PROMISSORY NOTE
Phoenix, Arizona
$10,000,000.00 As of August, 25, 1995
FOR VALUE RECEIVED, ILX INCORPORATED, an Arizona Corporation (the
"Undersigned" or the "Borrower"), promises to pay in lawful monies of the United
States of America, to the order of TAMMAC FINANCIAL CORP., having its principal
office located at 100 Commerce Boulevard, Wilkes-Barre, PA 18702 (hereinafter
referred to as the "Lender") or at such place as Lender may from time to time
designate in writing, the principal sum of Ten Million Dollars ($10,000,000.00)
or so much as shall have been advanced from time to time (the "Loan"), together
with interest as hereinafter provided, computed from the date hereof, in
accordance with the terms of a certain Loan and Security Agreement between the
undersigned and the Lender executed contemporaneously herewith (the "Loan
Agreement"), and in the following manner and upon the following terms and
conditions:
1. Payment of Loan.
(a) The unpaid principal, the accrued interest and all costs and
expenses relating to the Loan shall be payable on the first day of the
seventy-second (72nd) month after the expiration of the Draw Period, unless
sooner demanded in accordance with the terms and provisions set forth herein.
(b) Unless accelerated pursuant to the terms and conditions of the Loan
Agreement or this Note, or paid before the scheduled Maturity Date of the Loan,
the Borrower shall pay to Lender ninety-six (96) consecutive minimum monthly
payments each in an amount equal to ninety-four percent (94%) of the scheduled
monthly payments of principal and interest due on the Acceptable Contracts
comprising the Collateral for the Loan ("Mandatory Payments"). All Mandatory
Payments as hereinabove provided shall be applied first to the payment of
accrued and unpaid interest and the balance, if any, shall be applied to the
payment of the installments of principal then remaining unpaid. The aforesaid
payments shall be payable in arrears on the first day of each calendar month
commencing on the first day of the month next following the date of this Note
and shall continue until such time as the full principal sum, together with all
amounts owing under the Loan have been paid in full. The aforesaid payments
shall be made payable out of the monthly collections received under the
Acceptable Contracts. In the event the monthly collections are in excess of the
applicable monthly Mandatory Payment as aforesaid, said excess shall be applied
as a prepayment of the principal balance remaining due under the Loan. In the
event the monthly collections from the Acceptable Contracts are insufficient to
pay the aforesaid monthly principal and/or interest on the Loan the Borrower
shall pay the interest and/or principal insufficiency on the first of each month
as aforesaid.
(c) The Borrower shall direct or otherwise cause all Consumers (as that
term is defined in the Loan Agreement) under the Acceptable Contracts to pay all
monies due thereunder to the Agent (as that term is defined in the Loan
Agreement) or as otherwise advised by Lender in writing. The Borrower, to the
extent that it receives such payments directly from or on behalf of such
Consumers, shall hold the same (in the form so received) in trust for the sole
and exclusive benefit of Lender and immediately deliver same to Lender. Monies
(in good, collected funds) from Contracts collected and paid to Lender by the
Agent or the Borrower shall be (subject to the payment of fees, costs and
expenses as set forth herein and in the Loan Agreement) applied, on the first
business day of the calendar month following the receipt thereof, first towards
the payment of accrued and unpaid interest on the Loan and then to the payment
of the principal amount then outstanding under the Loan.
(d) For purposes of computing the amount of interest payable on the
Loan, the outstanding principal amount of the Loan shall not be reduced by the
amount of any funds collected by the Agent or the Borrower until such funds are
received by Lender as good, collected funds and applied to the Loan.
2. Interest Rate. The interest rate which shall be used to calculate
the amount of interest due each month shall be the highest prime rate as
announced, from time to time, in The Wall Street Journal during the month for
which interest is being charged ("Prime Rate"), plus four (4%) percentage points
per annum. Interest shall be calculated on the outstanding principal balance at
the close of each day, on the basis that one day represents 1/360th of a year.
The interest rate may be changed from time to time without notice to the
Borrower and for the purposes of this Note, any such change shall be effective
on the date of the change. Interest shall continue to accrue on the unpaid
principal balance remaining due until all sums due hereunder and under the Loan
Agreement are paid in full. Lender's failure or delay in submitting invoices of
the interest due under the Loan to the Borrower shall not discharge or relieve
the Borrower of its obligation to pay interest on the Loan when due.
3. Default Interest Rate. Upon the occurrence or during the continuance
of an Event of Default, as defined in the Loan Agreement, the rate used to
calculate the interest due on the Loan may, at the option of Lender, increase by
five (5%) percentage points above the interest rate referred to in paragraph 2.
above (the "Default Rate"). If such increased interest rate exceeds that which
may be collected under applicable law, the Default Rate shall be that maximum
allowable interest rate.
4. Late Charge. In the event Lender receives a payment of interest or
principal more than fifteen (15) days after its due date, such payment shall be
subject to a late charge of five (5%) percent of such payment (the "Late
Charge"). The Late Charge represents the cost to the Lender in processing late
payments and shall not be deemed to constitute additional interest.
5. Collateral. As security for the payment and performance of the
obligations hereunder, the undersigned has, contemporaneously herewith, granted
a security interest to Lender in and to the Collateral more particularly
described in the Loan Agreement.
6. Application of Payments. All payments of interest and principal or
prepayments of principal, howsoever designated by the undersigned, are to be
applied first on account of interest on the unpaid balance of the principal
indebtedness, and the balance, if any, on account of said principal
indebtedness.
7. Events of Default; Acceleration of Balance Due. (a) The Borrower
agrees with the Lender that the Borrower shall be bound by and shall comply with
all of the terms, covenants and conditions of the Loan Agreement and all other
Loan Documents, as that term is defined in the Loan Agreement, all of which
shall be construed as one instrument and any Default in any term, covenant or
condition contained in the Loan Agreement and/or any of the other Loan Documents
shall cause this Note to be in default and all money owed by the Borrower to the
Lender by virtue of this Note, the Loan Agreement and/or any of the other Loan
Documents shall be forthwith due and payable. All of the Events of Default set
forth in the Loan Agreement and the other Loan Documents are herein incorporated
by reference as though set forth fully at length.
(b) Upon the occurrence of any Event of Default as described or defined
in the Loan Agreement, and/or any of the other Loan Documents, then, at the
option of the Lender or the holder hereof, the aforesaid principal sum or so
much thereof as shall then remain unpaid, with all arrearage of interest
thereon, and any other sums due hereunder or thereunder shall, without notice or
demand, at the option of the Lender, become and be due and payable immediately
thereafter, anything hereinbefore contained to the contrary notwithstanding. In
addition, the Lender or holder hereof may exercise any and all rights and
remedies available to it under the terms of the Loan Agreement and/or any other
Loan Documents, or at law or in equity.
8. Principal Prepayments. It is understood and agreed that the
undersigned may prepay in full or in part at any time without penalty or
premium, the principal of this obligation; provided, however, the Borrower shall
notify Lender of each such prepayment. Any such prepayments of principal shall
be applied in the inverse order of their maturity.
9. Lender's Rights Cumulative. No remedy referred to herein is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to herein, in the Loan Agreement and/or any of the other Loan
Documents, or other agreements or otherwise available to Lender at law or in
equity. No express or implied waiver by Lender of any Default or Event of
Default hereunder shall in any way be, or be construed to be, a waiver of any
future or subsequent Default or Event of Default. The failure or delay of Lender
in exercising any rights granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such rights
upon the continuation or reoccurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by
Lender shall not exhaust the same or constitute a waiver of any other right
provided herein. The Events of Default and remedies thereon are not restrictive
of and shall be in addition to any and all other rights and remedies of Lender
provided for by the Loan Agreement and/or any of the other Loan Documents and
applicable law.
10. Waiver of Jury Trial. THE BORROWER HEREBY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS NOTE, THE LOAN AGREEMENT AND/OR
ANY OF THE OTHER LOAN DOCUMENTS OR OTHER AGREEMENTS OR INSTRUMENTS BETWEEN
BORROWER AND LENDER.
NS
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Initial
11. Attorney's Fees, Costs and Charges. The Borrower shall be liable
for all costs, charges and expenses, and other sums incurred or advanced by
Lender (including reasonable legal fees and disbursements) to preserve, protect
or maintain the Collateral securing this Note, collect the sums due hereunder
and/or the other Loan Documents, protect Lender's interests in or realize on the
Collateral or to enforce Lender's rights against the Borrower.
12. Joint and Several Liability. The liability of the Borrower shall be
joint and several, absolute and unconditional and without regard to the
liability of any other party.
13. Waivers. The Borrower and all other parties who at any time may be
liable hereon in any capacity, jointly and severally, waive presentment, demand
for payment, protest and notice of protest, and notice of dishonor of this Note,
and authorize Lender, without notice, to grant any extension, postponement of
time of payment, indulgence or any substitution, exchange or release of
Collateral and the addition to or release of any party or persons primarily or
secondarily liable or acceptance of partial payments on any accounts or
instruments and the settlement, compromising or adjustment thereof.
14. Disclosure of Information. Lender is hereby authorized to disclose
any financial or other information about the Borrower to any regulatory body or
agency having jurisdiction over the Lender, or to any present, future or
prospective participant or successor in interest in any loan or other financial
accommodation made by Lender to the Borrower.
15. Further Security; Right of Set-off. (a) As further security for the
performance of the obligations hereunder and the other Obligations, as defined
in the Loan Agreement, the Borrower hereby gives Lender a general lien upon all
property and assets heretofore or hereafter delivered to Lender, and Lender
shall have the right of setoff, in addition to any other rights conferred by
statute or operation of law, with respect to any funds or tangible assets which
may, at any time, be in possession of or under Lender's custody and control.
(b) Lender shall have the right, after the occurrence of an Event of
Default, to immediately without notice or other action, to set-off against the
Borrower's obligations to Lender, any sum owed by the Lender in any capacity to
the Borrower, whether due or not, or any property of the Borrower in the
possession of the Lender, and Lender shall be deemed to have exercised such
right of set-off and have made a charge against any such money or property
immediately upon the occurrence of any Event of Default, even though the actual
book entries may be made at times subsequent thereto.
16. No Waiver of Rights or Remedies. The Lender shall not by any act or
omission be deemed to have waived any of its rights or remedies hereunder unless
such waiver is in writing and signed by the Lender, and then only to the extent
set forth therein. A waiver as to any one event shall in no way be construed as
continuing or as preventing the exercise of such rights or remedies by a
subsequent event.
17. Business Purpose. The proceeds of this Note shall be (or have been)
utilized for business purposes and as a result, this loan transaction does not
fall under the regulations set forth in 12 CFR Section 226, et seq.
18. Balloon Note. IN THE EVENT THAT THERE IS A PRINCIPAL BALANCE
REMAINING DUE AFTER ALL MANDATORY PAYMENTS REQUIRED TO BE MADE UNDER PARAGRAPH I
ABOVE HAVE BEEN PAID BY BORROWER TO LENDER, THIS NOTE SHALL BE DEEMED TO BE A
BALLOON NOTE REQUIRING PAYMENT IN FULL ON THE DATE OF MATURITY AND THE LENDER
SHALL BE UNDER NO OBLIGATION TO REFINANCE THE AMOUNT DUE AT THAT TIME.
19. Loan Charges. In the event that the interest charged hereunder
exceeds the legal limit permitted by law, the interest rate shall be
automatically reduced to the permitted limit and any interest charged which
exceeds or exceeded the permitted limit shall, at Lender's option, be treated as
a payment of principal or refunded directly to the Borrower.
20. Invalidity. In the event any provision of this Note is determined
by competent authority to be prohibited or unenforceable in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability, without invalidating the remaining
provisions of this Note, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable any provision in any
other jurisdiction.
21. Governing Law. The provisions of this Note shall be governed by the
laws of the Commonwealth of Pennsylvania.
22. Binding Effect. The provisions herein contained shall bind and
inure to the benefit of the Borrower and Lender and their respective legal
representatives, successors and assigns (provided, however, that the Borrower
shall not assign this Note without first obtaining the written consent of
Lender). Lender (or any subsequent assignee) may transfer and assign this Note
and deliver the Collateral securing this Note to any assignee, who shall
thereupon have all of the rights of Lender; and Lender (or any such subsequent
assignee that in turn assigns as aforesaid) shall then be relieved and
discharged of any responsibility or liability with respect to this Note and said
Collateral. For the purposes of this Note wherever the term "Lender" shall be
used it shall refer to any subsequent holder, successor or assignee hereof
unless the context requires otherwise.
23. Cross Default/Collateralization. All other agreements between
Lender and/or any of its affiliates or subsidiaries and the Borrower are hereby
amended so that a default under this Note is a default under all other
agreements between Lender and the Borrower and a default under any one of the
other agreements is a default under this Note. Further, such agreements are
amended so that the Collateral securing this Note secures any presently existing
or hereafter arising obligations due and owing from the Borrower to Lender
and/or its affiliates or subsidiaries and the collateral pledged under any other
agreement with Lender and/or its affiliates or subsidiaries secures this Note.
24. Incorporation of Commitment Letter and Loan Agreement. This Note
has been issued pursuant to the terms and conditions of the Commitment Letter,
as that term is defined in the Loan Agreement, and pursuant to the Loan
Agreement between Borrower and Lender of even date herewith, and all of the
terms, covenants and conditions of the Commitment Letter and the Loan Agreement
(including all schedules and exhibits thereto) and all other instruments
evidencing and/or securing the indebtedness hereunder are hereby made part of
this Note and are deemed incorporated herein as though set forth at length.
25. Gender. Throughout this Note, the masculine shall include the
feminine and vice versa and the singular shall include the plural and vice
versa, unless the context of this Note indicates otherwise.
26. Section Headings. Section headings are for convenience only and
shall not be construed as limiting the contents of any section contained herein
and shall not be construed as part of this Note.
27. Conflicting Provisions. In the event that any of the terms and
conditions of this Note conflict with any of the terms and conditions of the
other Loan Documents or any other agreements between the Borrower and Lender,
the provisions offering Lender the greatest protection or most favorable
interpretation of its rights and remedies shall control.
28. Definitions. Unless otherwise defined herein, the capitalized terms
found herein shall have the same meaning ascribed to them as set forth in the
Loan Agreement.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
duly executed and delivered by its proper and duly authorized officers as of the
day and year first above written.
ATTEST: ILX INCORPORATED, an Arizona
Corporation
/S/STEPHANIE D. CASTRONOVA By: /S/ NANCY J. STONE
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STEPHANIE D. CASTRONOVA, NANCY J. STONE, Executive
Secretary Vice President