Exhibit 10.2
When recorded, return to:
Andrew Abraham, Esq.
Burch & Cracchiolo, P.A.
702 East Osborn Road, #200
Phoenix, Arizona 85014
FIRST MODIFICATION AGREEMENT
DATE: September _________, 2001
PARTIES: The Steele Foundation, Inc., an Arizona non-profit corporation
702 East Osborn Road, #200
Phoenix, Arizona 85014
("Lender")
ILX Resorts Incorporated
2111 E. Highland Ave., Suite #210
Phoenix, AZ 85016
("Borrower")
This Modification Agreement (the "Agreement") made effective the date and
year set forth above, is entered into by and between Lender and Borrower, as
identified above.
RECITALS:
A. On or about February 23, 2000, Borrower executed and delivered to Lender a
Promissory Note in the original principal amount of Six Hundred Thousand and
NO/100 Dollars ($ 600,000.00) (the "Note"). The Note is secured by, among other
things: (i) a Pledge Agreement dated February 23, 2000 (the "Pledge"), which
Pledge grants a security interest in Wedbush Morgan Securities, Account No.
4398-3106 (the "Stock") and by the collateral assignment of
Borrower's/Consenting Parties' right in each of the Resort Funding Inc.
contracts (`Contracts"); and (ii) other security documents executed by Borrower
and delivered to Lender in connection with the loan (the "Loan") evidenced by
the Note (for purposes of this Agreement, the Note, Pledge and other security
documents described herein may collectively be referred to as the "Related
Agreements").
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First Modification Agreement
B. Borrower has requested an additional advance in the amount of Five Hundred
Thousand Dollars ($500,000.00) and an extension of the Maturity Date of the
Loan, and Lender has agreed to advance the additional funds and to extend the
Maturity Date of the Loan, provided the other terms hereof are complied with.
C. It is the desire of the parties to permit a modification of the Note and
Pledge upon the terms and conditions hereinafter contained.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
promises contained herein, and for the purposes set forth in the foregoing
recitals which are incorporated herein by reference, the parties covenant and
agree as follows:
1. REPRESENTATIONS AND WARRANTIES. By signing this Agreement:
a. Borrower represents and warrants to Lender that: (i) Borrower is
authorized and empowered to enter into this Agreement; and (ii) Borrower
has had a full and complete opportunity to review and examine this
Agreement.
b. Borrower acknowledges that, as of the date of this Agreement, the
outstanding principal balance under the Loan is $ 261,667.79, that interest
and principal have been paid through September 1, 2001, and that the
present Maturity Date of the Loan is September 1, 2002.
c. Borrower confirms that no Event of Default, as defined under the
Related Agreements, has occurred under the Loan and no event has occurred
or condition exists that, with notice and/or the passage of time, would
constitute an Event of Default under the Loan.
d. Borrower ratifies, reaffirms and acknowledges that the Related
Agreements represent its valid, enforceable and collectible obligations,
and that there are no existing claims, defenses (personal or otherwise) or
rights of set-off with respect to the Note or the other Related Agreements.
e. Borrower acknowledges that this Agreement does not act as a release
or relinquishment of, or otherwise affect, the lien, security interest and
rights created by or arising under the Pledge and the other Related
Agreements, or the priority thereof, except as expressly described herein.
Such lien, security interest and rights are hereby ratified, confirmed,
renewed and extended in all respects.
f. Borrower acknowledges and agrees that, without affecting its
liability, obligations and agreements under the Note, the Pledge and the
other Related Agreements, as modified hereby, the Lender, at its option, at
any time and from time to time, may extend or further modify the terms and
amounts of payments under the Note, accept a renewal note or notes
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First Modification Agreement
therefor, modify the provisions of the Pledge and the other Related
Agreements, release any of the Collateral, or take or release other or
additional security for the Note, without consent from or notice to the
Borrower except to the extent that its signature may be required as a
matter of law on the documents evidencing such of the foregoing actions as
may be taken.
2. MODIFICATION OF PROMISSORY NOTE. Effective as of the date hereof the
terms of the Note are modified as follows:
a. The principal amount of the Note as set forth on the face thereof
is hereby increased to $ 761,667.79, which represents an increase of
$500,000 over the current outstanding principal balance of $ 261,667.79.
b. Paragraph 1 of the Note shall be deleted in its entirety and the
following substituted in lieu thereof:
" 1. PROMISE TO PAY PRINCIPAL AND INTEREST. Borrower promises to and
shall pay Lender in monthly installments of principal and interest in
an amount of $23,248.87, beginning on October 1, 2001, and continuing
on the first day of each month through December 1, 2004 ("maturity" or
the "Maturity Date"). Pursuant to the terms of the Loan Commitment
Letter dated February 23, 2000 (the "Commitment"), interest is charged
at the rate of Twelve Percent (12%) per annum (the "Contract Rate").
On or before December 1, 2004, Borrower shall have repaid all
principal due hereunder, totaling an amount of $ 761,667.79, plus all
interest due thereon. In the event the Stock or Contracts are
liquidated or otherwise transferred or encumbered as prohibited under
the Commitment and Pledge Agreement, Borrower promises to and shall
immediately pay Lender the principal sum and all accrued interest then
outstanding. In the event Borrower breaches any term or condition of
the Loan Commitment Letter dated February 23, 2000, between Borrower
and Lender, Lender may, at the Lender's option, declare all sums due
hereunder immediately due and payable. The entire unpaid balance of
the principal and interest, if not sooner paid, shall be and become
due and payable at maturity. "
All references to the Related Agreements are hereby amended to refer to the
Related Agreements as amended by this Agreement. All other terms, conditions and
provisions of the Related Agreements are continued in full force and effect and
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First Modification Agreement
shall remain unaffected and unchanged except as specifically amended by this
Agreement. The Related Agreements will continue to secure the obligations of the
Borrower under the Loan as amended hereby.
3. CONDITIONS OF LOAN MODIFICATION. This Agreement shall not be binding
upon or enforceable against Lender, until:
a. All parties identified herein execute this Agreement.
b. Borrower shall pay legal expenses of Lender incurred in the
negotiation and documentation of this Agreement in an amount of $2,500.00;
and,
c. Lender shall have received and approved such other documentation as
may be reasonably requested by Lender or its legal counsel, which shall be
in all respects satisfactory to Lender and its counsel, in their sole and
absolute discretion.
4. MISCELLANEOUS. Nothing contained herein shall in any way impair the
Note, the Pledge, any of the other Related Agreements or any other document or
instrument which evidences or secures the same, nor alter, waive, annul, vary,
or affect any provision, condition or covenant therein contained, except as
expressly provided herein, nor affect nor impair any rights, powers or remedies
under the Note, the Pledge, any of the other Related Agreements or any other
document now or hereafter held by Lender, it being the intent of Borrower and
Lender that all of the terms and provisions of the Note, the Pledge and the
other Related Agreements shall continue in full force and effect except as
expressly modified by this Agreement or any other instrument executed by and
between the parties hereto. In the event of a conflict between the terms of the
Note, the Pledge, and/or the other Related Agreements and the terms of this
Agreement, the terms of this Agreement shall prevail. This Agreement shall be
governed by the laws of the State of Arizona. Paragraph headings are inserted
herein for convenience only and shall not limit the content of any paragraph.
This Agreement shall be construed in accordance with its plain meaning and shall
not be strictly construed against either of the parties hereto. The provisions
hereof shall be binding upon and inure to the benefit of Borrower, Lender and
their heirs, devisees, successors in interest and assigns. This Agreement may be
executed in counterparts and each such counterpart when taken together with all
other counterparts shall be deemed one and the same original document.
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of the day and year first above written.
LENDER:
THE STEELE FOUNDATION, INC., AN ARIZONA
NON-PROFIT CORPORATION
By:
-------------------------------------
DANIEL CRACCHIOLO, PRESIDENT
BORROWER:
ILX RESORTS INCORPORATED, AN ARIZONA
CORPORATION
By:
-------------------------------------
Its:
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The following, as Consenting Partners hereby acknowledge and consent to the
terms set forth above:
LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP, AN ARIZONA LIMITED
PARTNERSHIP
By: ILE SEDONA INCORPORATED, AN ARIZONA
CORPORATION, ITS GENERAL PARTNER
By:
-------------------------------------
Its:
------------------------------------
PREMIERE DEVELOPMENT INCORPORATED,
AN ARIZONA CORPORATION
By:
-------------------------------------
Its:
------------------------------------
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VCA SOUTHBEND INCORPORATED, AN ARIZONA
CORPORATION
By:
-------------------------------------
Its:
------------------------------------
VCA TUCSON INCORPORATED, AN ARIZONA
CORPORATION
By:
-------------------------------------
Its:
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STEELE/ILX
First Modification Agreement
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