Stock who converted their shares in the last
quarter of 1994 and first nine months of 1995.
During the second quarter of 1995, the Company acquired 20,000 shares of its
common stock for $25,032. The acquired shares have been recorded as treasury
stock.
During the first nine months of 1995, the Company granted 18,600 shares of
restricted common stock, valued at $14,806, to employees in exchange for
services provided.
In July 1995, the Company granted options for 25,000 shares each to two
directors in exchange for services to be provided in the future. The exercise
price for the options is $2 per share and the options expire in July 2000.
Effective June 1995, the Company entered into a one year consulting agreement
for investor relations, broker relations and public relations services. In
exchange for the services to be provided, the Company issued 50,000 shares of
restricted common stock and will issue an additional 50,000 shares in January
1996. The shares have been valued at $1.1875 per share and the cost is being
recognized over a one year period. In addition, the Company granted options for
400,000 shares of common stock at $1.25 per share and 100,000 shares of common
stock at $1.625 per share. The options expire in June 1997.
Note 6 - Kohl's Ranch Lodge
In June 1995, the Company acquired the Kohl's Ranch Lodge, a 10 acre rustic
resort near Payson, Arizona for a purchase price of $1,590,000, consisting of a
$50,000 cash down payment, assumption of an existing deed of trust of
approximately $932,250, issuance of a $367,750 second deed of trust to the
seller and the issuance of 120,000 shares of ILX restricted common stock valued
at $2 per share. The Company began offering timeshare intervals in the property
in the third quarter of 1995. The assumed first mortgage bears interest at prime
plus 1 1/4%, with $3,000 principal plus accrued interest payable monthly through
December 1, when the remaining balance will begin being amortized over 36 equal
monthly installments of principal and interest through December 1998. Release
fees of $750 per interval sold are applied to principal. The note payable to the
seller bears interest at 8%, with the first year's interest to be added to
principal on June 1, 1996. Principal of $7,500 plus accrued interest is payable
monthly thereafter through June 2000. Release fees of $300 per interval sold are
applied to principal.
Note 7 - Varsity Clubs of America-Tucson
In July 1995, the Company acquired a two acre site in Tucson, Arizona, near the
University of Arizona, to be the site of its second Varsity Clubs of America.
The land was acquired for $1,002,000, consisting of a $300,600 down payment and
a note payable secured by a deed of trust to the seller of $701,400. The note
bears interest at 9.75%, payable in three equal annual payments of principal and
interest of $280,803 through June 1998.
Note 8 - Bond Offering
In June 1995, the Company signed a letter of intent to offer to the public $10
million in convertible secured bonds through Brookstreet Securities Corporation
("Brookstreet"). Subsequently, the offering was reduced to $3,000,000, with a
$450,000 over allotment option. The bonds will have a five year maturity, bear
interest at 10%, and will be convertible to common stock at prices tied to
market rates, with a minimum price of $2.50 per share. The offering is scheduled
for November 1995.
Note 9 - Other
In September 1995, the Company, through a limited partnership in which a
subsidiary of the Company is an 80% general partner, entered into an agreement
to acquire and develop the "Orangemen Club" at the Hotel Syracuse in Syracuse,
New York. The partnership intends to refurbish a portion of the Hotel Syracuse
into timeshare suites and market interests in these suites, together with the
rights to use certain common areas of the hotel. The partnership has a loan
commitment for $5 million for acquisition and construction financing and $30
million in receivables financing.
<PAGE>
ILX INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The increases in sales of timeshare interests from $5,828,785 in the third
quarter of 1994 to $5,930,648 in the third quarter of 1995 and from $14,094,357
for the first three quarters of 1994 to $16,548,152 for the first three quarters
of 1995 reflect 1995 sales of interests in Varsity Clubs of America-Notre Dame
and in the Kohl's Ranch Lodge, net of a decrease in sales made from the Phoenix
Sales Office. Sales of interests in Varsity Clubs of America-Notre Dame were
$1,387,727 for the third quarter and $4,329,074 for the first three quarters of
1995. Year-to-date 1995 Varsity Clubs of America-Notre Dame sales include
approximately $513,000 in sales made in 1994 for which recognition was deferred
until 1995, when it was recognized as a percentage of completion. 95.5% of the
1994 and first half 1995 sales were recognized in the first half of 1995, and
the remaining 4.5% (approximately $139,000) was recognized in the third quarter
of 1995. Sales in the Kohl's Ranch Lodge commenced in the third quarter of 1995
and were approximately $339,000 for the quarter.
The Sedona Sales Office closing rates (number of timeshare sales divided by
number of timeshare tours) increased from 1994 to 1995 for both the third
quarter and year-to-date. Sales in the Sedona Sales Office, including upgrades
by existing customers, increased by approximately $1.1 million from the first
three quarters of 1994 to the same period in 1995. Sales from the Sedona office
decreased by approximately $264,000 from the third quarter of 1994 to the third
quarter of 1995 due to a reduced number of timeshare tours, in part as a result
of the allocation of tours to the new Kohl's Ranch Lodge Sales Office.
On April 1, 1995, the Company closed the Phoenix Sales Office, which had sold
primarily interests in Los Abrigados, in favor of directing all Phoenix area
potential customers to the Sedona Sales Office. The Sedona Sales Office has had
consistently higher closing rates than the Phoenix Sales Office. The Phoenix
Sales Office generated approximately $3.7 million in timeshare sales in the
first nine months of 1994 and approximately $771,000 in 1995, prior to closure
of the office.
Year-to-date September 30, 1994, sales of timeshare interests include the
recognition of $428,100 in deferred revenue from a 1992 bulk sale.
The increases between 1994 and 1995 in cost of timeshare interests sold as a
percentage of sales for both the third quarter and first three quarters reflect
improvements to Los Abrigados and sales of interests in Varsity Clubs of
America-Notre Dame, which have a higher product cost as a percentage of revenue
than interests in Los Abrigados.
The increases in resort operating revenue from $2,156,286 for the third quarter
of 1994 to $2,321,423 for the third quarter of 1995 and from $6,193,016 for the
first three quarters of 1994 to $6,358,548 for the first three quarters of 1995
reflect revenue from Varsity Clubs of America-Notre Dame which opened in mid
August 1995 and revenue from the Kohl's Ranch Lodge which was acquired on June
1, 1995, net of reduced room revenue at the Los Abrigados resort as a result of
the decreasing availability of rooms for traditional resort guests.
Cost of resort operations has increased as a percentage of resort operating
revenue from 1994 to 1995 both for the third quarter and the first three
quarters because of the start up of operations at Kohl's Ranch Lodge and Varsity
Clubs of America-Notre Dame and the decreasing occupancy of traditional resort
guests at Los Abrigados as timeshare owners and prospective purchasers, who pay
substantially reduced rates for their room usage, utilize a greater portion of
the facilities. Kohl's Ranch Lodge is being renovated to provide improvements
necessary for timeshare marketing of the property and, as a result, occupancy
during the third quarter was low.
The 1994 sales of land and associated cost of sales reflect sales of parcels
held by Genesis.
Sales of consumer products increased from $85,261 for the third quarter of 1994
to $158,537 for the third quarter of 1995 and from $85,261 for the first three
quarters of 1994 to $437,175 for the first three quarters of 1995. Sales of Red
Rock Collection products commenced in the third quarter 1994. The increase in
the cost of consumer products as a percentage of sales of consumer products
reflects the shift away from the multi-level marketing of Red Rock Collection
products (high prices and high commissions) to consumer and business sales (at
reduced prices and reduced commissions).
Advertising and promotion expenses relate primarily to sales of timeshare
interests. Advertising and promotion as a percentage of timeshare sales
increased slightly from the first three quarters of 1994 to the first three
quarters of 1995 in part because 1994 included the recognition of $428,100 in
deferred revenue for which there was no associated advertising and promotion.
Advertising and promotion increased as a percentage of sales from the third
quarter of 1994 to the third quarter of 1995 due to the startup of marketing
efforts for the Kohl's Ranch Lodge and increased costs of generating tours to
the Sedona Sales Office.
General and administrative expenses declined in dollars and as a percentage of
sales from the third quarter of 1994 to the third quarter of 1995 due to
operating efficiencies. The increase in general and administrative expense for
the first three quarters of 1995 from the same period in 1994 reflects the
recognition in each of the three quarters of 1995 of Red Rock Collection
operating expenses. Red Rock Collection operating expenses were deferred during
the first six months of 1994, pending commencement of operations in the third
quarter of 1994.
The provision for doubtful accounts arises primarily from sales of timeshare
interests and is comparable as a percentage of sales of timeshare interests
between both the third quarter and first three quarters of 1994 and 1995.
The increases in interest expense between years reflect increased borrowings
against consumer paper, interest on notes payable arising from the acquisition
of the Los Abrigados Partners Limited Partnership ("LAP") Class A limited
partnership interests in the third quarter of 1994, and borrowings for
construction of and improvements to resort property held for sale. The increases
in interest income from 1994 to 1995 are a result of the increased consumer
paper retained by the Company.
The decreases in minority interests from 1994 to 1995 reflect the acquisition of
the LAP Class A limited partnership interests, the decrease in LAP net income in
1995 and the minority interests in the income generated from second quarter 1994
Genesis land sales. The decrease in LAP net income between years is a result of
closure of the Phoenix Sales Office and reduced tours and closing rates prior to
the closure, and reduced profitability from Los Abrigados hotel operations due
to decreased availability of rooms for resort guests.
Income tax expense decreased from a provision of $241,818 in the third quarter
of 1994 to a $384,727 benefit in the third quarter of 1995 and from a provision
of $241,818 for the first three quarters of 1994 to a provision of $63,399 for
the first three quarters of 1995. The decreases arise because of the reduction
in the Genesis deferred tax benefit valuation allowance, due to tax planning
strategies which management believes will more likely than not fully utilize
Genesis NOL carryforwards.
Liquidity and Capital Resources
- -------------------------------
The Company's liquidity needs principally arise from the necessity of financing
notes received from sales of timeshare interests. In that regard, the Company
has $13 million in lines of credit issued by a financing company under which
conforming notes from sales of interval interests in Los Abrigados and the
Golden Eagle Resort can be sold on a recourse basis through September 1996. In
addition, the Company has an open ended arrangement with a finance company which
is expected to provide financing of at least $5 million through 1996. At
September 30, 1995, approximately $9 million is available under the fixed
commitment lines and approximately $3 million is expected to be available on the
open ended line. In addition, the Company has a financing commitment whereby the
Company may borrow up to $2.5 million against non-conforming notes through
September 1998. Approximately $900,000 was available under this commitment at
September 30, 1995.
The Company also has a $10 million financing commitment whereby the Company may
sell eligible notes received from sales of timeshare interests in Varsity Clubs
of America-Notre Dame on a recourse basis through February 1996. The commitment
may be extended for an additional eighteen month period and an additional $10
million at the option of the financing company. Approximately $8.6 million was
available under this commitment at September 30, 1995.
The Company has a financing commitment whereby it may borrow up to $10 million
against eligible notes received from sales of timeshare interests in the Kohl's
Ranch Lodge through September 1997. This commitment was unused at September 30,
1995.
The Company will continue to retain certain non-conforming notes which have one
to two year terms or which do not otherwise meet existing financing criteria,
and finance these notes either through internal funds or through borrowings from
affiliates secured by the non-conforming notes. The Company will pursue
additional credit facilities to finance conforming and non-conforming notes as
the need for such financing arises.
The Company has a $500,000 line of credit from one financial institution and a
$400,000 line of credit from another. $400,000 was available on the lines for
working capital at September 30, 1995.
The Company has optioned property near various college campuses for possible
future Varsity Clubs of America sites and expects to finance such land
acquisitions through seller financing or through financial institutions, secured
by the land acquired. The Company may seek equity and/or debt financing for the
construction of facilities and future sites.
Cash provided by operating activities of $3,091,119 in 1994 decreased to cash
used in operating activities in 1995 of $5,558,236 due to greater additions to
resort property held for timeshare sales for Varsity Clubs of America-Notre Dame
in 1995, because 1994 included the collection of $750,000 on a note receivable
which arose from a 1992 bulk sale and the collection of $1,000,000 on a Genesis
mortgage receivable and because in 1995 more notes receivable from timeshare
sales were retained and used as security for borrowing, rather than sold. In
addition, 1994 cash flows from operating activities included Genesis land sales
of $2,048,678.
Cash used in investing activities decreased from $1,597,577 in 1994 to $275,509
in 1995 because 1994 includes investments in Red Rock Collection deferred assets
and the acquisition of the Red Rock Collection office and warehouse facility.
The change from cash used in financing activities in 1994 of $2,001,635 to cash
provided by financing activities in 1995 of $4,228,367 reflects increased
borrowings in 1995 for construction of Varsity Clubs of America-Notre Dame and
for improvements to the Los Abrigados resort.
In March 1995, the Company borrowed an additional $1,010,000 from The Steele
Foundation, Inc., the first mortgage holder on the Golden Eagle Resort. The
Company has used these funds for further expansion of food and beverage
facilities, refurbishment of suites and the construction of additional
administrative facilities at Los Abrigados resort.
In June 1995, the Company acquired the Kohl's Ranch Lodge, a ten acre rustic
resort near Payson, Arizona for $1,590,000, consisting of a $50,000 cash down
payment, assumption of the existing deed of trust of $932,250, seller financing
of $367,750, and the issuance of 120,000 shares of ILX restricted common stock
valued at $2 per share. Construction of additional units and future improvements
may be financed through the existing deed of trust holder, other financing
sources, or from working capital.
In June 1995, the Company signed a letter of intent to offer to the public
$10,000,000 in convertible secured bonds through Brookstreet Securities
Corporation ("Brookstreet"). In October 1995, the terms of the offering were
reduced to provide for $3,000,000, in convertible secured bonds, with a $450,000
overallotment option. The bonds will have a five year maturity, bear interest at
10%, and will be convertible to common stock at prices tied to market rates,
with a minimum price of $2.50 per share. The offering is scheduled for November
1995. The Company intends to use the proceeds of the offering for Varsity Clubs
of America expansion and repayment of high interest debt obligations.
In July 1995, the Company acquired land near the University of Arizona to be the
site of its second Varsity Clubs of America. The Company made a down payment of
$300,600 and the seller is carrying the balance of $701,400. The Company has
received a commitment for construction financing for the facility in the amount
of $6 million, which is expected to be sufficient to build and furnish the
property and a commitment for up to $20 million in financing for eligible notes
received from sales of timeshare interests in the property.
In July 1995, the Company borrowed $900,000 from Joseph P. Martori and Cynthia
J. Polich as Trustees for Cynthia J. Polich and Edward John Martori (an
affiliate), secured by 320 timeshare interests in the Los Abrigados resort. The
Company used these funds for refurbishment at Los Abrigados.
In September 1995, the Company, through a subsidiary, entered into an agreement
to acquire a portion of the Hotel Syracuse in Syracuse, New York and to develop
and market timeshare interests in the property. The Company has a financing
commitment for $5 million in acquisition and development non-recourse financing,
which is expected to be sufficient to acquire and construct the suites, and $30
million in receivables financing through September 1998.
Although no assurances can be made, based on the prior success of the Company in
obtaining necessary financings for operations and for expansion, the Company
believes that with its existing financing commitments, its cash flow from
operations and the contemplated financings discussed above, the Company will
have adequate resources for at least the next twelve to twenty-four months.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits
--------
The Exhibit Index attached to this report is hereby incorporated
------------------------------------------------------------------
by reference.
-------------
b) Reports on Form 8-K
-------------------
None
----
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ILX INCORPORATED
(Registrant)
/s/ Joseph P. Martori
----------------------
Joseph P. Martori
Chief Executive Officer
/s/ Nancy J. Stone
------------------
Nancy J. Stone
Executive Vice President/
Chief Financial Officer
/s/ Denise L. Janda
-------------------
Denise L. Janda
Vice President/Controller
Date: As of November 10, 1995
<PAGE>
Exhibits
to
Form 10-Q/A
For the Quarter Ended September 30, 1995
ILX INCORPORATED
10-1 Promissory Note ($900,000) to Cynthia J. Polich Irrovocable Trust and
Edward John Martori by Los Abrigados Partners Limited Partnership and
ILX Incorporated, dated July 27, 1995
10-2 Deed of Trust and Assignment of Rents to Cynthia J. Polich Irrevocable
Trust and Edward John Martori by Los Abrigados Partners Limited
Partnership, dated July 27, 1995
10-3 Prommissory Note ($10,000,000) to Tammac Financial Corp. by ILX
incorporated, dated August 25, 1995 (Kohl's Ranch)
10-4 Loan and Security Agreement between Tammac Financial Corp. and ILX
Incorporated, dated August 25, 1995 (Kohl's Ranch)
10-5 Letter of Commitment between Resort Service Company, Inc. and Orangemen
Club Limited Partnership, dated August 9, 1995
10-6 Articles of Limited Partnership between Hotel Syracuse Timeshare
Corporation and Syracuse Project Incorporated, dated August 15, 1995
10-7 Agreement of Purchase and Sale of Real Property, Improvements and
Associated Personalty between Hotel Syracuse, Inc. and Orangemen Club
Limited Partnership, dated September 12, 1995
10-8 Service Agreement between Hotel Syracuse, Inc. and Orangemen Club
Limited Partnership, dated Septemger 12, 1995
PROMISSORY NOTE
$900,000 July 28, 2 P.M., 1995
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP, an Arizona limited partnership, and ILX INCORPORATED, an Arizona
corporation (the "undersigned"), jointly and severally, promise to pay to the
order of Cynthia J. Polich and Joseph P. Martori as Trustees for the Cynthia J.
Polich Irrevocable Trust dated June 1, 1989 (to the extent of a 38.889%
participation herein), and Edward John Martori (to the extent of a 61.111%
participation herein) (collectively, "Payee"), at Phoenix, Arizona, or at such
other place as the holder hereof may from time to time designate, the principal
sum of Nine Hundred Thousand Dollars ($900,000), together with interest thereon
as computed below, and in accordance with their participation interests
described above, as follows:
Payments of interest only shall be made monthly on the first day of
each month commencing September 1, 1995. The entire unpaid principal
balance, together with all accrued and unpaid interest thereon and
other costs payable hereunder, shall be paid in full on July 31, 1998.
Interest shall be charged on the unpaid principal balance of this Note
from the date hereof to the date of maturity on a daily basis for the actual
number of days any portion of the principal is outstanding, computed on the
basis of a 360-day year, at a per annum rate (the "Note Rate") equal to thirteen
and one-half percent (13.5%).
The undersigned acknowledges that the undersigned has agreed to the
rate of interest represented by the Note Rate, and any additional charges, costs
and fees arising out of or related to the transaction of which this Note is a
part, to the extent deemed to be interest under applicable law.
Each and every payment due under this Note shall be made in lawful
money of the United State of America and in immediately available funds, and
when made shall be first applied to accrued costs, expenses and fees, if any,
then to accrued interest that has not yet been added to principal, and then to
the reduction of the principal amount of this Note. This Note may be prepaid, in
whole or in part, without penalty or premium, provided that each such payment
shall be applied as set forth above.
At the option of the holder hereof, any of the following shall
constitute a "default" hereunder, and, upon the occurrence of any of the
following, all obligations hereunder shall, at the option of the holder hereof,
become immediately due and payable, without presentment for payment, diligence,
grace, exhibition of this Note, protest, further demand or notice of any kind,
all of which are hereby expressly waived: (i) any sum owing hereunder or under
other indebtedness of the undersigned to Payee is not paid as agreed; (ii) any
petition or application for any form of relief under any provision of Title 11,
United States Code, as amended from time to time (the "Bankruptcy Code") or any
other law pertaining to reorganization, insolvency or readjustment of debts is
filed by or against the undersigned, its assets or affairs; (iii) the
undersigned makes an assignment for the benefit of creditors, is not paying
debts as they become due, or is granted an order for relief under any chapter of
the Bankruptcy Code; (iv) a custodian, as defined by the Bankruptcy Code, takes
charge of any property of the undersigned; (v) garnishment, attachment, levy or
execution is issued against any of the property or effects of the undersigned;
(vi) there is a termination, failure to exist or dissolution of the undersigned;
or (vii) there is any default or breach of any representation, warranty or
covenant, or there is any false statement or material omission, by the
undersigned under any document forming part of the transaction in respect of
which this Note is made or forming part of any other transaction under which the
undersigned is indebted to Payee.
The undersigned hereby agree: (i) to any and all extensions (including
extensions beyond the original term hereof) and renewals hereof, from time to
time, without notice, and that no such extension or renewal shall constitute or
be deemed a release of any obligation of the undersigned to the holder hereof;
(ii) that any written modification, extension or renewal hereof executed by the
undersigned shall constitute a representation and warranty of the undersigned
that the unpaid balance of principal, interest and other sums owing hereunder at
the time of such modification, renewal or extension are owed without adjustment
for offset, counterclaim or other defense of any kind by the undersigned against
Payee; (iii) that the acceptance by the holder hereof of any performance which
does not comply strictly with the terms hereof shall not be deemed to be a
waiver or bar of any right of said holder, nor a release of any obligation of
the undersigned to the holder hereof; (iv) to offsets of any sums or property
owed to the undersigned by the holder hereof at any time; (v) that this Note
shall be governed by the laws of the State of Arizona applicable to promissory
notes made and to be paid in the State of Arizona; and (vi) to pay the holder
hereof upon demand any and all costs, expenses and fees (including reasonable
attorneys' fees) incurred in enforcing or attempting to recover payment of the
amounts due under this Note, including negotiating, documenting and otherwise
pursuing or consummating modifications, extensions, compositions, renewals or
other similar transactions pertaining to this Note, irrespective of the
existence of an event of default, and including costs, expenses and fees
incurred before, after or irrespective of whether suit is commenced, and in the
event suit is brought to enforce payment hereof, such costs, expenses and fees
and all other issues in such suit shall be determined by a court sitting without
a jury.
This Note is secured by a Deed of Trust and Assignment of Rents of even
date herewith.
This Note is executed to be effective as of the date set forth above.
LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP, an Arizona
limited partnership
By: ILE SEDONA INCORPORATED,
an Arizona corporation, its
general partner
By: /S/ Joseph P. Martori
-------------------------
Joseph P. Martori
Its: President
-------------------------
ILX INCORPORATED, an Arizona
corporation
By: /s/ Nancy J. Stone
-------------------------
Nancy J. Stone
Its: Exec. Vice President
-------------------------
When Recorded Mail To:
Joseph P. Martori
c/o 2777 East Camelback
Phoenix, Arizona 85016
DEED OF TRUST AND ASSIGNMENT OF RENTS
This Deed of Trust is made this 27 day of July, 1995, between Los
Abrigados Partners Limited Partnership, an Arizona limited partnership, whose
mailing address is 2777 East Camelback Road, Phoenix, AZ 85016 ("Trustor"), and
Security Title Agency, an Arizona corporation, whose mailing address is 3620
North 3rd Avenue, Phoenix, AZ 85013 ("Trustee"), and Cynthia J. Polich and
Joseph P. Martori as Trustees for the Cynthia J. Polich Irrevocable Trust dated
June 1, 1989 (to the extent of a 38.889% participation herein) and Edward John
Martori (to the extent of a 61.111% participation herein) both of whose mailing
address is c/o 2777 East Camelback Road, Phoenix, AZ 85016 ("Beneficiary").
W I T N E S S E T H:
That Trustor conveys, transfers and assigns to Trustee in Trust, with
Power of Sale, the following described real property in Coconino County,
Arizona:
an undivided 320/8,925 fee simple interest in and to the real property
situated in Coconino County, Arizona, more particularly described in
Docket 1738, page 236 et seq., at the office of the Coconino County
Recorder, Coconino County, Arizona (with each undivided 1/8,925 fee
simple interest in and to such real property being referred to
hereinafter as a "Unit").
Together with all buildings, improvements and fixtures thereon.
This Deed of Trust, made on the above date between Trustor, Trustee and
Beneficiary above named,
WITNESSETH: That Trustor irrevocably grants and conveys to Trustee in Trust,
with Power of Sale, the above described real property, together with leases,
rents, issues, profits, or income thereof (all of which are hereinafter called
"property income"); subject, however, to the right, power, and authority
hereinafter given to and conferred upon Beneficiary to collect and apply such
property income; and subject to existing taxes, assessments, liens,
encumbrances, covenants, conditions, restrictions, rights of way, and easements
of record.
FOR THE PURPOSES OF SECURING:
A. Performance of each agreement of Trustor herein
contained.
B. Payment of the indebtedness evidenced by a Promissory Note of even
date herewith, and any extension or renewal thereof, in the principal sum of
$900,000 executed by Trustor and ILX Incorporated, an Arizona corporation, in
favor of Beneficiary or order (the "Note").
C. Payment of additional sums and interest thereon which may hereafter
be loaned to Trustor, or its successors or assigns, when evidenced by a
promissory note or notes reciting that they are secured by this Deed of Trust.
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES:
To keep said property in good condition and repair; not to remove or demolish
any building thereon; to complete or restore promptly, and in good and
workmanlike manner any building which may be constructed, damaged, or destroyed
thereon, and to pay when due all claims for labor performed and materials
furnished therefor; to comply with all laws affecting said property or requiring
any alterations or improvements to be made thereon; not to commit or permit
waste thereof; not to commit, suffer, or permit any act upon said property in
violation of law; and do all other acts which from the character or use of said
property may be reasonably necessary, the specific enumerations herein not
excluding the general.
The amount collected under any fire or other insurance policy may be applied by
Beneficiary upon any indebtedness secured hereby and in such order as
Beneficiary may determine, or at option of Beneficiary the entire amount so
collected or any part thereof may be released to Trustor. Such application or
release shall not cure or waive any default or notice of Trustee's sale
hereunder or invalidate any act done pursuant to such notice.
To appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee; and to pay
all costs and expenses of Beneficiary and Trustee, including cost of evidence of
title and attorneys' fees in a reasonable sum, in any such action or proceeding
in which Beneficiary or Trustee may appear or be named, and in any suit brought
by Beneficiary or Trustee to foreclose this Deed of Trust.
To pay: before delinquent, all taxes and assessments affecting said property;
when due, all encumbrances, charges, and liens, with interest, on said property
or any part thereof, which appear to be prior or superior hereto; all costs,
fees, and expenses of this Trust, including, without limiting the generality of
the foregoing, the fees of Trustee for issuance of any Deed of Partial Release
and Partial Reconveyance or Deed of Release and Full Reconveyance, and all
lawful charges, costs and expenses in the event of reinstatement of, following
default in, this Deed of Trust or the obligations secured hereby.
Should Trustor fail to make any payment or to do any act as herein provided,
then Beneficiary or Trustee, but without obligation so to do and without notice
to or demand upon Trustor and without releasing Trustor from any obligation
hereof, may: make or do the same in such manner and to such extent as either may
deem necessary to protect the security hereof, Beneficiary or Trustee being
authorized to enter upon said property for such purposes; appear in and defend
any action or proceeding purporting to affect the security hereof or the rights
or powers of Beneficiary or Trustee; pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in the judgment of either appears to be prior
to or superior hereto; and, in exercising any such powers, pay necessary
expenses, employ counsel, and pay its reasonable fees.
To pay immediately and without demand all sums expended by Beneficiary or
Trustee pursuant to the provisions hereof, together with interest from date of
expenditure at the same rate as is provided for in the note secured by this Deed
of Trust or at the highest legal rate, whichever be the greater rate. Any
amounts so paid by Beneficiary or Trustee shall become a part of the debt
secured by this Deed of Trust and a lien on said premises or immediately due and
payable at option of Beneficiary or Trustee.
IT IS MUTUALLY AGREED:
That any award of damages in connection with any condemnation or any such
taking, or for injury to the property by reason of public use, or for damages
for private trespass or injury thereto, is assigned and shall be paid to
Beneficiary as further security for all obligations secured hereby (reserving
unto the Trustor, however, the right to sue therefor and the ownership thereof
subject to this Deed of Trust), and upon receipt of such moneys Beneficiary may
hold the same as such further security, or apply or release the same in the same
manner and with the same effect as above provided for disposition of proceeds of
fire or other insurance.
That time is of the essence of this Deed of Trust, and that by accepting payment
of any sum secured hereby after its due date, Beneficiary does not waive its
right either to require prompt payment when due of all other sums so secured or
to declare default for failure so to pay.
That at any time or from time to time, and without notice, upon written request
of Beneficiary and presentation of this Deed of Trust and said note(s) for
endorsement, and without liability therefor, and without affecting the personal
liability of any person for payment of the indebtedness secured hereby, and
without affecting the security hereof for the full amount secured hereby on all
property remaining subject hereto, and without the necessity that any sum
representing the value or any portion thereof of the property affected by the
Trustee's action be credited on the indebtedness, and upon payment of its fees,
the Trustee may (a) release and reconvey all or any part of said property; (b)
consent to the making and recording, or either, of any map or plat of the
property or any part thereof; (c) join in granting any easement thereon; (d)
join in or consent to any extension agreement or any agreement subordinating the
lien, encumbrance, or charge hereof.
That upon written request of Beneficiary stating that all sums secured hereby
have been paid, and upon surrender of this Deed of Trust and said note(s) to
Trustee for cancellation and retention, and upon payment of its fees, Trustee
shall release and reconvey, without covenant or warranty, express or implied,
the property then held hereunder. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness thereof. The
grantee in such reconveyance may be described as the "person or persons legally
entitled thereto."
That as additional security, Trustor hereby gives to and confers upon
Beneficiary the right, power and authority, during the continuance of this
Trust, to collect the property income, reserving to Trustor the right, prior to
any default by Trustor in payment of any indebtedness secured hereby or in
performance of any agreement hereunder, to collect and retain such property
income as it becomes due and payable. Upon any such default, Beneficiary may at
any time, without notice, either in person, by agent, or by a receiver to be
appointed by a court, and without regard to the adequacy of any security for the
indebtedness hereby secured, enter upon and take possession of said property or
any part thereof, in its own name sue for or otherwise collect such property
income, including that past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including reasonable attorneys' fees, upon
any indebtedness secured hereby, and in such order as Beneficiary may determine.
The entering upon and taking possession of said property, the collection of such
property income, and the application thereof as aforesaid, shall not cure or
waive any default or notice of Trustee's sale hereunder or invalidate any act
done pursuant to such notice.
That upon default by Trustor in the payment of any indebtedness secured hereby
or in performance of any agreement hereunder, Beneficiary may declare all sums
secured hereby immediately due and payable by delivery to Trustee of written
notice thereof, setting forth the nature thereof, and of election to cause to be
sold said property under this Deed of Trust. At the time of giving such written
notice, Beneficiary (or its nominee) also shall deposit with Trustee this Deed
of Trust, said Purchase Agreements and/or note(s), and all documents evidencing
expenditures secured hereby.
Trustee shall record and give notice of Trustee's sale in the manner required by
law, and after the lapse of such time as may then be required by law, Trustee
shall sell, in the manner required by law, said property at public auction at
the time and place fixed by it in said notice of Trustee's sale to the highest
bidder for cash in lawful money in the United States, payable at time of sale.
Trustee may postpone or continue the sale by giving notice of postponement or
continuance by public declaration at the time and place last appointed for the
sale. Trustee shall deliver to such purchaser its Deed conveying the property so
sold, but without any covenant or warranty, expressed or implied. Any persons,
including Trustor, Trustee, or Beneficiary, may purchase at such sale.
After deducting all costs, fees, and expenses of Trustee and of this Trust,
including cost of evidence of title in connection with sale and reasonable
attorneys' fees, Trustee shall apply the proceeds of sale to payment of: All
sums then secured hereby and all other sums due under the terms hereof, with
accrued interest; and the remainder, if any, to the person or persons legally
entitled thereto, or as provided in A.R.S. ss. 33-712. To the extent permitted
by law, an action may be maintained by Beneficiary to recover a deficiency
judgment for any balance due hereunder.
That Beneficiary may appoint a successor Trustee in the manner prescribed by
law. A successor Trustee herein shall, without conveyance from the predecessor
Trustee, succeed to all the predecessor's title, estate, rights, powers, and
duties. Trustee may resign by mailing or delivering notice thereof to
Beneficiary and Trustor.
That this Deed of Trust applies to, inures to the benefit of, and binds all
parties hereto, their heirs, legatees, devisees, administrators, executors,
successors, and assigns. The term Beneficiary shall mean the owner and holder of
the note(s) secured hereby, whether or not named as Beneficiary herein. In this
Deed of Trust, whenever the context so requires, the masculine gender includes
the feminine and neuter, and the singular number includes the plural.
That Trustee accepts this Trust when this Deed of Trust, duly executed and
acknowledged, is made a public record as provided by law. Trustee is not
obligated to notify any party hereto of pending sale under any other Deed of
Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee
shall be a party unless brought by Trustee.
The undersigned Trustor requests that a copy of any notice of Trustee's sale
hereunder be mailed to him/her at the address set forth above.
Trustor shall be entitled to releases of Units (as defined above) from this Deed
of Trust at any time and from time to time, upon payment of a release price in
the amount of Three Thousand Five Hundred Dollars ($3,500) per Unit. The release
price shall be credited against and reduce the principal balance remaining under
the Note.
Type of Membership:
JEROME--Every Year
LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP, an Arizona
limited partnership
By: ILE SEDONA INCORPORATED,
an Arizona corporation, its
general partner
By: /S/ Joseph P. Martori
-------------------------
Joseph P. Martori
Its: President
-------------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
This instrument was acknowledged before me this 27 day of July, 1995,
by Joseph P. Martori as President of ILE SEDONA INCORPORATED, an Arizona
corporation, as general partner of LOS ABRIGADOS PARTNERS LIMITED PARTNERSHIP,
an Arizona limited partnership.
My Commission Expires:
/s/ Michelle C. Lemieux
-------------------------------
Notary Public
NEE: Michelle C. Park
PROMISSORY NOTE
Phoenix, Arizona
$10,000,000.00 As of August, 25, 1995
FOR VALUE RECEIVED, ILX INCORPORATED, an Arizona Corporation (the
"Undersigned" or the "Borrower"), promises to pay in lawful monies of the United
States of America, to the order of TAMMAC FINANCIAL CORP., having its principal
office located at 100 Commerce Boulevard, Wilkes-Barre, PA 18702 (hereinafter
referred to as the "Lender") or at such place as Lender may from time to time
designate in writing, the principal sum of Ten Million Dollars ($10,000,000.00)
or so much as shall have been advanced from time to time (the "Loan"), together
with interest as hereinafter provided, computed from the date hereof, in
accordance with the terms of a certain Loan and Security Agreement between the
undersigned and the Lender executed contemporaneously herewith (the "Loan
Agreement"), and in the following manner and upon the following terms and
conditions:
1. Payment of Loan.
(a) The unpaid principal, the accrued interest and all costs and
expenses relating to the Loan shall be payable on the first day of the
seventy-second (72nd) month after the expiration of the Draw Period, unless
sooner demanded in accordance with the terms and provisions set forth herein.
(b) Unless accelerated pursuant to the terms and conditions of the Loan
Agreement or this Note, or paid before the scheduled Maturity Date of the Loan,
the Borrower shall pay to Lender ninety-six (96) consecutive minimum monthly
payments each in an amount equal to ninety-four percent (94%) 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 hereinabove 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 the month next following the date of this Note
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 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 Payment 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.
(c) The Borrower shall direct or otherwise cause all Consumers (as that
term is defined in the Loan Agreement) under the Acceptable Contracts to pay all
monies due thereunder to the Agent (as that term is defined in the Loan
Agreement) or as otherwise advised by Lender in writing. The Borrower, to the
extent that it receives such payments directly from or on behalf of such
Consumers, shall hold the same (in the form so received) in trust for the sole
and exclusive benefit of Lender and immediately deliver same to Lender. Monies
(in good, collected funds) from Contracts collected and paid to Lender by the
Agent or the Borrower shall be (subject to the payment of fees, costs and
expenses as set forth herein and in the Loan Agreement) applied, on the first
business day of the calendar month following the receipt thereof, first towards
the payment of accrued and unpaid interest on the Loan and then to the payment
of the principal amount then outstanding under the Loan.
(d) For purposes of computing the amount of interest payable on the
Loan, the outstanding principal amount of the Loan shall not be reduced by the
amount of any funds collected by the Agent or the Borrower until such funds are
received by Lender as good, collected funds and applied to the Loan.
2. Interest Rate. The interest rate which shall be used to calculate
the amount of interest due each month shall be the highest prime rate as
announced, from time to time, in The Wall Street Journal during the month for
which interest is being charged ("Prime Rate"), plus four (4%) percentage points
per annum. Interest shall be calculated on the outstanding principal balance at
the close of each day, on the basis that one day represents 1/360th of a year.
The interest rate may be changed from time to time without notice to the
Borrower and for the purposes of this Note, any such change shall be effective
on the date of the change. Interest shall continue to accrue on the unpaid
principal balance remaining due until all sums due hereunder and under the Loan
Agreement are paid in full. Lender's failure or delay in submitting invoices of
the interest due under the Loan to the Borrower shall not discharge or relieve
the Borrower of its obligation to pay interest on the Loan when due.
3. Default Interest Rate. Upon the occurrence or during the continuance
of an Event of Default, as defined in the Loan Agreement, the rate used to
calculate the interest due on the Loan may, at the option of Lender, increase by
five (5%) percentage points above the interest rate referred to in paragraph 2.
above (the "Default Rate"). If such increased interest rate exceeds that which
may be collected under applicable law, the Default Rate shall be that maximum
allowable interest rate.
4. Late Charge. In the event Lender receives a payment of interest or
principal more than fifteen (15) days after its due date, 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 the Lender in processing late
payments and shall not be deemed to constitute additional interest.
5. Collateral. As security for the payment and performance of the
obligations hereunder, the undersigned has, contemporaneously herewith, granted
a security interest to Lender in and to the Collateral more particularly
described in the Loan Agreement.
6. Application of Payments. All payments of interest and principal or
prepayments of principal, howsoever designated by the undersigned, are to be
applied first on account of interest on the unpaid balance of the principal
indebtedness, and the balance, if any, on account of said principal
indebtedness.
7. Events of Default; Acceleration of Balance Due. (a) The Borrower
agrees with the Lender that the Borrower shall be bound by and shall comply with
all of the terms, covenants and conditions of the Loan Agreement and all other
Loan Documents, as that term is defined in the Loan Agreement, all of which
shall be construed as one instrument and any Default in any term, covenant or
condition contained in the Loan Agreement and/or any of the other Loan Documents
shall cause this Note to be in default and all money owed by the Borrower to the
Lender by virtue of this Note, the Loan Agreement and/or any of the other Loan
Documents shall be forthwith due and payable. All of the Events of Default set
forth in the Loan Agreement and the other Loan Documents are herein incorporated
by reference as though set forth fully at length.
(b) Upon the occurrence of any Event of Default as described or defined
in the Loan Agreement, and/or any of the other Loan Documents, then, at the
option of the Lender or the holder hereof, the aforesaid principal sum or so
much thereof as shall then remain unpaid, with all arrearage of interest
thereon, and any other sums due hereunder or thereunder shall, without notice or
demand, at the option of the Lender, become and be due and payable immediately
thereafter, anything hereinbefore contained to the contrary notwithstanding. In
addition, the Lender or holder hereof may exercise any and all rights and
remedies available to it under the terms of the Loan Agreement and/or any other
Loan Documents, or at law or in equity.
8. Principal Prepayments. It is understood and agreed that the
undersigned may prepay in full or in part at any time without penalty or
premium, the principal of this obligation; provided, however, the Borrower shall
notify Lender of each such prepayment. Any such prepayments of principal shall
be applied in the inverse order of their maturity.
9. Lender's Rights Cumulative. No remedy referred to herein is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to herein, in the Loan Agreement and/or any of the other Loan
Documents, or other agreements or otherwise available to Lender at law or in
equity. No express or implied waiver by Lender of any Default or Event of
Default hereunder shall in any way be, or be construed to be, a waiver of any
future or subsequent Default or Event of Default. The failure or delay of Lender
in exercising any rights granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such rights
upon the continuation or reoccurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by
Lender shall not exhaust the same or constitute a waiver of any other right
provided herein. The Events of Default and remedies thereon are not restrictive
of and shall be in addition to any and all other rights and remedies of Lender
provided for by the Loan Agreement and/or any of the other Loan Documents and
applicable law.
10. Waiver of Jury Trial. THE BORROWER HEREBY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS NOTE, THE LOAN AGREEMENT AND/OR
ANY OF THE OTHER LOAN DOCUMENTS OR OTHER AGREEMENTS OR INSTRUMENTS BETWEEN
BORROWER AND LENDER.
NS
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Initial
11. Attorney's Fees, Costs and Charges. The Borrower shall be liable
for all costs, charges and expenses, and other sums incurred or advanced by
Lender (including reasonable legal fees and disbursements) to preserve, protect
or maintain the Collateral securing this Note, collect the sums due hereunder
and/or the other Loan Documents, protect Lender's interests in or realize on the
Collateral or to enforce Lender's rights against the Borrower.
12. Joint and Several Liability. The liability of the Borrower shall be
joint and several, absolute and unconditional and without regard to the
liability of any other party.
13. Waivers. The Borrower and all other parties who at any time may be
liable hereon in any capacity, jointly and severally, waive presentment, demand
for payment, protest and notice of protest, and notice of dishonor of this Note,
and authorize Lender, without notice, to grant any extension, postponement of
time of payment, indulgence or any substitution, exchange or release of
Collateral and the addition to or release of any party or persons primarily or
secondarily liable or acceptance of partial payments on any accounts or
instruments and the settlement, compromising or adjustment thereof.
14. Disclosure of Information. Lender is hereby authorized to disclose
any financial or other information about the Borrower to any regulatory body or
agency having jurisdiction over the Lender, or to any present, future or
prospective participant or successor in interest in any loan or other financial
accommodation made by Lender to the Borrower.
15. Further Security; Right of Set-off. (a) As further security for the
performance of the obligations hereunder and the other Obligations, as defined
in the Loan Agreement, the Borrower hereby gives Lender a general lien upon all
property and assets heretofore or hereafter delivered to Lender, and Lender
shall have the right of setoff, in addition to any other rights conferred by
statute or operation of law, with respect to any funds or tangible assets which
may, at any time, be in possession of or under Lender's custody and control.
(b) Lender shall have the right, after the occurrence of an Event of
Default, to immediately without notice or other action, to set-off against the
Borrower's obligations to Lender, any sum owed by the Lender in any capacity to
the Borrower, whether due or not, or any property of the Borrower in the
possession of the Lender, and Lender shall be deemed to have exercised such
right of set-off and have made a charge against any such money or property
immediately upon the occurrence of any Event of Default, even though the actual
book entries may be made at times subsequent thereto.
16. No Waiver of Rights or Remedies. The Lender shall not by any act or
omission be deemed to have waived any of its rights or remedies hereunder unless
such waiver is in writing and signed by the Lender, and then only to the extent
set forth therein. A waiver as to any one event shall in no way be construed as
continuing or as preventing the exercise of such rights or remedies by a
subsequent event.
17. Business Purpose. The proceeds of this Note shall be (or have been)
utilized for business purposes and as a result, this loan transaction does not
fall under the regulations set forth in 12 CFR Section 226, et seq.
18. Balloon Note. IN THE EVENT THAT THERE IS A PRINCIPAL BALANCE
REMAINING DUE AFTER ALL MANDATORY PAYMENTS REQUIRED TO BE MADE UNDER PARAGRAPH I
ABOVE HAVE BEEN PAID BY BORROWER TO LENDER, THIS NOTE SHALL BE DEEMED TO BE A
BALLOON NOTE REQUIRING PAYMENT IN FULL ON THE DATE OF MATURITY AND THE LENDER
SHALL BE UNDER NO OBLIGATION TO REFINANCE THE AMOUNT DUE AT THAT TIME.
19. Loan Charges. In the event that the interest charged hereunder
exceeds the legal limit permitted by law, the interest rate shall be
automatically reduced to the permitted limit and any interest charged which
exceeds or exceeded the permitted limit shall, at Lender's option, be treated as
a payment of principal or refunded directly to the Borrower.
20. Invalidity. In the event any provision of this Note is determined
by competent authority to be prohibited or unenforceable in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions of this Note, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable any provision in any
other jurisdiction.
21. Governing Law. The provisions of this Note shall be governed by the
laws of the Commonwealth of Pennsylvania.
22. Binding Effect. The provisions herein contained shall bind and
inure to the benefit of the Borrower and Lender and their respective legal
representatives, successors and assigns (provided, however, that the Borrower
shall not assign this Note without first obtaining the written consent of
Lender). Lender (or any subsequent assignee) may transfer and assign this Note
and deliver the Collateral securing this Note to any assignee, who shall
thereupon have all of the rights of Lender; and Lender (or any such subsequent
assignee that in turn assigns as aforesaid) shall then be relieved and
discharged of any responsibility or liability with respect to this Note and said
Collateral. For the purposes of this Note wherever the term "Lender" shall be
used it shall refer to any subsequent holder, successor or assignee hereof
unless the context requires otherwise.
23. Cross Default/Collateralization. All other agreements between
Lender and/or any of its affiliates or subsidiaries and the Borrower are hereby
amended so that a default under this Note is a default under all other
agreements between Lender and the Borrower and a default under any one of the
other agreements is a default under this Note. Further, such agreements are
amended so that the Collateral securing this Note secures any presently existing
or hereafter arising obligations due and owing from the Borrower to Lender
and/or its affiliates or subsidiaries and the collateral pledged under any other
agreement with Lender and/or its affiliates or subsidiaries secures this Note.
24. Incorporation of Commitment Letter and Loan Agreement. This Note
has been issued pursuant to the terms and conditions of the Commitment Letter,
as that term is defined in the Loan Agreement, and pursuant to the Loan
Agreement between Borrower and Lender of even date herewith, and all of the
terms, covenants and conditions of the Commitment Letter and the Loan Agreement
(including all schedules and exhibits thereto) and all other instruments
evidencing and/or securing the indebtedness hereunder are hereby made part of
this Note and are deemed incorporated herein as though set forth at length.
25. Gender. Throughout this Note, the masculine shall include the
feminine and vice versa and the singular shall include the plural and vice
versa, unless the context of this Note indicates otherwise.
26. Section Headings. Section headings are for convenience only and
shall not be construed as limiting the contents of any section contained herein
and shall not be construed as part of this Note.
27. Conflicting Provisions. In the event that any of the terms and
conditions of this Note conflict with any of the terms and conditions of the
other Loan Documents or any other agreements between the Borrower and Lender,
the provisions offering Lender the greatest protection or most favorable
interpretation of its rights and remedies shall control.
28. Definitions. Unless otherwise defined herein, the capitalized terms
found herein shall have the same meaning ascribed to them as set forth in the
Loan Agreement.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
duly executed and delivered by its proper and duly authorized officers as of the
day and year first above written.
ATTEST: ILX INCORPORATED, an Arizona
Corporation
/S/STEPHANIE D. CASTRONOVA By: /S/ NANCY J. STONE
- --------------------------------- --------------------------------
STEPHANIE D. CASTRONOVA, NANCY J. STONE, Executive
Secretary Vice President
LOAN AND SECURITY AGREEMENT
AGREEMENT dated as of this 25th day of August, 1995, by and between
TAMMAC FINANCIAL CORP., a Delaware Corporation, having its principal office
located at 100 Commerce Boulevard, Wilkes-Barre, Pennsylvania 18702 (hereinafter
referred to as the "Lender"), and ILX INCORPORATED, an Arizona Corporation,
having its principal place of business located at 2777 East Camelback Road,
Phoenix, Arizona 85016 (hereinafter referred to as the "Borrower").
R E C I T A L :
Borrower has requested Lender to loan it certain funds on a secured
basis, and Lender has agreed to do so, subject to and upon the terms and
conditions hereinafter set forth. The maximum principal amount of the loan to be
made by the Lender to the Borrower is TEN MILLION DOLLARS ($10,000,000.00).
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
I
DEFINITIONS
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) Timeshare Estates 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 Timeshare Estates 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 in U.S. currency, except that up to
fifteen (15%) percent of the aggregate principal sum advanced under the Loan may
provide for the purchase price under the Contracts to be payable in up to one
hundred-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 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 Timeshare Estate, 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 Timeshare Estate 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 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
instrumentalities thereof; (xiii) the Consumer executing and delivering the
Contract shall not 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.
2. Accounts or Accounts Receivable: The term "Account" or "Accounts
Receivable" shall mean any and all obligations of any kind at any time due
and/or owing to Borrower relating to the Acceptable Contracts serving as
collateral for the Loan and all rights of Borrower to receive payment or other
consideration (whether classified under the Uniform Commercial Code of the State
of Arizona or any other state as accounts, contract rights, chattel paper,
general intangibles, or otherwise) relating to the Acceptable Contracts serving
as collateral for the Loan, including without limitation, invoices, contract
rights, accounts receivable, general intangibles, leases, choses-in-action,
notes, drafts, acceptances, instruments and all other debts, obligations and
liabilities in whatever form owing to Borrower from any person, firm,
governmental authority, corporation or any other entity, all security therefore,
whether now existing or hereafter arising, all relating to the Acceptable
Contracts serving as collateral for the Loan and the Contracts and Related
Documents, together with all proceeds and products of any and all of the
foregoing.
3. Advance: "Advance" shall be the proceeds of the Loan requested by
Borrower and advanced from time to time by Lender in accordance with the terms
of this Agreement.
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 of: (i) $10,000,000.00 or (ii) the product of 85% multiplied by the
aggregate remaining principal balance of the Acceptable Contracts in which
Lender is granted a security interest hereunder.
5. Agency Agreement: "Agency Agreement" shall be that certain agreement
to be entered into by and among Borrower, Lender and the Agent which will
provide, among other things, for the Agent 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 into a Dominion Account at an insured
financial institution selected by Borrower and acceptable to Lender all funds
received in connection with the Acceptable Contracts and turn said funds over to
Lender, all in accordance with the terms and conditions of this Agreement.
6. Agent: "Agent" shall mean the financial institution selected by
Borrower and approved by Lender to act as agent pursuant to the Agency
Agreement.
7. Collateral: "Collateral" shall mean the Collateral described in
Section III of this Agreement.
8. Commitment Letter: The "Commitment Letter" shall be that certain
Commitment Letter dated June 19, 1995, issued by Lender to the Borrower,
together with all amendments and modifications thereto.
9. Consumer or Consumers: "Consumer" or "Consumers" shall mean those
lessees or purchasers and/or borrowers of the Borrower leasing or purchasing and
financing the purchase of Timeshare Estates (including any guarantor thereof),
executing an agreement, contract, a note or lease and/or similar documentation,
which evidence his and/or her or their obligation to the Borrower for the
repayment of the unpaid portion of the cash price for the Timeshare Estate and
the first lien and security interest granted to Borrower in and to the Timeshare
Estate.
10. Contract or Contracts: "Contract" or "Contracts" means a Consumer
contract or agreement between the Borrower as lessor, seller and/or lender and a
Consumer, as the lessee or purchaser and/or borrower of (or relating to) a
Timeshare Estate together with all Related Documents. The term "Contract" or
"Contracts" shall also mean the Acceptable Contracts where the context and sense
and circumstances so require.
11. Deed of Trust: "Deed of Trust" shall mean the Mortgage or Deed of
Trust, Assignment of Leases and Security Agreement covering the Premises, given
by the Borrower, as trustor, in favor of the Lender, as beneficiary to secure
the Loan and the Obligations, which may be singular or plural as the text
requires, as same may be amended, modified or renewed or any replacements or
substitutions therefor.
12. Default: "Default" shall mean an event or condition, the occurrence
of which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
13. Dominion Account: "Dominion Account" shall mean the dominion
account described in Section V. 21. of this Agreement.
14. Event of Default: "Event of Default" shall mean the occurrence of
any of the events described in Section VIII of this Agreement.
15. Excess Borrowing: "Excess Borrowing" shall mean the aggregate of
all outstanding Advances minus the Advance Limit.
16. Financing Statements: "Financing Statements" shall mean the
financing statements required to be filed with the Arizona Secretary of State's
Office, the office of the Recorder in Gila County, Arizona and/or any other
recording office in order to perfect the security interests granted to the
Lender by the Loan Documents.
17. General Intangibles: "General Intangibles" shall mean and include
all of the Borrower's now owned or hereafter acquired choses in action, causes
of action and all other intangible personal property including, without
limitation, corporate or other business records, inventions, designs, patents,
patent applications, trademarks, trademark applications, trade names, trade
secrets, goodwill, registrations, copyrights, licenses, franchises, customer
lists, tax refunds, tax refund claims, insurance claims and rights to
indemnification all related to the Acceptable Contracts serving as Collateral
for the Loan, now or hereafter used or relating to the Premises, the other
Collateral or with any present or future operation of the Premises.
18. Lender: "Lender" shall mean Tammac Financial Corp., its successors
or assigns.
19. Loan: "Loan" shall mean the Loan described herein, which shall be
in the lesser of $10,000,000.00 or the Advance Limit.
20. Loan Documents: "Loan Documents" shall mean the Commitment Letter,
this Agreement, the Collateral Assignment, the Note, the Deed of Trust, the
Financing Statements, the Environmental Indemnity Agreement, the Governmental
Regulation Compliance Affidavit, the Agency Agreement, the Incumbency
Certificate, the Corporate Resolutions, the Intercreditor Agreement and all
other documents executed in connection with the Loan, whether executed
contemporaneously herewith or at any other time, together with all amendments,
supplements, substitutions, replacements or modifications to any or all of them.
21. Note: "Note" shall mean the Promissory Note made by the Borrower
and delivered to the Lender as evidence of the Loan, as same may be amended,
modified or renewed or any substitutions or replacements therefor.
22. Premises: "Premises" or "Project" or "Resort" shall mean the land
owned by Borrower located at Highway 260, Payson, Gila County, Arizona, as more
particularly described in Exhibit "A" attached hereto and made a part hereof, at
which is located the timeshare project (including, but not limited to the
Timeshare Estates) known as Kohl's Ranch Vacation Club, including the real
estate, the improvements thereon and all furnishings, fixtures and personalty
contained thereon and all common areas and/or elements appurtenant thereto. The
term Premises shall, where the context so requires, also include the other
"Trust Property", as that term is defined in the Deed of Trust.
23. Project Documents: "Project Documents" shall mean the constituent
documents for the Premises, including, but not limited to, the Kohl's Ranch
Vacation Club Membership Plan recorded April 24, 1995, in the official records
of Gila County, Arizona, bearing instrument number 95-664618, the Articles of
Incorporation, By-Laws and Rules and Regulations of Kohl's Ranch Owners
Association, the Public Report for a Timeshare Offering issued June 14, 1995,
bearing file number 95-00389, public offering statements, and any exhibits,
supplements, additions, substitutions, modifications or amendments to any of the
foregoing, as may be made from time to time.
24. Obligations: "Obligations" shall mean all indebtedness,
obligations, liabilities and agreements of every kind and nature of Borrower to
or with Lender, or to or with any affiliate of Lender, now existing or hereafter
arising, and now or hereafter contemplated, pursuant to this Agreement and/or
the Loan Documents, or otherwise, whether in the form of refinancing, loans,
interest, charges, expenses or otherwise, direct or indirect, including without
limitation, the Loan and any participation or interest of Lender (or of any
affiliate of Lender) in any obligations of Borrower to others, acquired
outright, conditionally or as collateral security from another, absolute or
contingent, joint or several, liquidated or unliquidated, direct or indirect,
secured or unsecured, arising by operation of law or otherwise, including
without limitation any future advances, renewals, extensions or changes in form
of, or substitutions for, any of said indebtedness, obligations or liabilities,
the other sums and charges to be paid to and all interest and late charges on
any of the foregoing.
25. Related Documents: "Related Documents" means, as applicable to each
Contract, the credit package, security agreements, certificates of membership,
mortgages, mortgage deeds, deeds of trust securing the Contracts and encumbering
the Time Share Estates, 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, public reports,
receipts for said prospectuses, public offering statements and public reports,
truth-in-lending disclosure statements, information, documents, records and such
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.
26. Servicing Agent: "Servicing Agent" shall mean the entity selected
by Borrower and approved by Lender to act as the servicing agent pursuant to the
Servicing Agreement.
27. Servicing Agreement: "Servicing Agreement" shall mean the agreement
entered into between Borrower and the Servicing Agent to service the Acceptable
Contracts as described in Section V. 20. of this Agreement.
28. Timeshare Estate: "Timeshare Estate" or "Timeshare Estates" shall
mean the timeshare interests) or estate(s) defined in or created by the Project
Documents or otherwise.
II
LOAN
1. Loan: Upon the terms and conditions set forth in this Agreement,
provided there has occurred no Event of Default, Lender will provide Loans to
Borrower in an aggregate amount up to but not in excess of the Borrower's
Advance Limit or $10,000,000.00, whichever is less, on a revolving loan basis,
payable in accordance with the terms of this Agreement. If the outstanding
amount of the Loan shall exceed the Advance Limit at any time, such excess shall
be deemed secured by the Collateral and shall be subject to the terms of this
Agreement.
2. Advances: (a) At Borrower's request, Advances will be made by Lender
during the period commencing from the date of this Agreement and ending
twenty-four (24) months thereafter (the "Draw Period"), provided, however, 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.
(b) Lender shall Advance only as to Acceptable Contracts and shall not
be required to make any Advance if: (i) the amount of such Advance when added to
the amount of the Loan then outstanding would exceed the Advance Limit; (ii) an
Event of Default has occurred and is continuing; or (iii) the request for an
Advance is for less than $50,000-00.
(c) Each request for an Advance shall be: (a) in writing and shall
designate the principal amount of the Advance requested, the date on which the
Advance is to be made and the account to which the proceeds of such Advance are
to be transferred; and (b) delivered to the office of Lender at least ten (10)
days in advance of the date for which an Advance is requested.
(d) With each written request for an Advance: (i) Borrower shall have
delivered to Lender all such new Acceptable Contracts and the Related Documents
being pledged or assigned to Lender, together with such additional information
concerning the Acceptable Contracts and the Consumers thereunder, as Lender may
reasonably require; (ii) Borrower shall have properly and effectively assigned
and delivered all such Contracts and Borrower shall have executed and delivered
all appropriate assignments thereof to Lender relating to such Acceptable
Contracts included in the Collateral; and (iii) Lender shall have a perfected
first lien in all such Acceptable Contracts included in the Collateral.
(e) Subject to the terms of this section 2, Lender will fund a
requested Advance on the later of the funding date requested or ten (10) days
following the date Lender has received all of the documentation and information
required or requested pursuant to this Agreement ("Date of Tender"), and if no
funding date is requested, Lender will fund ten (10) days following the Date of
Tender.
3. Recording of Advances: The Borrower will authorize, issue, execute
and deliver to Lender a Note in the aggregate principal amount of the total
Advances required to be made by Lender under the provisions of Section II.1
above. The principal amount outstanding under the Note shall be recorded on
Lender's internal data control systems and each payment of principal with
respect to the Note or any portion thereof, shall be evidenced by entries made
by Lender on Lender's internal data control system showing the date and amount
of each Advance or each payment of principal with respect thereto. Any such
entries reflecting payments made shall be recorded after Lender is in receipt of
the reports, documentation and information required pursuant to Section V. 20
hereof, but such payments shall be posted as of the date of Lender's receipt
thereof, provided the payments are received from a separate wire transfer from
the Agent (which does not include payments due to Lender relating to any other
resort operated by Borrower or an affiliate of Borrower) and/or Lender receives
reports and documentation from the Servicing Agent that provides sufficient data
to enable Lender to compute the amount of said postings. The aggregate unpaid
amount of the Note as set forth on the most recent data control system printout
of Lender shall be rebuttably presumptive evidence of the sum owing and unpaid
on the Note.
4. Interest Rate: The interest rate which shall be used to calculate
the amount of interest due each month shall be the highest Prime Rate as
announced, from time to time, in The Wall Street Journal during the month for
which interest is being charged, plus four (4%) percentage points per annum.
Interest shall be calculated on the outstanding principal balance at the close
of each day, on the basis that one day represents 1/360th of a year. The
interest rate may be changed from time to time without notice to the Borrower
and for the purposes of this Agreement, any such change shall be effective on
the date of the change. Interest shall continue to accrue on the unpaid
principal balance of the Loan until all sums due under the Loan are paid in
full. Any failure or delay by Lender in submitting invoices for interest
payments shall not discharge or relieve Borrower of the obligation to make such
interest payments. In the event that the interest rate charged under the Note
exceeds the legal limit permitted by law, the interest rate shall be
automatically reduced to the permitted limit and any interest charged which
exceeds or exceeded the permitted limit shall, at Lender's option, be treated as
a payment of principal or refunded directly to Borrower. In the event that The
Wall Street Journal no longer publishes the Prime Rate charged by financial
institutions, the Lender shall select another reputable publication that
publishes that information.
5. Default Rate: Upon the occurrence and during the continuation of an
Event of Default, the rate used to calculate the interest rate due on the Loan
may, at the option of Lender, increase by five (5%) percentage points per annum
above the then applicable interest rate referred to in Section II.4. above (the
"Default Rate"). In no event, however, shall the Default Rate exceed the maximum
allowable by law.
6. Late Charge: In the event the Lender 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 the Lender in processing late
payments and shall not be deemed to constitute additional interest.
7. Maturity Date: The unpaid principal, the accrued interest and all
costs and expenses relating to the Loan shall be payable on the first day of the
seventy-second (72nd) month after the expiration of the Draw Period, unless
sooner demanded in accordance with the terms and provisions set forth herein.
8. Excess Borrowing; Delinquent Contracts: If at any time during the
term of the Loan, an Excess Borrowing situation occurs, the Borrower shall be
required to immediately prepay an amount equal to the Excess Borrowing. An
Acceptable Contract previously pledged and assigned by Borrower to Lender, which
is more than sixty (60) days contractually delinquent under the original terms
of the Contract, shall no longer be construed to be an Acceptable Contract (a
"Delinquent Contract"). A Delinquent Contract will result in a reduction in the
Advance Limit and may also result in an Excess Borrowing. If at any time the
aggregate outstanding amount of the Loan shall exceed the Advance Limit (whether
as a result of the existence of one or more Delinquent Contracts, or otherwise),
Borrower shall immediately notify Lender of such fact, make a payment to Lender
in such amount necessary (including accrued interest) to reduce the outstanding
principal amount of the Loan to the Advance Limit. If a payment to Lender is
required during the Draw Period as aforesaid, Borrower shall have the right, in
lieu of payment, provided no Event of Default has occurred or is continuing and
provided further that the then outstanding principal sum of all Acceptable
Contracts is not greater than $10,000,000.00, to eliminate all, or any part, of
the Excess Borrowing and thereby avoid the obligation to make a payment as
aforesaid by: (a) promptly notifying Lender in writing of Borrower's intention
to pledge and assign new Acceptable Contracts so as to increase the Advance
Limit to the required amount; and (b) promptly effectuating the pledge and
assignment of the new Acceptable Contracts, but in no event later than five (5)
business days after notice of the Advance Limit deficiencies sent to Borrower by
Lender. At any time after the Draw Period during the term hereof an Excess
Borrowing situation occurs, the Borrower shall be required to immediately pay to
Lender an amount equal to the Excess Borrowing and Lender shall not be obligated
to accept any Acceptable Contracts as aforesaid. Any payments to be made by
Lender pursuant to this Section II.8 will not effect any other Obligation of
Borrower arising under this Agreement or the Note.
9. Mandatory Payments: (a) Unless accelerated pursuant to the terms and
conditions of this Agreement, or paid before the scheduled Maturity Date of the
Loan, the Borrower shall pay to Lender ninety-six (96) consecutive minimum
monthly payments each in an amount equal to ninety-four percent (94%) 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 hereinabove 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 the month next following the date of this
Agreement 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 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.
(b) In the event Lender receives monthly or other collections under the
Acceptable Contracts which exceed the principal balance and all other amounts
remaining due on the Loan or under any of the Loan Documents, Lender shall hold
such excess amounts in trust for the sole and exclusive benefit of Borrower, and
Lender acknowledges and agrees that any such excess amounts are Borrower's funds
being held in trust and are not funds of Lender. Lender shall promptly deliver
same to Borrower.
10. Prepayment: The Borrower shall have the right to prepay the
principal of the Loan at any time without penalty or premium, provided, however,
the Borrower shall notify Lender of each such prepayment. Any such prepayments
of principal shall be applied in the inverse order of their maturity.
11. Instructions to Consumers; Payments Received by Borrower: The Borrower shall
direct or otherwise cause all Consumers under the Acceptable Contracts to pay
all monies due thereunder to the Agent or as otherwise advised by Lender in
writing. The Borrower, to the extent that it receives such payments directly
from or on behalf of such Consumers, shall hold the same (in the form so
received) in trust for the sole and exclusive benefit of Lender and immediately
deliver same to Lender or Agent. Monies (in good, collected funds) from
Contracts collected and paid to Lender by the Agent or the Borrower shall be
(subject to the payment of fees, costs and expenses as set forth in this
Agreement) applied on the first business day of the calendar month following the
receipt thereof, first towards the payment of accrued and unpaid interest on the
Loan and then to the payment of the principal amount then outstanding under the
Loan, or to any other obligation in such order as Lender may elect in its sole
discretion.
12. Computation of Unpaid Principal Balance: (a) For purposes of
computing the amount of interest payable on the Loan, the outstanding principal
amount of the Loan shall not be reduced by the amount of any funds collected by
the Agent or the Borrower until such funds are received by Lender as good,
collected funds and applied to the Loan.
(b) Checks received by Lender prior to 12:00 noon on any business day
shall be credited against the balance of the Obligations on such business day.
Checks received by the Lender after 12:00 noon any business day, shall be
credited against the balance of the obligations on the following business day.
The crediting of checks received as aforesaid shall be conditioned upon final
payment to Lender at its own office in cash or solvent credits of the items
giving rise to them and if any item is not so paid, the amount of any credit
given for it shall be charged to the Loan whether or not the item is returned.
13. Monthly Statements: Once each month Lender shall render a statement
of account to Borrower showing the current status of the Loan and the interest
thereon. If these statements indicate that the outstanding balance of the Loan
exceeds the Advance Limit, Borrower forthwith either shall furnish additional
collateral or pay the difference in cash as more particularly set forth in
Section II.8. above. The statement of account rendered by Lender shall be
considered rebuttably correct and binding upon the Borrower. Borrower shall use
its best efforts to notify Lender in writing of any discrepancies with any such
statements of account within sixty (60) business days after the sending of such
statement by the Lender. If Borrower disputes the correctness of Lender's
statement, Borrower's notice shall specify in detail the particulars of why it
contends Lender's statement of account is incorrect.
III
SECURITY AND CROSS-COLLATERAL
1. To secure the payment and performance of all Obligations of the
Borrower set forth in this Agreement and the accompanying Loan Documents, as
well as any extensions, renewals and modifications therefore or substitutions
therefore and all other obligations of the Borrower to Lender, whether now
existing or hereafter arising, Borrower hereby grants or causes to be delivered
to Lender the following security interests:
(a) a valid third lien on the Premises, which shall be
evidenced by the Deed of Trust;
(b) a valid perfected security interest in all items of
personal property owned by the Borrower, including, but not limited to,
fixtures, furnishings, equipment, machinery, apparatus, appliances,
supplies, materials, fittings, building materials, including, but not
limited to, furnaces, boilers, oil burners, radiators and piping,
plumbing and bathroom fixtures, refrigeration systems, air-conditioning
systems, sprinkler systems, washtubs, sinks, gas and electric fixtures,
stoves, ranges, awnings, screens, window shades, elevators, motors,
dynamos, refrigerators, kitchen cabinets, incinerators, plants and
shrubbery and all other equipment and machinery, tools, appliances,
fittings, fixtures and building materials of any kind and whether or
not affixed to the realty located at the Premises if and when such
items exist now or are hereafter located in or upon any portion of the
Premises and used or usable in connection with any present or future
operation of the Premises;
(c) all construction materials, supplies, lumber and all other
materials or equipment delivered to the Premises for incorporation or
use in any construction at any time being conducted thereon;
(d) any licenses, franchises, contracts, plans, surveys,
permits, and agreements required or used in connection with the
ownership, operation, or maintenance of the Premises or any trade or
business conducted thereon or in connection with the construction or
alteration of any improvements on the Premises including but not
limited to any contracts with builders, material suppliers, utilities
or architects, and the right to the use of any trade name, trademark,
or service mark now or hereafter associated with the operation of any
business conducted on the Premises;
(e) any and all awards, including interest, previously and
hereafter made to Borrower for taking by eminent domain of the whole or
any part of the Premises or any easement therein;
(f) all of Borrower's interest in any inventory (as that term
is defined in the Uniform Commercial Code of the State of
Pennsylvania), trade stock, goods, merchandise or other personal
property available for sale or lease on the Premises in the ordinary
course of business, all raw materials, work in process, finished goods,
salvaged materials, supplies, plans and blueprints, and all accounts
receivable, cash on hand, checking accounts, saving accounts, or other
matters of any nature used in or arising from the operation of any
trade or business on the Premises, whether now owned or hereafter
acquired by Borrower;
(g) the Accounts Receivable;
(h) the General Intangibles;
(i) equipment, machinery, fixtures and furnishings and all
other tangible assets and/or replacements, repairs, modifications,
alterations, additions, controls and operating accessories therefore,
and all substitutions and replacements therefore, and all accessions
and additions thereto and all proceeds and products of the foregoing
now or hereafter acquired by Borrower, located in or upon any portion
of the Premises or relating to the use and operation of the Premises;
(j) all of Borrower's interest in:
(i) all existing and future leases, rents, issues and
profits and all security deposits from tenants,
lessees or other occupiers of the Premises;
(ii) all policies of insurance and all proceeds, loss
payable clauses and premium refunds, and all claims
relating thereto;
(iii) all operating or management or supervision
agreements;
(iv) all reciprocal easement agreements;
(v) all contracts with builders and/or material
suppliers;
(vi) all building and use permits issued by any
governmental agency or authority;
(vii) all rents, income, rates, accounts, issues,
profits, royalties, hotel revenues and other
revenues derived from or belonging to all or part
of the Premises and the other Collateral or any
part thereof, generated from room sales, and/or the
operation of Borrower's business thereon, and the
proceeds thereof, and all rights, whether now or at
any time hereafter existing, of Borrower, under,
pursuant to, or in connection with any and all
existing and future leases, subleases, and use and
occupancy agreements and other agreements affecting
all or any part of the Premises and the other
Collateral, and the proceeds thereof;
(viii) all of the estate, interest or other claim or
demand, which Borrower now has or may hereafter
acquire, in and to all deposits made with other
security given to utility companies by Debtor with
respect to the Premises and the improvements
thereon, and all advance payments of insurance
premiums made by Borrower with respect thereto and
claims or demands relating to insurance;
(ix) insofar as permitted by applicable law, all
licenses including, but not limited to, any
operating licenses, contracts, management contracts
or agreements, franchise agreements, permits,
authorizations or certificates required or used in
connection with the ownership of, or the operation
or maintenance of the Premises and any improvements
constructed thereon;
(x) all damages, royalties and revenue of every kind,
nature and description whatsoever that Borrower may
be entitled to receive from any person or entity
owning or having or hereafter acquiring a right to
the oil, gas or mineral rights and reservations
regarding the Premises; and
(xi) that certain Membership Plan for Kohl's Ranch
Vacation Club (the "Club") effective as of
April 17, 1995, between Borrower and Kohl's Ranch
owners Association, as recorded in the Records of
Gila County, Arizona on April 24, 1995, as
instrument number 95-664618, and any amendments or
supplements thereto or replacements or substitu-
tions therefor, together with all membership
interests of Borrower in the Club arising pursuant
to the aforesaid Membership Plan and all rights and
privileges associated therewith and all rights of
Borrower to market, sell or otherwise deal with
such memberships.
(k) a valid first lien on all of the Acceptable Contracts and Related
Documents which are more particularly set forth and described on the schedule
attached hereto and made a part hereof and labelled as Exhibit "B", together
with all other Acceptable Contracts that are hereafter pledged to Lender as
Collateral for the Obligations, pursuant to the terms and conditions hereof;
(l) any claims of Borrower against third parties for loss or damage to,
or destruction of, any and all of the foregoing, all guarantees, security and
liens for payment of any Accounts Receivable and documents of title, policies,
certificates of insurance, insurance proceeds, securities, chattel paper, and
other documents and instruments evidencing or pertaining thereto, and all files,
correspondence, computer programs, tapes, discs and related data processing
software owned by Borrower or in which Borrower has an interest which contain
information identifying any one or more of the items in (a) through (k) above or
(m) through (r) below, or any Consumer, showing the amounts owed by each,
payments thereon or otherwise necessary or helpful in the realization thereon or
the collection thereof;
(m) with respect only to those Acceptable Contracts securing this Loan
and the other Collateral, any and all moneys, securities, drafts, notes,
contracts, leases, licenses, General Intangibles and other property of Borrower,
including customer lists, and all proceeds and products thereof, and all other
assets of Borrower now or hereafter held or received by or in transit to Lender
from or for Lender, or which may now or hereafter be in the possession of
Lender, or as to which Lender may now or hereafter control possession, by
documents of title or otherwise, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and any and all deposits, general or
special, balances, sums, proceeds, and credits of Borrower and all rights and
remedies which Borrower might exercise with respect to any of the foregoing, but
for the execution of this Agreement;
(n) Borrower's right, title and interest throughout the world in and to
the trade secrets, rights in information regarding computer software programs
developed by or for Borrower, as same relate to the Acceptable Contracts and the
other Collateral securing the Loan, including without limitation, the right to
prevent all persons, including Borrower, from using the programs or from using
and transferring the information contained therein without authorization;
(o) Borrower's interest in any marketing or direct mail agreements with
respect to the Premises and as same relate to the Acceptable Contracts and the
other Collateral securing the Loan;
(p) licenses, contracts, management contracts or agreements, franchise
agreements, permits or certificates now or hereafter acquired or used in
connection with the ownership, operation or maintenance of the Premises and as
same relate to the Acceptable Contracts and other Collateral;
(q) Borrower's rights as "declarant", "developer," "owner", "seller",
"member" and/or otherwise under the Project Documents, whether now or hereafter
existing as same relate to the Acceptable Contracts and other Collateral
securing the Loan; and
(r) all proceeds, including insurance proceeds and the proceeds of sale
or other disposition of any of the Collateral, and products of the Collateral.
The aforedescribed Collateral shall also include, as applicable, all
additions, substitutions, accessions, repairs and replacements thereto.
2. Scope of Security Interest: The security interest granted hereunder
is given to and shall be held by Lender as collateral security for the payment
and performance of all liabilities and obligations of Borrower to Lender of
every kind and description, whether direct or indirect, absolute or contingent,
due or to become due, joint or several, howsoever created, arising, or evidenced
and now existing or at any time hereafter created, arising, or incurred.
3. Effective as Security Agreement: This Agreement shall be effective
as a Security Agreement as that term is used in the Uniform Commercial Code as
enacted in the State of Pennsylvania.
IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce the Lender to enter into this Agreement and to make the Loan
hereunder, the Borrower represents, warrants and covenants to the Lender that
(except as may have been previously disclosed in writing to Lender):
1. Corporate Existence: Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona and
is authorized to do business in the States of Colorado and Indiana and has the
power to execute, deliver and -carry out the terms of this Agreement and its
Board of Directors has duly authorized and approved the terms of the Loan
described herein, the other Loan Documents and the taking of any and all action
contemplated hereunder or thereunder by the Borrower.
2. Validity of Agreement: The execution of this Agreement and the other
Loan Documents and every other instrument or document required to be executed in
accordance herewith or therewith, or which the Lender may deem advisable in
connection herewith, does not violate any provisions of the Borrower's Articles
of Incorporation or By-Laws, or of any agreement or undertaking to which
Borrower is a party or by which the Borrower is bound in any fashion.
3. Corporate Action: Borrower has taken all action required by law to
validate and make this Agreement and to enter into the Loan Documents and any
other documents required in connection herewith, as evidenced by the incumbency
certificate and corporate resolution executed and delivered to Lender
contemporaneously herewith.
4. Lien Priority: The Borrower has, and at all times will have, good
and marketable title in and to the Collateral. No other person has or will have
any right, title, interest, claim or lien therein, thereon or thereto, other
than: (a) the existing first lien on the Premises maintained by Bank One,
Arizona, NA, formerly known as The Valley National Bank, with a principal
balance remaining due thereunder of no more than $932,250.00; (b) the existing
second lien on the Premises maintained by Kohl's Ranch Associates, with an
approximate principal balance remaining due thereunder of $380,000.00; (c) the
authorized borrowings as hereinafter provided; (d) customary equipment lease
agreements or purchase money financing of equipment entered into by Borrower
relating to the Project, which unpaid lease or financing obligations thereunder
do not exceed, at any time, in the aggregate, the sum of $200,000.00 (items
4.(a), (b), (c) and (d) above being hereinafter sometimes referred to as the
"Permitted Lien(s)"); and (e) the rights, if any, of the Consumers.
Notwithstanding anything contained herein to the contrary, provided the Borrower
is not in Default under the Loan Documents or any Obligations, whether now
existing or hereafter arising, upon Borrower's request, Lender shall subordinate
its third lien on the Premises 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 $2,480,000.00, which shall include the
remaining principal balances due on the aforesaid existing first and second
liens, if any, and which permitted prior lien(s) shall be construed to be
"Permitted Lien(s)". The Collateral will remain free and clear of any liens
other than the Permitted Lien(s), excepting the liens hereby granted to Lender,
which liens to Lender shall, at all times, except as hereinabove set forth, be
first and prior on the Collateral above described and as to the Accounts and
proceeds, including insurance proceeds, resulting from the sale, disposition or
loss thereof, that no further action need be take to perfect the lien to Lender
other than filing continuation statements under the Uniform Commercial Code and
continued possession by fender of that portion of the Collateral which
constitutes instruments or other pledged Collateral.
5. Financing Statements; Perfection of Lien: Borrower agrees at its own
expense, to execute the Financing Statements or continuation statements required
by the Uniform Commercial Code, together with any and all other instruments or
documents and take such other action including delivery as may be required to
perfect or maintain Lender's security interest in the Collateral and, unless
prohibited by law, Borrower hereby authorizes Lender to execute and file any
such financing statements or continuation statements on Borrower's behalf.
6. No Governmental Consent Necessary: No consent or approval of, giving
of notice to, registration with or taking of any other action in respect of, any
governmental authority or agency is required with respect to the execution,
delivery and performance by Borrower of this Agreement or any of the other Loan
Documents.
7. No Proceedings: There are no actions, suits, or proceedings pending
(nor, to the knowledge of the Borrower, any actions, suits or proceedings
threatened, nor is there any basis therefore) against or in any way relating
adversely to the Borrower, the Premises, any other Collateral or any property of
the Borrower in any court or before any arbitrator of any kind or before or by
any governmental or non-governmental body which, if adversely determined, would
singly or in the aggregate have a material adverse effect on the Borrower or the
Collateral; the Borrower is not in default with respect to any order of any
court, arbitrator or governmental or non-governmental body; and the Borrower is
not subject to or a party to any order of any court or governmental or
non-governmental body arising out of any action, suit or proceeding under any
statute or other law respecting anti-trust, monopoly, restraint of trade, unfair
competition or similar matters.
8. Financial Statements: The financial statements of Borrower submitted
to Lender in connection with the application for the within Loan fairly presents
the financial condition of Borrower. Borrower knows of no liability, direct or
contingent, involving significant amounts, not disclosed by or reserved against
in said financial statements.
9. Changes in Financial Condition: There has been no material and
adverse change in Borrower's condition, financial or otherwise, since the date
of the financial statements delivered to Lender.
10. Further Assurances: The Borrower agrees that it will execute and
deliver any further deeds of trust or any other documents or instruments
necessary to achieve and maintain at all times the balance due to the Lender as
a valid lien on the Premises and the other Collateral as described herein.
11. Taxes and Assessments: All federal, state and other tax returns of
Borrower required by law to be filed have been duly filed and all federal, state
and other taxes, assessments and other governmental charges or levies upon the
Borrower or its property, income, profits and assessments which are due and
payable have been paid. All taxes due to the Federal government, the States of
Arizona, Indiana and Colorado, and any taxes or assessments due to any other
state, county or municipality, have been fully paid and satisfied by the
Borrower except for current taxes not now due and payable.
12. Chief Executive Office and Location of Property: The Borrower's
Chief Executive Office, principal place of business and books and records
related to the Collateral pledged hereunder are located at 2777 Camelback Road,
Phoenix, Arizona 85016 and at the Premises. The Borrower will not move its Chief
Executive Office, its principal place of business or its books and records
referred to herein or change its name, identity or corporate structure without
giving the Lender prior written notice thereof and obtaining its written
consent, which consent shall not be unreasonably withheld or delayed. Borrower
further agrees that it will not remove any Collateral referred to herein from
the address where they are presently located other than in the ordinary course
of business.
13. Representations and Warranties True, Accurate and Complete: None of
the representations, warranties or statements made to Lender pursuant hereto or
in connection with this Agreement or the transactions contemplated hereby
contains any untrue statement of a material fact, or omits to state a material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances in which they are made, not misleading.
14. Validity and Enforceability of Acceptable Contracts: All of the
Acceptable Contracts are, and will be, legal, valid, binding and enforceable
obligations of the parties thereto (without right of set-off or subject to any
counterclaims or other defenses) in accordance with the terms thereof, and are
not, and will not be subject to any liens, and none of such Acceptable Contracts
are forged or have affixed thereto any unauthorized signatures or have been
entered into by any persons without the required legal capacity and otherwise
meet all of the criteria as set forth in the definition of an Acceptable
Contract herein above provided.
15. Project: The Project has direct access to a publicly dedicated road
and all roadways inside the Project are owned in fee simple by the Borrower.
Electric, gas, sewerage, water facilities and other necessary utilities are
available in sufficient capacity to service the Project and any easements
necessary to the furnishing of said utility services have been obtained and duly
recorded. Each Consumer has access to and the use of all of the amenities and
public utilities of the Project. All costs arising from the construction of any
improvements or the purchase of any equipment located in the Project have been
fully paid for, except for customary equipment financing or lease agreements
entered into by Borrower in connection with the Project. The Project complies
with all applicable restrictive covenants, zoning and land use ordinances and
building codes, all applicable health and environmental laws and regulations and
all other applicable laws, rules and regulations.
16. No Default: No Event of Default (as specified in Section VIII), and
no event which, with a lapse of time or the giving of notice, would constitute
an Event of Default, shall have occurred and be continuing at the closing date
of the Loan and Borrower is not presently in violation of any of the
representations and warranties herein specified.
17. Other Statements: All statements contained in any certificate,
financial statement, legal opinion or other instrument delivered by or on behalf
of the Borrower pursuant to or in connection with or in any amendment to this
Agreement, shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement shall be
made at and as of the date as of which this Agreement is dated. All
representations and warranties made under this Agreement shall survive and not
be waived by the execution and delivery of this Agreement or any investigation
by the Lender.
18. Subdivision/Final Site Plan: All right to appeal from any decision
rendered by any governmental body in connection with the subdivision or final
site plan approval of the Premises, if any, or proposed or actual use of the
Premises has expired.
19. O.S.H.A. and Environmental Matters: (a) Borrower has duly complied
with, and its facilities, business, assets, property, leaseholds and equipment
are in compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Americans with Disabilities Act (upon
completion of the planned renovations) all applicable environmental statutes,
and all rules and regulations thereunder and all similar state and local laws,
rules and regulations; and there have been no outstanding citations, notices or
orders of non-compliance issued to Borrower or relating to its business, assets,
property, leaseholds or equipment under any such laws, rules or regulations.
(b) Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to Borrower and its ownership,
use and development of the Premises (including without limitation, all necessary
utility connections or permits) and its facilities, business, assets, property,
leaseholds and equipment are in compliance in all material respects with, all
applicable federal, state and local laws, rules and regulations relating to, air
emissions, water discharge, noise emissions, solid or liquid waste disposal,
hazardous waste or materials, or other environmental, health or safety matters.
20. Protection of Collateral; Reimbursement: All insurance expenses and
all expenses of protecting, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral, and any and all excise, property, sale
and use taxes imposed by any state, federal or local authority on any of the
Collateral or in respect of the sale thereof, shall be borne and paid by
Borrower; if Borrower fails to promptly pay any portion thereof when due, Lender
may, at its option, but shall not be required to, pay the same and charge
Borrower's account therefore, and Borrower agrees promptly to reimburse Lender
therefore with interest accruing thereon daily at the Default Rate. All sums so
paid or incurred by Lender for any of the foregoing and any and all other sums
which Borrower may become liable hereunder and all costs and expenses (including
attorney's fees, legal expenses and court costs) which Lender may incur in
enforcing or protecting its lien on or rights and interest in the Collateral or
any of its rights or remedies under this or any other agreement between the
parties hereto or with respect to any of transactions to be had thereunder,
until paid by Borrower to Lender with interest at the rate aforesaid, shall be
considered as additional indebtedness owing by Borrower to Lender hereunder and,
as such, shall be secured by all the said Collateral and the proceeds from the
sale thereof and by any and all other collateral, security, assets, reserves or
funds of Borrower in or coming into the hands or enuring to the benefit Lender.
The Lender shall not be liable or responsible in any way for the safekeeping of
any of the Collateral or for any loss or damage thereto or for any diminution in
the value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency or other person whomsoever, but the same shall be at the
Borrower's sole risk.
21. Solvent Financial Condition: As to Borrower immediately prior to
the issuance of the Note, the present fair salable value of its assets is
greater than the amount required to pay its total liabilities, and it is able to
pay its debts as they mature or become due. Borrower shall maintain such solvent
financial condition, giving affect to the Obligations, as long as Borrower is
obligated to Lender under this Agreement.
22. Use of Proceeds: The proceeds of the Loan will be used for working
capital purposes of Borrower. None of the transactions contemplated in this
Agreement (including, without limitation, the use of the proceeds from such
Loan) will violate or result in the violation of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto, including, without
limitation, Regulation G of the Board of Governors of the Federal Reserve
System.
V
AFFIRMATIVE COVENANTS
Until payment in full of all obligations and the termination of this
Agreement, Borrower covenants and agrees that it will:
1. Notify Lender: Promptly inform Lender of any material adverse change
in circumstances with respect to matters set forth in the representations,
warranties and covenants under Section IV of this Agreement.
2. Pay Taxes and Liabilities; Comply with Agreements: Promptly pay and
discharge all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits and upon any properties belonging to it prior
to the date on which penalties attach thereto, and all lawful claims for labor,
materials and supplies which, if unpaid, might become a lien or charge upon any
properties of the Borrower; except that no such tax, assessment, charge, levy or
claim need be paid which is being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside.
3. Observe Covenants, etc.: Observe, perform and comply with the
covenants, terms and conditions of this Agreement, the other Loan Documents and
any other agreement or document entered into between Borrower and Lender.
4. Access to Records and Property: At any time and from time to time,
upon request by Lender permit representatives of the Lender to:
(a) Visit and inspect the properties of the Borrower,
(b) Inspect, copy and make extracts from its books and
records at any place designated by Lender, and
(c) Discuss with its employees its respective businesses,
assets, liabilities, financial condition, results of operations and business
prospects.
5. Comply with Laws: Comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority, compliance
with which is necessary to maintain its corporate existence or the conduct of
its business or non-compliance with which would materially and adversely affect
(a) its ability to perform in accordance with the terms and conditions of this
Agreement, or (b) any security given to secure its Obligations.
6. Insurance Required: (a) Cause to be maintained, in full force and
effect on the buildings and all other structures erected or to be erected upon
the Premises and all property given as Collateral security for all Obligations,
insurance in such reasonable amounts and against such customary risks as is
satisfactory to, Lender, including, but without limitation, fire, theft,
burglary, pilferage, loss in transit, boiler, machinery, workman's compensation,
builder's risk, liability and hazard insurance. Said insurance policy or
policies shall:
(i) Be in a form and with insurers which are
satisfactory to Lender;
(ii) Be for such risks and for such insured values
as Lender or its assigns may require in order to replace the property in the
event of actual or constructive total loss;
(iii) Designate Lender and its assignees, as first
(or second or third, as the case may be,) mortgagee and/or additional loss
payee, as their interests may from time to time appear;
(iv) Contain a "Breach of Warranty" clause whereby
the insurer agrees that a breach of the insuring conditions or any negligence by
Borrower or any other person shall not invalidate the insurance as to Lender and
its assignees;
(v) Provide that they may not be cancelled or
materially altered without thirty (30) days prior notice to the Lender and its
assignees; and
(vi) Upon demand, be delivered to Lender.
(b) Obtain such additional insurance as Lender may reasonably
require.
(c) In the event of loss or damage, forthwith notify Lender
and file proofs of loss with the appropriate insurer. Borrower hereby authorizes
Lender to endorse any checks or drafts constituting insurance proceeds.
(d) Forthwith upon receipt of insurance proceeds endorse and
deliver the same to Lender.
(e) In no event shall Lender be required to: (i) ascertain the
existence of or examine any insurance policy; or (ii) advise Borrower in the
event such insurance coverage shall not comply with the requirements of this
Agreement or any other Loan Documents; or (iii) obtain any insurance on the
aforementioned risks.
(f) Borrower hereby directs any insurance company concerned to
pay directly to Lender any monies which may become payable to Lender or Borrower
under such insurance policies, and Borrower appoints the Lender as
attorney-in-fact (which appointment is agreed to be coupled with an interest) to
endorse any draft therefore. Lender shall have the right to retain and apply the
proceeds of any such insurance, at its election, to reduction of any sums
advanced to Borrower by Lender, or to restoration or repair of the property
damaged, as more particularly set forth in the Loan Documents.
7. Further Assurances: Borrower shall execute and deliver to Lender,
any pledge, lien, encumbrance, security agreement, financing statement or other
documents as may reasonably be requested by Lender at any time when there are
monies due and payable to Lender under the terms and conditions of this
Agreement in order to effectuate more fully the purposes of this Agreement
and/or any other Loan Documents.
8. Pay Legal Fees and Expenses: Pay to Lender, upon demand, together
with interest at the rate set forth in the Note, from the date when incurred or
advanced by Lender until repaid by Borrower all costs, expenses or other sums
incurred or advanced by Lender to preserve, collect and protect its interest in
or realize on the Collateral, and to enforce Lender's rights as against
Borrower, any account debtor or guarantor, or in the prosecution or defense of
any action or proceeding related to the subject matter of this Agreement,
including without limitation legal fees, expenses and disbursements incurred by
Lender. All such expenses, costs and other sums shall be deemed Obligations
secured by the Collateral.
9. Reaffirmation of Representations and Warranties: All warranties and
representations made herein by Borrower, and in any other agreements or
documents executed and/or delivered by Borrower to Lender in connection with
this Agreement, will continue to be true and accurate so long as the obligations
remain unpaid.
10. Expenses: The Borrower agrees to pay all charges incident to the
procuring and making of the Loan and the charges for the examination of the
title of the Premises, searches relating to the Borrower and the Collateral,
title insurance premiums, surveys and drawing of papers, mortgage tax, recording
fees, legal fees and expenses of Lender's attorneys (as limited pursuant to the
Commitment Letter), and for all searches which may be required by the Lender to
assure the Lender that the Deed of Trust is a third lien as herein provided.
11. Taxes, Assessments, etc. The Borrower agrees to pay any tax,
assessment or other charge or liens upon the Premises, existing at any time,
whether before or after the making of the Loan, and to furnish proof thereof
satisfactory to the Lender, within thirty (30) days after such payment is due,
and upon the Borrower's failure to do so, all further obligation on the part of
the Lender to make said Loan, or the balance thereof, shall cease, and the
amount previously advanced, if any, shall become immediately due and payable; or
if the Lender shall so elect, it may pay such encumbrances or liens and add the
amount of said payments to the amount thereafter becoming due. Any sums paid or
expended in accordance with any of the foregoing provisions of this clause shall
be deemed to be advanced to the, Borrower pursuant to this Agreement and shall
be secured by the Collateral and the Loan Documents.
12. Permits, Licenses, etc.: The Borrower hereby assigns as further
security for the Obligations, all permits, licenses and contracts relating to
the Premises, including but not limited to, all environmental approvals, all
approvals for sewer, water and other utilities, all building or construction
permits, zoning, site plan or subdivision approvals, all licenses, permits or
approvals in connection with the operation of the Resort and the sale and
financing of Timeshare Estates, and all prepaid fees or charges relating
thereto, if any, each as may be permitted by the entity issuing such permits,
approvals, licenses and contracts.
13. Notice of Environmental, Health or Safety Complaints: Borrower
shall immediately provide to Lender notice or copies if written, of all
complaints, orders, citations or notices, whether formal or informal, written or
oral, from a governmental body or private person or entity, relating to air
emissions, water discharge, noise emission, solid or liquid waste disposal,
hazardous waste or materials, or any other environmental, health or safety
matter.
14. Assignment of Leases, Contract(s) of Sale: Borrower agrees to and
hereby does assign to Lender as further security for the Obligations, all leases
and/or contracts of sale of or affecting the Premises.
15. Financial Statements:
(a) Borrower agrees to submit to Lender its financial
statements, all prepared in accordance with generally accepted accounting
principles consistently applied, and in addition to such statements, any
supplementary information to the financial statements as Lender shall reasonably
require, as more particularly set forth herein and in the other Loan Documents.
(b) Borrower shall, within one hundred twenty (120) days after
the end of each fiscal year, furnish to Lender its balance sheet as at the end
of such year, and its income and surplus statement and statement of cash flow
for such fiscal year, all in reasonable detail, all prepared in accordance with
generally accepted accounting principals consistently applied on a consolidated
basis with its subsidiaries and affiliates, and all audited by independent
certified public accountants of recognized standing selected by Borrower and
satisfactory to Lender, and in addition to such statements, any supplementary
information to the financial reports as Lender shall reasonably require.
(c) Borrower shall also deliver to Lender within sixty (60)
days after the end of each quarter-annual fiscal period of the Borrower, except
the 4th quarter, its balance sheet as at the end of such period, its cumulative
income and surplus statement and its statement of cash flow for the period
beginning on the first day of such fiscal year and ending on the date of such
balance sheet, all in reasonable detail, all prepared in accordance with
generally accepted accounting principals consistently applied, certified by the
Chief Financial Officer of the Borrower and in addition to such statements any
supplementary information to the financial reports as Lender shall reasonably
require.
(d) As soon as practical after the end of each month, and in
any event within ten (10) days after the end of such month Borrower shall cause
to be furnished to Lender a monthly detailed trial balance of all Acceptable
Contracts, as of the close of the preceding month, together with a
reconciliation report showing collections, payments, adjustments and
delinquencies relating to the Acceptable Contracts, in form and substance
acceptable to Lender. All such statements shall be certified as correct by the
Chief Financial Officer of Borrower.
16. Broker's Fees: Borrower agrees to promptly pay all finders' fees,
brokerage fees, commissions or similar fees payable to them in connection with
the transactions described in this Agreement, if any. Borrower agrees to
indemnify and hold harmless Lender from and against any claim of any broker,
finder or other person, together with any attorneys' fees incurred by Lender in
respect thereto, arising out of the transactions contemplated by this Agreement.
Borrower and Lender acknowledge that they are not, as of the date of this
Agreement, aware of any such fees due to any person or entity. This obligation
shall survive the expiration or termination of the Commitment Letter and this
Agreement.
17. Payment of Contracts: Borrower will direct all account debtors
under the Contracts to remit all payments under such Contracts to the Lender's
account established at Bank one, Arizona, N.A., or such other bank or other
entity as may be acceptable to Lender pursuant to the terms of the Agency
Agreement between the Agent, Lender and Borrower. Lender agrees to apply such
funds paid to the obligations upon collection thereof by the Agent and delivery
to Lender, provided an Event of Default shall not then exist.
18. Other Documents: Borrower agrees that it will maintain accurate and
complete files relating to the Contracts and other Collateral to the
satisfaction of Lender, and that such files will contain copies of each
Contract, Related Documents, copies of all relevant credit memorandum relating
to the Contracts, and all collection information and correspondence relating
thereto and such other documents as are reasonably requested by Lender.
19. Collateral Assignment of Acceptable Contracts: Prior to Lender's
funding any Advance, including the first Advance, Borrower will execute and
deliver to Lender formal written collateral assignments of all new Acceptable
Contracts included in the Collateral accompanied by the executed originals of
all such Acceptable Contracts to which shall be annexed the originals and copies
of all Uniform Commercial Code Financing Statement filings, and the originals of
which shall be promptly filed or recorded in the appropriate filing or recording
offices by Borrower upon Borrower's receipt of the said original financing
statements countersigned by Lender, evidence of corporate authority on the part
of the Consumers, if corporations, and all Related Documents and instruments.
The form of the Contracts and Related Documents which now exist or shall be used
by Borrower and entered into in the future during the term of the Loan, shall be
in substantially the same form of the Acceptable Contracts reviewed and approved
by Lender prior to the execution of this Agreement. Borrower will not modify,
amend or otherwise alter any of the terms of the Acceptable Contracts or any
other documents relating thereto without Lender's prior written consent, or
waive any of Borrower's rights, if such modification might result in any
diminution or adverse effect upon the Collateral or the conduct of the business
of Borrower.
20. Servicing of Acceptable Contracts: Borrower shall, at its cost and
expense, enter into and maintain, for as long as the Loan remains unpaid, a
servicing agreement ("Servicing Agreement") with a servicing entity selected by
Borrower and approved by Lender ("Servicing Agent"), to service the Acceptable
Contracts. The Servicing Agent shall furnish to Lender such reports,
documentation and information regarding the Acceptable Contracts as is
reasonably satisfactory to Lender.
21. Dominion Account; Agency Agreement: Borrower and/or the Servicing
Agent shall maintain a Dominion Account at an insured financial institution
selected by Borrower and acceptable to Lender 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 or the Servicing Agent
into the Dominion Account. Borrower, Lender and the selected and approved Agent
shall enter into an Agency Agreement, the terms of which Agency Agreement shall
be acceptable to Lender and Lender's counsel, and which shall provide, among
other things, for the said Agent 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 Lender, all
in accordance with the terms and conditions of this Agreement. The said post
office box and Dominion Account shall be subject to the exclusive control of
Lender in accordance with the terms of this Agreement and the Agency Agreement.
The Agent selected and approved as Agent shall transfer to Lender the funds
deposited to the Dominion Account by wire transfer or check as shall be directed
by Lender. Borrower shall instruct all of the Consumers under the Acceptable
Contracts to direct remittances to a post office box established by Lender 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 agreements received by the Borrower or the Servicing Agent in
payment of or on account of any of the Acceptable Contracts. Upon receipt by
Lender, all such proceeds shall be applied in payment in full or in part of the
Obligations in such order as Lender may elect.
22. Notice of Default or Event of Default: Borrower shall immediately
upon becoming aware of the existence of any condition or event which constitutes
a Default or an Event of Default, give a written notice to Lender specifying the
notice given or action taken by such holder and the nature of the claimed
Default or Event of Default and what action Borrower is taking or proposes to
take with respect thereto.
23. Material Adverse Developments: Borrower shall immediately upon
becoming aware of any developments or other information which may materially and
adversely affect the Collateral, business, prospects, profits or condition
(financial or otherwise) of Borrower or its ability to perform this Agreement,
give to Lender telephonic or telegraphic notice specifying the nature of such
development or information and such anticipated effect.
24. Performance under Project Documents; Subsidize Operations of the
Club: Borrower shall at all times promptly and fully perform all of its
obligations under the Project Documents. Borrower shall subsidize all
Maintenance Fees and Assessments (as those terms are defined in the Membership
Plan) to the extent that said Maintenance Fees and Assessments paid by other
Members (as that term is defined in the Membership Plan) other than Borrower are
insufficient to pay when due the Common Expenses (as that term is defined in the
Membership Plan) actually incurred in connection with the operation of the Club
and the Premises. The aforesaid covenant to subsidize operations at the Club
shall terminate upon the earlier to occur of the following: (i) payment of all
sums due to Lender hereunder, or (ii) the sale of fifty (50%) percent of the
number of Timeshare Estates in the Project as determined from time to time in
accordance with the then current Arizona Department of Real Estate Public
Report.
25. Waste Water and Water Quality at the Premises: The Borrower shall:
(i) cause to be submitted to the Arizona Department of Environmental Quality
("ADEQ"), or such other appropriate entity having jurisdiction, evidence that
the existing septic system servicing the Premises is constructed in accordance
with all applicable laws and regulations, which submission shall include, but
not be limited to, as-built engineering drawings of said septic system and a
certification of a qualified, licensed engineer, all within the time frames
required by the ADEQ, or other entities having jurisdiction; (ii) if required,
effect all necessary changes to the waste water facility servicing the Premises
within such time frames as mandated or agreed upon by the ADEQ, or such other
entities having jurisdiction; (iii) prepare and file with the ADEQ, or such
other appropriate entity having jurisdiction, all documents and information
necessary or appropriate in order to obtain a Determination of Applicability for
the Aquifer Protection Permit relating to the Premises to determine if a general
or individual permit is required for the waste water facility servicing the
Premises; (iv) if necessary, make application for and prosecute to completion an
application for an individual permit relating to the said waste water facility;
(v) if required by the ADEQ, cause to be conducted a sampling study for water
quality parameters of the drinking water systems servicing the Premises, the
results of which shall be submitted to the ADEQ, for purposes of assisting the
ADEQ in determining whether the Premises' drinking water systems are groundwater
under the influence of surface water; (vi) if required, effect all remedial
action relating to the drinking water sources, which may include, but not be
limited to, installing additional filters and disinfection treatment devices,
all as required by applicable laws and regulations; (vii) monitor the said
drinking water systems in accordance with all applicable laws and regulation;
and (viii) otherwise comply in all material respects with all applicable
requirements of the ADEQ, and any other entities having jurisdiction, so as to
avoid any enforcement actions relating or pertaining to the waste water system
and drinking water systems servicing the Premises and notify Lender of all
material developments relating thereto and furnish to Lender true copies of all
reasonably requested documentation and information relating thereto.
26. Water Property: Borrower intends to purchase from Kohl's Ranch
Associates certain parcels of real property and the improvements thereon
adjacent to or nearby the Premises, all equipment relating thereto and the stock
of the Kohl's Ranch Water Company (collectively the "Water Property"). The
application to transfer the Water Property was approved by the Arizona
Corporation Commission on August 5, 1995. The closing on the Water Property is
expected to occur by the end of September, 1995. In conjunction with the closing
on the Water Property, Borrower agrees to and shall pledge and grant to Lender a
security interest in and to the additional real property and improvements and
all other assets that it acquires from Kohl's Ranch Associates in connection
with Borrower's acquisition of the Water Property, which additional assets shall
be included as a part of the Collateral. Borrower shall notify Lender of the
anticipated closing date and furnish a listing and/or detailed description of
the Water Property. Borrower shall execute and deliver to Lender and (as
applicable) cause to be filed or recorded amendments and/or modifications of the
Loan Documents to reflect the additional Collateral and shall cancel, discharge
or terminate that certain instrument entitled: "Kohl's Ranch Lodge and Kohl's
Ranch Water Company Covenants, Conditions & Restrictions" dated June 1, 1995,
recorded on June 2, 1995 in the Official Records of Gila County, in Fee No.
95-666436.
VI
NEGATIVE COVENANTS
Until payment in full of all Obligations, Borrower covenants and agrees
that it will not:
1. Other Liens: Incur, create or permit to exist any mortgage,
assignment, pledge, hypothecation, security interest, lien or other encumbrance
on any of its property or assets, whether now owned or hereafter acquired,
except: (a) liens for taxes not delinquent; (b) those liens in favor of Lender,
and (c) the Permitted Liens.
2. Other Liabilities: Incur, create, assume or permit to exist any
indebtedness or liability on account of either borrowed money or the deferred
purchase price of property, except (a) Obligations to Lender; or (b)
indebtedness subordinated to payment of the Obligations on terms approved by
Lender in writing; or (c) the Permitted Liens.
3. Loans: Make loans to any person, firm or entity, except in the
ordinary course of its business in connection with the financing of the sale of
Timeshare Estates.
4. Secondary Financing: Incur, create, assume, or permit to exist any
secondary financing encumbering the Premises and/or any other Collateral
securing the Obligations, except for Permitted Liens, nor shall there be any
encumbrances or security interest conveyed in any fixture or fixtures, nor in
any personalty whether affixed to the Premises or otherwise, except for
Permitted Liens.
5. Corporate Structure: Alter or change its corporate structure, or
materially change the present ownership of the interest of the Borrower or
Borrower's management without the prior written consent of Lender, which consent
shall not be unreasonably withheld or delayed.
6. Guaranties: Assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable upon the obligation of any person, firm or
entity except by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
7. Assignment: Assign this Agreement or any loan proceeds to be made
hereunder or any part thereof.
8. Lease: Rent or lease all or any portion of the Premises without the
prior written consent of the Lender, except in the ordinary course of Borrower's
business.
9. No Indulgences to Consumers: Borrower shall not grant extensions of
time for the payment or compromise for less than the full face value or release
in whole or in part any person liable for the payment of, allow any credit
whatsoever, except for the amount of cash to be paid upon any Collateral or any
instrument or document representing the Collateral without the prior written
consent of the Lender.
10. Modifications of Contracts or Other Documents: Borrower will not
modify, amend, or otherwise alter any of the terms of the Contracts or any other
documents relating thereto without Lender's prior written consent or waive any
of Borrower's rights, if such modification might result in any diminution or
adverse affect upon the Collateral or the conduct of the business of the
Borrower. The Borrower shall also not change, alter or modify or permit any
change, alteration or modification of its articles of incorporation or by-laws
or other governing documents without Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed.
VII
MISCELLANEOUS RIGHTS OF LENDER
1. Collections; Modification of Terms: Lender may, in its sole and
absolute discretion, and at any time, with respect to any of the Collateral,
demand, sue for, collect or receive any money or property, at any time payable
or receivable on account of or in exchange for, or make any compromises it deems
desirable including without limitation extending the time of payment, arranging
for payment in installments, or otherwise modifying the terms or rights with
respect to any of the Collateral, all of which may be effected without notice to
or consent by Borrower and without otherwise discharging or affecting the
Obligations, the Collateral or the security interests granted hereunder.
2. Notification to Consumers: At any time, prior to or after an Event
of Default, Lender may notify the Consumers on any of the Acceptable Contracts
to make payment directly to Lender, and Lender may endorse all items of payment
received by it which are payable to Borrower. Borrower, at the request of
Lender, shall notify the Consumers of Lender's security interest in the
Acceptable Contracts. Until such time as Lender elects to exercise its right of
notification, Borrower is authorized to collect and enforce the Acceptable
Contracts under the terms and conditions as set forth herein.
3. Uniform Commercial Code: At all times prior and subsequent to an
Event of Default hereunder, Lender shall be entitled to all the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in
Pennsylvania (or any other state having jurisdiction), as the same may be
amended from time to time, with respect to all Collateral.
4. Preservation of Collateral: At all times prior and subsequent to an
Event of Default, Lender may take any and all action which in its sole and
absolute discretion is necessary and proper to preserve its interest in the
Collateral, including without limitation the payment of debts of Borrower which
might in Lender's sole and absolute discretion, impair the Collateral or
Lender's security interest therein, purchasing insurance on the Collateral,
repairing the Collateral, or paying taxes or assessments thereon, and the sums
so expended by Lender shall be secured by the Collateral, shall be added to the
amount of the Obligation(s) due Lender and shall be payable on demand with
interest at the Default Rate from the date expended by Lender until repaid by
Borrower.
5. Mails: From and after an Event of Default, Lender is authorized to
(and Borrower shall, upon request of Lender) notify the postal authorities to
deliver all mail, correspondence or parcels addressed to Borrower and relating
to the Collateral to Lender at such address as Lender may direct.
6. Lender's Right to Cure: In the event Borrower shall fail to perform
any of its Obligations hereunder or under any of the other Loan Documents, then
Lender, in addition to all of its rights and remedies hereunder, may perform the
same, but shall not be obligated to do so, at the cost and expense of Borrower.
In any such event, Borrower shall promptly reimburse Lender together with
interest at the Default Rate from the date such sums are expended until repaid
by Borrower.
7. Test Verifications: Lender shall have the right to make test
verifications of any and all Acceptable Contracts in any manner and through any
medium Lender considers advisable, and Borrower shall render any necessary
assistance to Lender.
8. Power of Attorney: Subject to the terms, conditions and restrictions
of this Agreement, Borrower hereby irrevocably constitutes and appoints Lender
as its true and lawful attorney, with full power of substitution, to, while an
Event of Default or Default shall exist or be continuing, enforce collection of
the Collateral at the sole cost and expense of Borrower but for the sole benefit
of Lender, either in its own name or in the name of Borrower including but not
limited to executing releases, compromising or settling with any debtors and
prosecuting, defending, compromising or releasing any action relating to the
Collateral; to receive, open and dispose of all mail addressed to Borrower and
take therefrom, any proceeds of Collateral pledged or assigned to Lender; to
notify Post Office authorities to change the address for delivery of mail
addressed to Borrower to such address as Lender shall designate; to endorse the
money orders, notes, acceptances or other instruments of the same or different
nature; to sign and endorse the name of Borrower on and to receive as pledgee or
secured party of the property covered by any of the Collateral, any invoices,
schedules of Collateral assigned, freight or express receipts, or bills of
lading, storage receipts, warehouse receipts or other documents of title of same
or different nature relating to the Collateral and to do any and all things
necessary or proper to carry out the intent of this Agreement and to perfect the
liens and rights of Lender created under this Agreement. Lender shall not be
obliged to do any of the acts or exercise any of the powers hereinabove
authorized, but if Lender elects to do any such act or exercise any such power,
it shall not be accountable for more than it actually receives as a result of
such exercise of said power, and it shall not be liable or responsible to
Borrower for any acts or omissions nor for any error in judgment or mistake of
law or fact, unless caused by the gross negligence or willful misconduct of
Lender. All powers conferred upon Lender by this Agreement being coupled with an
interest shall be irrevocable so long as any obligations of Borrower to Lender
shall remain unpaid. Lender is hereby further authorized to sign on behalf of
Borrower any Financing Statement Lender deems necessary to perfect its security
interest and to file same with the appropriate authorities in Arizona or any
other state. All costs of such filings shall be charged to and be borne by
Borrower.
VIII
EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an Event
of Default (hereinafter referred to as an "Event of Default"):
1. The Borrower shall have failed to make any payment of any
installment of interest on the Loan when due;
2. The Borrower shall have failed to make any payment of any principal
when due;
3. Borrower's failure to keep, observe, perform, and/or carryout in
every particular the covenants, terms or provisions contained in this Agreement
or any of the other Loan Documents and such Default shall have remained uncured
for a period of fifteen (15) days after notice thereof to the Borrower by the
Lender;
4. Borrower's consent to the application for an appointment of a
receiver or trustee for it or for substantially all of its property, its
sufferance of any such appointment made without its consent to any proceedings
against it under any law relating to bankruptcy, insolvency, or the
reorganization or relief of debtors, which shall have continued unstayed and in
effect for a period of thirty (30) consecutive days;
5. Borrower's admission in writing of its inability to pay its debts as
they mature, or commission of any act of bankruptcy; Borrower's making of an
assignment for the benefit of creditors, or the filing of a voluntary petition
in bankruptcy by the Borrower; or the application for a receiver by the
Borrower;
6. The entry of any judgment or execution or attachment order against
or affecting the Borrower which, in the reasonable opinion of the Lender,
adversely and materially affects the credit standing of the Borrower. (For
purposes of this subsection, the term "materially" shall be defined to mean an
amount in excess of ten (10%) percent of the Borrower's net worth, as shown on
the most recently available financial statements or $50,000.00, whichever is
greater);
7. Any statement, representation, or warranty by the Borrower contained
in this Agreement, the other Loan Documents, the financial statements,
applications submitted for credit or any other agreement for the payment of
money with Lender proving to be incorrect or misleading in any material respect,
or a breach in any of the terms and conditions of this Agreement, the other Loan
Documents or any other agreement with Lender at any time when the Borrower is
obligated to Lender hereunder;
8. The failure of the Borrower to pay any principal or interest on any
Permitted Liens or any other material borrowed money obligation when due, so
that the holder of such obligation declares, or may declare, such obligation due
prior to its stated maturity because of the Borrower's default thereunder and
the Borrower shall have failed to procure, within thirty (30) days after the
declaration of said default, a written statement cancelling said default and/or
reinstating said obligation. (For purposes of this subsection, the term
"material" shall have the same meaning as set forth in Section VIII 6. above);
9. Any material and adverse change in the condition or affairs,
financial or otherwise, of the Borrower, which in the reasonable opinion of
Lender impairs Lender's security or increases its risk so as to jeopardize the
repayment of the Obligations of the Borrower under this Agreement or any of the
other Loan Documents;
10. If at any time Lender reasonably determines that an environmental
claim against the Premises will have a material adverse effect on the financial
condition of the Borrower;
11. The failure of the Borrower to provide financial statements and/or
annual tax returns to Lender when required or requested to do so, together with
such financial information as may reasonably be requested by Lender;
12. The passing of title, legal or equitable, to the Premises (except
as to the sale by Borrower of Timeshare Estates at the Premises in the ordinary
course of Borrower's business) without the written consent of Lender;
13. The failure to make payment of any tax, assessment, or municipal or
governmental charge against the Premises, or any Timeshare Estate, when due or
the imposition of any lien thereon not paid and removed within 15 days from the
date thereof, except that no such tax, assessment or charge need be paid which
is being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside, provided, however, any such payment
must be made if necessary to prevent the forfeiture or sale of the Premises or
any Timeshare Estate, as the case may be;
14. The failure to pay any insurance premium when due on or relating to
the Premises or the Collateral;
15. Any material change in the corporate structure or management of the
Borrower without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed;
16. Any suspension of the Borrower's transaction of its usual
businesses including, but not limited to, the termination, cessation or
discontinuance of the Borrower's operations at the Premises, other than as a
result of the sale of all Timeshare Estates therein;
17. Liquidation and/or dissolution of the Borrower;
18. The loss, revocation or failure to renew any license, approval,
franchise and/or permit now held or hereafter acquired by Borrower which is
necessary for the continued operation of the Borrower's business, including, but
not limited to, the Project, which, in the sole opinion of Lender, materially
adversely affects Borrower's business or its ability to repay the Loan;
19. The issuance of any stay, order, cease and desist order or similar
judicial or non-judicial sanctions limiting or otherwise affecting the sale of
Contracts, if such order or sanction is not discharged within thirty (30) days
thereafter, which in the sole opinion of Lender, materially adversely affects
the Borrower's business or its ability to repay the Loan;
20. Borrower terminates or breaches any management or marketing
agreement and/or engages the services of a different, substitute or subsequent
management or marketing firm, or materially modifies the management or marketing
agreements, without first obtaining the written consent of Lender, which consent
shall not be unreasonably withheld or delayed;
21. The Premises is partially or totally destroyed and the Borrower,
the Club governing the Resort and/or the owners of the Timeshare Estates, as the
case may be, if permitted, elect not to rebuild the improvements at the Premises
in substantially the same size, quality of construction, architecture and in all
other manner so as to conform with the improvements which existed prior to such
damage or destruction; or
22. A mechanics' lien, stop notice, or notice of intention or any other
lien or encumbrance shall have been filed against the Premises and/or any of the
other Collateral and the Borrower shall have failed to procure within thirty
(30) days after the same is filed, a cancellation of the said lien or a
discharge thereof or shall have failed to post a bond or escrow sufficient funds
to discharge the same in the opinion of Lender, in the manner and form provided
by law, and such default shall have remained uncured for a period of thirty (30)
days.
IX
CONSEQUENCES OF DEFAULT
In case any Event of Default shall have occurred and be continuing,
then and in every such Event of Default, the Lender may take any or all the
following actions in addition to those actions allowed in the other Loan
Documents, at law or in equity, at the same time or at different times:
1. Demand Obligations: Declare all Obligations owing to the Lender from
the Borrower under this Agreement, the other Loan Documents or any other
agreement between the Lender and the Borrower, to be forthwith due and payable,
whereupon all such Obligations and sums shall forthwith become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrower;
2. Possession and Disposition of Collateral: Lender may forthwith give
written notice to Borrower, whereupon Borrower shall, at its expense, promptly
deliver any and all Collateral to such place as Lender may designate, or Lender
shall have the right to enter upon the premises where the Collateral is located
and take immediate possession of and remove the Collateral without liability to
Lender except such as occasioned by the gross negligence or willful misconduct
of Lender, its employees or agents. In the event Lender obtains possession of
the Collateral, Lender may sell any or all of the Collateral at public or
private sale, at such price or prices as Lender may deem best, either for cash,
on credit or for future delivery, in bulk or in parcels and/or lease or retain
the Collateral repossessed using it or keeping it idle. Notwithstanding anything
contained herein to the contrary, Lender shall have no obligation to take
possession of all or any portion of the Collateral. Notice of any sale or other
disposition shall be given to the Borrower at least ten (10) days before the
time of any intended sale or disposition of the Collateral is to be made, which
Borrower hereby agrees shall be reasonable notice of such sale or other
disposition. Lender may also elect to retain the Collateral or any part thereof
in satisfaction of the Borrower's Obligations. The proceeds, if any, of any such
sale or leasing by Lender shall be applied: first, to the payment of all fees
and expenses incurred by Lender as a result of such Event of Default, including
without limitation any legal fees and expenses incurred in repossessing the
Collateral and selling it, disposing of it or leasing it; second, to pay the
Obligations in such order and in such manner as Lender shall deem appropriate;
and third, to pay any excess remaining thereafter to Borrower.
3. Terminate Borrower's Rights Under Loan Documents: Upon the
occurrence of any Event of Default, Lender may also, with or without proceeding
with such sale or foreclosure of any Collateral or demanding payment of the
Obligations, without notice terminate further performance under this Agreement
or any of the other Loan Documents or exercise all rights granted in any other
agreement or agreements between Lender and Borrower without further liability or
obligation by Lender. Neither such termination, nor the termination of this
Agreement by lapse of time, the giving of notice or otherwise, shall absolve,
release or otherwise affect the liability of Borrower in respect to transactions
had prior to such termination, nor affect any of the liens, security interests,
rights, powers and remedies of Lender, but they shall, in all events, continue
until all obligations are satisfied. Should Lender exercise the rights contained
herein, Lender shall not, in any manner be liable to Borrower for any failure to
make or continue to make loans or Advances to Borrower hereunder.
4. Foreclosure: To institute and maintain foreclosure proceedings in
accordance with the laws of the States of Pennsylvania or Arizona, as the case
may be.
5. Collection of Obligations: To institute proceedings to collect all
or any portion of the Obligations without instituting foreclosure proceedings.
6. Other Remedies: Exercise any rights or take any of the remedies
otherwise available to it under the Loan Documents or as a matter of law or
equity.
7. Set-Off: Immediately, and without notice or other action, to set-off
any money owed by the Lender in any capacity to the Borrower against any of the
Borrower's liability to the Lender, whether due or not, and the Lender shall be
deemed to have exercised such right of set-off and to have made a charge against
any such money immediately upon the occurrence of such Event of Default, even
though the actual book entries may be made at some time subsequent thereto.
8. Cumulative Remedies; Waivers: No remedy referred to herein is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lender at law or in
equity. No express or implied waiver by Lender of any Default or Event of
Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default. The failure or delay of Lender in
exercising any rights granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or recurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by
Lender shall not exhaust the same or constitute a waiver of any other right
provided herein. The Events of Default and remedies thereon are not restrictive
of and shall be in addition to any and all other rights and remedies of Lender
provided for by this Agreement, the other Loan Documents and applicable law.
9. Waive Jury Trial: BORROWER HEREBY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY LITIGATION RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR
OTHER AGREEMENTS OR INSTRUMENTS BETWEEN BORROWER AND LENDER. /S/ NS
--------
Initial
10. No Marshalling: Lender shall be under no obligation whatsoever to
proceed first against any of the Collateral before proceeding against any other
of the Collateral. It is expressly understood and agreed that all of the
Collateral stands as equal security for all Obligations, and that Lender shall
have the right to proceed against any or all of the Collateral in any order, or
simultaneously, as in its sole and absolute discretion it shall determine. It is
further understood and agreed that Lender shall have the right, in its sole and
absolute discretion, to sell any or all of the Collateral in any order or
simultaneously.
X
MISCELLANEOUS
1. Reimbursement of Expenses: The Lender shall be entitled to its
reasonable expenses incurred in the enforcement or liquidation of any
obligations due hereunder, or for the enforcement of payment of the Obligations,
and those expenses shall, without limitation, include reasonable attorneys' fees
plus other legal costs and expenses incurred. Borrower agrees to pay all costs
and expenses of the Lender in connection with the preparation, execution,
delivery, and administration of this Agreement, the other Loan Documents and
other instruments and documents to be executed contemporaneously herewith,
including reasonable attorney's fees and out-of-pocket expenses of counsel for
Lender, subject to the limitations set forth in the Commitment Letter.
2. No Waiver: The Borrower agrees that no delay on the part of the
Lender in exercising any power or right hereunder shall operate as a waiver or
relinquishment of any such power or right, nor preclude any further exercise
thereof, or the exercise of any other power or right. The Lender shall not by
any act or omission be deemed to have waived any of its rights or remedies
hereunder, unless such waiver is in writing and signed by the Lender, and then
only to the extent set forth therein. A waiver as to any one event shall in no
way be construed as continuing or as preventing the exercise of such rights or
remedy by subsequent event.
3. Waiver of Presentment, Etc.: The Borrower waives presentment,
dishonor and notice of dishonor, protest and notice of protest of all commercial
papers at any time held by the Lender on which the Borrower is in any way
liable.
4. Incorporation of Other Loan Documents: The provisions of this
Agreement shall be in addition to those of the other Loan Documents or other
writings held by the Lender relating to the Obligations, all of which shall be
construed as one instrument. To the extent there is any conflict between the
provisions of this Agreement and any other Loan Documents, the terms of the
agreement which affords the greater protection to Lender shall control. Borrower
agrees that all of the terms of the Commitment Letter shall be incorporated
herein as though set forth at length.
5. Consent to Extensions, Postponements, Releases, Etc.: Borrower
consents to any extension, postponement of time of payment, indulgence or to any
substitution exchange or release of Collateral and to any addition to or release
of, any party or persons primarily or secondarily liable, or acceptance of
partial payments on any Contracts or instruments in the settlement, compromising
or adjustment thereof.
6. Survival of Representations and Warranties: All representations and
warranties made herein or in any certificate or instrument contemplated hereby
shall survive any independent investigation made by Lender in the execution and
delivery of this Agreement, in said certificates or instruments and shall
continue so long as any Obligations are outstanding and unsatisfied, applicable
statutes of limitation to the contrary, notwithstanding.
7. Binding Effect: This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, their respective successors and assigns.
8. Rights and Remedies Cumulative: The rights and remedies herein
expressed to be vested in or conferred upon the Lender shall be cumulative and
shall be in addition to and not in substitution for or in derogation of the
rights and remedies conferred by any applicable law.
9. No Obligation to Enforce Terms: Nothing herein contained shall
impose upon the Lender any obligation to enforce any terms, covenants or
conditions contained herein. Failure of the Lender, in any one or more
instances, to insist upon strict performance by the Borrower of any terms,
covenants or conditions of this Agreement and/or the other Loan Documents, shall
not be deemed to be a waiver or relinquishment of any such terms, covenants and
conditions.
10. Lender's Right to Assign: This Agreement and all rights hereunder
may be assigned or otherwise transferred by the Lender to anyone of its
choosing.
11. Governing Law: This Agreement, the other Loan Documents and the
rights of the parties shall be governed by and construed under the laws of the
Commonwealth of Pennsylvania, except where the laws of the State of Arizona
control with respect to the exercise of Lender's rights and remedies as against
the Premises.
12. Indemnification: The Borrower hereby agrees to and does hereby
indemnify, protect, defend and save harmless the Lender, its directors,
employees, agents and shareholders from and against any and all losses, damages,
expenses or liabilities of any kind or nature and from any suits, claims or
demands including reasonable counsel fees incurred in investigating or defending
such claim, suffered by any of them, and caused by, relating to, arising out of,
or resulting from this Agreement, the other Loan Documents and the transactions
contemplated herein, including, but not limited to: (a) any act or omission to
act by the Borrower in connection with ' this Agreement;, or (b) losses,
damages, expenses or liabilities sustained by the Lender pursuant to any
provisions contained in any local, state or federal law, statute or ordinance,
including any environmental law or regulation. The provisions of this paragraph
shall survive the termination of this Agreement, cancellation of the other Loan
Documents and the repayment of the Obligations.
13. Modification: This Agreement may not be modified, amended, altered
or changed orally or by course of dealing between Borrower and Lender, but only
by an agreement in writing duly executed on behalf of the party to whom
enforcement of any such waiver, change, modification or discharge is sought.
14. Severability: If any term or provision of this Agreement or the
application thereof shall to any extent be invalid or unenforceable, the
remainder of this Agreement, or the application of such terms or provisions
other than that which is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
15. No Third Party Beneficiary; No Joint Venture or Agency
Relationship. All sums advanced hereunder and evidenced by the Note shall be
strictly for the benefit of the Borrower and shall not inure to the benefit of,
nor be intended or construed to give any third parties any legal or equitable
right, remedy or claim under or through the Borrower, the relationship between
Lender and Borrower being strictly a contractual one evidencing a
creditor-debtor relationship. Borrower and Lender hereby expressly disclaim the
existence of any partnership, joint venture, employment or other agency
relationship between them by, virtue of this Agreement.
16. Cross Default; Cross Collateralization: All other agreements
between the Borrower and Lender and/or any of its affiliates or subsidiaries are
hereby amended so that a default under this Agreement is a default under all
other agreements and a default under any one of the other agreements is a
default under this Agreement. Further, that the Collateral under this Agreement
secures the Obligations now or hereafter outstanding under all other agreements
with Lender and/or its affiliates or subsidiaries and the collateral pledged
under any other agreement with Lender and/or its affiliates or subsidiaries
secures the Obligations under this Agreement.
17. Notices: Any notices under this Agreement shall be deemed duly
served on the Borrower on the date received if mailed by certified mail, return
receipt requested, postage prepaid addressed to Borrower at Borrower's last
address on the Lender's records. Any notices to Lender pursuant to this
Agreement shall be mailed to Lender by certified mail, return receipt requested,
postage prepaid at the address of set forth at the heading of this Agreement and
shall be deemed effective upon receipt by Lender.
18. Term of Agreement: This Agreement shall continue in full force and
effect and the liens of the Collateral granted hereby and the duties, covenants
and liabilities of Borrower hereunder and all terms, conditions and provisions
hereof relating thereto shall continue to be fully operative until all
Obligations created under this Agreement and, at Lender's option, all
obligations under any other Agreement or agreements between the Lender and
Borrower have been satisfied in full, concluded and/or liquidated. Borrower
expressly agrees that to the extent Borrower or any Consumer makes a payment or
payments to Lender, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential set aside
and are required to be repaid to a trustee, receiver or any other party under
any Bankruptcy Code, State or Federal Law, common law or equitable cause, then
to the extent of such payment or repayment, the Obligations or part thereof
intended to be satisfied, shall be revived and continued in full force and
effect as if said payment had not been made.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers, as of
the day and year first above written.
ATTEST: ILX INCORPORATED, an Arizona
Corporation
/S/STEPHANIE D. CASTRONOVA By: /S/NANCY J. STONE
- ----------------------------------- -----------------------------------
STEPHANIE D. CASTRONOVA, NANCY J. STONE, Executive
Secretary Vice President
WITNESS/ATTEST: TOMMAC FINANCIAL CORP.
By: /S/ ANDY G. ROOSA
-----------------------------------
ANDY G. ROOSA, President
EXHIBIT "A"
No. DR-523645
PARCEL NO. 1:
Track K of KOHL'S TONTO CREEK RANCH PLAT "A", Map No. 356, as recorded in the
office of the Gila County Recorder, Gila County, Arizona located in a portion of
Homestead Entry Survey No. 567 lying within Section 21, Township 11 North, Range
12 East of the Gila and Salt River Base and Meridian, Gila County, Arizona, more
particularly described as follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 30 minutes 40 seconds East, along the Westerly line of
said H.E.S. No. 567, a distance of 751.85 feet to the Northwest corner of Lot 72
of said KOHL'S TONTO CREEK RANCH PLAT "A";
THENCE leaving said Westerly line, North 72 degrees 31 minutes 30 seconds East,
a distance of 108.23 feet to a point, said point being the intersection of the
North line of said Lot 72 extended and the East right-of-way of SHORT ROAD, said
point being the TRUE POINT OF BEGINNING;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the East right-of-way line of SHORT ROAD, a
distance of 725.49 feet (729.60 feet recorded) to the intersection with the East
right-of-way of STATE ROUTE 260, said intersection being a point on a curve
concave to the Northwest having a radius of 880.00 feet, a radial line through
said intersection bears South 62 degrees 57 minutes 16 seconds East;
THENCE Northeasterly 111.54 feet (107.43 recorded) alone said curve through a
central angle of 07 degrees 15 minutes 44 seconds to the beginning of a tangent
curve to the left, said curve being parallel to and 50.00 feet right of the
STATE ROUTE 260 centerline spiral curve having a rate of change in degree of
curvature, a = 4.8627 degrees, a full spiral deviation angle of 04 degrees 54
minutes 00 seconds, and a spiral distance of 141.96 feet;
THENCE Northeasterly continuing alone the East right-of-way line of STATE ROUTE
260, a distance of 146.24 feet along said curve to a point of tangency;
THENCE North 14 degrees 53 minutes 00 seconds East (North 14 degrees 49 minutes
10 seconds East recorded), continuing along the East right-of-way line of STATE
ROUTE 260, a distance of 288.61 feet (287.62 feet recorded) to the intersection
with the South right-of-way of BUENAGUA ROAD;
THENCE South 43 degrees 48 minutes 48 seconds East (South 44 degrees 15 minutes
10 seconds East recorded), along the South right-of-way of said BUENAGUA ROAD, a
distance of 159.16 feet (157.67 feet recorded);
THENCE South 38 degrees 12 minutes 48 seconds East (South 38 degrees 39 minutes
10 seconds East recorded), continuing along the South right-of-way of said
BUENAGUA ROAD, a distance of 223.06 feet;
THENCE South 29 degrees 35 minutes 48 seconds East (South 30 degrees 02 minutes
10 seconds East recorded), continuing along the South right-of-way of said
BUENAGUA ROAD, a distance of 19.24 feet (27.57 feet recorded);
THENCE South 22 degrees 45 minutes 51 seconds East (South 23 degrees 02 minutes
00 seconds East recorded), leaving the South right-of-way of said BUENAGUA ROAD,
a distance of 340.38 feet (332.09 feet recorded);
THENCE South 14 degrees 53 minutes 10 seconds East (South 15 degrees 19 minutes
10 seconds East recorded), a distance of 33.13 feet (33.15 feet recorded) to a
point on the West right-of-way of BUENAGUA ROAD;
THENCE South 05 degrees 03 minutes 48 seconds East (South 05 degrees 30 minutes
10 seconds East recorded), along the West right-of-way of said BUENAGUA ROAD, a
distance of 271.76 feet (271.74 feet recorded);
THENCE South 02 degrees 06 minutes 48 seconds East (South 02 degrees 33 minutes
10 seconds East recorded) continuing along the West right-of-way of BUENAGUA
ROAD, a distance of 36.58 feet;
THENCE South 30 degrees 43 minutes 12 seconds West (South 30 degrees 16 minutes
50 seconds West, recorded), leaving the West right-of-way of BUENAGUA ROAD, a
distance of 192.50 feet (193.61 feet recorded);
THENCE South 72 degrees 35 minutes 33 seconds West (South 72 degrees 20 seconds
30 minutes West recorded), a distance of 233.32 feet;
THENCE South 72 degrees 31 minutes 30 seconds West (South 72 degrees 20 minutes
30 seconds West recorded), a distance of 123.20 feet (123.81 feet recorded) to
the TRUE POINT OF BEGINNING;
EXCEPT that portion of Tract K, of KOHL'S TONTO CREEK RANCH PLAT "A", according
to the plat of record in the office of the County Recorder of Gila County,
Arizona, recorded in Map No. 356, located in a portion of Homestead Entry Survey
No. 567 lying within Section 21, Township 11 North, Range 12 East of the Gila
and Salt River Base and Merdian, Gila County, Arizona, being described as
follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 32 minutes 34 seconds East, along the line between
Corner No. 3 and No. 2 of said H.E.S. No. 567, a distance of 751.72 feet (752.78
feet recorded) to the Northwest corner of Lot 72, of KOHL'S TONTO CREEK RANCH,
according to the plat of record in the office of the County Recorder of Gila
County, Arizona, recorded in Map No. 112;
THENCE North 72 degrees 34 minutes 09 seconds East (North 72 degrees 51 minutes
East recorded), a distance of 107.81 feet (108.20 feet recorded) to a point
being the intersection of the Northerly line of said Lot 72 extended and the
Easterly right-of-way of SHORT ROAD;
THENCE North 11 dearees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the Easterly line of said SHORT ROAD, a
distance of 22.84 feet to the POINT OF BEGINNING;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), continuing along the Easterly line of SHORT ROAD, a
distance of 64.98 feet;
THENCE North 76 degrees 23 minutes 24 seconds East, a distance of 78.14 feet;
THENCE South 13 degrees 29 minutes 59 seconds East, a distance of 20.00 feet:
THENCE South 76 degrees 23 minutes 24 seconds West, a distance of 39.09 feet;
THENCE South 13 degrees 36 minutes 36 seconds East, a distance of 44.94 feet;
THENCE South 76 degrees 23 minutes 24 seconds West, a distance of 41.38 feet to
the POINT OF BEGINNING; and
EXCEPT that portion of Tract K, of KOHL'S TONTO CREEK RANCH PLAT "A", according
to the plat of record in the office of the County Recorder of Gila County,
Arizona, recorded in Map No. 356 located in a portion of Homestead Entry Survey
No. 567 lying within Section 21, Township 11 North, Range 12 East of the Gila
and Salt River Base and Meridian, Gila County, Arizona, being described as
follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 32 minutes 34 seconds East, along the line between
Corner No. 3 and No. 2 of said H.E.S. No. 567, a distance of 751.72 feet (752.78
feet recorded) to the Northwest corner of Lot 72, of KOHL'S TONTO CREEK RANCH,
according to the plat of record in the office of the County Recorder of Gila
County, Arizona, recorded in Map No. 112.
THENCE North 72 degrees 34 minutes 09 seconds East (North 72 degrees 51 minutes
East recorded), a distance of 107.81 feet (108.20 feet recorded) to a point
being the intersection of the Northerly line of said Lot 72 extended and the
Easterly right-of-way of SHORT ROAD;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the Easterly line of said SHORT ROAD, a
distance of 357.94 feet:
THENCE North 77 degrees 30 minutes 01 seconds East, a distance of 21.37 feet to
the POINT OF BEGINNING;
THENCE continuing North 77 degrees 30 minutes 01 seconds East, a distance of
11.18 feet;
THENCE South 12 degrees 47 minutes 54 seconds East, a distance of 5.97 feet;
THENCE South 77 degrees 30 minutes 01 seconds West, a distance of 11.18 feet;
THENCE North 12 degrees 47 minutes 54 seconds West, a distance of 5.97 feet to
the POINT OF BEGINNING; and
EXCEPT that portion of Tract K, of KOHL'S TONTO CREEK RANCH PLAT "A", according
to the plat of record in the office of the County Recorder of Gila County,
Arizona, recorded in Map No. 356 located in a portion of Homestead Entry Survey
No. 567 lying within Section 21, Township 11 North, Range 12 East of the Gila
and Salt River Base and Meridian, Gila County, Arizona, being described as
follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 32 minutes 34 seconds East, along the line between
Corner No. 3 and No. 2 of said H.E.S. No. 567, a distance of 751.72 feet (752.78
feet recorded) to the Northwest corner of Lot 72, of KOHL'S TONTO CREEK RANCH,
according to the plat of record in the office of the County Recorder of Gila
County, Arizona, recorded in Map No. 112;
THENCE North 72 degrees 34 minutes 09 seconds East (North 72 degrees 51 minutes
East recorded), a distance of 107.81 feet (108.20 feet recorded) to a point
being the intersection of the Northerly Line of said Lot 72 extended and the
Easterly right-of-way of SHORT ROAD:
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the Easterly line of said SHORT ROAD, a
distance of 710.49 feet to the POINT OF BEGINNING;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), continuing along the Easterly line of said SHORT
ROAD, a distance of 15.00 feet to the intersection with the Easterly
right-of-way of ARIZONA STATE ROUTE 260;
THENCE South 62 degrees 57 minutes 16 seconds East, a distance of 10.00 feet;
THENCE South 30 degrees 13 minutes 14 seconds West, a distance of 11.75 feet to
the POINT OF BEGINNING.
PARCEL NO. 2:
Tract "B", of KOHL'S TONTO CREEK RANCH, according to the plat of record in the
office of the County Recorder of Gila County, Arizona, recorded in Map No. 112,
described as follows:
COMMENCING at Corner No. 5 of said Homestead Entry Survey No. 567, said point
being the TRUE POINT OF BEGINNING;
THENCE South 22 degrees 45 minutes 51 seconds East (South 23 degrees 02 minutes
00 seconds East recorded), along the Easterly line of said H.E.S. No. 567, a
distance of 288.53 feet to a point on the Northerly right-of-way of BUENAGUA
ROAD:
THENCE North 38 degrees 12 minutes 48 seconds West (North 18 degrees 39 minutes
10 seconds West recorded), along said right-of-way, a distance of 145.99 feet;
THENCE North 43 degrees 48 minutes 48 seconds West (North 44 degrees 15 minutes
10 seconds West and North 43 degrees 43 minutes West recorded), continuing along
said right-of-way, a distance of 174.93 feet to the intersection with the East
right-of-way of STATE ROUTE 260;
THENCE North 14 degrees 53 minutes 00 seconds East (North 14 degrees 49 minutes
10 seconds East recorded), along said East right-of-way of STATE ROUTE 260, a
distance of 4.06 feet to the beginning of a tangent curve to the rights, said
curve being parallel to and 50.00 feet right of the STATE ROUTE 260 centerline
spiral curve having a rate of change in degree of curvature, a = 3.088 degrees,
and a full spiral deviation angle of 04 degrees 36 minutes 00 seconds;
THENCE Northeasterly 22.21 feet (23.96 feet recorded) along said curve to the
intersection with the North Line of H.E.S. No. 567;
THENCE South 89 degrees 50 minutes 00 seconds East (South 89 degrees 33 minutes
East and North 89 degrees 55 minutes East recorded), along the North line of
said H.E.S. No. 567, a distance of 93.01 feet (92.82 feet recorded) to the TRUE
POINT OF BEGINNING.
EXHIBIT B
LIST OF ACCEPTABLE CONTRACTS AS OF THE DATE OF THIS AGREEMENT
NONE.
August 9, 1995
Joseph P. Martori, Esq.
Orangemen Club Limited Partnership
2777 E. Camelback Rd.
Phoenix, AZ 85016
Re: Orangemen Club Limited Partnership
Dear Mr. Martori:
This shall serve as a commitment on the part of Resort Service Company, Inc.
("RSC") to provide an Acquisition and Development Loan ("Loan") to Orangemen
Club Limited Partnership, a New York limited partnership ("OC"), to develop a
Project known as Orangemen Club at The Hotel Syracuse in Syracuse, New York
("Project"). In addition, this letter shall also constitute a commitment on the
part of RSC to purchase from OC certain eligible promissory notes and mortgages
resulting from the sale of timeshare intervals in the Project ("Notes"). This
shall also constitute a commitment on the part of OC to enter into the Loan and
sell the Notes to RSC, all under the terms and conditions set forth below.
Acquisition and Development Loan
1. Intent: It is the understanding of RSC that OC
------ desires to borrow funds from RSC for the
purpose of acquiring floors seven, eight and
nine of The Hotel Syracuse to be developed
and sold as timeshare intervals in the
Project.
2. Borrower: OC
--------
3. Loan Amount: The amount of the Loan shall not exceed
----------- Five Million Dollars ($5,000,000.00). One
Million Six Hundred Thousand Dollars
($1,600,000.00) shall be used to acquire the
Project and the remaining Three Million Four
Hundred Thousand Dollars ($3,400,000.00)
shall be used for development and conversion
costs and operating capital.
4. Rate: Interest rate on the Loan during
---- construction shall be at twelve percent (12%)
per annum or Prime (as issued by Chemical
Bank, N.A.) plus three and one- quarter
percent (3.25%), whichever is greater, to be
adjusted semi-annually. Upon receipt of the
final Certificate of Occupancy the interest
rate on the Loan shall be fixed at twelve
percent (12%) per annum or the Prime rate
plus three and one-quarter percent (3.25%),
whichever is greater.
5. Loan Term: The Loan shall be non-revolving and funded
--------- in a series of advances ("Advance") to an
Escrow Agent approved by RSC. The Loan shall
mature forty-eight (48) months from the date
of the distribution of the final Loan
proceeds (Term"). RSC must approve the
anticipated draw schedule prior to the
initial Advance and each draw prior to each
subsequent Advance. Advances shall be only
made during the initial eighteen (18) months
of construction. During the Term, interest
shall accrue on a daily basis. Monthly
payments of interest shall begin thirty (30)
days after approval from the State of New
York is received to sell timeshare intervals
therein. Interest and principal will be paid
according to the release mechanism set forth
below. At maturity the outstanding principal
and interest balance shall be due and
payable. It is clearly understood that this
commitment is being issued based on OC's
representation to sell timeshare intervals in
the Project.
6. Release Fee: Release fee payments shall be paid by OC to
----------- RSC in the amount of $1,350.00 for each
annual timeshare interval at the closing of
the sale of each timeshare period in the
Project. RSC shall apply each release fee to
reduce the principal balance due under the
Loan. The monthly installments of interest
shall be recalculated each month based on the
principal reduction.
7. Security: To secure OC's payment and performance
-------- under the Loan a First Position Priority
Mortgage on the improvements and property of
the Project including all unsold timeshare
interval inventory owned by OC shall be
required.
8. Closing The following conditions must be met by OC
------- to the satisfaction of RSC prior to the
Conditions closing date of the Loan:
----------
(a) OC must provide evidence that it is
properly registered with the state of
Arizona and provide RSC with a
Certificate of Good Standing and all
other documents relating to that
registration;
(b) The negotiation, execution and
elivery of documentation satisfactory
to RSC containing all required
representations and warranties,
conditions, covenants, and events of
default;
(c) The receipt by OC and its general
partner, Syracuse Project Incorporated,
an Arizona corporation ("SPI") of all
necessary regulatory approvals from the
State of Arizona and the State of New
York and evidence of compliance with
all local, state and federal laws
applicable to each transaction prior to
the sale of any timeshare intervals in
the Project;
(d) RSC's receipt of satisfactory evidence
of appropriate corporate approval of
all proposed transactions as well as
opinions of counsel satisfactory to
RSC;
(e) Delivery of satisfactory title
insurance for the mortgage provided to
RSC;
(f) Execution of a Contract of Sale of
Timeshare Receivables With Recourse
for the purchase of timeshare
intervals between RSC and OC,
including compliance with all terms
and conditions set forth herein;
(g) OC agrees that all funds shall be kept
in a segregated account and not
commingled with the general operating
accounts of OC, SPI or any subsidiary
or affiliate of OC or SPI; and
(h) OC will provide to RSC all other items
reasonably requested by RSC in
connection with the transactions
contemplated hereunder.
9. Special (a) In the event the Loan is not closed by
------- September 15, 1995, RSC reserves the
Conditions: right to withdraw this commitment.
----------
(b) OC must provide RSC with copies of all
documents relating to the purchase from
of the property constituting the
Project as well as all releases of
mortgage, lien and UCC-1's from any
other entity which has an interest in
the property which will be satisfied by
the proceeds of the Loan.
10. Governing Law: All documents, including this
------------- commitment, shall be construed in
accordance with the laws of the State
of New York without regard to the
principles of conflicts of laws.
11. Indemnification: Except for instances of RSC's gross
--------------- egligence or misconduct, OC agrees to
indemnify and hold RSC and its
shareholders, directors agents,
officers, subsidiaries and affiliates
harmless from and against any and all
damages, losses, settlement payments,
obligations, liabilities, claims, or
causes of action, and to pay all
reasonable costs and expenses incurred,
suffered, sustained or required to be
paid by an indemnified party by reason
of or resulting from the transactions
contemplated hereby.
Contract of Sale of Timeshare Receivables with Recourse
1. Seller: The Seller of the Notes shall be the
------ OC. No other sales or asset ownership
entities exist in connection with the
transactions contemplated hereunder.
2. Amount: The amount of this commitment shall not
------ exceed Ten Million Dollars
($10,000,000.00) per year for, subject
to annual reviews and renewals pursuant
to the terms hereof, for a period of
three (3) years from the date of the
issuance of a final Certificate of
Occupancy for the Project. OC agrees
that RSC has the right of first refusal
with respect to all Notes generated by
the sale of timeshare periods in the
Project even in the event that OC
exceeds the Ten Million Dollar
($10,000,000.00) annual commitment
limitation hereunder. RSC agrees to
renew this commitment, upon sixty (60)
days prior written notice, on the
anniversary date of the execution of
the Contract for an additional twelve
(12) months and an additional Ten
Million Dollars ($10,000,000.00) with
the following conditions:
(a) The performance of the portfolio
meets the standards of RSC as
outlined in the Contract; and
(b) The financial condition of OC must
meet the standards of RSC as
outlined in the Contract.
3. Purchase Price: For purposes of calculating the
-------------- purchase price of the Notes the monthly
payments to be made pursuant to the
Note shall be discounted at the rate of
thirteen percent (13%) and, for those
Notes paid by electronic funds, the
discount rate to be applied shall be
twelve percent (12%). These rates will
be reviewed on a semi- annual basis and
adjusted to Prime plus three and
three-quarter percent (3.75%) or two
and three-quarter percent (2.75%) for
those Notes paid through electronic
funds.
4. Payment of Upon the acceptance of eligible Notes,
---------- RSC shall pay eighty-five percent (85%)
Purchase Price: of the aggregate purchase price of the
-------------- Notes to OC. The remaining fifteen
percent (15%) of the aggregate purchase
price for each Note shall be paid
within thirty (30) days of RSC's
receipt of full and final payment due
under that Note.
5. Contract: The terms and conditions of the sale of
-------- Notes shall be incorporated into a
Contract of Sale of Timeshare
Receivables with Recourse ("Contract").
6. Effective Date: The effective date of the Contract
-------------- shall be the date of date of the first
funding execution thereof.
7. Term: The initial term of the Contract is for
---- twelve (12) months from the effective
date.
8. Notes: OC shall warrant that the Notes sold to
----- RSC are free and clear of all liens and
encumbrances.
9. Expenses: The costs of acquiring title insurance,
-------- mortgage recording and related taxes,
UCC- 1 filing fees, and all other
similar expenses shall be paid by OC.
10. Prepayment: The entire outstanding amount due under
---------- this Contract may be prepaid at any
time by OC or a third party mutually
agreed upon in writing by OC and RSC,
upon not less than thirty (30) days
prior irrevocable written notice to
RSC. Any prepayment of principal must
be accompanied by all interest accrued
as of the date of prepayment, any fees
or expenses payable and a prepayment
penalty consisting of the weighted of
the outstanding principal of the Notes
as follows:
1st year 7%
2nd year 6%
3rd year 5%
4th year 4%
5th year 3%
6th year 2%
7th year 1%
In the event the individual purchasers
of timeshare intervals in the Project
elect to prepay their obligation within
ninety (90) days of RSC's funding to OC
for same, then OC will pay a processing
fee to RSC in the amount of $50.00 per
account prepaid.
At no time shall the individual
purchasers of timeshare intervals be
obligated to pay any prepayment penalty
to either OC or RSC.
11. Security: In order to secure payment and
-------- performance under the Notes each
original Note shall be assigned,
endorsed and delivered to RSC. The
corresponding mortgage shall be filed,
recorded and then assigned to RSC.
12. Recourse: The purchase of Notes shall be with
-------- full recourse to OC. Accordingly, any
Note that is more than ninety (90) days
past due or has a first payment default
shall be charged back to OC which must
either pay off the remaining principal
balance at the original discount to
yield percentage, accrued interest due
under said Note, as outlined in the
Contract, or substitute the Note with a
new Note of equal or greater value. In
the event that RSC charges back a Note
to OC, then RSC agrees to reassign the
Note and related mortgage to OC.
13. Documentation: Loan documentation will be prepared by
------------- RSC on RSC's standard forms. All
documentation must be satisfactory in
all respects to RSC and must contain
all provisions which it deems necessary
to adequately monitor the ownership and
operations of OC.
14. Closing The following conditions must be met by
------- OC to the satisfaction of RSC prior to
Conditions: the closing date:
----------
(a) RSC must be satisfied that the
financial information delivered
fairly presents the business and
financial condition of OC and the
results of operations; and that
there has been no material adverse
change in the business, assets or
financial condition of OC since
the date of that financial
information;
(b) The negotiation, execution and
delivery of documentation
satisfactory to RSC containing all
required representations and
warranties, conditions, covenants,
and events of default;
(c) Evidence that OC has the approval
and is authorized to sell
timeshare intervals in those
States in which OC has sold or
intends to sell timeshare
intervals;
(d) RSC's receipt of satisfactory
evidence of appropriate corporate
approval of all proposed
transactions as well as opinions
of counsel satisfactory to RSC;
(e) OC agrees to engage a title
company acceptable to RSC to
conduct a title search and provide
a title report on an annual basis
for the Project to RSC; and
(f) OC shall offer RSC an exclusive
first right of refusal to purchase
all Notes offered by OC.
15. Brokerage Fees: OC hereby acknowledges no brokerage
-------------- fees are due for any of the
transactions contemplated hereunder.
16. Special (a) It is clearly understood that this
Conditions: commitment is being issued on the
---------- basis of OC's intent to sell
timeshare intervals in the
Project.
(b) Prior to the funding of any Notes
pursuant to the terms of the
Contract, the receipt by OC of all
necessary regulatory approvals and
evidence of compliance with all
local, state and federal laws
applicable to each transaction
including but not limited to all
applicable Securities and Banuing
Acts, any Unit Ownership Act,
Timeshare Act and or applicable
Real Estate Act.
17. Governing Law: All documents shall be governed by the
------------- laws of the State of New York, without
regard to the principles of conflicts
of laws.
18. Indemnification: Except for instances of RSC's gross
--------------- negligence or misconduct, OC agrees to
indemnify and hold RSC and its
shareholders, directors, agents,
officers, subsidiaries and affiliates
harmless from and against any and all
damages, losses, settlement payments,
obligations, liabilities, claims,
actions or causes of actions, and
reasonable costs and expenses incurred,
suffered, sustained or required to be
paid by an indemnified party by reason
of or resulting from the transactions
contemplated hereby.
OC agrees that the contents of this letter are confidential and are provided
solely for the purpose described herein, subject to any requirements relating to
federal securities laws or regulations. This letter may be relied on by any
third-party without RSC's prior written consent and OC or any of the parties
hereto shall not deliver, display or otherwise disclose the contents of this
letter to any third-party without RSC's prior written consent. Neither this
letter nor the proposals herein may be assigned by OC. The proposals contained
herein are expressly contingent upon OC obtaining and maintaining approval to
sell timeshare intervals in the State of New York. This letter supersedes all
previous negotiations, proposals, and understandings either written or oral, of
any nature whatsoever.
This commitment may be executed in on or more counterparts (which may be
originals or copies sent by facsimile transmission), each of which counterparts
shall be an original, and together shall constitute one and the same document.
If the foregoing represents your concurrence with the proposed financing
structures, please so indicate by signing and delivering to RSC at the above
address an executed copy of this letter on or before 5:00 P.M. (EST) August 15,
1995. Your failure to return an executed copy of this letter within the above
stated time frame shall result in the termination of RSC's commitment to lend.
Very truly yours,
Resort Service Company, Inc.
/s/William P. Crowley
-----------------------------
William P. Crowley
Chief Accounting Officer
Accepted and agreed to this
15th day of August, 1995.
Orangemen Club Limited Partnership
Syracuse Project Incorporated, General Partner
By: /s/Joseph P. Martori
- -------------------------------
Print Name: Joseph P. Martori
Title: Chairman
ARTICLES OF LIMITED PARTNERSHIP
These Articles of Limited Partnership ("Articles) are made and entered
into by and between Syracuse Project Incorporated, an Arizona Corporation (the
"General Partner") and Hotel Syracuse Timeshare Corporation, a New YorK
Corporation (the "Limited Partner") (collectively sometimes referred to as the
"Partners").
ARTICLE I - ORGANIZATION OF LIMITED PARTNERSHIP
1.01 Formation: The parties hereto agree and by these presents do enter
into a limited partnership under and pursuant to the laws of the State of New
York. The rights and liabilities of the Partners shall be as provided under such
laws, as amended from time to time, except as the terms and provisions of these
Articles may otherwise provide.
1.02 Name: The partnership shall do business under the name
of ORANGEMEN CLUB LIMITED PARTNERSHIP (sometimes referred to as the
"Plan" or "Partnership").
1.03 Place of Business: The principal place of business of the
Partnership shall be at 500 South Warren Street, Syracuse, New York, 13202 or at
such other place as the General Partner may designate.
1.04 Fiscal Year: The Partnership's fiscal year shall end on
December 31st of each year. The first fiscal year shall be
considered an entire fiscal year.
1.05 Purposes. The Partnership is organized for the following
purposes:
(a) To own, operate, and manage a timeshare development
consisting of floors 7, 8 and 9 of the Hotel Syracuse
(sometimes referred to as the "Hotel") to be known as "The
Orangemen Club."
(b) To sell timeshare intervals to the general public.
(c) To enter into, make, and perform all contracts and other
undertakings, and engage in all acts, activities, and
transactions as may be necessary, desirable, or advisable to
the carrying out of each of the foregoing purposes.
(d) To borrow or raise moneys subject to the limitations as to
amount set forth herein and to secure the payment of any
obligations of the Partnership by the creation of security
interests in or by mortgage upon, or hypothecation or pledge
of, all or part of the property of the Partnership.
(e) To open, maintain and close bank accounts and draw checks
or other orders for the payment of money.
(f) To maintain one or more offices within or without the
State of New York, and in connection therewith to rent or
acquire office space, engage personnel and do such other acts
as may be desirable, advisable or necessary.
1.06 Names and Addresses of Partners:
General Partner:
Syracuse Project Incorporated
2777 East Camelback Road
Phoenix, Arizona 85016
Limited Partner:
Hotel Syracuse Timeshare Corporation
500 South Warren Street
Syracuse, New York 13202
ARTICLE II - CONTRIBUTIONS
2.01 Capital Contributions:
(a) The Limited Partner shall be required to initially
contribute to the capital of the Plan, Ten ($10.00) Dollars and other good and
valuable consideration as may be required herein.
(b) The General Partner shall not be required to make an
initial capital contribution to the Plan other than its unlimited liability.
(c) Interest earned on Partnership funds shall inure solely to
the benefit of the Partnership, and no interest shall be paid upon any
contribution to the capital of the Partnership, subject to the provision of the
Limited Partnership Law of the State of New York relating to retirement of
partners.
(d) Capital contributions shall be expended by the General
Partner in furtherance of the business of the Plan as set forth in Article 4 of
these Articles of Limited Partnership.
2.02 Capital Accounts; Rights as to Withdrawal.
(a) A capital account shall be maintained for each
Partner and shall be credited with the amounts of such Partner's capital
contribution to the Partnership and shall be subject to adjustment as provided
herein.
(b) Loans to the Partnership by any Partner shall not be
considered a capital contribution to the Partnership and shall not increase the
capital account of the lending Partner or increase the share of the lending
Partner in any income or loss of the Partnership. No Partner shall be entitled
to: (i) receive the return of his capital contribution, (ii) withdraw any
portion of his capital account, (iii) receive any distribution from the
Partnership, (iv) receive property other than cash from the Partnership, or (v)
make any additional capital contributions to the Partnership, except as
specifically otherwise provided 'in these Articles.
2.03 Adjustments to Capital Accounts: The capital account of each
Partner shall from time to time be increased by any additional capital
contribution of such Partner and, such Partner's share of the profits of the
Partnership whether or not distributed. The capital account of each Partner
shall from time to time be decreased by (i) all, distributions to or for the
account of such Partner, whether of capital or income and (ii) such Partner's
share of losses of the Partnership. For purposes of these Articles "Losses"
shall be defined as the net taxable losses of the Partnership as determined in
accordance with the accounting methods followed by the Partnership for federal
income tax purposes plus any expenditures of the Partnership not deductible in
computing its federal taxable income and not properly chargeable to a capital
account.
2.04 Loans:
(a) Construction. As soon as practicable after the execution
of these Art 0,000.00 from Resort Service Company, Inc. ("RSCI"). The proceeds
of the loan shall be used for the following purposes:
(1) Purchase of guest room floors 7, 8 and 9 from the
Hotel Syracuse, Inc.;
(2) Renovation of the guest rooms into units suitable
for timeshare interval sales;
(3) Development of an on-site sales office;
(4) Development of an on-site telemarketing operation;
(5) Preparation and filing of a timeshare offering plan
with the State of New York.
(6) Payment of related legal fees; and,
(7) Payment of related transaction costs and fees.
(8) Working capital of the Partnership.
The loan shall be non-recourse to any of the Partners and shall be
secured by a mortgage on the purchased floors. The loan shall bear interest at
the rate of twelve percent (12%) and shall be amortized over forty-eight (48)
months from the final distribution of the loan proceeds. Until such time as the
timeshare registration approval is obtained from the State of New York, interest
shall accrue but shall not be paid.
(b) Timeshare. As soon as practicable after the execution of
these Articles, the Partnership shall enter into a relationship with RSCI
whereby RSCI shall purchase creditworthy timeshare interval notes from the
Partnership under terms mutually agreeable to the Partnership and RSCI.
ARTICLE III - MANAGEMENT & OPERATION
3.01 Management and Operation of Business; Powers of General
Partner:
(a) (1) Subject to the specific matters addressed herein, the
General Partner shall have the exclusive management and control of the business
of the Plan.
(2) During, the continuance of the Plan, the General
Partner shall diligently and faithfully devote such of its time to the Plan's
business as may be necessary to carry on and conduct the same for the greatest
advantage of the Plan, and shall render to the Limited Partner, whenever
reasonably requested by it, a just and faithful account of all material dealings
and transactions in relation to the business.
(3) The General Partner is expressly authorized to execute
and deliver for and on behalf of the Plan all agreements and commitments
relating to its business and other affairs which shall be binding upon the Plan
in accordance with the provisions of these Articles, including without in any
way limiting the generality of the foregoing, the exclusive authority to execute
and deliver all (i) deeds, assignments and subleases of any part or all of the
properties and assets at any time belonging to the Plan; (ii) loan agreements,
mortgages and other security instruments executed in connection with the
borrowing as required hereunder; (iii) checks, drafts and other orders for the
payment of Plan funds, together with the right to designate others employed by
the Partnership or the General Partner to execute and deliver such checks,
drafts and other orders; (iv) operating agreements (excluding, however, any such
agreement which would constitute the Plan, or, after its termination, any
partner of the Plan, or any Limited Partners, a member of an association taxable
as a corporation for federal income tax purposes); (v) powers of attorney,
consents, waivers and other documents in connection with any proceedings before
any court, administrative body or agency of any governmental authority affecting
the Plan; (vi) documents incident to the termination and winding up of the Plan
affairs, and the withdrawal by the Limited Partner; and (vii) all other
documents of any character relating to the affairs of the Plan.
(b) In addition to the above general duties, the General
Partner shall have the following duties, rights and responsibilities:
(1) Market and sell timeshare intervals as
undivided fee simple or other forms of ownership interests on floors 7, 8 and 9.
(2) Provide owner services for all club members.
(3) Hire, train, and supervise all marketing,
telemarketing, sales and owner services personnel.
(4) Establish a telemarketing program to support
the sales of timeshare intervals.
(5) Establish an OPC/Owner Services desk in the
Hotel Syracuse.
(6) Sell only to individuals that meet the
Partnership's underwriting criteria.
(7) Comply with all licensing and regulatory
criteria.
(8) Utilize overnight stays at the Hotel
Syracuse and certificates from the Coach Mac restaurant to help procure tours.
(9) Engage and manage legal counsel to complete
the acquisition of floor s 7, 8, and 9, the loan documentation with RSCI and the
New York State timeshare registration.
(10) Develop the pricing structure for the intervals.
(11) Manage the general contractor, architect,
designer, and purchasing agent.
(12) Negotiate the Interval International (I.I.)
agreement.
(13) Coordinate all loan processing related to the
sale of the timeshare intervals.
(14) Provide accounting and tax services for the
homeowners association.
(15) Coordinate all construction of and renovation to
the guest rooms that shall comprise the timeshare units.
(c) No person dealing with the General Partner shall be
required to determine its authority to make any undertaking on behalf of the
Plan, nor to determine any fact or circumstance bearing upon the existence of
its authority, including but not limited to securing of any necessary consent or
approval of the Limited Partner.
(d) The General Partner shall enter into an agreement with the
Hotel Syracuse, Inc. ("HSI") or its designee to perform the following services
on behalf of the Partnership:
(1) Provide appropriate rent-free space for marketing
and sales activities as well as the space required under section 3.0.1(b)(5)
above.
(2) Provide all housekeeping and maintenance services
for the Orangemen Club.
(3) Provide the Orangemen Club members and I.I.
exchange guests with the same day-use privileges, afforded to in-house Hotel
Syracuse guests, on an ongoing basis. For example, use of the swimming pool and
fitness center as well as appropriate food and beverage discounts.
(4) Provide the use of 15 mid week rooms and 30
weekend rooms on the Hotel Syracuse's recently renovated 3rd floor and 6th floor
for overnight tour use until the renovation has been completed. The Partnership
will agree to pay the current airline contract rate, from time to time in
existence, for the use of these rooms. All guest rooms not used by the
Partnership may be returned to the Hotel Syracuse's available room inventory
with at least twenty-four (24) hours notice, without required payment by, or
penalty to the Partnership.
(5) Place the Partnership renovated rooms, when not
required for timeshare use, into its hotel inventory and rent them on a equal
basis (when compared to all other available guest rooms in the Hotel Syracuse)
at the highest rate acceptable within the market place.
(6) Provide the use of Coach MacPherson to assist the
marketing and sales functions as follows:
(i) Assistance in the identification and sales of
Tier One prospects.
(ii) Conducting podium presentations in selected,
season ticket holder home markets.
(iii) To act as an introduction and liaison
between the Orangemen Club, the university athletic department, chancellor's
office, office of development affairs, alumni office, etc.
(iv) To autograph direct mail and make personal
appearances.
(v) To authorize photographs and memorabilia and
give testimonials.
(vi) To sit on the Orangemen Club advisory board.
(vii) To use influence to assist the General
Partner with the negotiation of the I.I. Agreement.
(7) Use HIS's influence to facilitate the timeshare
registration process.
3.02 Rights of the Limited Partners:
(a) Except as may be otherwise specifically provided in these
Articles, the Limited Partner shall have the following rights, powers,
privileges, duties and liabilities under the Revised Limited Partnership Act of
New York.
(1) To be repaid its contributions, whether by way of
capital or advances to the Plan, and to share in the profits and surplus
remaining after all liabilities, including those to the General Partner and
Limited Partner, are satisfied; and to contribute to the losses, whether of
capital or otherwise, sustained by the Plan limited by its capital contribution
to the Plan;
(2) To be indemnified in respect of payments made and
personal liabilities reasonably incurred by it for the preservation of the
Plan's business or property;
(3) To vote as to any amendments to these Articles or
on any other matter which the General Partner may put to the vote of the Limited
Partners;
(4) To have the Plan books kept at the principal
place of business of the Plan, and at all times to have access to and to inspect
and copy any of them;
(5) To have tendered by the General Partner on demand
true and full information of all things affecting the Plan;
(6) To account to the Plan for any benefit, and hold
as trustee for it any profits derived by it without the consent of the General
Partner from any transaction connected with the formation, conduct or
liquidation of the Plan or from any use by it of Plan property;
(7) To have a formal account from the General Partner
as to Plan affairs: (i) If the Limited Partner is wrongfully excluded from the
Plan's business or possession of its property; or (ii) Whenever so provided by
other provisions of these Articles or any other agreement binding on the Plan or
the General Partner.
(b) Except as may be otherwise specifically provided in these
Articles, an assignee shall have only the rights set forth in the Revised
Uniform Limited Partnership Act of New York.
(c) To receive the profits to which its assignor would
otherwise be entitled.
3.03 Management Salary: The General Partner shall receive a management
fee in the amount of 5% of gross revenues generated from the sale of timeshare
intervals and other operations of the Orangemen Club, payable monthly during the
existence of the Partnership.
ARTICLE IV - PROFITS & LOSSES
4.01 Allocation of Profits and Losses; Distribution to Limited
Partners: The partners agree that:
(a) Prior to receiving net profits as defined below and
subject to the provisions below, profits, gains and losses of the Plan, computed
in accordance with generally-accepted accounting principles consistently
applied, including gains realized upon the sale, exchange or involuntary
conversion of any part or all of the properties, real or personal, of the Plan,
shall be allocated to the accounts of the Partners pro rata according to their
respective partnership interests in the Plan.
(b) Within thirty (30) days of the end of each fiscal year in
which the Plan shall earn "net profits" as set forth herein, such net profits
and all profits, gains and losses of the Plan, computed in accordance with
generally-accepted accounting principles consistently applied, including gains
realized upon the sale, exchange or involuntary conversion of any part or all of
the properties, real or personal, of the Plan shall be allocated to the accounts
of the Partners ("Partnership Interests") as follows:
General Partner - 80%
Limited Partner - 20%
(c) Net profit shall be determined after crediting to the
Plan, for the purpose of such computation, all credits accruing to all
properties and after taking into consideration all costs and expenses
theretofore incurred in connection therewith and all accounts payable or
receivable with regard thereto at the end of such month, including cash flow
distributions as described above. In making the foregoing computations, deficits
shall be carried from month to month and the accumulated totals thereof applied
to subsequent earnings before profits will be considered to have accrued.
Whenever the Plan is on a "net profit" basis, all subsequent development and
operating expenses shall be recovered solely out of subsequent production or
other credits accrued to the property.
ARTICLE V - DISTRIBUTIONS OF CASH FLOW
5.01 Definition of Cash Flow:
(a) Deductions from Operating Revenue: "Cash flow"
shall mean the actual receipts of revenue from the operation of the Partnership
business, funds released from any escrow account or reserve and payments from
insurance on account of business or rental interruption ("Operating Revenue")
after deduction of:
(1) all operating expenses of the Partnership,
excluding any expense not involving a cash expenditure, such as depreciation;
(2) interest payments and principal amortization on
any loans by third parties, including Partners in other capacities than as
partners, to the Partnership;
(3) reserves for working capital, capital
improvements and replacements, and any other contingencies of the Partnership;
(4) capital expenditures unless paid by a cash
withdrawal from a reserve for capital improvements or replacements; and,
(5) amounts paid into escrow accounts or reserves for
taxes, insurance and the like.
(b) Exclusions from Operating Revenue: Operating
Revenue shall exclude proceeds from:
(1) the sale or other disposition of any part or all
of the Property other than in the ordinary course of business;
(2) financing or refinancing of the Property;
(3) condemnation of any part or all of the Property;
(4) payments from insurance on account of a casualty
to the Property;
(5) Capital Contributions; and,
(6) similar items or transactions the proceeds of
which under generally accepted accounting principles are deemed attributable to
capital.
5.02 Priority of Distribution of Cash Flow: The Cash Flow of the
Partnership for each calendar month shall be distributed to the Partners once
during such succeeding calendar month in the following order: (1) Return on
Partner Loans: To each of the Partners, pro rata, the interest due on loans by
the Partners to the Partnership. (2) General Partner 80% Limited Partner 20%
ARTICLE VI - BOOKS & RECORDS
6.01 (A) Books of Account: Proper books of account shall be kept
wherein shall be entered particulars of all monies, goods or effects belonging
to or owing to or by the Plan, or paid, received, or sold or purchased in the
course of the Plan's business, and of all such other transactions, matters and
things relating to the said business as are usually entered in books of account
kept by persons engaged in a business of a like character. The books of account
shall be kept at the office of the Plan and the Limited Partner shall at all
times have free access to and the right to inspect and copy the same, subject to
reasonable advance written notice to the General Partner.
(b) The General Partner shall prepare and furnish to the
Limited Partner annually on a calendar year basis a report consisting of a
balance sheet and statement of incomes including an opinion of independent
public accountants. Unless written objection is made within 90 days after the
mailing of such statements, the Limited Partner shall be deemed to have agreed
to such accounts. Necessary tax information shall, be delivered to the Limited
Partner within 195 days after the close of the Plan's taxable year; every effort
shall be made by the General Partner to furnish such information by the 15th day
of July next following the close of the Plan's taxable year.
(c) At least semiannually the General Partner shall prepare
and furnish to the Limited Partner an interim report containing current
financial and other information relating to the Plan and its activities during
such period.
ARTICLE VII - ASSIGNMENT
7.01 Assignment of Limited Partnership Interests; Admissions of Limited
Partners; Amendments of Plan Articles; Annual and Special Meetings; Replacement
of General Partner.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY MAY NOT BE
OFFERED, SOLD, RESOLD OR DELIVERED IN VIOLATION OF THE SECURITIES ACT.
THE PURCHASER OF THIS CERTIFICATE, BY ITS ACCEPTANCE HEREOF, REPRESENTS
THAT IT IS ACQUIRING THIS CERTIFICATE FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE RESALE OR DISTRIBUTION THEREOF. NO
SUCH RESALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE
PARTNERSHIP THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS.
(a) Subject to the foregoing, in the event the Limited Partner shall
desire to make any disposition of its partnership interest for value, it shall
first notify the General Partner in writing of the lowest price it is willing
to accept and the terms and conditions on which it is willing to sell its
interest. Such notice shall constitute an offer, at the price and on the terms
therein set forth, to sell such interest to the General Partner which shall then
be entitled to a period of seven (7) days from the receipt of such notice to
accept or reject such offer. Any such offer shall be deemed rejected if not
accepted within said period. If such offer is not so accepted at the price and
on the terms and conditions so offered, the Limited Partner may thereafter sell
the same to anyone; provided, however, that any such sale or sales must (i) be
consummated within ninety (90) days after the expiration of said seven-day
period, and (ii) be effected at a price or prices not less and on terms and
conditions not substantially more favorable to the buyer than as set forth in
the offer to the General Partner.
(b) Unless admitted as a substituted Limited Partner under the
provisions of paragraph (d) of this Article, an assignee shall have only the
rights set forth above. Notwithstanding any such assignment, the Limited Partner
originally subscribing to the assigned interest shall remain primarily liable
for a ratable part of the Plan's debts and liabilities to the extent of its
original capital contribution; unless (i) the assigning Limited Partner shall
authorize the admission of the assignee as a substituted Limited Partner, and
(ii) the assignee shall consent, in a writing satisfactory in form to the
General Partner, that it be so substituted, and (iii) the General Partner shall
consent thereto. In no event shall an assignee become a substituted Limited
Partner, whether by operation of law, or otherwise, without the consent of the
General Partner.
(c) (1) The assignment of any interest in this Plan upon the books of
the Plan shall be accomplished by the submission to the General Partner, by the
assignor of such interest, of an assignment, satisfactory in form to the General
Partner, properly executed under oath or affirmed by the assignor. Any such
assignment shall be effective only as of the first day of a calendar month.
(2) The Plan will, after notice of any assignment pursuant to the
provisions of this Article, thereafter pay all further distributions of profits
or other compensation by way of income or returns of capital on account of the
interest so assigned to the assignee for such time as the interest is
transferred on its books in accordance with the above provisions.
(d) Other provisions of these Articles to the contrary notwithstanding
no conveyance or assignment (otherwise than by operation of law) of the interest
of the Limited Partner or assignee, or any part thereof, though otherwise
permitted hereunder, shall be recognized for the purposes of making payments of
profits, income, return of contribution or for any other purpose with respect to
such interest unless there be filed with the General Partner an instrument in
writing in form satisfactory to the General Partner, appropriately completed,
executed and sworn to or affirmed by the assignor. In the absence of such filing
with the General Partner of the assignment of a Plan interest, whether by
operation of law or otherwise, any payment to an assigning Limited Partner or
Assignee shall acquit the Plan of liability, to the extent of such payment, to
any other person who may be interested in such payment by reason of an
assignment by the Limited Partner or Assignee or by legal disability made by
them or on their behalf without complying with the restrictions on sale or other
disposition as set forth in this Article. Upon sale or other disposition the
Limited Partners interest by such persons pursuant to this paragraph (d),
consented to by the General Partner and represented by an executed Subscription
Agreement filed with the Partnership, the purchaser shall be deemed a
substituted Limited Partner within the meaning of Paragraph (f) of this Article,
subject to all of the provisions of these Articles.
(e) The General Partner may not, without the consent in
writing of the Limited Partners, substitute one or more General Partners to act
in its place and stead, provided, however, that nothing, in these Articles shall
be deemed to prevent the merger or consolidation of the General Partner into any
other corporation and the assumption of the rights and duties of a General
Partner by the surviving corporation by operation of law.
(f) Any person admitted to the Plan as a substituted Limited
Partner shall be subject to all provisions of these Articles as if originally a
party to them.
(g) Any amendment to these Articles shall require unanimous
consent of all Partners.
(h) Within 150 days after the end of the first year Plan, and
thereafter within 150 days after the end of each calendar year, the General
Partner shall call a meeting of the Limited Partner, at which time the General
Partner shall report to the Limited Partner as to the affairs of the
Partnership.
(i) Special meetings of the Partnership may be called by the
General Partner and will be called upon the written request of the Limited
Partner. The call shall state the nature of the business, to be transacted and
no other business will be considered.
ARTICLE VIII - DURATION
8.01 Duration of Business. The Plan shall commence business as soon as
practicable after the minimum capital requirements of the Plan have been met and
paid in, and its Certificate of Formation has been filed with the Secretary of
the State of New York and with such other states as require or permit the filing
of such a certificate before conduct of business. It shall continue in business
thereafter until terminated.
ARTICLE IX - TERMINATION
9.01 (a) Dissolution, Termination and Liquidation: The Plan shall be
dissolved:
(1) At the express will of the General Partner, any such
dissolution to be effective as of the last day of the calendar month in which
occurs such act of dissolution;
(2) By any event which makes it unlawful for the business of
the Plan to be carried on or for the members to carry it on in limited
partnership under the laws of the State of New York;
(3) By the bankruptcy of the General Partner or of the Plan;
(4) By decree of court for cause shown whenever (i) The
General Partner has been guilty of such conduct as tends to affect prejudicially
the carrying on of the business; or (ii) Other circumstances render a
dissolution equitable.
(b) Should a dissolution be caused by reason of (1) an event
which makes it unlawful for the business of the Plan to be carried on or for the
members to carry it on in limited partnership, (2) the bankruptcy of the Plan,
(3) the bankruptcy of the General Partner, (4) a decree of court upon a showing
that the General Partner has been guilty of such conduct as tends to affect
prejudicially the carrying on of the business, or (5) a decree of court upon a
showing that other circumstances render dissolution and mandatory liquidation
equitable, or should the General Partner deem liquidation necessary, the General
Partner (except in the case of dissolution by decree of court by reason of the
bankruptcy or misconduct of the General Partner, in which case the court shall
appoint a trustee for liquidation) shall terminate the Partnership and wind up
the affairs of the Plan.
(c) Upon any termination of the Partnership, its assets shall
be applied to the following purposes, in the order stated.
(1) All Partnership debts shall be paid or provided
for in a manner satisfactory to the General Partner;
(2) Any remaining balances of the Partners shall be
paid or provided for in a manner satisfactory to the General Partner;
(3) Any income of the Partnership shall be allocated
in accordance with the provisions hereunder; and,
(4) All remaining properties, interests and assets of
the Partnership shall be distributed in undivided interests among the Partners
proportionately according to the Partnership Interests of the General Partner
and the Limited Partner.
ARTICLE X - LITIGATION
10.01 Nature of Interests and Consequences of Litigation. In
furtherance of the intent of the parties that each Limited Partner shall be
liable only for his ratable part of any Plan liability, to the extent only of
his original capital contribution, the parties hereto agree as follows:
(a) The General Partner shall arrange to prosecute or defend
actions at law or in equity as such may be necessary to enforce or protect Plan
interests.
(b) The General Partner shall arrange for the defense of any
suit or action brought against the Plan or the Limited Partner.
(c) The Limited Partner shall be liable for its ratable part
of all Partnership liabilities, to the extent only of its original capital
contribution, which may be enforced against the General Partner, the Plan or the
Limited Partner as representative of the Plan, by a final decree, judgment or
decision of any court, board, or authority having jurisdiction in the premises,
and of any settlement of any suit or claim prior to judgment or final decision
therein. The General Partner shall satisfy any such judgment, decree, decision
or settlement first, out of any insurance proceeds available therefor, next, out
of the Plan's assets and income and finally, out of the assets and income of the
General Partner.
The Plan hereby indemnifies the General Partner against tort or
contract liability resulting from good faith acts or omissions to act on its
part.
ARTICLE XI - POWER/ATTORNEY
11.01 Power of Attorney: The Limited Partner, by the execution of these
Articles, and each Assignee or transferee of the Limited Partner, by the
execution of these Articles as then constituted, does thereby irrevocably
constitute and appoint the General Partner as its true and lawful attorney, in
his name, place and stead to execute, acknowledge, deliver, file and publish, if
necessary, (a) the original Certificate of Formation of Limited Partnership,
when, as and if such Certificate is to be executed under these Articles and the
laws of the State of New York, or the laws of any other state in which the Plan
may conduct its business; (b) all amendments, alterations or changes to the
Certificate of Formation of Limited Partnership; (c) all instruments which
effect a change in the Partnership or a change in these Articles; (d) all
certificates or other instruments necessary to qualify or maintain the
Partnership as a limited partnership or a partnership in which the Limited
Partner has limited liability in the states where the Partnership may conduct
business; and (e) all instruments necessary to effect a dissolution, termination
and liquidation of the Partnership. The power of attorney granted by this
Article XI shall be deemed coupled with an interest and shall survive the
disability of the Limited Partner or the assignment of all or any part of the
interest of the Limited Partner until the transferee or Assignee shall execute
and acknowledge these Articles as then constituted, containing the grant of the
written Power of Attorney.
ARTICLE XII - NOTICES
12.01 All notices or other communications required or permitted under
these Articles shall be in writing and shall be deemed to have been given when
delivered in and, or two days after being deposited in the United States mails,
postage prepaid, certified and return receipt requested, or one day after being
deposited with Federal Express or other similar overnight courier service,
delivery fee prepaid and return receipt requested, addressed as follows:
If to the Limited Partner - 500 South Warren Street, Syracuse, New
York, 13202;
If to the General Partner or the Partnership, 2777 East Camelback Road,
Phoenix, Arizona 85016 or to such other address or addresses as any party may
notify the others in accordance with the foregoing provisions.
ARTICLE XIII - MISCELLANEOUS
13.01 Gender and Number: Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
13.02 Binding Effect Upon Partners: The terms and conditions of these
Articles shall be binding upon the Partners upon their execution hereof.
13.03 Governing Law: These Articles and the rights of the General
Partner and Limited Partner shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
13.04 Severability: The provisions of these Articles are severable, and
if any provision hereof is held to be invalid or unenforceable, the remainder of
these Articles shall continue and remain in full force and effect.
13.05 Successors and Assigns: These Articles shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
13.06 Further Assurances: Each of the parties shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
instruments and documents and take such action as may be necessary or advisable
to carry out its obligations under the Plan.
13.06 Entire Agreement: These Articles sets forth the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous agreements,
understandings, inducements or conditions, express or implied, oral or written,
with respect hereto, except as contained herein.
IN WITNESS WHEREOF, the parties hereby sign their name the 16th day of
August, 1995.
SYRACUSE PROJECT INCORPORATED
(GENERAL PARTNER)
By: /S/ Joseph P. Martori
-------------------------------------
Title: Chairman
-------------------------------------
HOTEL SYRACUSE TIMESHARE
CORPORATION
By:____________________________________
Title:
AGREEMENT OF PURCHASE AND SALE OF
REAL PROPERTY, IMPROVEMENTS AND
ASSOCIATED PERSONALITY
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made as of the
12th day of September, 1995, and between Hotel Syracuse, Inc., a New York
corporation ("Seller"), and Orangemen Club Limited Partnership, a New York
limited partnership ("Purchaser"), with reference to the following facts:
A. Seller owns real property and all improvements located thereon
situated in the City of Syracuse, State of New York, and certain personal
property and equipment, all of which real and personal property are being used
in the conduct of a hotel operation (the "Hotel").
B. Seller is desirous to and shall convert the Hotel into a
condominium. Pursuant thereto, the Seller shall reserve all floors and related
facilities of the Hotel except as provided below. Purchaser agrees to further
convert its portion of the condominium into a timeshare project whereby it shall
offer timeshare intervals to the public (the "Project").
C. Seller desires to sell, and buyer desires to buy, all of Seller's
right title and interest in and to said real property and improvements, personal
property, permits plans and specifications of floors 7, 8 and 9 of the Hotel,
upon the terms and conditions set forth below.
NOW, THEREFORE, with reference to the foregoing recitals and in
reliance thereon and in consideration of the purchase price hereinbelow set
forth, and the other terms, covenants and conditions set forth below, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed by Seller and Purchaser as
follows:
1. Definitions.
(a) Real Property and Improvements. "Real Property and
Improvements" shall mean floors 7, 8 and 9 of the Hotel, which is more
particularly described in Exhibit "A" attached hereto and incorporated herein by
this reference, all improvements located thereon as of the Closing Date, all
hereditaments, easements, rights and appurtenances pertaining thereto as of the
Closing and all fixtures and apparatus affixed thereto as of the Closing.
(b) Personal Property. The "Personal property" shall mean all
of the equipment, supplies and other personal property of any nature whatsoever
which is owned by Seller and located upon the Real Property and Improvements as
of the Closing Date, including without limitation, the personal property listed
on Exhibit "B" attached hereto and incorporated herein by this reference. Said
Exhibit "B" shall be updated as of the Closing to delete therefrom any such
personal property which may have been replaced or otherwise disposed of between
the date hereof and the Closing Date and to add thereto any other items of
personal property which may have been acquired by Seller between the date hereof
and the Closing Date for use in the Business.
(c) Permits and Plans. The "Permits and Plans" shall mean all
permits, administrative approvals and applications therefor issued by or filed
with administrative authorities, relating to the Project.
(d) Property. The "Property" shall mean the Real Property and
Improvements, the Personal Property and the Permits and Plans, collectively.
(e) Closing. The "Closing" shall mean the consummation of the
purchase and sale of the Real Property and Improvements, the Personal Property
and the Permits and Plans contemplated by this Agreement, all as more
particularly set forth below.
(f) Closing Date. The "Closing Date" shall mean November 30,
1995, or such other date as Purchaser and Seller may hereafter agree upon in
writing.
(g) Effective Date. The "Effective Date" shall mean August
___, 1995, or such other date as Purchaser and Seller may hereafter agree upon
in writing.
(h) Preliminary Title Report. The "Preliminary Title Report"
shall mean the Preliminary Title Report dated as of August ___ 1995, issued by
_________________________ Title Insurance company, a copy of which is attached
hereto as Exhibit "G" and incorporated herein by this reference.
(i) Grant Deed. The "Grant Deed" shall mean the Grant Deed in
the form and substance of that attached hereto as Exhibit "H" and incorporated
herein by this reference, which shall be delivered by Seller to Purchaser at the
closing to convey to Purchaser title to the Real property and Improvements as
more specifically set forth below.
(i) Bill of Sale. The "Bill of Sale" shall mean the Bill of
Sale and Assignment, in the form and substance of that attached hereto as
Exhibit "I" and incorporated herein by this reference, which shall be delivered
by Seller to Purchaser at the Closing to convey to Purchaser title to the
Personal Property and the Permits and Plans as more specifically set forth
below.
(k) Title Policy. The "Title Policy" shall mean the title
insurance policy described in Section 4(b) below.
2. Purchase and Sale.
Subject to all of the terms and conditions of this Agreement
and for the consideration herein set forth, at the Closing Seller shall convey,
or cause to be conveyed, to Purchaser, and Purchaser shall purchase from Seller,
all of Seller's right, title and interest in and to all of the following:
(a) The Real Property and Improvements, subject to (i) such
easements, agreements and other matters as are shown as exceptions to title in
the Preliminary Title Report and (ii) the Deed of Trust;
(b) The Personal Property, free and clear of all
liens, and
(c) The Permits and Plans, to the extent assignable
under law.
3. Purchase Price and Payment.
The purchase price (the "Purchase Price") to be paid by
Purchaser to Seller for the Property is the sum of On Million, Six Hundred
Thousand Dollars ($1,600,000.00), payable as follows:
Upon the execution hereof Purchaser shall deliver to Seller
the sum of One Million, Six Hundred Thousand Dollars ($1,600,000.00), in the
form of a cashier's check payable to the order of Seller. Subject to section 4
below, the Seller shall be able to use the proceeds from the purchase price
prior to the Closing.
4. Title and Other Matters.
(a) Preliminary Title Report. Within thirty (30) day receipt
of the Preliminary Title Report, Purchaser shall have the right to object to any
exceptions to title by giving written notice to Seller of such objections. Upon
its receipt of any such written objection to any exception to title, Seller
shall remove of record any such exception to title at Seller's sole cost and
expense, and the closing shall be postponed for such length of time, but not in
any case beyond November 30, 1995, which may be required by Seller to do so. In
the event Seller elects not to remove any such additional exception, or fails to
do so for any reason, Seller shall have no liability whatsoever to Purchaser
with respect thereto, and, in the event Purchaser elects not to accept title to
the Real Property and Improvements subject to such exception, Purchaser's sole
remedy shall be to terminate this Agreement. In this event, it is agreed, to the
extent funds were given to the Seller, that Purchaser's liability to the Seller
or to any third party with respect to the repayment of the Purchase Price, shall
be terminated and the Seller shall be responsible and obligated to repay the
Purchase Price to such third party lender. Moreover, in the event the Purchaser
is not able to obtain the necessary permits to proceed with the Project, then
all liability to the Seller hereunder shall terminate, and to the extent it
received such funds, the Seller shall be responsible and obligated to repay the
Purchase Price to such third party lender. Purchaser's failure timely to
disapprove any additional exception to title shall conclusively be deemed his
approval thereof.
(b) Title Policy. For purposes of this Agreement the Title
Policy shall be a CLTA joint protection policy of title insurance issued by
_____________________________ Title Insurance company with liability in the
amount of Purchase Price showing title to the Real Property and Improvements
vested in Purchaser or nominee, subject only to the exceptions to title shown in
the Preliminary title Report and such additional exceptions to title, if any, as
may be approved by Purchaser between the date hereof and the Closing.
(c) Real Property Condition.
(i) The Seller represents and warrants that, to the
best of its knowledge that the Real Property and Improvements:
(1a) are free from any material or structural defect;
(2a) are free from any environmental hazards or
conditions which would be considered or are material violations of any federal,
state or local laws or regulations having jurisdiction thereover;
(3a) are free from asbestos; and,
(4a) are free from any defect, which would impede
owner's ability to market and sell timeshare intervals at the Project.
5. Inspections and Approval by Purchaser.
From and after the date hereof, Purchaser and its
agents, employees and contractors shall be afforded reasonable access to the
Property during normal business hours, upon reasonable notice and accompanied at
all times by a representative of Seller, for the purpose of making such
investigations as Purchaser deems prudent with respect to the Property.
6. Conditions Precedent to Purchaser's Obligation to
Close.
The obligation of Purchaser to consummate the transactions
contemplated hereby is subject to the following conditions, inserted for
Purchaser's sole benefit and which may be waived by Purchaser only in writing at
its sole option:
(a) Representations and Warranties True at Closing. The
representations and warranties of Seller contained in Sections 5 and 12 of this
Agreement shall be true on the date of Closing in all material respects as
though such representations and warranties were made on, and as of, such date.
(b) Compliance with this Agreement. Seller shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing.
(c) Title Policy. ____________________ Title Insurance Company
shall be ready, willing and able to issue the title Policy to Purchaser.
(d) Change in Condition. Subject to the provisions of Sections
14(b) and 14(c) hereof, there shall have occurred no material damage,
destruction or condemnation of the Property between the date hereof and the
Closing.
7. Conditions Precedent to Seller's Obligation to Close. The obligation
of Seller to consummate the transactions contemplated hereby is subject to the
following conditions, inserted for Seller's sole benefit and which may be waived
solely by Seller only in writing at its sole option:
(a) Representations and Warranties True at Closing. The
representations and warranties of Purchaser contained in this Agreement, or in
any certificate or document signed by Purchaser pursuant to the provisions
hereof, shall be true on, and as of, Closing in all material respects as though
such representations and warranties were made on, and as of such date.
(b) Compliance with this Agreement. Purchaser shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it on or prior to Closing.
8. Documents.
The following documents shall be delivered at Closing:
(i) The Grant Deed, duly executed and
acknowledged by Seller;
(ii) Executed Bill of Sale; and,
(iii) Appropriate conveyance forms.
9. Costs and Prorations.
(a) Prorations. All revenues, income, receivables, costs,
expenses and payables of the Property shall be apportioned equitably between the
parties as of the Closing Date on the basis of a thirty (30) day month, and with
respect to the items enumerated below where a particular manner of apportionment
is provided, then apportionment of such item shall be made in such manner. The
obligation to make apportionments shall survive Closing. Without limitation, the
following items shall be so apportioned:
(i) Real Estate and personal property taxes and
any special assessments, taking into consideration discounts for the earliest
permitted payment, based upon the latest previous tax levies. Such items shall
be reapportioned between Seller and Purchaser if current tax rates differ from
the latest previous tax rates as soon as the same are known;
(ii) No insurance policies shall be assigned
hereunder and accordingly there shall be no proration of insurance premiums.
(b) Expenses of Closing. The expenses of Closing
shall be paid in the following manner:
(i) Seller shall pay:
(A) The cost of the Preliminary Title Report.
(B) Documentary transfer taxes imposed upon the
conveyance of title to the Real Property and Improvements;
(C) Gains Tax.
(ii) Purchaser shall pay:
(A) Any sales taxes which may be owing in connection
with the transactions contemplated by this Agreement;
(B) The cost of the Title Policy. All other Closing
fees and expenses, including but not limited to the parties' legal expenses,
accounting and consulting fees, and other incidental expenses in connection with
this transaction shall be borne by the party incurring same.
10. The Closing.
The Closing shall occur at the office of the Seller at 500
South Warren Street, Syracuse, New York.
11. Representations, Warranties and Covenants of Seller.
Seller represents, warrants and covenants to Purchaser
that:
(a) Seller has full legal power and authority to enter into
and perform this Agreement in accordance with its terms, and that this Agreement
constitutes the valid and binding obligation of Seller, enforceable in
accordance with its terms, except as such enforcement may be affected by
bankruptcy, insolvency and other laws affecting the rights of creditors
generally.
(b) Seller has, and will at the Closing transfer to Purchaser,
good and marketable title to the Personal Property, free and clear of any liens,
security interests or other claims.
12. Representations and Warranties of Purchaser.
Purchaser hereby represents, warrants and covenants to Seller
that Purchaser has full legal power and authority to enter into and perform this
Agreement in accordance with its terms, and that this Agreement constitutes the
valid and binding obligation of purchaser, enforceable in accordance with its
terms, except as such enforcement may be affected by bankruptcy, insolvency and
other laws affecting the rights of creditors generally.
13. General Covenants and Agreements of Purchasers and Seller.
(a) Delivery of Possession. Possession of the Property shall
be delivered to Purchaser upon the Closing, subject to the rights of any tenants
in possession.
(b) Damage to or Destruction of Property Prior to Closing;
Risk of Loss. If prior to the Closing the Property shall sustain damage caused
by fire or other casualty which is insured and which would cost ___________
($____________) or more to repair, either Seller or Purchaser may respectively
elect to terminate this Agreement by written notice to the other within fifteen
(15) days after notice of such event, or at the Closing, whichever is earlier.
If neither Seller nor Purchaser so elects to terminate its obligations under
this Agreement, or if the loss or casualty would cost less than ______________
($____________) to repair and Seller has insurance coverage reasonably
satisfactory to Purchaser, the Closing shall take place as provided herein
without abatement of the Purchase Price, and there shall be assigned to
Purchaser at the Closing all of Seller's interest in and to the insurance
proceeds which may be payable to Seller on account of such occurrence and Seller
shall have no obligation of repair or replacement. If an uninsured loss or
casualty occurs in an amount of more than _____________ ($_______________),
either party may elect to terminate its obligations under this Agreement at any
time prior to the Closing without liability or recourse as to the other, failing
which Purchaser shall receive a credit at the Closing against the Purchase Price
in an amount equal to the cost of repairing or restoring the loss or casualty in
question. Seller shall bear the risk and expense of any uninsured loss or
casualty in an amount of ______________ ($_______________) or less.
(c) Condemnation of Property Prior to Closing. In the event
that the Real Property and Improvements or any material part thereof becomes the
subject of a condemnation proceeding prior to the Closing, Seller agrees to
advise Purchaser thereof immediately. In the event of such condemnation,
Purchaser shall have the option to (1) take title in accordance with the terms
and conditions of this Agreement and permit Seller to negotiate with the
condemning authority and receive the condemnation award, reducing the Purchase
Price as a post-Closing adjustment by the amount thereof received by Seller less
its reasonable costs and expenses incurred in negotiating such award; or (2)
take title in accordance with the terms and conditions of this Agreement and
negotiate with the said condemning authority for the condemnation award and
receive the benefits thereof without affecting the Purchase Price; or (3)
terminate this Agreement and declare its obligations thereunder null and void
and of no further effect, in which event all sums theretofore paid to Seller or
to Escrow Agent hereunder shall be returned to Purchaser as set forth herein.
(d) Brokers' Commissions. Each Party represents, warrants and
covenants to the other that it did not engage any broker, agent, finder or other
third party in connection with the purchase and sale contemplated herein and
that it did not incur any liability, contingent or otherwise, for any such
brokerage or finder's fees, agent's commissions or other like payments, in
connection with this Agreement or the transactions contemplated hereby.
(e) Further Assurances Prior to Closing. Seller and Purchaser
shall, prior to the Closing, execute any and all documents and perform any and
all acts reasonably necessary, incidental or appropriate to effectuate the
purchase and sale and the transactions contemplated in this Agreement.
(f) Failure to Close. Except as otherwise provided in this
Agreement, in the event the Closing does not occur for any reason whatsoever,
and after the parties shall have conformed to the requirements set forth in this
Agreement, the parties shall execute and deliver mutual general releases with
respect to any claims in connection with the transactions contemplated by this
Agreement and evidencing the termination of this Agreement.
(g) Nominee. Purchaser shall have the right to name a nominee
to take title to the Property. Purchaser shall notify Seller and Escrow Agent at
least five business days prior to the Closing whether or not Purchaser intends
to so name a nominee, and if so, the exact name and composition of such entity.
The taking of title to the Property by any such nominee shall not relieve
Purchaser of any obligation or liability arising hereunder or any instruction or
agreement delivered pursuant hereto.
(h) Waivers, Amendments and Modifications of Provisions.
Waivers, amendments or modifications of any term or condition of this Agreement
must be in writing signed by the party against whom such waiver is sought to be
enforced. No waiver by any party of any breach hereunder shall be deemed a
waiver of any other or subsequent breach.
(i) Indemnification. Seller shall indemnify and hold harmless
Purchaser and its officers, directors, shareholders, employees, agents and
attorneys from and against any and all loss, cost, damage, claim, liability or
expense, including court costs and all attorneys' fees actually incurred and
including costs of appeal, settlement or defense as well as the obligation to
undertake or assume such defense if so requested, arising out of or in
connection with any injury or damage or claim of injury, including death, or
damage of any kind whatsoever, to persons or property, including employees,
agents and business invitees of Seller (unless and then only to the extent
caused by Purchaser), occasioned in or about the Property prior to the Closing.
Purchaser shall indemnify and hold harmless Seller and its officers, directors,
shareholders, employees, agents and attorneys from and against any and all loss,
damage, claim of damage, liability or expense, including costs and all
attorneys' fees actually incurred, arising out of or in connection with any
injury or damage or claim of injury, including death, or damage of any kind
whatsoever, to persons or property, including employees, agents and business
invitees of Purchaser (unless and then only to the extent caused by Seller),
occasioned in or about the Property on or subsequent to Closing. These covenants
shall survive the Closing subject only to the statute of limitations. In
addition, each party shall indemnify and hold harmless the other from and
against any and all loss, cost, damage, claim, liability or expense, including
court costs and all attorneys fees actually incurred, arising out of or in
connection with any breach by such party of any of its obligations hereunder.
14. Miscellaneous Provisions.
(a) Successors and Assigns. Subject to the provisions hereof,
the terms and provisions hereof shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto.
(b) Meaning of Terms. When necessary herein, all terms used in
the singular shall apply to the plural, and vice versa, and all terms used in
the masculine shall apply to the neuter and feminine genders, and vice versa.
(c) Joint and Several Liability. The obligations of Purchaser
hereunder shall be joint and several.]
(d) Entire Agreement. This Agreement is the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements between the parties hereto with respect thereto.
Neither Seller nor any of its employees, agents, principals or representatives,
actual or alleged, has made any agreement, covenant, warranty or representation
to Purchaser except as expressly set forth in this Agreement. No claim of
waiver, modification, consent or acquiescence with respect to any of the
provisions of this Agreement shall be made against either party, except on the
basis of a written instrument executed by or on behalf of such party.
(e) Governing Law and Venue. This Agreement is to be governed
by and construed in accordance with the laws of the State of New York. Any suit
brought hereon shall be brought in the state or federal courts sitting in
Syracuse, New York, the parties hereto hereby waiving any claim or defense that
such forum is not convenient or proper. Each party hereby agrees that any such
court shall have in persona jurisdiction over it and consents to service of
process in any manner authorized by New York law.
(f) Paragraph Headings. The headings of the several paragraphs
of this Agreement are inserted solely for convenience of reference and are not a
part of and are not intended to govern, limit or aid in the construction of any
term or provision hereof.
(g) Attorneys' Fees. If either Seller or Purchaser shall bring
an action against the other by reason of the breach of any covenant, provision
or condition hereof, or otherwise arising out of this Agreement, the
unsuccessful party shall pay to the prevailing party all attorneys' fees and
costs actually incurred by the prevailing party, in addition to any other relief
to which it may be entitled.
(h) Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered by courier or other means of personal service, or if sent by telex or
telecopy or mailed first class, postage prepaid, by certified mail, return
receipt requested, addressed to:
Purchaser:
ORANGEMEN CLUB LIMITED PARTNERSHIP
2777 E. Camelback Road
Phoenix, AZ 85016
Attention: Joseph Martori
Seller:
HOTEL SYRACUSE, INC.
500 South Warren Street
Syracuse, New York 13202
Attention: Michael A. Bennett
All notices, requests and other communications shall be deemed received on the
date of actual receipt as evidenced by written receipt, acknowledgment or other
evidence of actual receipts.
(i) Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
(j) Further Assurances on or After Closing. Each party hereto
agrees to do all acts and things and to make, execute and deliver such written
instruments as shall be reasonably necessary to carry out the terms and
provisions of this Agreement.
(k) Other Parties. Nothing in this Agreement shall be
construed as giving any person, firm, corporation or other entity, other than
the parties hereto, their successors and permitted assigns, any right, remedy or
claim under or in respect of this Agreement or any provision hereof.
(l) Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed an original; such
counterparts shall together constitute but one agreement.
(m) Time of the Essence. Time is of the essence in the
performance of each of the duties and obligations of the parties hereunder and
the satisfaction of each of the conditions precedent set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first hereinabove written.
ORANGEMEN CLUB
HOTEL SYRACUSE, INC. LIMITED PARTNERSHIP
By: Syracuse Project Incorporated,
General Partner
By: /s/ Illegible
- ------------------------------
Title: President By: /s/ Joseph P. Martori
------------------------------
Title: Chairman
AGREED AND ACCEPTED:
RESORT SERVICE COMPANY, INC.
By: /s/ Illegible
- ------------------------------
Title: VP, Sec. and GC
SERVICE AGREEMENT
This Service Agreement ("Agreement") is made and entered into
on this 12th day of September, 1995 ("Effective Date") between Orangemen Club
Limited Partnership, a New York limited partnership ("Owner") and Hotel
Syracuse, Inc., a New York Corporation ("Servicer").
ARTICLE 1
THE PROJECT
Section 1.01. The Project. The subject matter of this Agreement is the
rendering of services, as set forth below, from Servicer to Owner at a timeshare
project located on floors 7,8, and 9 of the Hotel Syracuse ("Project").
ARTICLE 2
TERM
Section 2.01. Opening Date. Owner shall open the Project to solicit the
public to purchase timeshare intervals as soon as practicable after the offering
plan for the Project has been accepted by and approval granted by the State of
New York ("Opening Date").
Section 2.02. Term. The term shall commence on the Opening
Date and continue until December 31, 2044 ("Term").
Section 2.03. Extension of Term. The Term of this Agreement
may be extended upon mutual consent by both parties hereto.
ARTICLE 3
SERVICER'S OBLIGATIONS
Section 3.01. Servicer's Obligations. Servicer shall, on
behalf of Owner perform the following services:
(a) Provide appropriate rent free space for marketing and sales
activities as well as a Project member's service desk. A description of the
spaces to be provided hereunder is set forth on Exhibit 3.01.(a).
(b) Provide housekeeping and maintenance services for the Project, as
set forth on Exhibit 5.01.
(c) Provide Project members, timeshare tours, and Interval
International ("I.I.") exchange guests with the same day-use privileges,
afforded to in-house Hotel Syracuse guests, on an ongoing basis. For example,
use of the swimming pool and fitness center as well as food and beverage
discounts, consistent with other projects affiliated with Owner's general
partner.
(d) Provide the use of 15 mid-week rooms and 30 weekend rooms on the
Hotel Syracuse's recently renovated 3rd floor and 6th floor for overnight tour
use until the renovation of the Project has been completed. The Owner shall pay
the airline contract rate for the use of these rooms, as it may vary from time
to time. The current rate is set forth in Exhibit 5.01. All guest rooms not used
by the Owner shall be returned to the Hotel Syracuse's available room inventory
with at least twenty four (24) hours notice, without required payment or penalty
to the Owner.
(e) Place the Project renovated rooms into the Hotel Syracuse inventory
and rent them on an equal basis (when compared to all other available guest
rooms in the Hotel Syracuse) at the highest rate acceptable within the market
place.
(f) Subject to availability and scheduling, provide the use of Coach
MacPherson to assist the marketing and sales functions on behalf of the Owner as
follows:
(1) Assistance in the identification and sales of Tier
One prospects.
(2) Conducting podium presentations in selected, season
ticket holder home markets.
(3) To introduce and act as a liaison between the Owner and
the Syracuse University athletic department, chancellors office, office of
development affairs, alumni office, etc.
(4) To autograph direct mail and make personal
appearances
(5) To sit on the Owner's advisory board.
(6) To authorize photographs and memorabilia and to give
testimonials.
(g) Use its influence to assist the Owner with the negotiation of the
I.I. Agreement.
(h) Provide utility services to the Project.
Section 3.02. Personnel. Servicer shall be the sole judge of the
fitness and qualification of all personnel working for the Servicer at the
Project ("Servicer's Project Personnel") and shall have the sole and absolute
right to hire, supervise, order, instruct, discharge and determine the
compensation, benefits and terms of employment of all Servicer's Project
Personnel. As it relates to the performance of services hereunder by the
Servicer, Owner shall have the right to consult with Servicer and comment upon
the fitness and qualification of Servicer's Project Personnel. All Servicer's
Project Personnel shall be employees of Servicer. Servicer shall also have the
right to use employees of Servicer, Servicer's parent and subsidiary and
affiliated companies, not located at the Project to provide services to the
Project ("Off-Site Personnel"). All expenses, costs (including, but not limited
to, salaries, benefits and severance pay), liabilities and claims which are
related to Servicer's Project Personnel and Off-Site Personnel shall be paid by
Servicer.
Section 3.03. Hotel Policies. Servicer shall determine the terms of
guest admittance to the Hotel Syracuse, establish room rates, and use of rooms
for commercial purposes.
Section 3.04. Operating Statement. Servicer shall prepare and furnish
Owner, on or before the twentieth (20th) day of the fiscal month immediately
following the close of a fiscal month, with a detailed operating statement
setting forth the results of the Project's operations as they relate to the
services provided herein. Within ninety (90) days after the end of each fiscal
year, Servicer shall furnish Owner with a detailed operating statement setting
forth the results of the Project's operations for the fiscal year.
Section 3.05. Accounting Standards. Servicer shall maintain the books
and records reflecting the operations of the Project as they relate to the
services provided herein in accordance with the accounting practices of Servicer
in conformity with generally accepted accounting practices consistently applied
and shall adopt and follow the fiscal accounting periods utilized by Servicer in
its normal course of business. The Project level generated accounting records
reflecting detailed day-to-day transactions of the Project's operations, shall
be kept by Servicer at the Project or at Servicer's corporate headquarters, or
at such other location as Servicer shall reasonably determine.
Section 3.06. Permits and Licenses. Servicer shall assist Owner in
obtaining the various permits and licenses required to operate the Project in
accordance with the terms of this Agreement.
Section 3.07. Owner Meetings. The Servicer shall meet with Owner
monthly, or more often if required, to review and discuss the previous and
future month's operating statement, cash flow, budget, capital expenditures,
important personnel matters and the general concerns of Owner and Servicer
("Monthly Meeting"). Except to the extent otherwise mutually agreed upon by
Owner and Servicer, all Monthly Meetings shall be held at the Project.
ARTICLE 4
OWNER'S OBLIGATIONS
Section 4.01. Owner's Obligations. During the Term, Owner
shall have the obligations set forth below:
(a) Limited Partnership Agreement. Owner shall comply with all the
terms and conditions of the Limited Partnership Agreement ("LP Agreement") and
keep the LP Agreement in full force and effect from the Effective Date through
the remainder of the Term. Nothing in this Agreement shall be interpreted in a
manner which would relieve Owner of any of its obligations under the LP
Agreement;
(b) Licenses and Permits. Owner shall obtain and maintain, with
Servicer's assistance and cooperation, all governmental permissions, licenses
and permits necessary to enable Servicer to operate the Project in accordance
with the terms of this Agreement and the LP Agreement;
(c) Insurance. Owner shall procure and maintain throughout the Term
appropriate insurance coverage on the Project;
(d) Operating Funds. Owner shall provide all funds necessary to operate
the Project in accordance with the terms of this Agreement and the LP Agreement;
(e) Capital Funds. Owner shall expend such amounts for renovation
programs, furnishings, equipment and ordinary Project capital replacement items
as are required from time to time to (a) maintain the Project in good order and
repair; (b) comply with the standards referred to in the LP Agreement; and (c)
comply with governmental regulations and orders;
(f) Payments to Servicer. Owner shall promptly pay to Servicer all
amounts due Servicer under this Agreement;
(g) Owner's Representative. Owner shall appoint a representative to
represent Owner in all matters relating to this Agreement and/or the Project
("Owner's Representative"). Servicer shall have the right to deal solely with
the Owner's Representative on all such matters. Servicer may rely upon
statements and representations of Owner's Representative as being from and
binding upon Owner. Owner may change its Owner's Representative from time to
time by providing written notice to Servicer. Owner shall cause the Owner's
Representative to attend all Monthly Meetings; and,
(h) Quiet and Peaceable Service. Owner shall ensure that Servicer is
able to peaceably and quietly service the Project in accordance with the terms
of this Agreement, free from molestation, eviction and disturbance by Owner or
by any other person or persons claiming by, through or under Owner. Owner shall
undertake and prosecute all reasonable and appropriate actions, judicial or
otherwise, required to assure such quiet and peaceable operations by Servicer.
ARTICLE 5
SERVICE FEE
Section 5.01. Service Fee. On the fifteenth (15th) day of each fiscal
month after the Opening Date, Servicer shall be entitled to receive and shall be
paid a fee for services provided herein in the (i) amount set forth on Schedule
5.01. and (ii) amount equal to four percent (4%) of the gross revenue generated
from the converted guest room rentals (floors 7,8 and 9) at the Project. The
parties agree that the fee paid to Servicer pursuant to subsection (i) shall be
adjusted annually to correspond with relative increases in the consumer price
index.
ARTICLE 6
CLAIMS AND LIABILITY
Section 6.01. Claims and Liability. Owner and Servicer mutually agree
for the benefit of each other to look only to the appropriate insurance
coverages in effect pursuant to this Agreement in the event any demand, claim,
action, damage, loss, liability or expense occurs as a result of injury to
person or damage to property regardless whether any such demand, claim, action,
damage, loss, liability or expense is caused or contributed to, by or results
from the negligence of Owner or Servicer or their subsidiaries, affiliates,
employees, directors, officers, agents or independent contractors and regardless
whether the injury to person or damage to property occurs in and about the
Project or elsewhere as a result of the performance of this Agreement.
Section 6.02. Survival. The provisions of this Article 6 shall survive
any cancellation, termination or expiration of this Agreement and shall remain
in full force and effect until such time as the applicable statute of limitation
shall cut off all demands, claims, actions, damages, losses, liabilities or
expenses which are the subject of the provisions of this Article.
ARTICLE 7
CLOSURE, EMERGENCIES AND DELAYS
Section 7.01. Events of Force Majeure. If at any time during the Term
of this Agreement it becomes necessary, in the Owner's or Servicer's opinion, to
cease operation of the Project or the Hotel Syracuse respectively in order to
protect the health, safety and welfare of the members, guests and/or employees
of the Project or the Hotel Syracuse for reasons beyond the reasonable control
of the Owner or Servicer, such as, but not limited to, acts of war,
insurrection, civil strife and commotion, labor unrest, governmental regulations
and orders, shortage or lack of adequate supplies or lack of skilled or
unskilled employees, contagious illness, catastrophic events or acts of God
("Force Majeure"), then in such event or similar events Owner or Servicer may
close and cease operation of all or any part of the Project or the Hotel
Syracuse, reopening and commencing operation when Owner or Servicer deems that
such may be done without jeopardy to the Project or the Hotel Syracuse, the
members, guests and employees.
Servicer and Owner agree, except as otherwise provided herein, that the
time within which a party is required to perform an obligation under this
Agreement shall be extended for a period of time equivalent to the period of
delay caused by an event of Force Majeure.
ARTICLE 8
CONDEMNATION AND CASUALTY
Section 8.01. Condemnation. If the Project is taken in any eminent
domain, expropriation, condemnation, compulsory acquisition or similar
proceeding by a competent authority, this Agreement shall automatically
terminate as of the date of taking or condemnation. Any compensation for the
taking or condemnation of the physical facility comprising the Project shall be
paid to Owner. Servicer, however, with the full cooperation of Owner, shall have
the right to file a claim with the appropriate authorities for the loss of
service fee income for the remainder of the Term and any extension thereof
because of the condemnation or taking. If only a portion of the Project is so
taken and the taking does not make it unreasonable or imprudent, in Servicer's
and Owner's opinion, to operate the remainder as a Project of the type
immediately preceding such taking, this Agreement shall not terminate. Any
compensation shall be used, however, in whole or in part, to render the Project
a complete and satisfactory architectural unit of the same type and class as it
was immediately preceding such taking or condemnation.
Section 8.02. Casualty. In the event of a fire or other casualty, Owner
shall comply with the terms of the LP Agreement and this Agreement.
ARTICLE 9
TERMINATION RIGHTS
Section 9.01. Bankruptcy and Dissolution. If either party is
voluntarily or involuntarily dissolved or declared bankrupt, or insolvent, or if
a company enters into liquidation whether compulsory or voluntary otherwise than
for the purpose of amalgamation or reconstruction, or compounds with its
creditors, or has a receiver appointed over all or any part of its assets, or
passes title in lieu of foreclosure, the other party may terminate this
Agreement immediately upon serving notice to the other party, without liability
on the part of the terminating party.
Section 9.02. Breach. If either party, during the Term of this
Agreement, commits a breach of this Agreement by failing to keep, perform or
observe any covenant, obligation or agreement required to be kept, performed or
observed by such party under the terms of this Agreement, and the defaulting
party fails to remedy or correct such breach within thirty (30) days after
receipt of notice of such breach from the non-defaulting party, then the
non-defaulting party may terminate this Agreement, without prejudice to its
right to seek damages or other remedies available to it at law or in equity, at
the expiration of such thirty (30) day period; provided, however, that if the
breach is non-monetary and is of a nature that it cannot reasonably be remedied
or corrected within such thirty (30) day period, then such thirty (30) day
period shall be deemed to be extended for such additional period as may
reasonably be required to remedy or correct the same if the party committing the
breach promptly commences to remedy the breach upon receipt of the other party's
notice and continues therewith with due diligence.
Section 9.03. Employment Solicitation Restriction Upon Termination. The
parties agree that neither they nor their affiliates, subsidiaries, or their
successors shall solicit the employment of any employee of the other at any time
during the term of this Agreement without the other's prior written approval.
ARTICLE 10
GENERAL PROVISIONS
Section 10.01. Authorization. Owner and Servicer represent and warrant
to each other that their respective corporations have full power and authority
to execute this Agreement and to be bound by and perform the terms hereof. On
request, each party shall furnish the other evidence of such authority.
Section 10.02. Relationship. Servicer and Owner shall not be construed
as joint venturers or partners of each other by reason of this Agreement and
neither shall have the power to bind or obligate the other except as set forth
in this Agreement.
Section 10.03. Further Actions. Owner and Servicer agree to execute all
contracts, agreements and documents and to take all actions necessary to comply
with the provisions of this Agreement and the intent hereof.
Section 10.04. Successors and Assigns. Owner's consent shall not be
required for Servicer to assign any of its rights, interests or obligations as
Servicer hereunder to any parent, subsidiary or affiliate of Servicer provided
that any such assignee agrees to be bound by the terms and conditions of this
Agreement. The acquisition of Servicer or its parent company by a third party
shall not constitute an assignment of this Agreement by Servicer and this
Agreement shall remain in full force and effect between Owner and Servicer.
Except as herein provided, Servicer shall not assign any of its obligations
hereunder without the prior written consent of Owner, which shall not be
unreasonably withheld or delayed. Owner shall be deemed to have consented to
such an assignment of this Agreement if Owner has not notified Servicer in
writing to the contrary within fifteen (15) days after Owner has received
Servicer's request for Owner's consent to an assignment. Servicer shall have the
right to pledge or assign its right to receive the service fees hereunder
without the prior written consent of Owner. In the event of any such pledge or
assignment, Owner shall have no right of set off, counterclaim or defense of
payment against assignee. Owner's sole remedy for breach of Servicer's
obligations under this Agreement shall be suit for damages or specific
performance against Servicer.
Owner shall have the right to assign this Agreement to the person or
entity which has obtained title to the Project. Except as hereinabove provided,
Owner shall not have the right to assign this Agreement.
Section 10.05. Notices. All notices or other communications provided
for in this Agreement shall be in writing and shall be either hand delivered,
delivered by certified mail, postage prepaid, return receipt requested,
delivered by an overnight delivery service, or delivered by facsimile machine
(with an executed original sent the same day by an overnight delivery service),
addressed to the respective party. Notices shall be deemed delivered on the date
that is four (4) calendar days after the notice is deposited in the U.S. mail
(not counting the mailing date) if sent by certified mail, or, if hand
delivered, on the date the hand delivery is made, or if delivered by facsimile
machine, on the date the transmission is made. If given by an overnight delivery
service, the notice shall be deemed delivered on the next business day following
the date that the notice is deposited with the overnight delivery service.
Section 10.06. Waivers. No failure or delay by Servicer or Owner to
insist upon the strict performance of any covenant, agreement, term or condition
of this Agreement, or to exercise any right or remedy consequent upon the breach
thereof, shall constitute a waiver of any such breach or any subsequent breach
of such covenant, agreement, term or condition. No covenant, agreement, term, or
condition of this Agreement and no breach thereof shall be waived, altered or
modified except by written instrument. No waiver of any breach shall affect or
alter this Agreement, but each and every covenant, agreement, term and condition
of this Agreement shall continue in full force and effect with respect to any
other then existing or subsequent breach thereof.
Section 10.07. Changes. Any change to or modification of this Agreement
including, without limitation, any change in the application of this Agreement
to the Project, must be evidenced by a written document signed by both parties
hereto.
Section 10.08. Captions. The captions for each Article and Section are
intended for convenience only.
Section 10.09. Severability. If any of the terms and provisions hereof
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any of the other terms or provisions hereof. If, however, any
material part of a party's rights under this Agreement shall be declared invalid
or unenforceable, (specifically including Servicer's right to receive its
service fees) the party whose rights have been declared invalid or unenforceable
shall have the option to terminate this Agreement upon thirty (30) days written
notice to the other party, without liability on the part of the terminating
party.
Section 10.10. Interest. Any amount payable to Servicer or Owner by the
other which has not been paid when due shall accrue interest at two percentage
points (2%) over the published base rate of interest charged by Citibank, N.A.,
New York, New York, to borrowers on ninety (90) day unsecured commercial loans,
as the same may be changed from time to time.
Section 10.11. Third Party Beneficiary. This Agreement is exclusively
for the benefit of the parties hereto and it may not be enforced by any party
other than the parties to this Agreement and shall not give rise to liability to
any third party other than the authorized successors and assigns of the parties
hereto.
Section 10.12. Brokerage. Servicer and Owner represent and warrant to
each other that neither has sought the services of a broker, finder or agent in
this transaction, and neither has employed, nor authorized, any other person to
act in such capacity. Servicer and Owner each hereby agrees to indemnify and
hold the other harmless from and against any and all claims, loss, liability,
damage or expenses (including reasonable attorneys' fees) suffered or incurred
by the other party as a result of a claim brought by a person or entity engaged
or claiming to be engaged as a finder, broker or agent by the indemnifying
party.
Section 10.13. Survival of Covenants. Any covenant, term or provision
of this Agreement which, in order to be effective, must survive the termination
of this Agreement, shall survive any such termination.
Section 10.14. Estoppel Certificate. Servicer and Owner agree to
furnish to the other party, from time to time upon request, an estoppel
certificate in such reasonable form as the requesting party may request stating
whether there have been any defaults under this Agreement known to the party
furnishing the estoppel certificate and such other information relating to the
Project as may be reasonably requested.
Section 10.15. Other Agreements. Except to the extent as may now or
hereafter be specifically provided, nothing contained in this Agreement shall be
deemed to modify any other agreement between Owner and Servicer with respect to
the Project or any other property.
Section 10.16. Periods of Time. Whenever any determination is to be
made or action is to be taken on a date specified in this Agreement, if such
date shall fall on a Saturday, Sunday or legal holiday under the laws of the
state of New York, then in such event said date shall be extended to the next
day which is not a Saturday, Sunday or legal holiday.
Section 10.17. Preparation of Agreement. This Agreement shall not be
construed more strongly against either party regardless of who is responsible
for its preparation.
Section 10.18. Exhibits. All exhibits attached hereto are incorporated
herein by reference and made a part hereof as if fully rewritten or reproduced
herein.
Section 10.19. Jurisdiction. The parties to this Agreement agree that
in the event any legal action is commenced hereunder, personal jurisdiction and
venue shall be in the Supreme Court for the State of New York for the County of
Onondaga.
Section 10.20. Attorneys' Fees and other Costs. The parties to this
Agreement shall bear their own attorneys' fees in relation to negotiating and
drafting this Agreement. Should Owner or Servicer engage in litigation to
enforce their respective rights pursuant to this Agreement, the prevailing party
shall have the right to indemnity by the non-prevailing party for an amount
equal to the prevailing party's reasonable attorneys' fees, court costs and
expenses arising therefrom.
IN WITNESS WHEREOF, the parties set their hands the date above first
written.
ORANGEMEN CLUB LIMITED
PARTNERSHIP HOTEL SYRACUSE, INC.
By its General Partner
SYRACUSE PROJECT INCORPORATED
By: /S/ JOSEPH P. MARTORI By: /S/ ILLEGIBLE
----------------------------- ------------------------
Title: Chairman Title: President
EXHIBIT 3.01(a)
OFFICE SPACE
Pursuant to Section 3.01(a), the Servicer shall provide Owner with the following
described space at the Hotel Syracuse:
1. Sales Office
2. Service Desk
3. Telemarketing Office
4. Such other space as may be mutually agreed upon for signage and the like. The
parties agree that any signage placed in the areas set forth herein or in the
Hotel is subject to the express permission of the Hotel Syracuse, Inc., which
permission shall not be unreasonably withheld.
EXHIBIT 5.01.
FEES & SERVICES
1. Administrative Fee. The fee referred to in Section 5.01.(ii)
is in an amount equal to four percent (4%) of the gross
revenue generated from the converted guest room rentals
(floors 7, 8 and 9) at the Project. The services included
are: the administration of the reservation function, the
check-in and check-out at the front desk, supplying van
drivers and bell staff. In addition, the fee shall include
security, use of pool and pool attendants, and use of all
guest facilities customarily enjoyed by Hotel Syracuse guests.
2. Guest Room Incidentals. All guest room incidentals shall be
charged to the guest room on a consumption basis. Each room
must set up credit for these charges on par with other Hotel
Syracuse guests. These charges must be settled at the time of
check-out. Incidentals include pay TV, movies, telephone
usage, room service, food and beverage charges, laundry and
dry cleaning, and all other charges which are customarily
billed to Hotel Syracuse guests.
3. Housekeeping. The first year's cost for housekeeping shall be
$18.50/day/room. The services provided for housekeeping are:
room cleaning, linen and terry laundering, garbage disposal,
and guest amenities.
4. Maintenance. Requested maintenance shall be billed at the
rate of $15.00/hour for labor plus the actual costs for
materials.
5. Utilities. Owner shall pay for utilities in an amount based
on the square footage of the Project and the sales area at the
prevailing rate. The payment for utilities shall not commence
until the Project and sales areas are operational.
6. `Cost to Book'. If a reservation is booked through Radisson, a six
percent (6%) reservation fee shall be charged. If a reservation is
booked through a travel agent, a ten percent (10%) fee shall be
charged. If a reservation is booked through both Radisson and a travel
agent, a sixteen percent (16%) fee shall be charged. Direct call-ins
shall have no fee.
7. Parking. The current cost is three dollars ($3.00)/day/room.
8. Airline Rate. The current rate is $32.00.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANTS THIRD QUARTER 1995 CONSOLIDATED BALANCE SHEET AND CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 2,030,209
<SECURITIES> 0
<RECEIVABLES> 11,211,351
<ALLOWANCES> 2,818,889
<INVENTORY> 20,760,394
<CURRENT-ASSETS> 31,183,065
<PP&E> 1,928,396
<DEPRECIATION> 567,923
<TOTAL-ASSETS> 36,993,861
<CURRENT-LIABILITIES> 4,528,961
<BONDS> 13,060,457
<COMMON> 9,284,469
0
1,523,476
<OTHER-SE> 30,160
<TOTAL-LIABILITY-AND-EQUITY> 36,993,861
<SALES> 16,985,327
<TOTAL-REVENUES> 23,343,875
<CGS> 6,382,655
<TOTAL-COSTS> 17,771,672
<OTHER-EXPENSES> 2,281,762
<LOSS-PROVISION> 950,917
<INTEREST-EXPENSE> 836,850
<INCOME-PRETAX> 1,949,185
<INCOME-TAX> 63,399
<INCOME-CONTINUING> 1,540,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,540,100
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
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