PROMISSORY NOTE
Kohl's Ranch Associates Phoenix, Arizona
$367,750.00 June 1, 1995
FOR VALUE RECEIVED, the undersigned ILX INCORPORATED, an Arizona
corporation ("Maker"), whose mailing address is 2777 East Camelback Road,
Phoenix, Arizona 85016, promises to pay to KOHL'S RANCH ASSOCIATES, an Arizona
general partnership, whose mailing address is 300 East Cherry Street,
Cottonwood, Arizona 86326, or its successors or assigns, or its order, or to
such other person as the holder hereof ("Holder") may from time to time
designate in writing, the principal sum of THREE HUNDRED SIXTY-SEVEN THOUSAND
SEVEN HUNDRED FIFTY AND NO/100 DOLLARS ($367,750.00), together with interest on
the outstanding principal balance from time to time remaining unpaid from the
date hereof. Principal and interest are payable in lawful money of the United
States of America at the office of the Account Servicing Agent set forth below,
or at such other address as the Holder hereof may from time to time designate in
writing, as follows:
Interest (prior to maturity and so long as no uncured event of default
exists) shall accrue on the unpaid principal balance of the Indebtedness (as
hereinafter defined) at an annual interest rate of eight percent (8%) per annum,
and shall be computed on the basis of a 360 day year of 30 day months, payable
monthly in arrears.
For the period prior to the "First Anniversary Date" (the first (1st)
day of the thirteenth (13th) full calendar month following the date of this
Note) which is June 1, 1996, the amount of interest accrued for the one-year
period prior to the First Anniversary Date shall be added to the outstanding
principal balance under this promissory note ("the Note") on the First
Anniversary Date (and will thereafter be principal and not accrued interest),
and each subsequent calculation of accrued interest will take into account the
increased principal due to interest payment in this manner.
Payments of principal plus all accrued interest shall be due and
payable in monthly installments commencing on the First Anniversary Date of this
Note and continuing on the first (1st) day of each succeeding month thereafter
("Monthly Due Date"). Such monthly principal payments shall be not less than
Seventy Five Hundred Dollars ($7500.00) per month, subject to prepayment as
described below. Interest on any principal payment made on the Monthly Due Date
shall cease to accrue at the end of the day prior to the Monthly Due Date.
Interest paid on a Monthly Due Date shall be paid for interest accrued or due
for the period ended at the end of the day prior to the Monthly Due Date. The
remaining principal balance of the Indebtedness shall be due and payable in full
on the "Fifth Anniversary Date" (the first day of the sixty-first (61st) full
calendar month following the date of this Note) which is June 1, 2000.
All references in this Note to the "Indebtedness" shall mean the stated
principal sum of this Note, late charges, interest and all other amounts
provided for herein.
Maker shall have the right to prepay (including without limitation in
the form of Release Prices described in the Deed of Trust defined below) all or
any portion of the principal balance due hereunder at any time and from time to
time; provided, however, Maker shall not have the right to prepay the entire
principal balance due hereunder prior to January 1, 1996, without the prior
written consent of the Holder. Interest on the amount of a Release Price
prepayment shall cease to accrue at the end of the day prior to the date of
prepayment, and such accrued interest shall be paid on the Monthly Due Date next
following such principal prepayment. Notwithstanding the foregoing, accrued
interest on any Release Price paid prior to the First Anniversary Date shall be
calculated as described in the preceding sentence, but shall accompany the
Release Price. Any full prepayment of the principal balance of this Note shall
be accompanied by all accrued interest to the time of prepayment. All principal
payments, whether scheduled payments or prepayments, shall apply and be credited
to Release Prices. Release Prices pursuant to the Deed of Trust and any and all
principal payments or prepayments shall be applied and credited to the principal
balance of the Note in order of payment maturity. Notwithstanding the foregoing,
upon the occurrence of an event of default, Holder may direct the Account
Servicing Agent to apply payments and permitted prepayments in any order that
Holder shall in its absolute discretion determine.
If any payment required to be made hereunder shall be due on a
Saturday, Sunday or legal holiday in the State of Arizona, then such payment may
be made on the next day which is not a Saturday, Sunday or legal holiday (a
"business" day).
If any amount required to be paid hereunder or under the Deed of Trust
is not paid on or before the tenth (10th) calendar day after the date when the
same first became due, and Holder does not exercise its option to accelerate the
Indebtedness, then at the option of Holder, Maker shall pay, immediately upon
demand, and irrespective of whether or not such failure to pay constitutes a
default or Event of Default hereunder, a late charge equal to five percent (5%)
of the required payment, as liquidated and agreed damages for the additional
expenses which Holder will incur in administering the collection of the
Indebtedness, for loss of use of the money due and for Holder's consequent
inability to meet its other commitments. Maker acknowledges the extreme
difficulty and impracticality of presently determining Holder's actual damages
resulting from a future late payment and, accordingly, agrees that this late
charge is a reasonable estimate thereof and not a penalty.
This Note may only be assumed by permitted transferees of the Trust
Property pursuant to the Deed of Trust (defined below). Otherwise, Maker shall
procure the prior written consent of Holder, which shall not be unreasonably
withheld or delayed.
If (a) Maker fails to pay any installment of principal or interest due
hereunder or any other monetary payment under the Deed of Trust, or other
instruments securing this Note, within ten (10) days after Maker's receipt of
written notice of non-payment from Holder, or (b) fails to comply with any of
the other non-monetary terms and conditions of this Note or the Deed of Trust,
or other instruments securing this Note within thirty (30) days of written
notice from Holder demanding compliance (the "Demand") (or, in the event full
compliance is not reasonably possible within thirty (30) days of the Demand;
then the period for completion may be extended sixty (60) additional days
provided Maker is diligently pursuing performance or cure)or if Maker shall be
liquidated, terminated or dissolved, or shall admit in writing its inability to
pay its debts generally as the same become due, or shall make an assignment for
the benefit of its creditors, or shall be adjudicated a bankrupt or insolvent,
or shall commence or have commenced against it (and fail to have discharged
within fifteen (15) days after filing) any bankruptcy, insolvency or similar
proceeding for the relief of debtors, or shall seek or fail to prevent the
appointment of any trustee-in-bankruptcy, receiver, custodian, liquidator or
similar official for itself or for its property; or shall fail to have
discharged, or have otherwise acted to fully protect Holder from any loss or
liability from the lien or encumbrance within 45 days from the commencement of
any action or proceeding to foreclose or enforce any encumbrance or lien on or
with respect to the property which is the subject of the Deed of Trust or any
other instrument securing this Note, whether or not superior or inferior; or any
material damage or destruction of the property subject to the lien(s) securing
this Note shall occur and not be covered by appropriate insurance and Trustor
shall not immediately make satisfactory arrangements with Holder for the repair
or replacement thereof (collectively, "Events of Default"), then the
Indebtedness shall, at the option of Holder, become immediately due and payable
without further notice or demand of any kind or nature whatsoever. Maker
understands that the foregoing acceleration remedy is in addition to all other
rights, powers and remedies provided for herein or under the Deed of Trust and
other security agreements, or otherwise available to Holder at law or in equity,
and that neither the exercise thereof, nor the accrual or collection of interest
at the "Default Rate" (hereinafter defined), nor the accrual or collection of
late charges, shall, in and of itself, constitute a cure of or an election of
remedies with respect to Maker's default, or prejudice any other rights, powers
or remedies of Holder hereunder or under the Deed of Trust or other security
agreements or at law or in equity.
Maker agrees to an effective rate of interest which is the rate stated
herein plus any additional rate of interest resulting from any other payments
provided for herein or in the Deed of Trust and other security agreements
securing this Note, or incident to the transaction of which this Note forms a
part, to the extent that such charges may be deemed includable in interest for
any purpose or are deemed to be interest under applicable Arizona law.
Notwithstanding anything contained to the contrary in this Note or in
any instrument which may secure repayment of the Indebtedness, no provision
hereof and no other aspect of the transaction of which this Note is a part is
intended to or shall require or permit Holder to contract for, charge or
receive, or obligate Maker to pay, interest in excess of the maximum rate
permitted by applicable law. Should, however, any interest or other sum or
charge paid or payable hereunder result, or be adjudicated to result, in the
computation or earning of interest in excess of the allowable maximum legal
rate, then the same shall be deemed the result of a mistake and Maker shall not
be obligated to pay such excess and Holder hereby waives its right to demand or
collect the same; but if any excessive amount has been paid, then the same
automatically shall be applied in reduction of the unpaid principal balance
hereof and not to the payment of interest or any other sum or charge payable
hereunder, and, to the extent that the principal sum has been paid in full by
reason of such application or otherwise, any balance remaining from such excess
shall be remitted to Maker.
Whenever but only for so long as Maker is in default hereunder or under
the Deed of Trust or security agreements securing this Note, and whether or not
Holder has elected to accelerate the maturity of the Note as provided above, at
the option of Holder, all amounts then due and in default hereunder or under the
Deed of Trust and security agreements (including, without limitation, unpaid
interest and other sums and charges) shall bear interest at the rate of fifteen
percent (15%) per annum (the "Default Rate") from their respective due dates
until the same have been paid in full; provided, however, that unless the
Account Servicing Agent has received written notice from Holder of the
occurrence of a default (other than a failure to pay principal, interest or late
charges) prior to its receipt of any payment, the Account Servicing Agent shall
be excused from its obligation to collect interest at the Default Rate. Holder's
failure to so notify the Account Servicing Agent, however, shall not relieve
Maker from its obligation to pay interest at the Default Rate under and during
the continuance of the circumstances set forth in this paragraph.
Unless limited by the terms of the specific instrument, all of Holder's
rights, powers and remedies hereunder or under the Deed of Trust and other
security agreements or at law or in equity shall be cumulative and
non-exclusive, and each may be exercised singularly, consecutively or
concurrently with any other(s), at the sole discretion of Holder, and as often
as occasion therefor shall arise. No act or omission of Holder (including,
without limitation, any failure to exercise or delay in exercising any right,
power or remedy) shall constitute a waiver thereof or of any other right, power
or remedy or of the act or omission entitling Holder to exercise such right,
power or remedy; and no single or partial exercise of any right, power or remedy
shall preclude other or further exercise thereof or the exercise of any other
right, power or remedy. No release of any security or any person or entity
liable under this Note or the Security Agreement shall operate to release any
other security or any other person or entity liable hereunder or thereunder. No
provision hereof may be waived, amended or terminated except by a written
instrument signed and dated by the party against whom enforcement of such
waiver, amendment or termination is sought. A waiver in one or more instances of
any provision hereof or breach thereof shall apply to the particular instance
only. No course of dealings between the parties shall operate as a waiver.
Should suit be brought to enforce this Note and Holder be the
prevailing party, then Maker shall pay, on demand, all costs (including, but not
limited to, reasonable attorneys' fees, court costs and other expenses) incurred
by Holder in connection with collection, enforcement, foreclosure, insolvency,
bankruptcy, protection of security or other proceedings.
Maker and all endorsers, guarantors and other parties now or hereafter
liable on this Note: (i) agree to any and all extensions of time for payment and
other modifications, indulgences or waivers of any of the terms hereof, and to
any and all realizations, compromises, releases, exchanges or substitutions of
any security (or portions thereof) given to secure the repayment of the
Indebtedness, in each case at any time or from time to time, without notice;
(ii) agree that no such extension, modification, waiver, realization,
compromise, exchange, release or substitution, and no other indulgence given by
Holder, shall impair, release, discharge or otherwise modify or affect in any
respect the liability of Maker hereunder or preclude Holder from realizing upon
any security (or portion thereof) or from obtaining any other relief provided
for herein or otherwise available to Holder at law or in equity; (iii) agree to
offsets of any sums or property owed to it by Holder at any time; (iv) waive, to
the fullest extent permitted by law, any and all applicable, exemption,
redemption, marshalling, moratorium, valuation and appraisal rights; (v) waive
any right to require Holder to proceed against, protect, insure, preserve or
exhaust any security held by Holder or to pursue any other remedy or action, and
expressly agree that Holder may without limitation to any other remedies it may
have, waive any security and bring action directly upon this Note; (vi) except
for the notice herein specifically required with respect to an Event of Default,
waive diligence, presentment and demand for payment, protest and notice of
protest, demand and dishonor, notice of dishonor, notice of non-payment, notice
of maturity and all other notices which it lawfully may waive; (vii) waive, to
the fullest extent permitted by law, the right to demand a trial by jury and/or
to assert the statute or limitations as a defense in any action brought upon
this Note by Holder and agree that all issues in any such proceeding shall, at
the option of Holder, be decided and determined by the judge of the court in
which such proceeding is pending; and (viii) consent to, and acknowledges that
it is and shall remain subject to, the in personam, in rem and subject matter
jurisdiction of the courts of the State of Arizona for all purposes pertaining
to this Note and to all documents and instruments executed in connection
herewith securing the same or in any way pertaining hereto.
If any provision (or portion thereof) contained herein shall be held to
be invalid, illegal or unenforceable in any respect, the remaining provisions
(and remaining portions of the affected provision) shall not be affected
thereby. If any provision is capable of two constructions, one of which would
render the provision void and the other of which would render the provision
valid, then the provision shall have the meaning which renders it valid.
The interpretation, construction and enforcement of this Note shall be
governed by the laws of the State of Arizona applicable to instruments made and
to be performed entirely therein, except where such law is preempted by the laws
and regulations of the United States of America.
This Note is secured by, inter alia, a Deed of Trust between the named
Maker and Holder (the "Deed of Trust") and a Security Agreement, which encumber
certain real and personal property located in Gila County, Arizona known as
Kohl's Ranch Lodge (the "Trust Property"), and a Pledge Agreement.
Maker shall make all payments required hereunder to the trustee under
the Deed of Trust, as the "Account Servicing Agent," at First American Title,
111 West Monroe, Phoenix, Arizona 85003 (or at such other address as Holder may
direct), accompanied by all amounts necessary to pay Maker's share (i.e.,
one-half) of the Account Servicing Agent's fees and expenses. Said Account
Servicing Agent is hereby directed and authorized to apply such payments first
to its fees and expenses, and the balance shall be remitted promptly to Holder
or as Holder otherwise may direct.
All notices or other communications relating to this Note shall be in
writing, addressed to the intended recipient thereof at its address set forth on
the first page hereof (or, in the case of the Account Servicing Agent, at its
address set forth immediately above) and, if given either by personal delivery
or certified U.S. mail, return receipt requested, postage prepaid, conclusively
shall be deemed to have been given and received seventy-two (72) hours after
such notice has been deposited in the United States mail or, if personally
delivered, on the date of actual delivery. Refusal to accept delivery or to sign
a receipt, or any inability to obtain a receipt because of a changed address of
which the intended recipient, by like method, did not previously advise the
sender, shall constitute actual receipt.
The provisions of this Note shall be binding upon, and inure to the
benefit of, the heirs, personal representatives, successors and assigns of the
Maker and Holder.
Time is of the essence of this Note and each and every term and
provision hereof.
IN WITNESS WHEREOF, Maker by its duly authorized officer has executed
and delivered this Note on the day and year first above written.
MAKER:
ILX INCORPORATED, an Arizona
corporation,
By /s/ Nancy J. Stone
-----------------------
Nancy J. Stone
Executive Vice President