JUNIOR
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DEED OF TRUST, ASSIGNMENT OF RENTS,
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AND SECURITY AGREEMENT
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THIS JUNIOR DEED OF TRUST, ASSIGNMENT OF RENTS, AND SECURITY AGREEMENT
(hereinafter called "Deed of Trust") is made this _____ day of ______________,
1995, by and among ILX INCORPORATED, an Arizona corporation, whose mailing
address is 2777 East Camelback Road, Phoenix, Arizona 85016, (hereinafter called
"Trustor"), First American Title Insurance Company, a California corporation,
whose mailing address is 111 West Monroe Street, Phoenix, Arizona 85003,
(hereinafter called "Trustee"), and KOHL'S RANCH ASSOCIATES, an Arizona general
partnership, whose mailing address is 300 East Cherry Street, Cottonwood,
Arizona 85326, (hereinafter called "Beneficiary").
A. Creation of Trust
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Trustor hereby irrevocably grants, conveys, transfers, and assigns to
Trustee, in trust, with power of sale, all of Trustor's present and future
estate, right, title, and interest in and to that real property and all
buildings and other improvements now thereon or hereafter constructed thereon
(the "Property"), located in the County of Gila, State of Arizona, and more
particularly described on Exhibit "A" attached hereto and by this reference
incorporated herein; all of the following and the Property (except where the
context otherwise requires) are hereinafter collectively called the "Trust
Property":
(a) All appurtenances, easements, reversions, and remainders pertaining
to the Property;
(b) All water and water rights, ditches, and ditch rights, reservoir
and reservoir rights, stock or interests in irrigation or ditch companies,
minerals, oil, and gas rights, royalties, lease or leasehold interests owned by
Trustor, now or hereafter used or useful in connection with, appurtenant to, or
related to the Property.
(c) All right, title, and interest of Trustor now owned or hereafter
acquired in and to all streets, roads, alleys, and public places, and all
easements and rights or way, public or private, now or hereafter used in
connection with the property;
(d) All machinery, equipment, fixtures, appliances, materials, and
other personal property now or at any time attached to the Property together
with all processing, manufacturing, and service equipment and other personal
property now or at any time hereafter located on or appurtenant to the Property
and used in connection with the management and operation thereof;
EXHIBIT "H"
JUNIOR DEED OF TRUST, ASSIGNMENT OF RENTS,
AND SECURITY AGREEMENT
(e) Any licenses, contracts, permits, approvals, and agreements
required by or used in connection with the ownership, operation, or maintenance
of the property or in connection with the construction or alteration of any
improvements on the Property including but not limited to any contracts with
builders, material suppliers, or architects, and the right to the use of any
tradename, trademark, or service mark now or hereafter associated with the
operation of any business conducted on the Property;
(f) Any and all awards, including interest, previously and hereafter
made to Trustor for taking by eminent domain of the whole or any part of the
Property or any easements therein;
(g) Subject to the rights of Trustor under Section D hereof, all
existing and future leases, subleases, licenses, and other agreements for the
use and occupancy of all or any portion of the Property and all income,
receipts, revenues, rents, issues, and profits arising from the use or enjoyment
of all or any portion of the Property;
(h) All construction materials, supplies, lumber, and all other
materials or equipment delivered to the Property for incorporation or use in any
construction at any time being conducted thereon;
(i) Any and all policies of insurance and all proceeds, loss payable
clauses and premium refunds pertaining to any portion of the Property and all
claims relating thereto; and
(j) All of Trustor's interest in any raw materials, work in process,
finished goods, inventory, trade stock, or other personal property available for
sale on the Property in the ordinary course of business, and all accounts
receivables, 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 property.
AS OF THE DATE HEREOF THIS DEED OF TRUST IS SUBJECT AND SUBORDINATE TO
THE TERMS OF A SENIOR DEED OF TRUST (AND RELATED SECURITY DOCUMENTS) ON THE
TRUST PROPERTY, DATED DECEMBER 2, 1983, RECORDED IN DOCKET 602, PAGE 676 (THE
"EXISTING FIRST LIEN").
B. Purpose of Trust
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This Junior Deed of Trust is given by Trustor for the purpose of
securing, in such order of priority as Beneficiary may elect:
B(1). Payment of the sum of Three Hundred Sixty-seven Thousand Seven
Hundred Fifty and No/100 ($367,750.00) with interest thereon, and other monetary
amounts due thereunder, according to the terms of that certain promissory note
(the "Note"), of even date herewith, made by Trustor, payable to the order of
Beneficiary, and all extensions, modifications, renewals, or replacements
thereof;
B(2). Performance, and observance by Trustor of each agreement, term,
provision, and condition contained herein and payment of all moneys expended or
advanced by Beneficiary pursuant to the terms hereof;
B(3). Performance, and observance by Trustor of each agreement, term,
provision, and condition contained in any other document or instrument related
to or securing the Indebtedness (as defined below) and payment of all moneys
expended or advanced by Beneficiary pursuant to the terms thereof or to preserve
any right of Beneficiary thereunder; and
B(4). Payment of any and all additional loans and advances made by
Beneficiary to Trustor and/or to the then record owner or owners of the Trust
Property with interest thereon, and other monetary amounts due thereunder,
according to the terms of the promissory note(s) and/or credit agreements
evidencing such advances and all extension, modifications, renewals, or
replacements.
All of the indebtedness and obligations secured by this Deed of Trust
are herein collectively called the "Indebtedness."
C. Trustor's Covenants
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Trustor covenants, warrants, and agrees:
C(1). Maintenance of Trust Property. Trustor shall neither commit, nor
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permit to occur, any waste upon the Trust Property, and shall at all times make
or cause to be made all repairs, maintenance, renewals, and replacements as may
be necessary to maintain the Trust Property in good condition and repair.
Trustor shall keep the Trust Property free of rubbish and other unsightly or
unhealthful conditions.
C(2). Construction on the Property. Trustor shall promptly complete any
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improvements that may be commenced, in good and workmanlike manner and in
conformity with plans and specifications, and shall repair and restore any
portions of the Trust Property that may be damaged or destroyed. Trustor shall
pay when due all claims for work performed and materials furnished on or in
connection with the Trust Property or any part thereof and shall pay, discharge,
or cause to be removed, all mechanic's, artisan's, laborer's, or materialman's
charges, liens, claims of liens, or encumbrances upon the Trust Property.
Notwithstanding anything herein to the contrary, Trustor may contest any claims
or liens which Trustor, in good faith, believes are invalid, provided Trustor
immediately records and serves a surety bond pursuant to Arizona Revised
Statutes 33-1044 or otherwise fully protects Beneficiary from any loss or
liability arising therefrom.
C(3). Insurance.
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(a) Policies Required. Trustor shall provide and maintain public
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liability insurance in amounts not less than $1,000,000 combined single limit
naming Beneficiary as an additional insured. Trustor shall provide and maintain
policies of fire and hazard insurance on any structures or improvements on the
Trust Property from time to time, containing endorsements naming Beneficiary as
its interest may appear. All such policies shall be written by reputable
carriers qualified to write insurance in the state where the Trust Property is
located. All insurance policies shall provide that Beneficiary is to receive
thirty (30) days' written notice from the insurer prior to cancellation. With
respect to all insurance required hereunder, original policies of insurance or
certificates of insurance shall be delivered to Beneficiary; renewal policies or
certificates of insurance shall be delivered to Beneficiary thirty (30) days
before expiration thereof with satisfactory proof that the premiums for renewal
have been paid.
C(4). Taxes and Assessments.
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(a) If Imposed on Trust Property. Trustor shall pay or cause to
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be paid all taxes and assessments of every kind, nature, and description levied
or assessed on or against the Trust Property at least five (5) days before they
become delinquent and shall pay when due all dues and charges for water and
water delivery, electricity, gas, sewers, waste removal, bills for repairs, and
any and all other claims, encumbrances, and expenses incident to the ownership
of the Trust Property, for the purpose of preventing the creation of any lien
upon the Trust Property.
(b) If Imposed on This Lien. Trustor shall pay any taxes or
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assessments, and shall protect Beneficiary against any and all loss from any
taxation that may be imposed upon this Deed of Trust or the lien of this Deed of
Trust on the Trust Property by any law, rule, regulation, or levy of the federal
government, any state government, or any political subdivision thereof.
(c) Disputed Tax or Assessment. Provided Trustor fully protects
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Beneficiary from any loss therefrom, Trustor may contest in good faith the
validity or amount of any tax, assessment, governmental charge, or other charge,
lien, or claim of lien, by appropriate proceedings provided by law, including
payment thereof under protest, if required, provided that upon a final
determination with respect to any such contested tax, assessment, or
governmental charge, Trustor shall promptly pay any sums found to be due
thereon.
C(5). Impound Account. Upon the occurrence of an Event of Default
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hereunder and while such default is continuing, in order to insure the payment
of taxes and assessments which thereafter may be a lien upon the Trust Property,
and to insure the payment of all premiums on policies of insurance required
herein, Trustor shall, upon receipt of written notice from Beneficiary, pay to
Beneficiary each month, in addition to any other payments required hereunder, an
amount equal to the taxes and special assessments levied or to be levied against
the Trust Property and the premium or premiums that will become due and payable
to maintain the insurance on the Trust Property, all as reasonably estimated by
Beneficiary (giving due consideration to the previous year's taxes, assessments,
and premiums), less all deposits therefore already made, divided by the number
of months remaining before one month prior to the date when the taxes,
assessments, and premiums become delinquent. If amounts paid to Beneficiary
under the terms of this paragraph are insufficient to pay all taxes,
assessments, and premiums as they become due, Trustor shall pay to Beneficiary
upon demand all additional sums necessary to fully pay and discharge these
items. All moneys paid to Beneficiary under the terms of this paragraph may be
either held by Beneficiary to pay the taxes, assessments, and premiums before
the same become delinquent or applied to the Indebtedness upon payment by
Beneficiary from its own funds of the taxes, assessments, and premiums. To the
extent provision is not made for payment pursuant to this paragraph, Trustor
shall remain obligated to pay all taxes, assessments, and premiums as they
become due and payable.
C(6). Expenses Advanced by Beneficiary. If, as described in this Deed
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of Trust, Trustor shall fail to pay any taxes, assessments, expenses, or
charges, to keep all of the Trust Property free from liens and claims of liens,
to maintain and repair the Trust Property, to procure and maintain insurance
thereon, or to perform otherwise as required herein, Beneficiary, at its option,
but without any obligation to do so, after giving Trustor written notice as
described elsewhere herein, may advance the moneys necessary to pay the same, to
accomplish such maintenance and repairs, to procure and maintain such insurance
or to so perform.
Beneficiary is hereby authorized to enter upon the Trust Property for such
purposes.
C(7). Performance of other Liens. Trustor shall fully and promptly
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perform all of Trustor's obligations under any deeds of trust, mortgages, or
other liens having a priority over or being subordinate to this Deed of Trust.
Trustor shall immediately instruct the trustees and beneficiaries under any such
prior liens to send copies to Beneficiary of all notices to Trustor of default
and Trustor shall forward to Beneficiary all such notices received by it.
Beneficiary shall have the right but not the obligation to cure on Trustor's
behalf any default under any prior lien and all costs incurred by Beneficiary in
so doing shall be treated as amounts advanced by Beneficiary.
C(8). Actions Affecting Priority. Upon written request by Beneficiary,
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Trustor shall appear in and prosecute or defend any action or proceeding by any
third party that may affect the lien or the priority of the lien of this Deed of
Trust or the rights of Beneficiary hereunder and shall pay all costs, expenses
(including the cost of searching title) and attorneys' fees incurred in such
action or proceeding. Beneficiary may, at its option, appear in and defend any
action or proceeding purporting to affect the lien or the priority of the lien
of this Deed of Trust or the rights of Beneficiary.
C(9). Compensation for Condemnation or injury to Trust Property.
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Trustor hereby assigns, transfers and conveys to Beneficiary all compensation in
each and every award of damages in connection with any condemnation for public
or private use of, or injury to, the Trust Property or any part thereof, to be
applied to, and to the extent of, the Indebtedness then remaining unpaid, unless
Trustor applies said proceeds to the replacement of the Trust Property or the
improvement of the remaining Trust Property
C(10). Transfer of Trust Property.
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(a) Except for transfers to "affiliates" (a person or entity
who, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, Trustor or Trustor's affiliates,
as defined and interpreted by federal securities laws), and except as
hereinafter specifically provided in subparagraph C(10)(b) below, Trustor shall
not, without obtaining Beneficiary's prior written consent (which consent may be
given or withheld in Beneficiary's absolute discretion, grant, convey, sell,
encumber, exchange, assign, lease, option, grant a right of first refusal,
contribute to a partnership, joint venture, corporation or other legal entity or
otherwise transfer or dispose of (whether directly or indirectly and whether
voluntarily, involuntarily or by operation of law) the Trust Property or any
part thereof or any interest therein, or enter into any agreement or make any
arrangement to do any of the foregoing (individually or collectively, a
"transfer"). Any transfer attempted or undertaken in violation of the provisions
of this Section shall, at Beneficiary's option, be null and void and of no force
and effect whatsoever, and the same also shall constitute a default hereunder
(and notwithstanding any other provision hereof, without any requirement of
notice or opportunity to cure) entitling Beneficiary, at its option, to avail
itself of any and all rights, powers and remedies provided therefor in this Deed
of Trust, or under the Note or under any other instrument relating thereto, or
at law or in equity. Consent to any particular transfer shall not be deemed to
be consent under any other instrument relating thereto, or at law or in equity.
Consent to any particular transfer shall not be deemed to be consent to any
further or other transfer. Whether or not Beneficiary has consented to any
transfer, Beneficiary may deal with Trustor's successor-in-interest (without
respect to this Deed of Trust and the indebtedness) in the same manner as with
the Trustor herein named without in any way vitiating or discharging Trustor's
liability hereunder or for the indebtedness. All transfers consented to
hereunder shall be evidenced by a written instrument, duly and properly executed
and acknowledged by each of the parties thereto and, if requested by
Beneficiary, in form suitable for recording. No transfer, whether or not
undertaken in violation of this Section shall release Trustor from any of its
obligations under this Deed of Trust or the Note or any Security Document or
reduce or diminish the same in any way. The provisions of this Section shall
apply to each and every such transfer, regardless of whether or not Beneficiary
has consented to any such previous or other transfer.
(b) Notwithstanding anything herein to the contrary, it is
expressly agreed that Trustor may: (i) develop the Trust Property and sell
Timeshare intervals as provided in Section C(11) below; (ii) sell any personal
property or equipment in accordance with a separate Security Agreement between
Trustor and Beneficiary; (iii) impose upon the Trust Property a lien, or liens,
superior to the lien of this instrument, the Security Agreement and other
security instruments related to this transaction, securing a principal
indebtedness not to exceed the principal sum of $2,050,000.00 (including the
remaining principal amount of the Existing First Lien), which indebtedness must
be a regulary amortized indebtedness and may not be a revolving line of credit,
for refurbishing and construction of improvements on the Trust Property and
development of the timeshare program, which senior liens, whether entered into
and/or recorded before or after this Junior Deed of Trust will be senior in
priority to this Junior Deed of Trust without further action by Beneficiary, and
(iv) impose upon the Trust Property a lien or liens junior to the lien of this
instrument, the Security Agreement and other security instruments related to
this transaction for the purpose of securing obligations to lenders of Trustor
resulting from timeshare sales of the Trust Property. At Trustors reasonable
request, Beneficiary will execute any documents resonably intended to evidence
subordination to such senior deed(s) of trust. Beneficiary shall be provided
with true and complete copies of the documentation evidencing the senior deed(s)
of trust (including any loan agreement and promissory note), and provided at
least ten (10) days prior notice of the closing of such transaction(s) so
Beneficiary may have an opportunity to negotiate with the holder of such senior
deed(s) of trust for a right to notice and cure. The outcome of any such
negotiation shall have no effect whatsoever upon the effectiveness of any
provision of this Deed of Trust (including without limitation the right of
Trustor to place senior liens as described above).
C(11). Development and Establishment of Timeshare. Notwithstanding any
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provision of this Deed of Trust to the contrary, without the necessity of
consent of the Trustee or Beneficiary, Trustor may develop the Trust Property,
to include granting easements, dedicating roadways, imposing covenants,
conditions and restrictions, building structures and other improvements thereon
and doing every other thing incidental to or convenient for such development,
all by Trustor's signature execution alone which will fully bind the Property.
In that connection, Trustor may establish a timeshare club membership plan at
the Property ("Timeshare") and record or file against the Trust Property any
documents necessary or convenient to accomplish same.
(a) Without limitation, the Timeshare may include a membership
plan forming the Timeshare and any and all articles, bylaws, organizational
documents, easements, management agreements, rules and regulations, and other
documents or agreements relating to formation and operation of the Timeshare;
(b) Trustor shall comply with all applicable local, state and
federal laws, rules and regulations governing the development of the Trust
Property and establishment and sale of club memberships and/or Timeshares;
(c) In connection with the Timeshare, Trustor intends to
divide each residential unit located on the Trust Property into salable one-week
(or less) intervals (each such interval hereafter called a "Membership
Interval");
(d) The Trustor shall create no fewer than the number of
"every year" Membership Intervals, as described in Sections G(14) and G(15)
below, which are necessary to pay the debt secured hereby in the manner
described below in this paragraph, unless Trustor elects to also create "every
other year" Membership Intervals, in which case Trustor may reduce the number of
"every year" Membership Intervals by replacing each such Membership Interval
with two "every other year" Membership Intervals, it being the intention of the
parties that the release prices multiplied by the number of available Membership
Intervals shall be adequate to amortize and pay the debt secured hereby;
(e) Trustor shall be entitled to a release and reconveyance
from this Deed of Trust of a fractional interest in the Trust Property
corresponding to a Membership Interval all as described in Sections G(14) and
G(15) below. D. Leases, Assignment of Rents and Leases
D(1). Rents and Leases Assigned. To facilitate payment and performance
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of the Indebtedness, Trustor hereby transfers and assigns to Beneficiary all
right, title, and interest of Trustor in and to (i) all existing and future
unreleased Membership Intervals, leases, subleases, licenses, and other
agreements for the use and occupancy of all or any portion of the Trust
Property, whether written or oral and whether for a definite term or month to
month, together with any and all guarantees of the lessee's or member's
obligations thereunder and together with any and all extensions, modifications,
and renewals thereof (hereinafter called the "Leases"), and (ii) all income,
payments, receipts, revenues, security deposits, rents, issues, and profits now
or hereafter arising from or out of the Leases or from or out of the Trust
Property or any part thereof (hereinafter called the "Rents").
D(2). Payment of rent to Beneficiary. Conditioned upon notice of
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Trustor's default, in writing from Beneficiary, Trustor hereby authorizes and
directs the members, lessees and tenants under the Leases and any managing agent
that, upon such written notice from Beneficiary, all Rents shall be paid
directly to Beneficiary as they become due. Trustor hereby relieves the members,
lessees and tenants from any liability to Trustor by reason of the Rents being
paid to Beneficiary after such notice. Nevertheless, Trustor shall be entitled
to collect the Rents, subject to the restrictions contained in paragraph D(3)
below, until Beneficiary notifies the members, lessees and tenants in writing to
pay the Rents to Beneficiary. Beneficiary is hereby authorized to give such
notification upon the occurrence of an Event of Default. All Rents collected by
Beneficiary may be applied in any manner or priority Beneficiary deems advisable
to payment of amounts due and owing to Beneficiary under the terms of any
obligations secured hereby.
D(3). Leases in Effect. Beneficiary does not assume and shall not be
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liable for any obligation of the lessor under any of the Leases, and Beneficiary
shall not be liable for the failure or inability to collect any Rents.
E. Security Agreement
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E(1). Security Interest Created. This Deed of Trust shall cover, and
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the Trust Property shall include, all personal property, tangible or intangible,
and fixtures, which are both (i) now owned or subsequently acquired by Debtor,
and (ii) now or subsequently installed, affixed, attached, kept or situated on,
to or at the Trust Property or used in the operation thereof. To the extent any
of the Trust Property consists of rights in action or personal property covered
by the Uniform Commercial Code, this Deed of Trust shall also constitute a
security agreement, and Trustor hereby grants to Beneficiary, as secured party,
a security interest in such property, including all proceeds and products
thereof, for the purpose of securing the Indebtedness.
E(2). Additional Documents Evidencing Security Agreement. The security
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interests granted herein shall be self-operative with respect to such property,
but Trustor agrees to execute and deliver on demand such additional security
agreements, financing statements, certificates of title, and other instruments
as may be reasonably requested in order to impose the lien and security interest
hereof more specifically upon such property. Should the lien and/or security
interest of this Deed of Trust on any property be subject to a prior security
agreement covering such property, then, upon the occurrence of an Event of
Default, all the right, title, and interest of Trustor in and to any and all
deposits made in connection with the transaction whereby such prior security
agreement was made are hereby assigned to Beneficiary, together with the benefit
of any payments now or hereafter made in connection with such transactions.
E(3). Replacement of Personal Property. Trustor shall promptly replace
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any personal property that is consumed or worn out in ordinary usage.
E(4). Change in Location of Property or Trustor's Office. Trustor shall
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immediately notify Beneficiary of any change in the location of Trustor's
address as set forth in the beginning of the Deed of Trust, and any change in
location of the personal property encumbered hereby except that which is
replaced with property of equal value.
E(5). Property Subject to Security Interest. All covenants of Trustor
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contained in this Deed of Trust shall apply to the personal property encumbered
hereby whether or not expressly referred to in this Section E. The covenants and
warranties of Trustor contained in this Section E are in addition to, and not in
limitation of, those contained in the other provisions of this Deed of Trust.
E(6). Filing. Upon its recording in the real property records, this
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Deed of Trust is intended to be effective as a financing statement filed as a
fixture filing. In addition, a reproduced copy of this Deed of Trust and/or any
financing statement relating hereto is intended to be sufficient for filing
and/or recording as a financing statement.
F. Defaults; Remedies
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F(1). Default Defined. The occurrence of any of the following events or
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conditions shall constitute an "Event of Default" by Trustor under this Deed of
Trust:
(a) Any failure on the part of Trustor to comply with and perform
any term, provision, or condition contained in this Deed of Trust, or any other
document evidencing or securing the Indebtedness, or the failure of any material
warranty or representation of Trustor made in connection with the Indebtedness
to be true; provided, however, that Trustor shall not be in default under this
paragraph if payment of any monetary obligation is made within ten (10) days
after Trustor's receipt of written notice of non-payment from Beneficiary, and
performance of any non-monetary obligation is completed within thirty (30) days
after written notice demanding performance. If performance of a non-monetary
obligation cannot reasonably be completed within thirty (30) days after notice
as provided herein, then the period for completion of performance for purposes
of this paragraph may be extended sixty (60) additional days, provided Trustor
is diligently pursuing performance or cure.
(b) The voluntary or involuntary commencement of bankruptcy or
insolvency proceedings or the filing for an arrangement or composition of
creditors against Trustor, any partner in Trustor, Trustor's general
contractors, or any guarantor of the Indebtedness, or upon the filing of any
suit or legal action materially affecting the Trust property or Trustor;
provided, however, that if an action or proceeding is commenced by someone other
than Trustor, any partner in Trustor, or Trustor's contractors, Trustor shall
not be in default if said action or proceeding is dismissed by a court of
competent jurisdiction within forty-five (45) days after commencement of the
action or proceeding.
(c) The commencement of any action or proceeding to foreclose, or
enforce any claim, encumbrance, or lien, on or with respect to the Trust
Property, whether or not superior or inferior to the lien created by this Deed
of Trust or any other document evidencing or securing the Indebtedness unless
Trustor shall, within fifteen (15) days after service of such action or
proceeding, record and serve a surety bond pursuant to Arizona Revised Statutes
Section 33-1004 or otherwise fully protect Beneficiary from any loss or
liability arising therefrom;
(d) The material damage or destruction of the Trust property by
any casualty not covered by appropriate insurance; provided, however, that, in
the case of material damage or destruction of the Trust Property by a casualty
not covered by appropriate insurance, Trustor shall not be deemed to be in
default if Trustor makes arrangements reasonably satisfactory to Beneficiary for
the repair of the Trust Property.
F(2). Remedies. Upon the occurrence of any Event of Default,
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Beneficiary may do one or more of the following:
(a) Acceleration. Declare the entire Indebtedness to be
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immediately due and payable, and the same, with all costs and charges, shall be
collectible thereupon by action at law.
(b) Trustee's Sale. Give such notice of default and of election
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to cause the Trust Property to be sold as may be required by law or as may be
necessary to cause Trustee to exercise the power of sale granted herein. Trustee
shall then record and give such notice of trustee's sale as is then required by
law and, after the expiration of such time as may be required by law, may sell
the Trust Property at the time and place specified in the notice of sale, but as
a whole only, at public auction to the highest bidder for cash in lawful money
of the United States, payable at time of sale, all in accordance with applicable
law. Trustee, from time to time, may postpone or continue the sale of all or any
portion of the Trust Property by public declaration at the time and place last
appointed for the sale. No other notice of the postponed sale shall be required.
Upon any sale, Trustee shall deliver its deed conveying the property sold,
without any covenant or warranty, express or implied, to the purchaser or
purchasers at the sale. The recitals in such deed of any matters or facts shall
be conclusive as to the accuracy thereof. Any person, including Trustor,
Trustee, or Beneficiary, may purchase at the sale.
(c) Foreclosure. Commence proceedings for foreclosure of this
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Deed of Trust in the manner provided by law for the foreclosure of a real
property mortgage.
(d) Uniform Commercial Code Remedies, Sale as a Unit. Exercise
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any or all of the remedies of a secured party under the Uniform Commercial Code
with respect to any personal property covered hereby. If Beneficiary should
proceed to dispose of any personal property in accordance with the provisions of
the Uniform Commercial Code, fifteen (15) days' notice by Beneficiary to Trustor
shall be deemed to be commercially reasonable notice under any provision of the
Uniform Commercial Code requiring notice. All property of every nature and
description, whether real or personal, covered by this Deed of Trust, together
with all personal property used on or in connection with the Trust Property or
any business conducted thereon by the Trustor and covered by separate security
agreement are encumbered as one unit, and this Deed of Trust and such security
interests shall be sold as such in one unit as a going business.
(e) Collection of Rents. Send notifications to any and all
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members, lessees and tenants under the Leases that all Rents shall be paid to
Beneficiary. Thereafter, Beneficiary shall be entitled to collect the Rents and
may apply the Rents collected to the payment of the Indebtedness.
F(3). Appointment of Receiver. At any time after the recording by
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Trustee of notice of trustee's sale, or after the institution of foreclosure
proceedings, upon application of Beneficiary, a receiver may be appointed by any
court of competent jurisdiction to take charge of all the Trust Property, to
manage, operate and carry on any business then being conducted or that could be
conducted on the Property, to carry on, protect, preserve, replace and repair
the Trust property, and receive and collect all Rents and to apply the same in
the manner provided in paragraph D(2) herein. Upon appointment of said receiver,
Trustor shall immediately deliver possession of all of the Trust property to
such receiver.
F(4). Legal Fees and Costs. In the event that it becomes necessary for
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Beneficiary to take legal action to enforce payment or performance of the
Indebtedness, to enforce any provision hereof, or to protect any of
Beneficiary's rights hereunder, Trustor shall pay to Beneficiary all taxable
costs of any legal proceeding or action and all reasonable attorneys' fees
actually incurred. In the event a court action shall be commenced, fees shall be
fixed by the Judge of the court.
F(5). No Waiver. No failure on the part of Beneficiary to exercise any
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of its rights hereunder arising upon any Event of Default shall be construed to
prejudice its rights upon the occurrence of any other or subsequent Event of
Default. No delay on the part of Beneficiary in exercising any such rights shall
be construed to preclude it from the exercise thereof at any time during the
continuance of that Event of Default. Beneficiary may enforce any one or more
remedies or rights hereunder successively or concurrently.
G. General Provisions
------------------
G(1). No Waiver, Additional Security. The acceptance of this Deed of
---------------------------------
Trust by Beneficiary shall not be considered a waiver of or in any way to affect
or impair any other security that Beneficiary may have, acquire simultaneously
herewith, or hereafter acquire for the payment or performance of the
Indebtedness, nor shall the taking by Beneficiary at any time of any such
additional security be construed as a waiver of, or in any way to affect or
impair the security of this Deed of Trust; Beneficiary may resort, for the
payment or performance of the Indebtedness, to its several securities therefor
in such order and manner as it may determine.
G(2). Modification of Obligations. Without notice or demand, without
----------------------------
affecting the obligations of Trustor hereunder or the personal liability of any
person for payment or performance of the Indebtedness and without affecting the
lien or the priority of the lien of this Deed of Trust, Beneficiary, from time
to time, may: (i) extend the time for payment of all or any part of the
Indebtedness, accept a renewal note therefor, reduce the payments thereon,
release any person liable for all or any part thereof, or otherwise change the
terms of all or any part of the Indebtedness; (ii) take and hold other security
for payment or performance of the Indebtedness and enforce exchange, substitute,
subordinate, waive or release any such security; (iii) join in any extension or
subordination agreement; or (iv) release or direct Trustee to release any part
of the Trust Property from this Deed of Trust. Any such action by Beneficiary,
or Trustee at Beneficiary's direction, may be taken without the consent of any
junior lienholder and shall not affect the priority of this Deed of Trust over
any junior lien.
G(3). Waiver of Formalities and priority of Remedies. Trustor waives
------------------------------------------------
and agrees not to assert: (i) any right to require Beneficiary to proceed
against any guarantor, to proceed against or exhaust any other security for the
Indebtedness, to pursue any other remedy available to Beneficiary, or to pursue
any remedy in any particular order or manner, and (ii) demand, diligence,
presentment for payment, protest and demand, and notice of extension, dishonor,
protest, demand and nonpayment, relating to the indebtedness.
G(4). Alternative Remedies. In addition, if, under the terms hereof,
---------------------
Beneficiary is given two or more alternative courses of action, Beneficiary may
elect any alternative or combination of zero or more alternatives, at its
option.
G(5). Advances Secured Hereby. All monies advanced by Beneficiary under
------------------------
the terms hereof and all amounts paid, suffered or incurred by Beneficiary in
exercising any authority granted herein, including reasonable attorneys' fees,
shall be added to the Indebtedness, shall be secured by this Deed of Trust,
shall bear interest at the highest default interest rate specified in the
note(s) described in paragraph B(1) hereof until paid, and shall be due and
payable by Trustor to Beneficiary immediately without demand.
G(6). Full Release of Trust Property. Upon written request of
-----------------------------------
Beneficiary stating that all of the Indebtedness has been paid, and upon
surrender of this Deed of Trust and any promissory note or notes secured hereby
to Trustee for cancellation and retention, the then Trustee (and Beneficiary if
necessary to clear title), upon payment of Trustee's fees, shall release and
reconvey, without warranty, the Trust Property. The recitals in such
reconveyance of any matters or facts shall be conclusive as to the accuracy
thereof. The grantee in such reconveyance may be described as "the person or
persons legally entitled thereto." Five years after issuance of such full
reconveyance, Trustee may destroy said promissory note or notes and this Deed of
Trust unless prior thereto trustee has been directed to retain them or deliver
them to the person or persons to whom the Property was reconveyed.
Beneficiary may also execute a release and reconveyance as provided by Arizona
law.
G(7). Inspection of Trust Property. Beneficiary or Trustee, or both,
-----------------------------
shall have the right to inspect the Trust Property at all reasonable times.
G(8). Joint Liability, Time, Gender, Number, Future Owners. Time is of
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the essence hereof. If more than one Trustor is named herein, the word "Trustor"
shall mean all and any one or more of them, severally and collectively. All
liability hereunder shall be joint and several. This Deed of Trust applies to,
inures to the benefit of, and binds all parties hereto, their heirs personal
representatives, successors and assigns. The term "Beneficiary" shall include
not only the original Beneficiary hereunder but also any future owner and
holder, including pledgees, of any note or notes evidencing the Indebtedness.
The provisions hereof shall apply to the parties according to the context
thereof and without regard to the number or gender of words or expressions used.
G(9). Recordation of This Deed of Trust. The acceptance by Trustee of
----------------------------------
this trust shall be evidenced when this Deed of Trust, duly executed and
acknowledged, is made a public record as provided by law by Trustee or its
affiliate. The trust created hereby is irrevocable by Trustor.
G(10). Written Modification. This Deed of Trust cannot be changed
----------------------
except by agreement, in writing, signed by Trustor and Beneficiary.
G(11). Additional Acts. Trustor, upon request of Beneficiary, and vice
----------------
- - versa, shall promptly cooperate in the correction of any technical defect,
error or omission that may be discovered in the content of this Deed of Trust or
in the execution or acknowledgment hereof. Beneficiary, upon request of Trustor,
shall cooperate in effecting any Timeshare as required by the Arizona Department
of Real Estate and which does not materially adversely affect the enforceability
of its lien as described herein.
G(12). Severability. Should any term, provision, covenant or condition
-------------
of this Deed of Trust be held to be void or invalid, the same shall not affect
any other term, provision, covenant or condition of this Deed of Trust, but the
remainder hereof shall be effective as though such term, provision, covenant or
condition had not been contained herein. In addition, should this instrument be
or become ineffective as a deed of trust, then these presents shall be construed
and enforced as a realty mortgage with the Trustor being the mortgagor and
Beneficiary being the mortgagee.
G(13). Notice. All notices required or permitted to be given hereunder
-------
shall be in writing, and shall become effective immediately upon hand delivery
or seventy-two (72) hours after such notices are deposited with the United State
Postal Service, certified or registered, postage prepaid, addressed as shown
above, or to such other address as such party may, from time to time, designate
in writing.
G(14). Partial Releases of Trust Property by Beneficiary. In the event
--------------------------------------------------
a conversion to Timeshare (see Section C(11) above) has occurred, and provided
that Beneficiary has not given written notice to the Trustor of an existing
Event of Default, Trustor shall be entitled to the issuance by Beneficiary
(pursuant to Arizona Revised Statues, Section 33-707) of a partial release and
reconveyance of a fractional interest in the Trust Property, in the form
substantially as attached hereto as Exhibit "B" (the "Release"), which
corresponds to the Membership Interval requested for release, subject to the
following conditions:
(a) The principal payment to Beneficiary, or any collection agent
appointed by the Trustor and Beneficiary ("Collection Agent"), for credit to the
principal of the Note as of the date of such payment, of a release price (the
"Release Price") of:
(i) Three Hundred Dollars ($300.00) for an "every year"
Membership Interval; or
(ii) One Hundred Fifty Dollars ($150.00) for an "every other
year" Membership Interval;
(b) Upon payment of the Release Price, Beneficiary or Collection
Agent, as the case may be, shall immediately deliver a separate executed Release
to Trustor for each Membership Interval released in exchange for such payment,
including without limitation the scheduled principal payments on the Note. The
fractional release of the Trust Property for an "every year" or "every other
year" Membership Interval shall be the applicable fraction as set forth in the
Timeshare plan of public record, as it may be amended from time to time.
(c) The signature on the Release of only one partner of
Beneficiary shall fully bind Beneficiary on such Release.
(d) Beneficiary shall execute and deposit in advance with the
Collection Agent, if appointed, a sufficient number of separate Releases for
each month as reasonably projected by Trustor, but not less than fifty (50) each
month in any event. The Collection Agent is authorized to fill in the
appropriate fractional release on the Release, and the "Purchaser's" name
thereon shall be left blank to be filled in by Trustor after delivery to Trustor
as described above.
G(15). Partial Releases of Trust Property by Trustee. In the event that
a conversion to Timeshare has occurred, and provided that Trustee has received
no written notice from Beneficiary of an existing Event of Default, Trustor
shall be entitled, without further action or request by Beneficiary, to the
issuance by Trustee of a partial release and reconveyance of a fractional
interest in the Trust Property, in the form substantially as attached hereto as
Exhibit "C" (the "Trustee Release"), which corresponds to the Membership
Interval requested for release, subject to the following conditions:
(a) The written request for release and the principal payment to
Trustee, for credit to the principal of the Note as of the date of such payment,
of a release price (the "Release Price") of:
(i) Three Hundred Dollars ($300.00) for an "every year"
Membership Interval; or
(ii) One Hundred Fifty Dollars ($150.00) for an "every other
year" Membership Interval;
plus the Trustee's fees applicable to such release and reconveyance.
(b) Upon the submission by the Trustor to the Trustee of the
release request and Release Price, Trustee shall, as soon as practicable,
deliver or send a separate executed Trustee Release to Trustor for each
Membership Interval released in exchange for such payment (which payment shall
be transmitted to Beneficiary). The fractional release of the Trust Property for
an "every year" or "every other year" Membership Interval shall be as set forth
in the Timeshare plan of public record, as it may be amended from time to time.
(c) The Trustee is authorized to fill in the appropriate
fractional release on the Release, and the "Purchaser's" name thereon shall be
left blank to be filled in by Trustor after delivery to Trustor as described
above.
G(16). All Principal Applies to Releases. All payments of principal on
the Note, scheduled payments, prepayments, or otherwise, shall apply and be
credited to partial release and reconveyance of the Trust Property as described
above.
IN WITNESS WHEREOF, these presents have been executed by the parties
below.
BENEFICIARY: TRUSTOR:
KOHL'S RANCH ASSOCIATES ILX INCORPORATED,
an Arizona general partnership an Arizona corporation,
By: /s/ Thomas L. Griffith By: /s/ Joseph P. Martori
------------------------- --------------------------
Thomas L. Griffith Joseph P. Martori
Partner Chairman
By: /s/ Diane M. Griffith
-------------------------
Diane M. Griffith
Partner
ACCEPTED:
TRUSTEE:
First American Title Insurance Company
of Arizona, an Arizona corporation
By: Donald M. Miltz
-----------------------
Its Senior Escrow Officer
-----------------------
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this 1st day of
June, 1995, by Joseph P. Martori, the Chairman of ILX, INCORPORATED, an
Arizona corporation, for and on behalf of the corporation.
/s/ Michelle Lemiux
------------------------------
Notary Public
My Commission Expires:
April 11, 1997
- ---------------------
STATE OF ARIZONA )
) ss.
County of Gila )
The foregoing instrument was acknowledged before me this 1st day of
June, 1995, by Thomas L. Griffith, Partner of KOHL'S RANCH ASSOCIATES,
an Arizona general partnership, for and on behalf of the general partnership.
/s/ Brenda Williams
------------------------------
Notary Public
My Commission Expires:
October 15, 1998
- -----------------------
STATE OF ARIZONA )
) ss.
County of Gila )
The foregoing instrument was acknowledged before me this 1st day of
June, 1995, by Diane M. Griffith, Partner of KOHL'S RANCH ASSOCIATES,
an Arizona general partnership, for and on behalf of the general partnership.
/s/Brenda Williams
------------------------------
Notary Public
My Commission Expires:
October 15, 1998
- ----------------------