AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Amendment to Purchase and Sale Agreement ("Agreement") is made and
entered into as of the 3rd day of January, 1995 ("Effective Date"), by and
between Edward John Martori, Martori Enterprises Incorporated, Wedbush Morgan
Securities (IRA), and Joseph P. Martori (as Trustee) (collectively, "Assignor"),
and ILX Incorporated, an Arizona corporation ("Assignee").
WHEREAS Assignor and Assignee previously enterred into that certain
Purchase and Sale Agreement effective as of the 1st day of October, 1994 (the
"Original Agreement");
WHEREAS the parties desire to make certain modifications to the
Original Agreement regarding payment of the purchase price to Wedbush Morgan
Securities (IRA) and Joseph P. Martori (as Trustee);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree,
effective as of the Effective Date, as follows:
1. Continuation of Original Agreement. Except as specifically modified
herein, the Original Agreement shall remain in full force and effect.
Capitalized terms used herein and otherwise not defined shall have the meanings
ascribed to them in the Original Agreement.
2. Partial Satisfaction of Original Agreement.
A. Assignee warrants and represents that the purchase price to
be paid in cash under the Original Agreement to Jerome M. White and Guadalupe
Iniguez (as Trustee) on January 2, 1995 was paid when due, and except for the
indemnification provision in Section 5 of the Original Agreement, all of
Assignee's financial obligations to Jerome M. White and Guadalupe Iniguez (as
Trustee) under the Original Agreement have been satisfied.
B. Assignee, Wedbush Morgan Securities (IRA) and Joseph P.
Martori (as Trustee) acknowledge that Assignee's obligation to pay each of
Wedbush Morgan Securities (IRA) and Joseph P. Martori (as Trustee) cash in the
amount of $60,875 on January 2, 1995 was partially satisfied on January 3, 1995
by the payment to each of them of $3,000 (plus interest from October 1, 1994
through December 31, 1994).
3. Modification in Manner of Payment of Purchase Price. The remaining
balance of the purchase price to be paid to Wedbush Morgan Securities (IRA) and
Joseph P. Martori (as Trustee) in the amount of $57,875 each shall be deferred
and evidenced by installment promissory notes in the forms attached hereto as
Exhibit "A" and Exhibit "B," respectively. Each installment promissory note
shall be secured by, among other things, the Partnership Interest, all in
accordance with the Security Agreements attached hereto as Exhibit "C."
4. Modification as to Payment of Partnership Distributions. The parties
hereby agree that, with respect to any distributions of cash or property
otherwise to be made by the Partnership to Assignee as owner of the Partnership
Interest, Assignee shall instead cause such distributions to be made pro rata in
satisfaction of the installment promissory notes payable to Edward John Martori,
Martori Enterprises Incorporated, Wedbush Morgan Securities (IRA) and Joseph P.
Martori (as Trustee), until paid in full.
5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which may be executed by one or more of the parties
hereto, which, when taken together, shall have the same force and effect as
though all the parties executing such counterparts had executed the same
instrument.
ASSIGNEE: ASSIGNOR:
ILX Incorporated Edward Martori
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Edward John Martori
By: Joseph P. Martori
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Its: Chairman
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Martori Enterprises Incorporated
By: Joseph P. Martori
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Its: Chairman
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By Joseph P. Martori, Self Directed
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Wedbush Morgan Securities (IRA)
Joseph P. Martori, Trustee
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Joseph P. Martori, Trustee
EXHIBIT "A"
Installment Promissory Note
Payable to
Wedbush Morgan Securities (IRA)
INSTALLMENT PROMISSORY NOTE
$57,875.00 January 1, 1995
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned, ILX INCORPORATED, an Arizona
corporation (the "undersigned"), promises to pay to the order of Wedbush Morgan
Securities (IRA) ("Payee"), at Phoenix, Arizona, or at such other place as the
holder hereof may from time to time designate, the principal sum of Fifty Seven
Thousand Eight Hundred Seventy Five Dollars ($57,875.00), together with interest
thereon as computed below, as follows:
Installments of principal and interest in the amount of $3,000 shall be
payable monthly on the first day of each month commencing February 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 December 31, 1996.
Interest shall be charged on the unpaid principal balance of this Note
from January 1, 1995 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 twelve
percent (12%).
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 agrees: (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 Security Agreement of even date herewith.
This Note is executed to be effective as of the date set forth above.
ILX INCORPORATED, an Arizona corporation
ATTEST: By:
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Its:
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By:
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Its:
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EXHIBIT "B"
Installment Promissory Note
Payable to
Joseph P. Martori (as Trustee)
INSTALLMENT PROMISSORY NOTE
$57,875.00 January 1, 1995
Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned, ILX INCORPORATED, an Arizona
corporation (the "undersigned"), promises to pay to the order of Joseph P.
Martori (as Trustee) ("Payee"), at Phoenix, Arizona, or at such other place as
the holder hereof may from time to time designate, the principal sum of Fifty
Seven Thousand Eight Hundred Seventy Five Dollars ($57,875.00), together with
interest thereon as computed below, as follows:
Installments of principal and interest in the amount of $3,000 shall be
payable monthly on the first day of each month commencing February 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 December 31, 1996.
Interest shall be charged on the unpaid principal balance of this Note
from January 1, 1995 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 twelve
percent (12%).
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 agrees: (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 Security Agreement of even date herewith.
This Note is executed to be effective as of the date set forth above.
ILX INCORPORATED, an Arizona corporation
ATTEST: By:
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Its:
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By:
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Its:
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EXHIBIT "C"
Security Agreements
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is dated as of January 1, 1995,
from ILX INCORPORATED, an Arizona corporation (the "Debtor") with a mailing
address of 2777 E. Camelback Road, Phoenix, Arizona 85016, to Wedbush Morgan
Securities (IRA) ("Secured Party"), with a mailing address of 2777 East
Camelback Road, Phoenix, Arizona 85016.
1. SECURITY INTEREST AND ASSIGNMENT
1.1 For valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtor hereby grants Secured Party a security interest in
and does hereby assign, convey, transfer, pledge and set over to Secured Party
all of Debtor's rights, title, interest, powers and privileges (including,
without limitation, the right to receive any monies now or hereafter due and
payable to Debtor) in and to the following property (the "Collateral"):
(a) All Debtor's interest in that Certificate of Limited
Partnership and Agreement of Los Abrigados Partners Limited Partnership, dated
June 24, 1991, and filed with the Secretary of State for the State of Arizona,
on June 27, 1991, at Filing No. 20010032 forming a limited partnership (the
"Partnership"), and any amendments or modifications thereto (the "Partnership
Agreement");
(b) All Debtor's rights and interest as a Class A Limited Partner
in the Partnership, and any successor thereto by operation of law or otherwise;
(c) All Debtor's interest, if any, in any partnership property of
the Partnership;
(d) All Debtor's share of any profits of the Partnership, now
existing or hereafter arising, and Debtor's right to any surplus and any other
money due or to become due to Debtor in respect of the Partnership;
(e) All rights to receive any cash proceeds, cash available for
distribution, property, units of ownership, or other distributions of any kind
or in any form which may be due and payable to Debtor, from time to time,
pursuant to the Partnership Agreement described above or applicable law;
(f) Debtor's Class A Limited Partner's interest, ownership
interests and ownership position in the Partnership, now or hereafter acquired;
and
(g) Any and all proceeds, monies, claims for monies due and to
become due, increases in ownership share, and all other payments or
distributions of whatever nature now existing or hereafter arising from the
foregoing Partnership, Partnership Agreement and collateral or from any
extensions, amendments or modifications thereof.
1.2 The grant of these security interests and assignments is made for the
purpose of securing:
(a) Payment of a Promissory Note of even date herewith in the face
amount of Fifty Seven Thousand Eight Hundred Seventy Five Dollars ($57,875) made
by Debtor to the order of Secured Party (said note and any and all renewals,
amendments, modifications, increases and extensions thereof being hereinafter
collectively called the "Note");
(b) The strict performance and observance of all agreements,
warranties, covenants and conditions contained in any other security agreement
and contained in any other document or instrument entered into by and between
Debtor and Secured Party (collectively, the "Documents")';
(c) The repayment of all monies expended by Secured Party under
the provisions hereof, with interest thereon at the default rate set forth in
the Note.
1.3 All matters referred to in subsections 1.2(a) through 1.2(c) above are
sometimes herein referred to as the "Obligations".
1.4 This Agreement is for security purposes only. Accordingly, Secured
Party shall have no right hereunder to enforce its rights until an Event of
Default (as defined below) has occurred hereunder or under any other Loan
Document. Notwithstanding the foregoing, Debtor hereby agrees that any
distributions of cash or property otherwise to be made by the Partnership to
Debtor shall instead be made prorata in satisfaction of the Note and the other
installment Promissory Notes described in the Purchase and Sale Agreement to
which Secured Party is a party dated October 1, 1994 as amended effective
January 3, 1995.
2. DEBTOR'S WARRANTIES AND COVENANTS
2.1 Debtor hereby warrants and covenants as follows:
(a) The execution, delivery and performance hereof does not
contravene or violate any law or the terms of any agreement or undertaking to
which Debtor is a party or by which Debtor is bound. Debtor has full power and
authority to make the assignments and grant the security interests evidenced
hereby. This Agreement and the assignments and security interests created hereby
are valid, legal, binding and enforceable in accordance with their terms;
(b) Debtor is and, as to Collateral acquired after the date hereof
will be, the owner of the Collateral free from any adverse claim, lien, security
interest, co-ownership or encumbrance other than the security interests and
assignments granted to Secured Party hereby. Debtor shall notify Secured Party
of and shall defend the Collateral against all claims and demands of all other
persons at any time claiming any interest in the Collateral;
(c) Debtor agrees to faithfully perform and discharge each and
every obligation, covenant and agreement to be performed by Debtor under the
agreements constituting the Collateral and agrees that Debtor will not default
under any such agreement. Debtor agrees to give Secured Party prompt notice of
any notice of default or breach or termination received from or made by any
party to the agreements constituting the Collateral. Debtor shall provide
Secured Party with such information concerning the Collateral as Secured Party
may reasonable request including copies of reports or certificates delivered by
Debtor or received by Debtor pursuant to the agreements constituting the
Collateral;
(d) Debtor will not modify, amend, waive, cancel, compromise or in
any way alter the terms of any of the agreements constituting the Collateral
without the prior written consent of Secured Party. Debtor will not release or
discharge any other party from its obligations, covenants or agreements
contained in the agreements constituting the Collateral. Debtor shall take all
such actions with reference to the collection of monies due under the Collateral
as Secured Party may reasonably request;
(e) Debtor will not further assign or attempt to assign its rights
under any of the agreements constituting the Collateral nor pledge or grant any
other security interest in any of the Collateral nor permit any other lien or
encumbrance to attach thereto;
(f) Debtor warrants that all of the agreements constituting the
Collateral are valid, legal, enforceable and in full force and effect. Such
agreements have not been amended or modified in any way and are free from any
default, breach, dispute, defenses and counterclaims;
(g) Debtor shall from time to time do all acts and things and will
execute and file all instruments in a timely and proper manner as reasonably
required by Secured Party to establish, maintain, continue, guarantee and
protect the security interests and assignments contained herein, and will
promptly on demand pay all costs and expenses of filing and recording, including
costs of any search reasonably deemed necessary by Secured Party from time to
time to establish and determine the validity and the continuing priority of the
security interest and assignments of Secured Party, and also pay all other
claims and charges that in the opinion of Secured Party might prejudice, imperil
or otherwise affect the Collateral or Secured Party's interest therein;
(h) Debtor shall pay promptly when due all taxes and assessments
upon the Collateral or upon this Agreement or upon any agreements or notes
evidencing any of the Obligations;
(i) Debtor warrants that the assignment of its partnership
interest in the Partnership is an assignment of all of its rights and interests
as a Class A Limited Partner in the Partnership and not a mere assignment of
distributions due to Debtor and the Partnership Agreement of Partnership permits
the assignment given by Debtor to Secured Party hereunder and will allow Secured
Party to assume all partnership rights of Debtor in and to the Partnership upon
the occurrence of an Event of Default hereunder; and
(j) Debtor warrants that its interest as a Class A Limited Partner
constitutes a 7.5 percentage interest in the Partnership as a whole.
3. AUTHORITY OF SECURED PARTY TO PERFORM FOR DEBTOR
3.1 Should Debtor fail or refuse to make any payment, perform any covenant
or obligation, observe any condition or take any action which Debtor is
obligated hereunder to make, perform, observe, take or do, at the time or in the
manner herein provided, then Secured Party may, at Secured Party's sole
discretion, without notice to or demand upon Debtor (except as provided in any
of the Documents), and without releasing Debtor from any obligation, covenant or
condition hereof, make, perform, observe, take or do the same in such manner and
to such extent as Secured Party may deem necessary to protect the security of
this Agreement and the Collateral. Debtor agrees to reimburse Secured Party on
demand for any payment made, or any expense incurred, by Secured Party
hereunder, together with interest thereon at the default rate of interest set
forth in the Note from the date of said payment or expenditure, and any such
payments and expenses, together with interest thereon, shall be added to the
Obligations secured hereby and shall be deemed secured hereby.
3.2 Debtor hereby constitutes and appoints Secured Party as the Debtor's
true and lawful attorney-in-fact with full right of appointment and
substitution, to perform any and all acts necessary or convenient to preserve
and protect Secured Party's and Debtor's interest in and to the Collateral. Said
power of attorney shall empower Secured Party to endorse the Debtor's name on
all checks and other forms of payment, which may come into the possession of
Secured Party and to sign and endorse the Debtor's name on any other instruments
or documents. Secured Party is further empowered under such power of attorney to
take any and all action necessary to effect, protect, or preserve Debtor's
rights under the agreements constituting the Collateral including the execution
of documents and agreements substituting Secured Party as general partner and/or
limited partner of the Partnership upon an Event of Default hereunder. The
powers granted herein, being coupled with an interest, are irrevocable until all
Obligations to Secured Party have been fully paid and satisfied.
4. EVENTS OF DEFAULT
4.1 Debtor shall be in default under this agreement upon the occurrence of
any of the following events or conditions ("Events of Default"):
(a) Any breach of any covenant or condition in this Agreement and
such breach continues for a period of thirty (30) days after notice thereof from
Secured Party to Debtor; or, if such failure is not capable of being cured
within such thirty (30) day period, Debtor does not commence to cure the failure
within such thirty (30) day period and thereafter diligently and continuously
prosecutes the cure to completion (such cure must be completed to Secured
Party's reasonable satisfaction in its reasonable discretion within sixty (60)
days after Debtor has actual or constructive notice of such failure);
(b) Any breach or default by Debtor of any of its Obligations
under any agreement constituting the Collateral;
(c) Any warranty, representation or statement made in this
Agreement or the Documents by Debtor proves to have been false in any material
respect when made or furnished;
(d) Default in the payment or performance of any of the
Obligations after giving effect to any applicable grace or cure period; or the
occurrence of any Event of Default under the Note or any other Document after
giving effect to any applicable grace or cure period.
5. SECURED PARTY'S RIGHTS UPON DEFAULT
5.1 Upon the happening of any Event of Default, Secured Party may, at its
option and without further notice to Debtor, declare all of the Obligations to
be immediately due and payable and Secured Party shall have the rights, options,
duties and remedies of Secured Party and Debtor shall have the rights and duties
of a Debtor under the Uniform Commercial Code as adopted in the State of
Arizona. Without limitation thereto, Secured Party shall have the following
specific rights:
(a) To take immediate possession of all records, instruments,
documents and writings of Debtor pertaining to the Collateral without resort to
legal process and without notice and for such purpose to enter upon any premises
in which such records, instruments, documents, writings or any part thereof may
be situated and remove the same therefrom;
(b) To require Debtor to assemble all records, instruments,
documents or writings pertaining to the Collateral and make such available to
Secured Party at a place to then be designated by Secured Party;
(c) To have a public or private sale of all or any part of the
Collateral;
(d) To be substituted for Debtor as a Class A Limited Partner of
Partnership with all rights, powers and privileges of the same under the terms
of the Partnership Agreement of Partnership;
(e) To collect by legal proceedings or otherwise, endorse, receive
and receipt for all money or other property now or hereafter payable upon or on
account of the Collateral and enforce performance of all Obligations of obligors
under the Collateral; to make any compromise or settlement with respect to the
Collateral; to cause the Collateral to be transferred to Secured Party's name or
to the name of its nominee; and to exercise as to the Collateral all the rights,
powers and remedies of an owner;
(f) To bring suit for specific performance against any or all of
the persons and entities constituting Debtor;
(g) To have any other rights or remedies available by law.
6. CUMULATIVE REMEDIES
6.1 Any and all remedies herein expressly conferred upon Secured Party
shall be deemed cumulative with, and not exclusive of, any other remedy
conferred hereby or by law on Secured Party, and the exercise of any one remedy
shall not preclude the exercise of any other.
6.2 Failure of Secured Party to exercise any rights it may have upon
Debtor's breach hereof or upon Debtor's default in payment of any Obligation
secured hereby shall not release Debtor from any of its Obligations hereunder or
under any loan, unless such waiver or release be express and in writing signed
by Secured Party. In addition, the waiver by Secured Party of any breach hereof
or default in payment of any Obligation secured hereby shall not be deemed to
constitute a waiver of any succeeding breach or default. By exercising or
failing to exercise any of the options or elections contained in this Agreement,
Secured Party shall not be deemed to have waived any breach or default on the
part of Debtor.
6.3 Debtor hereby waives any right or privilege which it or its creditors
might otherwise have to require Secured Party to proceed against the assets
encumbered hereby or by any other security document or instrument securing any
loan to Partnership, in any particular order or fashion under any legal or
equitable doctrine or principle of marshaling and/or suretyship and further
agrees that upon default, Secured Party may proceed to exercise any or all
remedies with regard to any or all assets encumbered hereby or by any other
security document or instrument in such manner and order as Secured Party in its
sole discretion may determine.
7. PAYMENT TO SECURED PARTY
7.1 During the existence of any Event of Default hereunder, Debtor and
Secured Party agree that all proceeds, cash, payments or distributions of any
nature due, owing or to be paid to Debtor by reason of the Collateral, including
but not limited to earnings distributable under the Partnership Agreement, shall
be paid directly to Secured Party. All such sums received may be applied by
Secured Party to the Obligations, whether or not then due, in such order and
manner as Secured Party shall determine. Debtor agrees to promptly advise
Secured Party, before any payment or distribution is due and before Debtor
receives or is credited with payment, of the amount of any sum due and owing and
the intended medium or form of payment.
7.2 Secured Party shall not be obligated to perform or discharge any
obligation, duty or liability of Debtor under any agreement. Secured Party shall
not be obligated to assume or exercise any rights or obligations as general
partner of the Partnership.
7.3 At such time as no Event of Default exists hereunder, Debtor may
exercise all its rights as a partner in the Partnership and receive all
distributions from the Partnership without the consent of Secured Party, except
as otherwise provided herein and in the Documents.
8. LIMITATION OF LIABILITY
Subject to the provisions below, nothing contained herein shall be
construed as creating any personal liability on the part of the Class A Limited
Partners or the General Partner, the Class B Limited Partners, or the
Partnership for all obligations of Debtor under the Documents to Secured Party,
all such liability being expressly waived by Secured Party for itself, its
successors and assigns, and Secured Party agrees to look solely to Debtor and to
any collateral heretofore, now or hereafter pledged by any party to secure the
Loan.
The foregoing shall in no way limit or impair the enforcement against any
security granted by the Documents of any of the Secured Party's rights and
remedies pursuant to the Documents.
9. MISCELLANEOUS
9.1 Debtor hereby agrees to indemnify and hold Secured Party harmless from
and against any and all claims, demands, liabilities, losses, lawsuits,
judgments and costs and expenses (including without limitation, reasonable
attorneys' fees) to which Secured Party may become exposed, or which Secured
Party may incur, in properly and legally exercising any of its rights under this
Agreement. In addition to the foregoing award of attorneys' fees, Secured Party
shall be entitled to its attorneys' fees incurred in any post judgment
proceedings to collect or enforce any judgment related to this Agreement. This
provision is separate and several and shall survive the merger of this provision
into any judgment on this Agreement.
9.2 The failure of Secured party to enforce any of the terms, covenants, or
conditions herein shall not be construed or deemed to be a waiver of any rights
or remedies hereunder. Secured Party shall have the full right, power and
authority to enforce this Agreement, or any of the terms, covenants, or
conditions hereof, at any time that Secured Party shall deem proper.
9.3 This Agreement applies to and binds the parties hereto and their
respective heirs, administrators, executors, successors, and assigns. Any
provisions in any other agreement creating rights in Secured Party other than
those created herein shall be deemed incorporated herein by reference and made a
part hereof for all purposes.
9.4 Debtor shall execute such documents and take such further actions as
may be reasonably required by Secured Party to carry out the provisions hereof.
9.5 Time is the essence of this Agreement and all its provisions.
9.6 THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT ARE TO BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ARIZONA.
ILX Incorporated
By:
-------------------------------------
Its:
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is dated as of January 1, 1995,
from ILX INCORPORATED, an Arizona corporation (the "Debtor") with a mailing
address of 2777 E. Camelback Road, Phoenix, Arizona 85016, to Joseph P. Martori
(as Trustee) ("Secured Party"), with a mailing address of 2777 East Camelback
Road, Phoenix, Arizona 85016.
1. SECURITY INTEREST AND ASSIGNMENT
1.1 For valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtor hereby grants Secured Party a security interest in
and does hereby assign, convey, transfer, pledge and set over to Secured Party
all of Debtor's rights, title, interest, powers and privileges (including,
without limitation, the right to receive any monies now or hereafter due and
payable to Debtor) in and to the following property (the "Collateral"):
(a) All Debtor's interest in that Certificate of Limited
Partnership and Agreement of Los Abrigados Partners Limited Partnership, dated
June 24, 1991, and filed with the Secretary of State for the State of Arizona,
on June 27, 1991, at Filing No. 20010032 forming a limited partnership (the
"Partnership"), and any amendments or modifications thereto (the "Partnership
Agreement");
(b) All Debtor's rights and interest as a Class A Limited Partner
in the Partnership, and any successor thereto by operation of law or otherwise;
(c) All Debtor's interest, if any, in any partnership property of
the Partnership;
(d) All Debtor's share of any profits of the Partnership, now
existing or hereafter arising, and Debtor's right to any surplus and any other
money due or to become due to Debtor in respect of the Partnership;
(e) All rights to receive any cash proceeds, cash available for
distribution, property, units of ownership, or other distributions of any kind
or in any form which may be due and payable to Debtor, from time to time,
pursuant to the Partnership Agreement described above or applicable law;
(f) Debtor's Class A Limited Partner's interest, ownership
interests and ownership position in the Partnership, now or hereafter acquired;
and
(g) Any and all proceeds, monies, claims for monies due and to
become due, increases in ownership share, and all other payments or
distributions of whatever nature now existing or hereafter arising from the
foregoing Partnership, Partnership Agreement and collateral or from any
extensions, amendments or modifications thereof.
1.2 The grant of these security interests and assignments is made for the
purpose of securing:
(a) Payment of a Promissory Note of even date herewith in the face
amount of Fifty Seven Thousand Eight Hundred Seventy Five Dollars ($57,875) made
by Debtor to the order of Secured Party (said note and any and all renewals,
amendments, modifications, increases and extensions thereof being hereinafter
collectively called the "Note");
(b) The strict performance and observance of all agreements,
warranties, covenants and conditions contained in any other security agreement
and contained in any other document or instrument entered into by and between
Debtor and Secured Party (collectively, the "Documents")';
(c) The repayment of all monies expended by Secured Party under
the provisions hereof, with interest thereon at the default rate set forth in
the Note.
1.3 All matters referred to in subsections 1.2(a) through 1.2(c) above are
sometimes herein referred to as the "Obligations".
1.4 This Agreement is for security purposes only. Accordingly, Secured
Party shall have no right hereunder to enforce its rights until an Event of
Default (as defined below) has occurred hereunder or under any other Loan
Document. Notwithstanding the foregoing, Debtor hereby agrees that any
distributions of cash or property otherwise to be made by the Partnership to
Debtor shall instead be made prorata in satisfaction of the Note and the other
installment Promissory Notes described in the Purchase and Sale Agreement to
which Secured Party is a party dated October 1, 1994 as amended effective
January 3, 1995.
2. DEBTOR'S WARRANTIES AND COVENANTS
2.1 Debtor hereby warrants and covenants as follows:
(a) The execution, delivery and performance hereof does not
contravene or violate any law or the terms of any agreement or undertaking to
which Debtor is a party or by which Debtor is bound. Debtor has full power and
authority to make the assignments and grant the security interests evidenced
hereby. This Agreement and the assignments and security interests created hereby
are valid, legal, binding and enforceable in accordance with their terms;
(b) Debtor is and, as to Collateral acquired after the date hereof
will be, the owner of the Collateral free from any adverse claim, lien, security
interest, co-ownership or encumbrance other than the security interests and
assignments granted to Secured Party hereby. Debtor shall notify Secured Party
of and shall defend the Collateral against all claims and demands of all other
persons at any time claiming any interest in the Collateral;
(c) Debtor agrees to faithfully perform and discharge each and
every obligation, covenant and agreement to be performed by Debtor under the
agreements constituting the Collateral and agrees that Debtor will not default
under any such agreement. Debtor agrees to give Secured Party prompt notice of
any notice of default or breach or termination received from or made by any
party to the agreements constituting the Collateral. Debtor shall provide
Secured Party with such information concerning the Collateral as Secured Party
may reasonable request including copies of reports or certificates delivered by
Debtor or received by Debtor pursuant to the agreements constituting the
Collateral;
(d) Debtor will not modify, amend, waive, cancel, compromise or in
any way alter the terms of any of the agreements constituting the Collateral
without the prior written consent of Secured Party. Debtor will not release or
discharge any other party from its obligations, covenants or agreements
contained in the agreements constituting the Collateral. Debtor shall take all
such actions with reference to the collection of monies due under the Collateral
as Secured Party may reasonably request;
(e) Debtor will not further assign or attempt to assign its rights
under any of the agreements constituting the Collateral nor pledge or grant any
other security interest in any of the Collateral nor permit any other lien or
encumbrance to attach thereto;
(f) Debtor warrants that all of the agreements constituting the
Collateral are valid, legal, enforceable and in full force and effect. Such
agreements have not been amended or modified in any way and are free from any
default, breach, dispute, defenses and counterclaims;
(g) Debtor shall from time to time do all acts and things and will
execute and file all instruments in a timely and proper manner as reasonably
required by Secured Party to establish, maintain, continue, guarantee and
protect the security interests and assignments contained herein, and will
promptly on demand pay all costs and expenses of filing and recording, including
costs of any search reasonably deemed necessary by Secured Party from time to
time to establish and determine the validity and the continuing priority of the
security interest and assignments of Secured Party, and also pay all other
claims and charges that in the opinion of Secured Party might prejudice, imperil
or otherwise affect the Collateral or Secured Party's interest therein;
(h) Debtor shall pay promptly when due all taxes and assessments
upon the Collateral or upon this Agreement or upon any agreements or notes
evidencing any of the Obligations;
(i) Debtor warrants that the assignment of its partnership
interest in the Partnership is an assignment of all of its rights and interests
as a Class A Limited Partner in the Partnership and not a mere assignment of
distributions due to Debtor and the Partnership Agreement of Partnership permits
the assignment given by Debtor to Secured Party hereunder and will allow Secured
Party to assume all partnership rights of Debtor in and to the Partnership upon
the occurrence of an Event of Default hereunder; and
(j) Debtor warrants that its interest as a Class A Limited Partner
constitutes a 7.5 percentage interest in the Partnership as a whole.
3. AUTHORITY OF SECURED PARTY TO PERFORM FOR DEBTOR
3.1 Should Debtor fail or refuse to make any payment, perform any covenant
or obligation, observe any condition or take any action which Debtor is
obligated hereunder to make, perform, observe, take or do, at the time or in the
manner herein provided, then Secured Party may, at Secured Party's sole
discretion, without notice to or demand upon Debtor (except as provided in any
of the Documents), and without releasing Debtor from any obligation, covenant or
condition hereof, make, perform, observe, take or do the same in such manner and
to such extent as Secured Party may deem necessary to protect the security of
this Agreement and the Collateral. Debtor agrees to reimburse Secured Party on
demand for any payment made, or any expense incurred, by Secured Party
hereunder, together with interest thereon at the default rate of interest set
forth in the Note from the date of said payment or expenditure, and any such
payments and expenses, together with interest thereon, shall be added to the
Obligations secured hereby and shall be deemed secured hereby.
3.2 Debtor hereby constitutes and appoints Secured Party as the Debtor's
true and lawful attorney-in-fact with full right of appointment and
substitution, to perform any and all acts necessary or convenient to preserve
and protect Secured Party's and Debtor's interest in and to the Collateral. Said
power of attorney shall empower Secured Party to endorse the Debtor's name on
all checks and other forms of payment, which may come into the possession of
Secured Party and to sign and endorse the Debtor's name on any other instruments
or documents. Secured Party is further empowered under such power of attorney to
take any and all action necessary to effect, protect, or preserve Debtor's
rights under the agreements constituting the Collateral including the execution
of documents and agreements substituting Secured Party as general partner and/or
limited partner of the Partnership upon an Event of Default hereunder. The
powers granted herein, being coupled with an interest, are irrevocable until all
Obligations to Secured Party have been fully paid and satisfied.
4. EVENTS OF DEFAULT
4.1 Debtor shall be in default under this agreement upon the occurrence of
any of the following events or conditions ("Events of Default"):
(a) Any breach of any covenant or condition in this Agreement and
such breach continues for a period of thirty (30) days after notice thereof from
Secured Party to Debtor; or, if such failure is not capable of being cured
within such thirty (30) day period, Debtor does not commence to cure the failure
within such thirty (30) day period and thereafter diligently and continuously
prosecutes the cure to completion (such cure must be completed to Secured
Party's reasonable satisfaction in its reasonable discretion within sixty (60)
days after Debtor has actual or constructive notice of such failure);
(b) Any breach or default by Debtor of any of its Obligations
under any agreement constituting the Collateral;
(c) Any warranty, representation or statement made in this
Agreement or the Documents by Debtor proves to have been false in any material
respect when made or furnished;
(d) Default in the payment or performance of any of the
Obligations after giving effect to any applicable grace or cure period; or the
occurrence of any Event of Default under the Note or any other Document after
giving effect to any applicable grace or cure period.
5. SECURED PARTY'S RIGHTS UPON DEFAULT
5.1 Upon the happening of any Event of Default, Secured Party may, at its
option and without further notice to Debtor, declare all of the Obligations to
be immediately due and payable and Secured Party shall have the rights, options,
duties and remedies of Secured Party and Debtor shall have the rights and duties
of a Debtor under the Uniform Commercial Code as adopted in the State of
Arizona. Without limitation thereto, Secured Party shall have the following
specific rights:
(a) To take immediate possession of all records, instruments,
documents and writings of Debtor pertaining to the Collateral without resort to
legal process and without notice and for such purpose to enter upon any premises
in which such records, instruments, documents, writings or any part thereof may
be situated and remove the same therefrom;
(b) To require Debtor to assemble all records, instruments,
documents or writings pertaining to the Collateral and make such available to
Secured Party at a place to then be designated by Secured Party;
(c) To have a public or private sale of all or any part of the
Collateral;
(d) To be substituted for Debtor as a Class A Limited Partner of
Partnership with all rights, powers and privileges of the same under the terms
of the Partnership Agreement of Partnership;
(e) To collect by legal proceedings or otherwise, endorse, receive
and receipt for all money or other property now or hereafter payable upon or on
account of the Collateral and enforce performance of all Obligations of obligors
under the Collateral; to make any compromise or settlement with respect to the
Collateral; to cause the Collateral to be transferred to Secured Party's name or
to the name of its nominee; and to exercise as to the Collateral all the rights,
powers and remedies of an owner;
(f) To bring suit for specific performance against any or all of
the persons and entities constituting Debtor;
(g) To have any other rights or remedies available by law.
6. CUMULATIVE REMEDIES
6.1 Any and all remedies herein expressly conferred upon Secured Party
shall be deemed cumulative with, and not exclusive of, any other remedy
conferred hereby or by law on Secured Party, and the exercise of any one remedy
shall not preclude the exercise of any other.
6.2 Failure of Secured Party to exercise any rights it may have upon
Debtor's breach hereof or upon Debtor's default in payment of any Obligation
secured hereby shall not release Debtor from any of its Obligations hereunder or
under any loan, unless such waiver or release be express and in writing signed
by Secured Party. In addition, the waiver by Secured Party of any breach hereof
or default in payment of any Obligation secured hereby shall not be deemed to
constitute a waiver of any succeeding breach or default. By exercising or
failing to exercise any of the options or elections contained in this Agreement,
Secured Party shall not be deemed to have waived any breach or default on the
part of Debtor.
6.3 Debtor hereby waives any right or privilege which it or its creditors
might otherwise have to require Secured Party to proceed against the assets
encumbered hereby or by any other security document or instrument securing any
loan to Partnership, in any particular order or fashion under any legal or
equitable doctrine or principle of marshaling and/or suretyship and further
agrees that upon default, Secured Party may proceed to exercise any or all
remedies with regard to any or all assets encumbered hereby or by any other
security document or instrument in such manner and order as Secured Party in its
sole discretion may determine.
7. PAYMENT TO SECURED PARTY
7.1 During the existence of any Event of Default hereunder, Debtor and
Secured Party agree that all proceeds, cash, payments or distributions of any
nature due, owing or to be paid to Debtor by reason of the Collateral, including
but not limited to earnings distributable under the Partnership Agreement, shall
be paid directly to Secured Party. All such sums received may be applied by
Secured Party to the Obligations, whether or not then due, in such order and
manner as Secured Party shall determine. Debtor agrees to promptly advise
Secured Party, before any payment or distribution is due and before Debtor
receives or is credited with payment, of the amount of any sum due and owing and
the intended medium or form of payment.
7.2 Secured Party shall not be obligated to perform or discharge any
obligation, duty or liability of Debtor under any agreement. Secured Party shall
not be obligated to assume or exercise any rights or obligations as general
partner of the Partnership.
7.3 At such time as no Event of Default exists hereunder, Debtor may
exercise all its rights as a partner in the Partnership and receive all
distributions from the Partnership without the consent of Secured Party, except
as otherwise provided herein and in the Documents.
8. LIMITATION OF LIABILITY
Subject to the provisions below, nothing contained herein shall be
construed as creating any personal liability on the part of the Class A Limited
Partners or the General Partner, the Class B Limited Partners, or the
Partnership for all obligations of Debtor under the Documents to Secured Party,
all such liability being expressly waived by Secured Party for itself, its
successors and assigns, and Secured Party agrees to look solely to Debtor and to
any collateral heretofore, now or hereafter pledged by any party to secure the
Loan.
The foregoing shall in no way limit or impair the enforcement against any
security granted by the Documents of any of the Secured Party's rights and
remedies pursuant to the Documents.
9. MISCELLANEOUS
9.1 Debtor hereby agrees to indemnify and hold Secured Party harmless from
and against any and all claims, demands, liabilities, losses, lawsuits,
judgments and costs and expenses (including without limitation, reasonable
attorneys' fees) to which Secured Party may become exposed, or which Secured
Party may incur, in properly and legally exercising any of its rights under this
Agreement. In addition to the foregoing award of attorneys' fees, Secured Party
shall be entitled to its attorneys' fees incurred in any post judgment
proceedings to collect or enforce any judgment related to this Agreement. This
provision is separate and several and shall survive the merger of this provision
into any judgment on this Agreement.
9.2 The failure of Secured party to enforce any of the terms, covenants, or
conditions herein shall not be construed or deemed to be a waiver of any rights
or remedies hereunder. Secured Party shall have the full right, power and
authority to enforce this Agreement, or any of the terms, covenants, or
conditions hereof, at any time that Secured Party shall deem proper.
9.3 This Agreement applies to and binds the parties hereto and their
respective heirs, administrators, executors, successors, and assigns. Any
provisions in any other agreement creating rights in Secured Party other than
those created herein shall be deemed incorporated herein by reference and made a
part hereof for all purposes.
9.4 Debtor shall execute such documents and take such further actions as
may be reasonably required by Secured Party to carry out the provisions hereof.
9.5 Time is the essence of this Agreement and all its provisions.
9.6 THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT ARE TO BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ARIZONA.
ILX Incorporated
By:
------------------------------------------------
Its:
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