LOAN AND SECURITY AGREEMENT
AGREEMENT dated as of this 25th day of August, 1995, by and between
TAMMAC FINANCIAL CORP., a Delaware Corporation, having its principal office
located at 100 Commerce Boulevard, Wilkes-Barre, Pennsylvania 18702 (hereinafter
referred to as the "Lender"), and ILX INCORPORATED, an Arizona Corporation,
having its principal place of business located at 2777 East Camelback Road,
Phoenix, Arizona 85016 (hereinafter referred to as the "Borrower").
R E C I T A L :
Borrower has requested Lender to loan it certain funds on a secured
basis, and Lender has agreed to do so, subject to and upon the terms and
conditions hereinafter set forth. The maximum principal amount of the loan to be
made by the Lender to the Borrower is TEN MILLION DOLLARS ($10,000,000.00).
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
I
DEFINITIONS
1. Acceptable Contract: For purposes of this Agreement, an "Acceptable
Contract" shall be a consumer contract or agreement and all related documents
entered into between the Borrower as seller and/or lender and a Consumer as the
purchaser and/or borrower of (or relating to) Timeshare Estates defined in and
created by the Project Documents, which satisfy the following requirements, and
which are in all other respects acceptable to Lender: (i) Borrower is the seller
of Timeshare Estates under a Contract to a Consumer who is a United States
resident; (ii) the purchase price under the terms of the Contract is payable in
not more than 84 equal monthly installments in U.S. currency, except that up to
fifteen (15%) percent of the aggregate principal sum advanced under the Loan may
provide for the purchase price under the Contracts to be payable in up to one
hundred-twenty (120) equal monthly installments of principal and interest in
U.S. currency; (iii) no monthly installment is more than 30 days contractually
delinquent under the original terms of the Contract, and neither the Borrower
nor the Consumer is (in the sole discretion of Lender) materially in default
under the terms of the Contract; (iv) all documents relating to the Contract and
Project have been executed and delivered and copies are readily available to
Lender in the files of Borrower; (v) none of the Contracts are or shall be
subject to any defense, offset, counterclaim, discount or allowance except as
otherwise consented to in writing by Lender; (vi) the terms of any Contract and
all Related Documents shall comply in all respects with all applicable laws and
regulations promulgated thereunder, including without limitation, the provisions
of the Federal Consumer Credit Protection Act of 1968, the Federal Consumer
Leasing Act of 1976, the Real Estate Settlement Procedures Act, Regulation X,
the Truth-in-Lending Act and Regulation Z; (vii) a cash down payment has been
received in an amount equal to at least 10% of the purchase price under the
Contract or, if the Consumer is upgrading his Timeshare Estate, the 10%
requirement may be met by aggregating the cash down payment and principal
payments under the prior and current Contracts, prior to any discount; (viii)
the rate of interest thereon applied to the unpaid balance is at least fourteen
(14%) percent per annum on a simple interest basis; (ix) the Consumer has
immediate access to a Timeshare Estate which has been developed to the
specifications provided in the Project Documents, approvals and Contract; (x)
any applicable statutory or contractual "cooling off" or recision period has
expired; (xi) under which no single Consumer has a balance due Borrower in
excess of $15,000-00, unless specifically approved in writing by Lender; (xii)
Borrower is the sole owner of the Contract and has not sold, assigned,
mortgaged, pledged or hypothecated all or any portion thereof, nor is the
Contract subject to any claim, lien or security interest of any person or
entity, including without limitation, the United States, or any agencies or
instrumentalities thereof; (xiii) the Consumer executing and delivering the
Contract shall not have filed for protection under any bankruptcy or insolvency
laws or shall have been the subject of a repossession or foreclosure; and (xiv)
the Contract shall be valid, enforceable and legally binding upon the Consumer.
2. Accounts or Accounts Receivable: The term "Account" or "Accounts
Receivable" shall mean any and all obligations of any kind at any time due
and/or owing to Borrower relating to the Acceptable Contracts serving as
collateral for the Loan and all rights of Borrower to receive payment or other
consideration (whether classified under the Uniform Commercial Code of the State
of Arizona or any other state as accounts, contract rights, chattel paper,
general intangibles, or otherwise) relating to the Acceptable Contracts serving
as collateral for the Loan, including without limitation, invoices, contract
rights, accounts receivable, general intangibles, leases, choses-in-action,
notes, drafts, acceptances, instruments and all other debts, obligations and
liabilities in whatever form owing to Borrower from any person, firm,
governmental authority, corporation or any other entity, all security therefore,
whether now existing or hereafter arising, all relating to the Acceptable
Contracts serving as collateral for the Loan and the Contracts and Related
Documents, together with all proceeds and products of any and all of the
foregoing.
3. Advance: "Advance" shall be the proceeds of the Loan requested by
Borrower and advanced from time to time by Lender in accordance with the terms
of this Agreement.
4. Advance Limit: The term "Advance Limit" shall mean the loans or
Advances which the Lender may, from time to time when requested by Borrower,
make to Borrower, and which shall not in the aggregate at any time exceed the
lesser of: (i) $10,000,000.00 or (ii) the product of 85% multiplied by the
aggregate remaining principal balance of the Acceptable Contracts in which
Lender is granted a security interest hereunder.
5. Agency Agreement: "Agency Agreement" shall be that certain agreement
to be entered into by and among Borrower, Lender and the Agent which will
provide, among other things, for the Agent to apply for, obtain and maintain in
Borrower's name a post office box to which all payments under the Acceptable
Contracts shall be made and to deposit into a Dominion Account at an insured
financial institution selected by Borrower and acceptable to Lender all funds
received in connection with the Acceptable Contracts and turn said funds over to
Lender, all in accordance with the terms and conditions of this Agreement.
6. Agent: "Agent" shall mean the financial institution selected by
Borrower and approved by Lender to act as agent pursuant to the Agency
Agreement.
7. Collateral: "Collateral" shall mean the Collateral described in
Section III of this Agreement.
8. Commitment Letter: The "Commitment Letter" shall be that certain
Commitment Letter dated June 19, 1995, issued by Lender to the Borrower,
together with all amendments and modifications thereto.
9. Consumer or Consumers: "Consumer" or "Consumers" shall mean those
lessees or purchasers and/or borrowers of the Borrower leasing or purchasing and
financing the purchase of Timeshare Estates (including any guarantor thereof),
executing an agreement, contract, a note or lease and/or similar documentation,
which evidence his and/or her or their obligation to the Borrower for the
repayment of the unpaid portion of the cash price for the Timeshare Estate and
the first lien and security interest granted to Borrower in and to the Timeshare
Estate.
10. Contract or Contracts: "Contract" or "Contracts" means a Consumer
contract or agreement between the Borrower as lessor, seller and/or lender and a
Consumer, as the lessee or purchaser and/or borrower of (or relating to) a
Timeshare Estate together with all Related Documents. The term "Contract" or
"Contracts" shall also mean the Acceptable Contracts where the context and sense
and circumstances so require.
11. Deed of Trust: "Deed of Trust" shall mean the Mortgage or Deed of
Trust, Assignment of Leases and Security Agreement covering the Premises, given
by the Borrower, as trustor, in favor of the Lender, as beneficiary to secure
the Loan and the Obligations, which may be singular or plural as the text
requires, as same may be amended, modified or renewed or any replacements or
substitutions therefor.
12. Default: "Default" shall mean an event or condition, the occurrence
of which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
13. Dominion Account: "Dominion Account" shall mean the dominion
account described in Section V. 21. of this Agreement.
14. Event of Default: "Event of Default" shall mean the occurrence of
any of the events described in Section VIII of this Agreement.
15. Excess Borrowing: "Excess Borrowing" shall mean the aggregate of
all outstanding Advances minus the Advance Limit.
16. Financing Statements: "Financing Statements" shall mean the
financing statements required to be filed with the Arizona Secretary of State's
Office, the office of the Recorder in Gila County, Arizona and/or any other
recording office in order to perfect the security interests granted to the
Lender by the Loan Documents.
17. General Intangibles: "General Intangibles" shall mean and include
all of the Borrower's now owned or hereafter acquired choses in action, causes
of action and all other intangible personal property including, without
limitation, corporate or other business records, inventions, designs, patents,
patent applications, trademarks, trademark applications, trade names, trade
secrets, goodwill, registrations, copyrights, licenses, franchises, customer
lists, tax refunds, tax refund claims, insurance claims and rights to
indemnification all related to the Acceptable Contracts serving as Collateral
for the Loan, now or hereafter used or relating to the Premises, the other
Collateral or with any present or future operation of the Premises.
18. Lender: "Lender" shall mean Tammac Financial Corp., its successors
or assigns.
19. Loan: "Loan" shall mean the Loan described herein, which shall be
in the lesser of $10,000,000.00 or the Advance Limit.
20. Loan Documents: "Loan Documents" shall mean the Commitment Letter,
this Agreement, the Collateral Assignment, the Note, the Deed of Trust, the
Financing Statements, the Environmental Indemnity Agreement, the Governmental
Regulation Compliance Affidavit, the Agency Agreement, the Incumbency
Certificate, the Corporate Resolutions, the Intercreditor Agreement and all
other documents executed in connection with the Loan, whether executed
contemporaneously herewith or at any other time, together with all amendments,
supplements, substitutions, replacements or modifications to any or all of them.
21. Note: "Note" shall mean the Promissory Note made by the Borrower
and delivered to the Lender as evidence of the Loan, as same may be amended,
modified or renewed or any substitutions or replacements therefor.
22. Premises: "Premises" or "Project" or "Resort" shall mean the land
owned by Borrower located at Highway 260, Payson, Gila County, Arizona, as more
particularly described in Exhibit "A" attached hereto and made a part hereof, at
which is located the timeshare project (including, but not limited to the
Timeshare Estates) known as Kohl's Ranch Vacation Club, including the real
estate, the improvements thereon and all furnishings, fixtures and personalty
contained thereon and all common areas and/or elements appurtenant thereto. The
term Premises shall, where the context so requires, also include the other
"Trust Property", as that term is defined in the Deed of Trust.
23. Project Documents: "Project Documents" shall mean the constituent
documents for the Premises, including, but not limited to, the Kohl's Ranch
Vacation Club Membership Plan recorded April 24, 1995, in the official records
of Gila County, Arizona, bearing instrument number 95-664618, the Articles of
Incorporation, By-Laws and Rules and Regulations of Kohl's Ranch Owners
Association, the Public Report for a Timeshare Offering issued June 14, 1995,
bearing file number 95-00389, public offering statements, and any exhibits,
supplements, additions, substitutions, modifications or amendments to any of the
foregoing, as may be made from time to time.
24. Obligations: "Obligations" shall mean all indebtedness,
obligations, liabilities and agreements of every kind and nature of Borrower to
or with Lender, or to or with any affiliate of Lender, now existing or hereafter
arising, and now or hereafter contemplated, pursuant to this Agreement and/or
the Loan Documents, or otherwise, whether in the form of refinancing, loans,
interest, charges, expenses or otherwise, direct or indirect, including without
limitation, the Loan and any participation or interest of Lender (or of any
affiliate of Lender) in any obligations of Borrower to others, acquired
outright, conditionally or as collateral security from another, absolute or
contingent, joint or several, liquidated or unliquidated, direct or indirect,
secured or unsecured, arising by operation of law or otherwise, including
without limitation any future advances, renewals, extensions or changes in form
of, or substitutions for, any of said indebtedness, obligations or liabilities,
the other sums and charges to be paid to and all interest and late charges on
any of the foregoing.
25. Related Documents: "Related Documents" means, as applicable to each
Contract, the credit package, security agreements, certificates of membership,
mortgages, mortgage deeds, deeds of trust securing the Contracts and encumbering
the Time Share Estates, guaranty agreements, all records pertaining to the
Contracts, including, but not limited to, all files, closing or settlement
statements, title insurance reports and policies, copies of deeds, contracts,
prospectuses delivered to Consumers, public offering statements, public reports,
receipts for said prospectuses, public offering statements and public reports,
truth-in-lending disclosure statements, information, documents, records and such
other writings or documents of every kind and nature submitted and/or executed
by or on behalf of a Consumer and relating to the Contracts and the Consumer's
financing thereof.
26. Servicing Agent: "Servicing Agent" shall mean the entity selected
by Borrower and approved by Lender to act as the servicing agent pursuant to the
Servicing Agreement.
27. Servicing Agreement: "Servicing Agreement" shall mean the agreement
entered into between Borrower and the Servicing Agent to service the Acceptable
Contracts as described in Section V. 20. of this Agreement.
28. Timeshare Estate: "Timeshare Estate" or "Timeshare Estates" shall
mean the timeshare interests) or estate(s) defined in or created by the Project
Documents or otherwise.
II
LOAN
1. Loan: Upon the terms and conditions set forth in this Agreement,
provided there has occurred no Event of Default, Lender will provide Loans to
Borrower in an aggregate amount up to but not in excess of the Borrower's
Advance Limit or $10,000,000.00, whichever is less, on a revolving loan basis,
payable in accordance with the terms of this Agreement. If the outstanding
amount of the Loan shall exceed the Advance Limit at any time, such excess shall
be deemed secured by the Collateral and shall be subject to the terms of this
Agreement.
2. Advances: (a) At Borrower's request, Advances will be made by Lender
during the period commencing from the date of this Agreement and ending
twenty-four (24) months thereafter (the "Draw Period"), provided, however, no
Advances will be made to Borrower if an Event of Default exists, or if the
aggregate amount of all Advances (including the Advance requested), exceeds, or
would exceed the Advance Limit.
(b) Lender shall Advance only as to Acceptable Contracts and shall not
be required to make any Advance if: (i) the amount of such Advance when added to
the amount of the Loan then outstanding would exceed the Advance Limit; (ii) an
Event of Default has occurred and is continuing; or (iii) the request for an
Advance is for less than $50,000-00.
(c) Each request for an Advance shall be: (a) in writing and shall
designate the principal amount of the Advance requested, the date on which the
Advance is to be made and the account to which the proceeds of such Advance are
to be transferred; and (b) delivered to the office of Lender at least ten (10)
days in advance of the date for which an Advance is requested.
(d) With each written request for an Advance: (i) Borrower shall have
delivered to Lender all such new Acceptable Contracts and the Related Documents
being pledged or assigned to Lender, together with such additional information
concerning the Acceptable Contracts and the Consumers thereunder, as Lender may
reasonably require; (ii) Borrower shall have properly and effectively assigned
and delivered all such Contracts and Borrower shall have executed and delivered
all appropriate assignments thereof to Lender relating to such Acceptable
Contracts included in the Collateral; and (iii) Lender shall have a perfected
first lien in all such Acceptable Contracts included in the Collateral.
(e) Subject to the terms of this section 2, Lender will fund a
requested Advance on the later of the funding date requested or ten (10) days
following the date Lender has received all of the documentation and information
required or requested pursuant to this Agreement ("Date of Tender"), and if no
funding date is requested, Lender will fund ten (10) days following the Date of
Tender.
3. Recording of Advances: The Borrower will authorize, issue, execute
and deliver to Lender a Note in the aggregate principal amount of the total
Advances required to be made by Lender under the provisions of Section II.1
above. The principal amount outstanding under the Note shall be recorded on
Lender's internal data control systems and each payment of principal with
respect to the Note or any portion thereof, shall be evidenced by entries made
by Lender on Lender's internal data control system showing the date and amount
of each Advance or each payment of principal with respect thereto. Any such
entries reflecting payments made shall be recorded after Lender is in receipt of
the reports, documentation and information required pursuant to Section V. 20
hereof, but such payments shall be posted as of the date of Lender's receipt
thereof, provided the payments are received from a separate wire transfer from
the Agent (which does not include payments due to Lender relating to any other
resort operated by Borrower or an affiliate of Borrower) and/or Lender receives
reports and documentation from the Servicing Agent that provides sufficient data
to enable Lender to compute the amount of said postings. The aggregate unpaid
amount of the Note as set forth on the most recent data control system printout
of Lender shall be rebuttably presumptive evidence of the sum owing and unpaid
on the Note.
4. 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, 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 Agreement, any such change shall be effective on
the date of the change. Interest shall continue to accrue on the unpaid
principal balance of the Loan until all sums due under the Loan are paid in
full. Any failure or delay by Lender in submitting invoices for interest
payments shall not discharge or relieve Borrower of the obligation to make such
interest payments. In the event that the interest rate charged under the Note
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 Borrower. In the event that The
Wall Street Journal no longer publishes the Prime Rate charged by financial
institutions, the Lender shall select another reputable publication that
publishes that information.
5. Default Rate: Upon the occurrence and during the continuation of an
Event of Default, the rate used to calculate the interest rate due on the Loan
may, at the option of Lender, increase by five (5%) percentage points per annum
above the then applicable interest rate referred to in Section II.4. above (the
"Default Rate"). In no event, however, shall the Default Rate exceed the maximum
allowable by law.
6. Late Charge: In the event the Lender receives a payment of interest
or principal more than fifteen (15) days after the date due, 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.
7. Maturity Date: 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.
8. Excess Borrowing; Delinquent Contracts: If at any time during the
term of the Loan, an Excess Borrowing situation occurs, the Borrower shall be
required to immediately prepay an amount equal to the Excess Borrowing. An
Acceptable Contract previously pledged and assigned by Borrower to Lender, which
is more than sixty (60) days contractually delinquent under the original terms
of the Contract, shall no longer be construed to be an Acceptable Contract (a
"Delinquent Contract"). A Delinquent Contract will result in a reduction in the
Advance Limit and may also result in an Excess Borrowing. If at any time the
aggregate outstanding amount of the Loan shall exceed the Advance Limit (whether
as a result of the existence of one or more Delinquent Contracts, or otherwise),
Borrower shall immediately notify Lender of such fact, make a payment to Lender
in such amount necessary (including accrued interest) to reduce the outstanding
principal amount of the Loan to the Advance Limit. If a payment to Lender is
required during the Draw Period as aforesaid, Borrower shall have the right, in
lieu of payment, provided no Event of Default has occurred or is continuing and
provided further that the then outstanding principal sum of all Acceptable
Contracts is not greater than $10,000,000.00, to eliminate all, or any part, of
the Excess Borrowing and thereby avoid the obligation to make a payment as
aforesaid by: (a) promptly notifying Lender in writing of Borrower's intention
to pledge and assign new Acceptable Contracts so as to increase the Advance
Limit to the required amount; and (b) promptly effectuating the pledge and
assignment of the new Acceptable Contracts, but in no event later than five (5)
business days after notice of the Advance Limit deficiencies sent to Borrower by
Lender. At any time after the Draw Period during the term hereof an Excess
Borrowing situation occurs, the Borrower shall be required to immediately pay to
Lender an amount equal to the Excess Borrowing and Lender shall not be obligated
to accept any Acceptable Contracts as aforesaid. Any payments to be made by
Lender pursuant to this Section II.8 will not effect any other Obligation of
Borrower arising under this Agreement or the Note.
9. Mandatory Payments: (a) Unless accelerated pursuant to the terms and
conditions of this Agreement, 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
Agreement 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 Payments 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.
(b) In the event Lender receives monthly or other collections under the
Acceptable Contracts which exceed the principal balance and all other amounts
remaining due on the Loan or under any of the Loan Documents, Lender shall hold
such excess amounts in trust for the sole and exclusive benefit of Borrower, and
Lender acknowledges and agrees that any such excess amounts are Borrower's funds
being held in trust and are not funds of Lender. Lender shall promptly deliver
same to Borrower.
10. Prepayment: The Borrower shall have the right to prepay the
principal of the Loan at any time without penalty or premium, 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.
11. Instructions to Consumers; Payments Received by Borrower: The Borrower shall
direct or otherwise cause all Consumers under the Acceptable Contracts to pay
all monies due thereunder to the Agent 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 or Agent. 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 in this
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, or to any other obligation in such order as Lender may elect in its sole
discretion.
12. Computation of Unpaid Principal Balance: (a) 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.
(b) Checks received by Lender prior to 12:00 noon on any business day
shall be credited against the balance of the Obligations on such business day.
Checks received by the Lender after 12:00 noon any business day, shall be
credited against the balance of the obligations on the following business day.
The crediting of checks received as aforesaid shall be conditioned upon final
payment to Lender at its own office in cash or solvent credits of the items
giving rise to them and if any item is not so paid, the amount of any credit
given for it shall be charged to the Loan whether or not the item is returned.
13. Monthly Statements: Once each month Lender shall render a statement
of account to Borrower showing the current status of the Loan and the interest
thereon. If these statements indicate that the outstanding balance of the Loan
exceeds the Advance Limit, Borrower forthwith either shall furnish additional
collateral or pay the difference in cash as more particularly set forth in
Section II.8. above. The statement of account rendered by Lender shall be
considered rebuttably correct and binding upon the Borrower. Borrower shall use
its best efforts to notify Lender in writing of any discrepancies with any such
statements of account within sixty (60) business days after the sending of such
statement by the Lender. If Borrower disputes the correctness of Lender's
statement, Borrower's notice shall specify in detail the particulars of why it
contends Lender's statement of account is incorrect.
III
SECURITY AND CROSS-COLLATERAL
1. To secure the payment and performance of all Obligations of the
Borrower set forth in this Agreement and the accompanying Loan Documents, as
well as any extensions, renewals and modifications therefore or substitutions
therefore and all other obligations of the Borrower to Lender, whether now
existing or hereafter arising, Borrower hereby grants or causes to be delivered
to Lender the following security interests:
(a) a valid third lien on the Premises, which shall be
evidenced by the Deed of Trust;
(b) a valid perfected security interest in all items of
personal property owned by the Borrower, including, but not limited to,
fixtures, furnishings, equipment, machinery, apparatus, appliances,
supplies, materials, fittings, building materials, including, but not
limited to, furnaces, boilers, oil burners, radiators and piping,
plumbing and bathroom fixtures, refrigeration systems, air-conditioning
systems, sprinkler systems, washtubs, sinks, gas and electric fixtures,
stoves, ranges, awnings, screens, window shades, elevators, motors,
dynamos, refrigerators, kitchen cabinets, incinerators, plants and
shrubbery and all other equipment and machinery, tools, appliances,
fittings, fixtures and building materials of any kind and whether or
not affixed to the realty located at the Premises if and when such
items exist now or are hereafter located in or upon any portion of the
Premises and used or usable in connection with any present or future
operation of the Premises;
(c) all construction materials, supplies, lumber and all other
materials or equipment delivered to the Premises for incorporation or
use in any construction at any time being conducted thereon;
(d) any licenses, franchises, contracts, plans, surveys,
permits, and agreements required or used in connection with the
ownership, operation, or maintenance of the Premises or any trade or
business conducted thereon or in connection with the construction or
alteration of any improvements on the Premises including but not
limited to any contracts with builders, material suppliers, utilities
or architects, and the right to the use of any trade name, trademark,
or service mark now or hereafter associated with the operation of any
business conducted on the Premises;
(e) any and all awards, including interest, previously and
hereafter made to Borrower for taking by eminent domain of the whole or
any part of the Premises or any easement therein;
(f) all of Borrower's interest in any inventory (as that term
is defined in the Uniform Commercial Code of the State of
Pennsylvania), trade stock, goods, merchandise or other personal
property available for sale or lease on the Premises in the ordinary
course of business, all raw materials, work in process, finished goods,
salvaged materials, supplies, plans and blueprints, and all accounts
receivable, 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 Premises, whether now owned or hereafter
acquired by Borrower;
(g) the Accounts Receivable;
(h) the General Intangibles;
(i) equipment, machinery, fixtures and furnishings and all
other tangible assets and/or replacements, repairs, modifications,
alterations, additions, controls and operating accessories therefore,
and all substitutions and replacements therefore, and all accessions
and additions thereto and all proceeds and products of the foregoing
now or hereafter acquired by Borrower, located in or upon any portion
of the Premises or relating to the use and operation of the Premises;
(j) all of Borrower's interest in:
(i) all existing and future leases, rents, issues and
profits and all security deposits from tenants,
lessees or other occupiers of the Premises;
(ii) all policies of insurance and all proceeds, loss
payable clauses and premium refunds, and all claims
relating thereto;
(iii) all operating or management or supervision
agreements;
(iv) all reciprocal easement agreements;
(v) all contracts with builders and/or material
suppliers;
(vi) all building and use permits issued by any
governmental agency or authority;
(vii) all rents, income, rates, accounts, issues,
profits, royalties, hotel revenues and other
revenues derived from or belonging to all or part
of the Premises and the other Collateral or any
part thereof, generated from room sales, and/or the
operation of Borrower's business thereon, and the
proceeds thereof, and all rights, whether now or at
any time hereafter existing, of Borrower, under,
pursuant to, or in connection with any and all
existing and future leases, subleases, and use and
occupancy agreements and other agreements affecting
all or any part of the Premises and the other
Collateral, and the proceeds thereof;
(viii) all of the estate, interest or other claim or
demand, which Borrower now has or may hereafter
acquire, in and to all deposits made with other
security given to utility companies by Debtor with
respect to the Premises and the improvements
thereon, and all advance payments of insurance
premiums made by Borrower with respect thereto and
claims or demands relating to insurance;
(ix) insofar as permitted by applicable law, all
licenses including, but not limited to, any
operating licenses, contracts, management contracts
or agreements, franchise agreements, permits,
authorizations or certificates required or used in
connection with the ownership of, or the operation
or maintenance of the Premises and any improvements
constructed thereon;
(x) all damages, royalties and revenue of every kind,
nature and description whatsoever that Borrower may
be entitled to receive from any person or entity
owning or having or hereafter acquiring a right to
the oil, gas or mineral rights and reservations
regarding the Premises; and
(xi) that certain Membership Plan for Kohl's Ranch
Vacation Club (the "Club") effective as of
April 17, 1995, between Borrower and Kohl's Ranch
owners Association, as recorded in the Records of
Gila County, Arizona on April 24, 1995, as
instrument number 95-664618, and any amendments or
supplements thereto or replacements or substitu-
tions therefor, together with all membership
interests of Borrower in the Club arising pursuant
to the aforesaid Membership Plan and all rights and
privileges associated therewith and all rights of
Borrower to market, sell or otherwise deal with
such memberships.
(k) a valid first lien on all of the Acceptable Contracts and Related
Documents which are more particularly set forth and described on the schedule
attached hereto and made a part hereof and labelled as Exhibit "B", together
with all other Acceptable Contracts that are hereafter pledged to Lender as
Collateral for the Obligations, pursuant to the terms and conditions hereof;
(l) any claims of Borrower against third parties for loss or damage to,
or destruction of, any and all of the foregoing, all guarantees, security and
liens for payment of any Accounts Receivable and documents of title, policies,
certificates of insurance, insurance proceeds, securities, chattel paper, and
other documents and instruments evidencing or pertaining thereto, and all files,
correspondence, computer programs, tapes, discs and related data processing
software owned by Borrower or in which Borrower has an interest which contain
information identifying any one or more of the items in (a) through (k) above or
(m) through (r) below, or any Consumer, showing the amounts owed by each,
payments thereon or otherwise necessary or helpful in the realization thereon or
the collection thereof;
(m) with respect only to those Acceptable Contracts securing this Loan
and the other Collateral, any and all moneys, securities, drafts, notes,
contracts, leases, licenses, General Intangibles and other property of Borrower,
including customer lists, and all proceeds and products thereof, and all other
assets of Borrower now or hereafter held or received by or in transit to Lender
from or for Lender, or which may now or hereafter be in the possession of
Lender, or as to which Lender may now or hereafter control possession, by
documents of title or otherwise, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and any and all deposits, general or
special, balances, sums, proceeds, and credits of Borrower and all rights and
remedies which Borrower might exercise with respect to any of the foregoing, but
for the execution of this Agreement;
(n) Borrower's right, title and interest throughout the world in and to
the trade secrets, rights in information regarding computer software programs
developed by or for Borrower, as same relate to the Acceptable Contracts and the
other Collateral securing the Loan, including without limitation, the right to
prevent all persons, including Borrower, from using the programs or from using
and transferring the information contained therein without authorization;
(o) Borrower's interest in any marketing or direct mail agreements with
respect to the Premises and as same relate to the Acceptable Contracts and the
other Collateral securing the Loan;
(p) licenses, contracts, management contracts or agreements, franchise
agreements, permits or certificates now or hereafter acquired or used in
connection with the ownership, operation or maintenance of the Premises and as
same relate to the Acceptable Contracts and other Collateral;
(q) Borrower's rights as "declarant", "developer," "owner", "seller",
"member" and/or otherwise under the Project Documents, whether now or hereafter
existing as same relate to the Acceptable Contracts and other Collateral
securing the Loan; and
(r) all proceeds, including insurance proceeds and the proceeds of sale
or other disposition of any of the Collateral, and products of the Collateral.
The aforedescribed Collateral shall also include, as applicable, all
additions, substitutions, accessions, repairs and replacements thereto.
2. Scope of Security Interest: The security interest granted hereunder
is given to and shall be held by Lender as collateral security for the payment
and performance of all liabilities and obligations of Borrower to Lender of
every kind and description, whether direct or indirect, absolute or contingent,
due or to become due, joint or several, howsoever created, arising, or evidenced
and now existing or at any time hereafter created, arising, or incurred.
3. Effective as Security Agreement: This Agreement shall be effective
as a Security Agreement as that term is used in the Uniform Commercial Code as
enacted in the State of Pennsylvania.
IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce the Lender to enter into this Agreement and to make the Loan
hereunder, the Borrower represents, warrants and covenants to the Lender that
(except as may have been previously disclosed in writing to Lender):
1. Corporate Existence: Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona and
is authorized to do business in the States of Colorado and Indiana and has the
power to execute, deliver and -carry out the terms of this Agreement and its
Board of Directors has duly authorized and approved the terms of the Loan
described herein, the other Loan Documents and the taking of any and all action
contemplated hereunder or thereunder by the Borrower.
2. Validity of Agreement: The execution of this Agreement and the other
Loan Documents and every other instrument or document required to be executed in
accordance herewith or therewith, or which the Lender may deem advisable in
connection herewith, does not violate any provisions of the Borrower's Articles
of Incorporation or By-Laws, or of any agreement or undertaking to which
Borrower is a party or by which the Borrower is bound in any fashion.
3. Corporate Action: Borrower has taken all action required by law to
validate and make this Agreement and to enter into the Loan Documents and any
other documents required in connection herewith, as evidenced by the incumbency
certificate and corporate resolution executed and delivered to Lender
contemporaneously herewith.
4. Lien Priority: The Borrower has, and at all times will have, good
and marketable title in and to the Collateral. No other person has or will have
any right, title, interest, claim or lien therein, thereon or thereto, other
than: (a) the existing first lien on the Premises maintained by Bank One,
Arizona, NA, formerly known as The Valley National Bank, with a principal
balance remaining due thereunder of no more than $932,250.00; (b) the existing
second lien on the Premises maintained by Kohl's Ranch Associates, with an
approximate principal balance remaining due thereunder of $380,000.00; (c) the
authorized borrowings as hereinafter provided; (d) customary equipment lease
agreements or purchase money financing of equipment entered into by Borrower
relating to the Project, which unpaid lease or financing obligations thereunder
do not exceed, at any time, in the aggregate, the sum of $200,000.00 (items
4.(a), (b), (c) and (d) above being hereinafter sometimes referred to as the
"Permitted Lien(s)"); and (e) the rights, if any, of the Consumers.
Notwithstanding anything contained herein to the contrary, provided the Borrower
is not in Default under the Loan Documents or any Obligations, whether now
existing or hereafter arising, upon Borrower's request, Lender shall subordinate
its third lien on the Premises to one or more prior liens thereon held by one or
more financial institutions or reputable funding sources having an aggregate
principal balance of no more than $2,480,000.00, which shall include the
remaining principal balances due on the aforesaid existing first and second
liens, if any, and which permitted prior lien(s) shall be construed to be
"Permitted Lien(s)". The Collateral will remain free and clear of any liens
other than the Permitted Lien(s), excepting the liens hereby granted to Lender,
which liens to Lender shall, at all times, except as hereinabove set forth, be
first and prior on the Collateral above described and as to the Accounts and
proceeds, including insurance proceeds, resulting from the sale, disposition or
loss thereof, that no further action need be take to perfect the lien to Lender
other than filing continuation statements under the Uniform Commercial Code and
continued possession by fender of that portion of the Collateral which
constitutes instruments or other pledged Collateral.
5. Financing Statements; Perfection of Lien: Borrower agrees at its own
expense, to execute the Financing Statements or continuation statements required
by the Uniform Commercial Code, together with any and all other instruments or
documents and take such other action including delivery as may be required to
perfect or maintain Lender's security interest in the Collateral and, unless
prohibited by law, Borrower hereby authorizes Lender to execute and file any
such financing statements or continuation statements on Borrower's behalf.
6. No Governmental Consent Necessary: No consent or approval of, giving
of notice to, registration with or taking of any other action in respect of, any
governmental authority or agency is required with respect to the execution,
delivery and performance by Borrower of this Agreement or any of the other Loan
Documents.
7. No Proceedings: There are no actions, suits, or proceedings pending
(nor, to the knowledge of the Borrower, any actions, suits or proceedings
threatened, nor is there any basis therefore) against or in any way relating
adversely to the Borrower, the Premises, any other Collateral or any property of
the Borrower in any court or before any arbitrator of any kind or before or by
any governmental or non-governmental body which, if adversely determined, would
singly or in the aggregate have a material adverse effect on the Borrower or the
Collateral; the Borrower is not in default with respect to any order of any
court, arbitrator or governmental or non-governmental body; and the Borrower is
not subject to or a party to any order of any court or governmental or
non-governmental body arising out of any action, suit or proceeding under any
statute or other law respecting anti-trust, monopoly, restraint of trade, unfair
competition or similar matters.
8. Financial Statements: The financial statements of Borrower submitted
to Lender in connection with the application for the within Loan fairly presents
the financial condition of Borrower. Borrower knows of no liability, direct or
contingent, involving significant amounts, not disclosed by or reserved against
in said financial statements.
9. Changes in Financial Condition: There has been no material and
adverse change in Borrower's condition, financial or otherwise, since the date
of the financial statements delivered to Lender.
10. Further Assurances: The Borrower agrees that it will execute and
deliver any further deeds of trust or any other documents or instruments
necessary to achieve and maintain at all times the balance due to the Lender as
a valid lien on the Premises and the other Collateral as described herein.
11. Taxes and Assessments: All federal, state and other tax returns of
Borrower required by law to be filed have been duly filed and all federal, state
and other taxes, assessments and other governmental charges or levies upon the
Borrower or its property, income, profits and assessments which are due and
payable have been paid. All taxes due to the Federal government, the States of
Arizona, Indiana and Colorado, and any taxes or assessments due to any other
state, county or municipality, have been fully paid and satisfied by the
Borrower except for current taxes not now due and payable.
12. Chief Executive Office and Location of Property: The Borrower's
Chief Executive Office, principal place of business and books and records
related to the Collateral pledged hereunder are located at 2777 Camelback Road,
Phoenix, Arizona 85016 and at the Premises. The Borrower will not move its Chief
Executive Office, its principal place of business or its books and records
referred to herein or change its name, identity or corporate structure without
giving the Lender prior written notice thereof and obtaining its written
consent, which consent shall not be unreasonably withheld or delayed. Borrower
further agrees that it will not remove any Collateral referred to herein from
the address where they are presently located other than in the ordinary course
of business.
13. Representations and Warranties True, Accurate and Complete: None of
the representations, warranties or statements made to Lender pursuant hereto or
in connection with this Agreement or the transactions contemplated hereby
contains any untrue statement of a material fact, or omits to state a material
fact necessary in order to make the statements contained herein and therein, in
light of the circumstances in which they are made, not misleading.
14. Validity and Enforceability of Acceptable Contracts: All of the
Acceptable Contracts are, and will be, legal, valid, binding and enforceable
obligations of the parties thereto (without right of set-off or subject to any
counterclaims or other defenses) in accordance with the terms thereof, and are
not, and will not be subject to any liens, and none of such Acceptable Contracts
are forged or have affixed thereto any unauthorized signatures or have been
entered into by any persons without the required legal capacity and otherwise
meet all of the criteria as set forth in the definition of an Acceptable
Contract herein above provided.
15. Project: The Project has direct access to a publicly dedicated road
and all roadways inside the Project are owned in fee simple by the Borrower.
Electric, gas, sewerage, water facilities and other necessary utilities are
available in sufficient capacity to service the Project and any easements
necessary to the furnishing of said utility services have been obtained and duly
recorded. Each Consumer has access to and the use of all of the amenities and
public utilities of the Project. All costs arising from the construction of any
improvements or the purchase of any equipment located in the Project have been
fully paid for, except for customary equipment financing or lease agreements
entered into by Borrower in connection with the Project. The Project complies
with all applicable restrictive covenants, zoning and land use ordinances and
building codes, all applicable health and environmental laws and regulations and
all other applicable laws, rules and regulations.
16. No Default: No Event of Default (as specified in Section VIII), and
no event which, with a lapse of time or the giving of notice, would constitute
an Event of Default, shall have occurred and be continuing at the closing date
of the Loan and Borrower is not presently in violation of any of the
representations and warranties herein specified.
17. Other Statements: All statements contained in any certificate,
financial statement, legal opinion or other instrument delivered by or on behalf
of the Borrower pursuant to or in connection with or in any amendment to this
Agreement, shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement shall be
made at and as of the date as of which this Agreement is dated. All
representations and warranties made under this Agreement shall survive and not
be waived by the execution and delivery of this Agreement or any investigation
by the Lender.
18. Subdivision/Final Site Plan: All right to appeal from any decision
rendered by any governmental body in connection with the subdivision or final
site plan approval of the Premises, if any, or proposed or actual use of the
Premises has expired.
19. O.S.H.A. and Environmental Matters: (a) Borrower has duly complied
with, and its facilities, business, assets, property, leaseholds and equipment
are in compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Americans with Disabilities Act (upon
completion of the planned renovations) all applicable environmental statutes,
and all rules and regulations thereunder and all similar state and local laws,
rules and regulations; and there have been no outstanding citations, notices or
orders of non-compliance issued to Borrower or relating to its business, assets,
property, leaseholds or equipment under any such laws, rules or regulations.
(b) Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to Borrower and its ownership,
use and development of the Premises (including without limitation, all necessary
utility connections or permits) and its facilities, business, assets, property,
leaseholds and equipment are in compliance in all material respects with, all
applicable federal, state and local laws, rules and regulations relating to, air
emissions, water discharge, noise emissions, solid or liquid waste disposal,
hazardous waste or materials, or other environmental, health or safety matters.
20. Protection of Collateral; Reimbursement: All insurance expenses and
all expenses of protecting, storing, warehousing, insuring, handling,
maintaining and shipping the Collateral, and any and all excise, property, sale
and use taxes imposed by any state, federal or local authority on any of the
Collateral or in respect of the sale thereof, shall be borne and paid by
Borrower; if Borrower fails to promptly pay any portion thereof when due, Lender
may, at its option, but shall not be required to, pay the same and charge
Borrower's account therefore, and Borrower agrees promptly to reimburse Lender
therefore with interest accruing thereon daily at the Default Rate. All sums so
paid or incurred by Lender for any of the foregoing and any and all other sums
which Borrower may become liable hereunder and all costs and expenses (including
attorney's fees, legal expenses and court costs) which Lender may incur in
enforcing or protecting its lien on or rights and interest in the Collateral or
any of its rights or remedies under this or any other agreement between the
parties hereto or with respect to any of transactions to be had thereunder,
until paid by Borrower to Lender with interest at the rate aforesaid, shall be
considered as additional indebtedness owing by Borrower to Lender hereunder and,
as such, shall be secured by all the said Collateral and the proceeds from the
sale thereof and by any and all other collateral, security, assets, reserves or
funds of Borrower in or coming into the hands or enuring to the benefit Lender.
The Lender shall not be liable or responsible in any way for the safekeeping of
any of the Collateral or for any loss or damage thereto or for any diminution in
the value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency or other person whomsoever, but the same shall be at the
Borrower's sole risk.
21. Solvent Financial Condition: As to Borrower immediately prior to
the issuance of the Note, the present fair salable value of its assets is
greater than the amount required to pay its total liabilities, and it is able to
pay its debts as they mature or become due. Borrower shall maintain such solvent
financial condition, giving affect to the Obligations, as long as Borrower is
obligated to Lender under this Agreement.
22. Use of Proceeds: The proceeds of the Loan will be used for working
capital purposes of Borrower. None of the transactions contemplated in this
Agreement (including, without limitation, the use of the proceeds from such
Loan) will violate or result in the violation of the Securities Exchange Act of
1934, as amended, or any regulations issued pursuant thereto, including, without
limitation, Regulation G of the Board of Governors of the Federal Reserve
System.
V
AFFIRMATIVE COVENANTS
Until payment in full of all obligations and the termination of this
Agreement, Borrower covenants and agrees that it will:
1. Notify Lender: Promptly inform Lender of any material adverse change
in circumstances with respect to matters set forth in the representations,
warranties and covenants under Section IV of this Agreement.
2. Pay Taxes and Liabilities; Comply with Agreements: Promptly pay and
discharge all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits and upon any properties belonging to it prior
to the date on which penalties attach thereto, and all lawful claims for labor,
materials and supplies which, if unpaid, might become a lien or charge upon any
properties of the Borrower; except that no such tax, assessment, charge, levy or
claim need be paid which is being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside.
3. Observe Covenants, etc.: Observe, perform and comply with the
covenants, terms and conditions of this Agreement, the other Loan Documents and
any other agreement or document entered into between Borrower and Lender.
4. Access to Records and Property: At any time and from time to time,
upon request by Lender permit representatives of the Lender to:
(a) Visit and inspect the properties of the Borrower,
(b) Inspect, copy and make extracts from its books and
records at any place designated by Lender, and
(c) Discuss with its employees its respective businesses,
assets, liabilities, financial condition, results of operations and business
prospects.
5. Comply with Laws: Comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority, compliance
with which is necessary to maintain its corporate existence or the conduct of
its business or non-compliance with which would materially and adversely affect
(a) its ability to perform in accordance with the terms and conditions of this
Agreement, or (b) any security given to secure its Obligations.
6. Insurance Required: (a) Cause to be maintained, in full force and
effect on the buildings and all other structures erected or to be erected upon
the Premises and all property given as Collateral security for all Obligations,
insurance in such reasonable amounts and against such customary risks as is
satisfactory to, Lender, including, but without limitation, fire, theft,
burglary, pilferage, loss in transit, boiler, machinery, workman's compensation,
builder's risk, liability and hazard insurance. Said insurance policy or
policies shall:
(i) Be in a form and with insurers which are
satisfactory to Lender;
(ii) Be for such risks and for such insured values
as Lender or its assigns may require in order to replace the property in the
event of actual or constructive total loss;
(iii) Designate Lender and its assignees, as first
(or second or third, as the case may be,) mortgagee and/or additional loss
payee, as their interests may from time to time appear;
(iv) Contain a "Breach of Warranty" clause whereby
the insurer agrees that a breach of the insuring conditions or any negligence by
Borrower or any other person shall not invalidate the insurance as to Lender and
its assignees;
(v) Provide that they may not be cancelled or
materially altered without thirty (30) days prior notice to the Lender and its
assignees; and
(vi) Upon demand, be delivered to Lender.
(b) Obtain such additional insurance as Lender may reasonably
require.
(c) In the event of loss or damage, forthwith notify Lender
and file proofs of loss with the appropriate insurer. Borrower hereby authorizes
Lender to endorse any checks or drafts constituting insurance proceeds.
(d) Forthwith upon receipt of insurance proceeds endorse and
deliver the same to Lender.
(e) In no event shall Lender be required to: (i) ascertain the
existence of or examine any insurance policy; or (ii) advise Borrower in the
event such insurance coverage shall not comply with the requirements of this
Agreement or any other Loan Documents; or (iii) obtain any insurance on the
aforementioned risks.
(f) Borrower hereby directs any insurance company concerned to
pay directly to Lender any monies which may become payable to Lender or Borrower
under such insurance policies, and Borrower appoints the Lender as
attorney-in-fact (which appointment is agreed to be coupled with an interest) to
endorse any draft therefore. Lender shall have the right to retain and apply the
proceeds of any such insurance, at its election, to reduction of any sums
advanced to Borrower by Lender, or to restoration or repair of the property
damaged, as more particularly set forth in the Loan Documents.
7. Further Assurances: Borrower shall execute and deliver to Lender,
any pledge, lien, encumbrance, security agreement, financing statement or other
documents as may reasonably be requested by Lender at any time when there are
monies due and payable to Lender under the terms and conditions of this
Agreement in order to effectuate more fully the purposes of this Agreement
and/or any other Loan Documents.
8. Pay Legal Fees and Expenses: Pay to Lender, upon demand, together
with interest at the rate set forth in the Note, from the date when incurred or
advanced by Lender until repaid by Borrower all costs, expenses or other sums
incurred or advanced by Lender to preserve, collect and protect its interest in
or realize on the Collateral, and to enforce Lender's rights as against
Borrower, any account debtor or guarantor, or in the prosecution or defense of
any action or proceeding related to the subject matter of this Agreement,
including without limitation legal fees, expenses and disbursements incurred by
Lender. All such expenses, costs and other sums shall be deemed Obligations
secured by the Collateral.
9. Reaffirmation of Representations and Warranties: All warranties and
representations made herein by Borrower, and in any other agreements or
documents executed and/or delivered by Borrower to Lender in connection with
this Agreement, will continue to be true and accurate so long as the obligations
remain unpaid.
10. Expenses: The Borrower agrees to pay all charges incident to the
procuring and making of the Loan and the charges for the examination of the
title of the Premises, searches relating to the Borrower and the Collateral,
title insurance premiums, surveys and drawing of papers, mortgage tax, recording
fees, legal fees and expenses of Lender's attorneys (as limited pursuant to the
Commitment Letter), and for all searches which may be required by the Lender to
assure the Lender that the Deed of Trust is a third lien as herein provided.
11. Taxes, Assessments, etc. The Borrower agrees to pay any tax,
assessment or other charge or liens upon the Premises, existing at any time,
whether before or after the making of the Loan, and to furnish proof thereof
satisfactory to the Lender, within thirty (30) days after such payment is due,
and upon the Borrower's failure to do so, all further obligation on the part of
the Lender to make said Loan, or the balance thereof, shall cease, and the
amount previously advanced, if any, shall become immediately due and payable; or
if the Lender shall so elect, it may pay such encumbrances or liens and add the
amount of said payments to the amount thereafter becoming due. Any sums paid or
expended in accordance with any of the foregoing provisions of this clause shall
be deemed to be advanced to the, Borrower pursuant to this Agreement and shall
be secured by the Collateral and the Loan Documents.
12. Permits, Licenses, etc.: The Borrower hereby assigns as further
security for the Obligations, all permits, licenses and contracts relating to
the Premises, including but not limited to, all environmental approvals, all
approvals for sewer, water and other utilities, all building or construction
permits, zoning, site plan or subdivision approvals, all licenses, permits or
approvals in connection with the operation of the Resort and the sale and
financing of Timeshare Estates, and all prepaid fees or charges relating
thereto, if any, each as may be permitted by the entity issuing such permits,
approvals, licenses and contracts.
13. Notice of Environmental, Health or Safety Complaints: Borrower
shall immediately provide to Lender notice or copies if written, of all
complaints, orders, citations or notices, whether formal or informal, written or
oral, from a governmental body or private person or entity, relating to air
emissions, water discharge, noise emission, solid or liquid waste disposal,
hazardous waste or materials, or any other environmental, health or safety
matter.
14. Assignment of Leases, Contract(s) of Sale: Borrower agrees to and
hereby does assign to Lender as further security for the Obligations, all leases
and/or contracts of sale of or affecting the Premises.
15. Financial Statements:
(a) Borrower agrees to submit to Lender its financial
statements, all prepared in accordance with generally accepted accounting
principles consistently applied, and in addition to such statements, any
supplementary information to the financial statements as Lender shall reasonably
require, as more particularly set forth herein and in the other Loan Documents.
(b) Borrower shall, within one hundred twenty (120) days after
the end of each fiscal year, furnish to Lender its balance sheet as at the end
of such year, and its income and surplus statement and statement of cash flow
for such fiscal year, all in reasonable detail, all prepared in accordance with
generally accepted accounting principals consistently applied on a consolidated
basis with its subsidiaries and affiliates, and all audited by independent
certified public accountants of recognized standing selected by Borrower and
satisfactory to Lender, and in addition to such statements, any supplementary
information to the financial reports as Lender shall reasonably require.
(c) Borrower shall also deliver to Lender within sixty (60)
days after the end of each quarter-annual fiscal period of the Borrower, except
the 4th quarter, its balance sheet as at the end of such period, its cumulative
income and surplus statement and its statement of cash flow for the period
beginning on the first day of such fiscal year and ending on the date of such
balance sheet, all in reasonable detail, all prepared in accordance with
generally accepted accounting principals consistently applied, certified by the
Chief Financial Officer of the Borrower and in addition to such statements any
supplementary information to the financial reports as Lender shall reasonably
require.
(d) As soon as practical after the end of each month, and in
any event within ten (10) days after the end of such month Borrower shall cause
to be furnished to Lender a monthly detailed trial balance of all Acceptable
Contracts, as of the close of the preceding month, together with a
reconciliation report showing collections, payments, adjustments and
delinquencies relating to the Acceptable Contracts, in form and substance
acceptable to Lender. All such statements shall be certified as correct by the
Chief Financial Officer of Borrower.
16. Broker's Fees: Borrower agrees to promptly pay all finders' fees,
brokerage fees, commissions or similar fees payable to them in connection with
the transactions described in this Agreement, if any. Borrower agrees to
indemnify and hold harmless Lender from and against any claim of any broker,
finder or other person, together with any attorneys' fees incurred by Lender in
respect thereto, arising out of the transactions contemplated by this Agreement.
Borrower and Lender acknowledge that they are not, as of the date of this
Agreement, aware of any such fees due to any person or entity. This obligation
shall survive the expiration or termination of the Commitment Letter and this
Agreement.
17. Payment of Contracts: Borrower will direct all account debtors
under the Contracts to remit all payments under such Contracts to the Lender's
account established at Bank one, Arizona, N.A., or such other bank or other
entity as may be acceptable to Lender pursuant to the terms of the Agency
Agreement between the Agent, Lender and Borrower. Lender agrees to apply such
funds paid to the obligations upon collection thereof by the Agent and delivery
to Lender, provided an Event of Default shall not then exist.
18. Other Documents: Borrower agrees that it will maintain accurate and
complete files relating to the Contracts and other Collateral to the
satisfaction of Lender, and that such files will contain copies of each
Contract, Related Documents, copies of all relevant credit memorandum relating
to the Contracts, and all collection information and correspondence relating
thereto and such other documents as are reasonably requested by Lender.
19. Collateral Assignment of Acceptable Contracts: Prior to Lender's
funding any Advance, including the first Advance, Borrower will execute and
deliver to Lender formal written collateral assignments of all new Acceptable
Contracts included in the Collateral accompanied by the executed originals of
all such Acceptable Contracts to which shall be annexed the originals and copies
of all Uniform Commercial Code Financing Statement filings, and the originals of
which shall be promptly filed or recorded in the appropriate filing or recording
offices by Borrower upon Borrower's receipt of the said original financing
statements countersigned by Lender, evidence of corporate authority on the part
of the Consumers, if corporations, and all Related Documents and instruments.
The form of the Contracts and Related Documents which now exist or shall be used
by Borrower and entered into in the future during the term of the Loan, shall be
in substantially the same form of the Acceptable Contracts reviewed and approved
by Lender prior to the execution of this Agreement. Borrower will not modify,
amend or otherwise alter any of the terms of the Acceptable Contracts or any
other documents relating thereto without Lender's prior written consent, or
waive any of Borrower's rights, if such modification might result in any
diminution or adverse effect upon the Collateral or the conduct of the business
of Borrower.
20. Servicing of Acceptable Contracts: Borrower shall, at its cost and
expense, enter into and maintain, for as long as the Loan remains unpaid, a
servicing agreement ("Servicing Agreement") with a servicing entity selected by
Borrower and approved by Lender ("Servicing Agent"), to service the Acceptable
Contracts. The Servicing Agent shall furnish to Lender such reports,
documentation and information regarding the Acceptable Contracts as is
reasonably satisfactory to Lender.
21. Dominion Account; Agency Agreement: Borrower and/or the Servicing
Agent shall maintain a Dominion Account at an insured financial institution
selected by Borrower and acceptable to Lender into which all payments due under
the Acceptable Contracts will be made. All proceeds of the Acceptable Contracts
shall be deposited in the form received by the Borrower or the Servicing Agent
into the Dominion Account. Borrower, Lender and the selected and approved Agent
shall enter into an Agency Agreement, the terms of which Agency Agreement shall
be acceptable to Lender and Lender's counsel, and which shall provide, among
other things, for the said Agent to apply for, obtain and maintain in Borrower's
name a post office box to which all payments under the Acceptable Contracts
shall be made and to deposit in the Dominion Account all funds received in
connection with the Acceptable Contracts and turn said funds over to Lender, all
in accordance with the terms and conditions of this Agreement. The said post
office box and Dominion Account shall be subject to the exclusive control of
Lender in accordance with the terms of this Agreement and the Agency Agreement.
The Agent selected and approved as Agent shall transfer to Lender the funds
deposited to the Dominion Account by wire transfer or check as shall be directed
by Lender. Borrower shall instruct all of the Consumers under the Acceptable
Contracts to direct remittances to a post office box established by Lender in
the name of the Borrower. All proceeds of the Acceptable Contracts shall be
directed to such post office box, whether in the form of cash, checks, drafts,
notes or other agreements received by the Borrower or the Servicing Agent in
payment of or on account of any of the Acceptable Contracts. Upon receipt by
Lender, all such proceeds shall be applied in payment in full or in part of the
Obligations in such order as Lender may elect.
22. Notice of Default or Event of Default: Borrower shall immediately
upon becoming aware of the existence of any condition or event which constitutes
a Default or an Event of Default, give a written notice to Lender specifying the
notice given or action taken by such holder and the nature of the claimed
Default or Event of Default and what action Borrower is taking or proposes to
take with respect thereto.
23. Material Adverse Developments: Borrower shall immediately upon
becoming aware of any developments or other information which may materially and
adversely affect the Collateral, business, prospects, profits or condition
(financial or otherwise) of Borrower or its ability to perform this Agreement,
give to Lender telephonic or telegraphic notice specifying the nature of such
development or information and such anticipated effect.
24. Performance under Project Documents; Subsidize Operations of the
Club: Borrower shall at all times promptly and fully perform all of its
obligations under the Project Documents. Borrower shall subsidize all
Maintenance Fees and Assessments (as those terms are defined in the Membership
Plan) to the extent that said Maintenance Fees and Assessments paid by other
Members (as that term is defined in the Membership Plan) other than Borrower are
insufficient to pay when due the Common Expenses (as that term is defined in the
Membership Plan) actually incurred in connection with the operation of the Club
and the Premises. The aforesaid covenant to subsidize operations at the Club
shall terminate upon the earlier to occur of the following: (i) payment of all
sums due to Lender hereunder, or (ii) the sale of fifty (50%) percent of the
number of Timeshare Estates in the Project as determined from time to time in
accordance with the then current Arizona Department of Real Estate Public
Report.
25. Waste Water and Water Quality at the Premises: The Borrower shall:
(i) cause to be submitted to the Arizona Department of Environmental Quality
("ADEQ"), or such other appropriate entity having jurisdiction, evidence that
the existing septic system servicing the Premises is constructed in accordance
with all applicable laws and regulations, which submission shall include, but
not be limited to, as-built engineering drawings of said septic system and a
certification of a qualified, licensed engineer, all within the time frames
required by the ADEQ, or other entities having jurisdiction; (ii) if required,
effect all necessary changes to the waste water facility servicing the Premises
within such time frames as mandated or agreed upon by the ADEQ, or such other
entities having jurisdiction; (iii) prepare and file with the ADEQ, or such
other appropriate entity having jurisdiction, all documents and information
necessary or appropriate in order to obtain a Determination of Applicability for
the Aquifer Protection Permit relating to the Premises to determine if a general
or individual permit is required for the waste water facility servicing the
Premises; (iv) if necessary, make application for and prosecute to completion an
application for an individual permit relating to the said waste water facility;
(v) if required by the ADEQ, cause to be conducted a sampling study for water
quality parameters of the drinking water systems servicing the Premises, the
results of which shall be submitted to the ADEQ, for purposes of assisting the
ADEQ in determining whether the Premises' drinking water systems are groundwater
under the influence of surface water; (vi) if required, effect all remedial
action relating to the drinking water sources, which may include, but not be
limited to, installing additional filters and disinfection treatment devices,
all as required by applicable laws and regulations; (vii) monitor the said
drinking water systems in accordance with all applicable laws and regulation;
and (viii) otherwise comply in all material respects with all applicable
requirements of the ADEQ, and any other entities having jurisdiction, so as to
avoid any enforcement actions relating or pertaining to the waste water system
and drinking water systems servicing the Premises and notify Lender of all
material developments relating thereto and furnish to Lender true copies of all
reasonably requested documentation and information relating thereto.
26. Water Property: Borrower intends to purchase from Kohl's Ranch
Associates certain parcels of real property and the improvements thereon
adjacent to or nearby the Premises, all equipment relating thereto and the stock
of the Kohl's Ranch Water Company (collectively the "Water Property"). The
application to transfer the Water Property was approved by the Arizona
Corporation Commission on August 5, 1995. The closing on the Water Property is
expected to occur by the end of September, 1995. In conjunction with the closing
on the Water Property, Borrower agrees to and shall pledge and grant to Lender a
security interest in and to the additional real property and improvements and
all other assets that it acquires from Kohl's Ranch Associates in connection
with Borrower's acquisition of the Water Property, which additional assets shall
be included as a part of the Collateral. Borrower shall notify Lender of the
anticipated closing date and furnish a listing and/or detailed description of
the Water Property. Borrower shall execute and deliver to Lender and (as
applicable) cause to be filed or recorded amendments and/or modifications of the
Loan Documents to reflect the additional Collateral and shall cancel, discharge
or terminate that certain instrument entitled: "Kohl's Ranch Lodge and Kohl's
Ranch Water Company Covenants, Conditions & Restrictions" dated June 1, 1995,
recorded on June 2, 1995 in the Official Records of Gila County, in Fee No.
95-666436.
VI
NEGATIVE COVENANTS
Until payment in full of all Obligations, Borrower covenants and agrees
that it will not:
1. Other Liens: Incur, create or permit to exist any mortgage,
assignment, pledge, hypothecation, security interest, lien or other encumbrance
on any of its property or assets, whether now owned or hereafter acquired,
except: (a) liens for taxes not delinquent; (b) those liens in favor of Lender,
and (c) the Permitted Liens.
2. Other Liabilities: Incur, create, assume or permit to exist any
indebtedness or liability on account of either borrowed money or the deferred
purchase price of property, except (a) Obligations to Lender; or (b)
indebtedness subordinated to payment of the Obligations on terms approved by
Lender in writing; or (c) the Permitted Liens.
3. Loans: Make loans to any person, firm or entity, except in the
ordinary course of its business in connection with the financing of the sale of
Timeshare Estates.
4. Secondary Financing: Incur, create, assume, or permit to exist any
secondary financing encumbering the Premises and/or any other Collateral
securing the Obligations, except for Permitted Liens, nor shall there be any
encumbrances or security interest conveyed in any fixture or fixtures, nor in
any personalty whether affixed to the Premises or otherwise, except for
Permitted Liens.
5. Corporate Structure: Alter or change its corporate structure, or
materially change the present ownership of the interest of the Borrower or
Borrower's management without the prior written consent of Lender, which consent
shall not be unreasonably withheld or delayed.
6. Guaranties: Assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable upon the obligation of any person, firm or
entity except by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
7. Assignment: Assign this Agreement or any loan proceeds to be made
hereunder or any part thereof.
8. Lease: Rent or lease all or any portion of the Premises without the
prior written consent of the Lender, except in the ordinary course of Borrower's
business.
9. No Indulgences to Consumers: Borrower shall not grant extensions of
time for the payment or compromise for less than the full face value or release
in whole or in part any person liable for the payment of, allow any credit
whatsoever, except for the amount of cash to be paid upon any Collateral or any
instrument or document representing the Collateral without the prior written
consent of the Lender.
10. Modifications of Contracts or Other Documents: Borrower will not
modify, amend, or otherwise alter any of the terms of the Contracts or any other
documents relating thereto without Lender's prior written consent or waive any
of Borrower's rights, if such modification might result in any diminution or
adverse affect upon the Collateral or the conduct of the business of the
Borrower. The Borrower shall also not change, alter or modify or permit any
change, alteration or modification of its articles of incorporation or by-laws
or other governing documents without Lender's prior written consent, which
consent shall not be unreasonably withheld or delayed.
VII
MISCELLANEOUS RIGHTS OF LENDER
1. Collections; Modification of Terms: Lender may, in its sole and
absolute discretion, and at any time, with respect to any of the Collateral,
demand, sue for, collect or receive any money or property, at any time payable
or receivable on account of or in exchange for, or make any compromises it deems
desirable including without limitation extending the time of payment, arranging
for payment in installments, or otherwise modifying the terms or rights with
respect to any of the Collateral, all of which may be effected without notice to
or consent by Borrower and without otherwise discharging or affecting the
Obligations, the Collateral or the security interests granted hereunder.
2. Notification to Consumers: At any time, prior to or after an Event
of Default, Lender may notify the Consumers on any of the Acceptable Contracts
to make payment directly to Lender, and Lender may endorse all items of payment
received by it which are payable to Borrower. Borrower, at the request of
Lender, shall notify the Consumers of Lender's security interest in the
Acceptable Contracts. Until such time as Lender elects to exercise its right of
notification, Borrower is authorized to collect and enforce the Acceptable
Contracts under the terms and conditions as set forth herein.
3. Uniform Commercial Code: At all times prior and subsequent to an
Event of Default hereunder, Lender shall be entitled to all the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in
Pennsylvania (or any other state having jurisdiction), as the same may be
amended from time to time, with respect to all Collateral.
4. Preservation of Collateral: At all times prior and subsequent to an
Event of Default, Lender may take any and all action which in its sole and
absolute discretion is necessary and proper to preserve its interest in the
Collateral, including without limitation the payment of debts of Borrower which
might in Lender's sole and absolute discretion, impair the Collateral or
Lender's security interest therein, purchasing insurance on the Collateral,
repairing the Collateral, or paying taxes or assessments thereon, and the sums
so expended by Lender shall be secured by the Collateral, shall be added to the
amount of the Obligation(s) due Lender and shall be payable on demand with
interest at the Default Rate from the date expended by Lender until repaid by
Borrower.
5. Mails: From and after an Event of Default, Lender is authorized to
(and Borrower shall, upon request of Lender) notify the postal authorities to
deliver all mail, correspondence or parcels addressed to Borrower and relating
to the Collateral to Lender at such address as Lender may direct.
6. Lender's Right to Cure: In the event Borrower shall fail to perform
any of its Obligations hereunder or under any of the other Loan Documents, then
Lender, in addition to all of its rights and remedies hereunder, may perform the
same, but shall not be obligated to do so, at the cost and expense of Borrower.
In any such event, Borrower shall promptly reimburse Lender together with
interest at the Default Rate from the date such sums are expended until repaid
by Borrower.
7. Test Verifications: Lender shall have the right to make test
verifications of any and all Acceptable Contracts in any manner and through any
medium Lender considers advisable, and Borrower shall render any necessary
assistance to Lender.
8. Power of Attorney: Subject to the terms, conditions and restrictions
of this Agreement, Borrower hereby irrevocably constitutes and appoints Lender
as its true and lawful attorney, with full power of substitution, to, while an
Event of Default or Default shall exist or be continuing, enforce collection of
the Collateral at the sole cost and expense of Borrower but for the sole benefit
of Lender, either in its own name or in the name of Borrower including but not
limited to executing releases, compromising or settling with any debtors and
prosecuting, defending, compromising or releasing any action relating to the
Collateral; to receive, open and dispose of all mail addressed to Borrower and
take therefrom, any proceeds of Collateral pledged or assigned to Lender; to
notify Post Office authorities to change the address for delivery of mail
addressed to Borrower to such address as Lender shall designate; to endorse the
money orders, notes, acceptances or other instruments of the same or different
nature; to sign and endorse the name of Borrower on and to receive as pledgee or
secured party of the property covered by any of the Collateral, any invoices,
schedules of Collateral assigned, freight or express receipts, or bills of
lading, storage receipts, warehouse receipts or other documents of title of same
or different nature relating to the Collateral and to do any and all things
necessary or proper to carry out the intent of this Agreement and to perfect the
liens and rights of Lender created under this Agreement. Lender shall not be
obliged to do any of the acts or exercise any of the powers hereinabove
authorized, but if Lender elects to do any such act or exercise any such power,
it shall not be accountable for more than it actually receives as a result of
such exercise of said power, and it shall not be liable or responsible to
Borrower for any acts or omissions nor for any error in judgment or mistake of
law or fact, unless caused by the gross negligence or willful misconduct of
Lender. All powers conferred upon Lender by this Agreement being coupled with an
interest shall be irrevocable so long as any obligations of Borrower to Lender
shall remain unpaid. Lender is hereby further authorized to sign on behalf of
Borrower any Financing Statement Lender deems necessary to perfect its security
interest and to file same with the appropriate authorities in Arizona or any
other state. All costs of such filings shall be charged to and be borne by
Borrower.
VIII
EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an Event
of Default (hereinafter referred to as an "Event of Default"):
1. The Borrower shall have failed to make any payment of any
installment of interest on the Loan when due;
2. The Borrower shall have failed to make any payment of any principal
when due;
3. Borrower's failure to keep, observe, perform, and/or carryout in
every particular the covenants, terms or provisions contained in this Agreement
or any of the other Loan Documents and such Default shall have remained uncured
for a period of fifteen (15) days after notice thereof to the Borrower by the
Lender;
4. Borrower's consent to the application for an appointment of a
receiver or trustee for it or for substantially all of its property, its
sufferance of any such appointment made without its consent to any proceedings
against it under any law relating to bankruptcy, insolvency, or the
reorganization or relief of debtors, which shall have continued unstayed and in
effect for a period of thirty (30) consecutive days;
5. Borrower's admission in writing of its inability to pay its debts as
they mature, or commission of any act of bankruptcy; Borrower's making of an
assignment for the benefit of creditors, or the filing of a voluntary petition
in bankruptcy by the Borrower; or the application for a receiver by the
Borrower;
6. The entry of any judgment or execution or attachment order against
or affecting the Borrower which, in the reasonable opinion of the Lender,
adversely and materially affects the credit standing of the Borrower. (For
purposes of this subsection, the term "materially" shall be defined to mean an
amount in excess of ten (10%) percent of the Borrower's net worth, as shown on
the most recently available financial statements or $50,000.00, whichever is
greater);
7. Any statement, representation, or warranty by the Borrower contained
in this Agreement, the other Loan Documents, the financial statements,
applications submitted for credit or any other agreement for the payment of
money with Lender proving to be incorrect or misleading in any material respect,
or a breach in any of the terms and conditions of this Agreement, the other Loan
Documents or any other agreement with Lender at any time when the Borrower is
obligated to Lender hereunder;
8. The failure of the Borrower to pay any principal or interest on any
Permitted Liens or any other material borrowed money obligation when due, so
that the holder of such obligation declares, or may declare, such obligation due
prior to its stated maturity because of the Borrower's default thereunder and
the Borrower shall have failed to procure, within thirty (30) days after the
declaration of said default, a written statement cancelling said default and/or
reinstating said obligation. (For purposes of this subsection, the term
"material" shall have the same meaning as set forth in Section VIII 6. above);
9. Any material and adverse change in the condition or affairs,
financial or otherwise, of the Borrower, which in the reasonable opinion of
Lender impairs Lender's security or increases its risk so as to jeopardize the
repayment of the Obligations of the Borrower under this Agreement or any of the
other Loan Documents;
10. If at any time Lender reasonably determines that an environmental
claim against the Premises will have a material adverse effect on the financial
condition of the Borrower;
11. The failure of the Borrower to provide financial statements and/or
annual tax returns to Lender when required or requested to do so, together with
such financial information as may reasonably be requested by Lender;
12. The passing of title, legal or equitable, to the Premises (except
as to the sale by Borrower of Timeshare Estates at the Premises in the ordinary
course of Borrower's business) without the written consent of Lender;
13. The failure to make payment of any tax, assessment, or municipal or
governmental charge against the Premises, or any Timeshare Estate, when due or
the imposition of any lien thereon not paid and removed within 15 days from the
date thereof, except that no such tax, assessment or charge need be paid which
is being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside, provided, however, any such payment
must be made if necessary to prevent the forfeiture or sale of the Premises or
any Timeshare Estate, as the case may be;
14. The failure to pay any insurance premium when due on or relating to
the Premises or the Collateral;
15. Any material change in the corporate structure or management of the
Borrower without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed;
16. Any suspension of the Borrower's transaction of its usual
businesses including, but not limited to, the termination, cessation or
discontinuance of the Borrower's operations at the Premises, other than as a
result of the sale of all Timeshare Estates therein;
17. Liquidation and/or dissolution of the Borrower;
18. The loss, revocation or failure to renew any license, approval,
franchise and/or permit now held or hereafter acquired by Borrower which is
necessary for the continued operation of the Borrower's business, including, but
not limited to, the Project, which, in the sole opinion of Lender, materially
adversely affects Borrower's business or its ability to repay the Loan;
19. The issuance of any stay, order, cease and desist order or similar
judicial or non-judicial sanctions limiting or otherwise affecting the sale of
Contracts, if such order or sanction is not discharged within thirty (30) days
thereafter, which in the sole opinion of Lender, materially adversely affects
the Borrower's business or its ability to repay the Loan;
20. Borrower terminates or breaches any management or marketing
agreement and/or engages the services of a different, substitute or subsequent
management or marketing firm, or materially modifies the management or marketing
agreements, without first obtaining the written consent of Lender, which consent
shall not be unreasonably withheld or delayed;
21. The Premises is partially or totally destroyed and the Borrower,
the Club governing the Resort and/or the owners of the Timeshare Estates, as the
case may be, if permitted, elect not to rebuild the improvements at the Premises
in substantially the same size, quality of construction, architecture and in all
other manner so as to conform with the improvements which existed prior to such
damage or destruction; or
22. A mechanics' lien, stop notice, or notice of intention or any other
lien or encumbrance shall have been filed against the Premises and/or any of the
other Collateral and the Borrower shall have failed to procure within thirty
(30) days after the same is filed, a cancellation of the said lien or a
discharge thereof or shall have failed to post a bond or escrow sufficient funds
to discharge the same in the opinion of Lender, in the manner and form provided
by law, and such default shall have remained uncured for a period of thirty (30)
days.
IX
CONSEQUENCES OF DEFAULT
In case any Event of Default shall have occurred and be continuing,
then and in every such Event of Default, the Lender may take any or all the
following actions in addition to those actions allowed in the other Loan
Documents, at law or in equity, at the same time or at different times:
1. Demand Obligations: Declare all Obligations owing to the Lender from
the Borrower under this Agreement, the other Loan Documents or any other
agreement between the Lender and the Borrower, to be forthwith due and payable,
whereupon all such Obligations and sums shall forthwith become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrower;
2. Possession and Disposition of Collateral: Lender may forthwith give
written notice to Borrower, whereupon Borrower shall, at its expense, promptly
deliver any and all Collateral to such place as Lender may designate, or Lender
shall have the right to enter upon the premises where the Collateral is located
and take immediate possession of and remove the Collateral without liability to
Lender except such as occasioned by the gross negligence or willful misconduct
of Lender, its employees or agents. In the event Lender obtains possession of
the Collateral, Lender may sell any or all of the Collateral at public or
private sale, at such price or prices as Lender may deem best, either for cash,
on credit or for future delivery, in bulk or in parcels and/or lease or retain
the Collateral repossessed using it or keeping it idle. Notwithstanding anything
contained herein to the contrary, Lender shall have no obligation to take
possession of all or any portion of the Collateral. Notice of any sale or other
disposition shall be given to the Borrower at least ten (10) days before the
time of any intended sale or disposition of the Collateral is to be made, which
Borrower hereby agrees shall be reasonable notice of such sale or other
disposition. Lender may also elect to retain the Collateral or any part thereof
in satisfaction of the Borrower's Obligations. The proceeds, if any, of any such
sale or leasing by Lender shall be applied: first, to the payment of all fees
and expenses incurred by Lender as a result of such Event of Default, including
without limitation any legal fees and expenses incurred in repossessing the
Collateral and selling it, disposing of it or leasing it; second, to pay the
Obligations in such order and in such manner as Lender shall deem appropriate;
and third, to pay any excess remaining thereafter to Borrower.
3. Terminate Borrower's Rights Under Loan Documents: Upon the
occurrence of any Event of Default, Lender may also, with or without proceeding
with such sale or foreclosure of any Collateral or demanding payment of the
Obligations, without notice terminate further performance under this Agreement
or any of the other Loan Documents or exercise all rights granted in any other
agreement or agreements between Lender and Borrower without further liability or
obligation by Lender. Neither such termination, nor the termination of this
Agreement by lapse of time, the giving of notice or otherwise, shall absolve,
release or otherwise affect the liability of Borrower in respect to transactions
had prior to such termination, nor affect any of the liens, security interests,
rights, powers and remedies of Lender, but they shall, in all events, continue
until all obligations are satisfied. Should Lender exercise the rights contained
herein, Lender shall not, in any manner be liable to Borrower for any failure to
make or continue to make loans or Advances to Borrower hereunder.
4. Foreclosure: To institute and maintain foreclosure proceedings in
accordance with the laws of the States of Pennsylvania or Arizona, as the case
may be.
5. Collection of Obligations: To institute proceedings to collect all
or any portion of the Obligations without instituting foreclosure proceedings.
6. Other Remedies: Exercise any rights or take any of the remedies
otherwise available to it under the Loan Documents or as a matter of law or
equity.
7. Set-Off: Immediately, and without notice or other action, to set-off
any money owed by the Lender in any capacity to the Borrower against any of the
Borrower's liability to the Lender, whether due or not, and the Lender shall be
deemed to have exercised such right of set-off and to have made a charge against
any such money immediately upon the occurrence of such Event of Default, even
though the actual book entries may be made at some time subsequent thereto.
8. Cumulative Remedies; Waivers: No remedy referred to herein is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Lender at law or in
equity. No express or implied waiver by Lender of any Default or Event of
Default 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 right
upon the continuation or recurrence 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 this Agreement, the other Loan Documents and applicable law.
9. Waive Jury Trial: BORROWER HEREBY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY LITIGATION RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR
OTHER AGREEMENTS OR INSTRUMENTS BETWEEN BORROWER AND LENDER. /S/ NS
--------
Initial
10. No Marshalling: Lender shall be under no obligation whatsoever to
proceed first against any of the Collateral before proceeding against any other
of the Collateral. It is expressly understood and agreed that all of the
Collateral stands as equal security for all Obligations, and that Lender shall
have the right to proceed against any or all of the Collateral in any order, or
simultaneously, as in its sole and absolute discretion it shall determine. It is
further understood and agreed that Lender shall have the right, in its sole and
absolute discretion, to sell any or all of the Collateral in any order or
simultaneously.
X
MISCELLANEOUS
1. Reimbursement of Expenses: The Lender shall be entitled to its
reasonable expenses incurred in the enforcement or liquidation of any
obligations due hereunder, or for the enforcement of payment of the Obligations,
and those expenses shall, without limitation, include reasonable attorneys' fees
plus other legal costs and expenses incurred. Borrower agrees to pay all costs
and expenses of the Lender in connection with the preparation, execution,
delivery, and administration of this Agreement, the other Loan Documents and
other instruments and documents to be executed contemporaneously herewith,
including reasonable attorney's fees and out-of-pocket expenses of counsel for
Lender, subject to the limitations set forth in the Commitment Letter.
2. No Waiver: The Borrower agrees that no delay on the part of the
Lender in exercising any power or right hereunder shall operate as a waiver or
relinquishment of any such power or right, nor preclude any further exercise
thereof, or the exercise of any other power or right. 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
remedy by subsequent event.
3. Waiver of Presentment, Etc.: The Borrower waives presentment,
dishonor and notice of dishonor, protest and notice of protest of all commercial
papers at any time held by the Lender on which the Borrower is in any way
liable.
4. Incorporation of Other Loan Documents: The provisions of this
Agreement shall be in addition to those of the other Loan Documents or other
writings held by the Lender relating to the Obligations, all of which shall be
construed as one instrument. To the extent there is any conflict between the
provisions of this Agreement and any other Loan Documents, the terms of the
agreement which affords the greater protection to Lender shall control. Borrower
agrees that all of the terms of the Commitment Letter shall be incorporated
herein as though set forth at length.
5. Consent to Extensions, Postponements, Releases, Etc.: Borrower
consents to any extension, postponement of time of payment, indulgence or to any
substitution exchange or release of Collateral and to any addition to or release
of, any party or persons primarily or secondarily liable, or acceptance of
partial payments on any Contracts or instruments in the settlement, compromising
or adjustment thereof.
6. Survival of Representations and Warranties: All representations and
warranties made herein or in any certificate or instrument contemplated hereby
shall survive any independent investigation made by Lender in the execution and
delivery of this Agreement, in said certificates or instruments and shall
continue so long as any Obligations are outstanding and unsatisfied, applicable
statutes of limitation to the contrary, notwithstanding.
7. Binding Effect: This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, their respective successors and assigns.
8. Rights and Remedies Cumulative: The rights and remedies herein
expressed to be vested in or conferred upon the Lender shall be cumulative and
shall be in addition to and not in substitution for or in derogation of the
rights and remedies conferred by any applicable law.
9. No Obligation to Enforce Terms: Nothing herein contained shall
impose upon the Lender any obligation to enforce any terms, covenants or
conditions contained herein. Failure of the Lender, in any one or more
instances, to insist upon strict performance by the Borrower of any terms,
covenants or conditions of this Agreement and/or the other Loan Documents, shall
not be deemed to be a waiver or relinquishment of any such terms, covenants and
conditions.
10. Lender's Right to Assign: This Agreement and all rights hereunder
may be assigned or otherwise transferred by the Lender to anyone of its
choosing.
11. Governing Law: This Agreement, the other Loan Documents and the
rights of the parties shall be governed by and construed under the laws of the
Commonwealth of Pennsylvania, except where the laws of the State of Arizona
control with respect to the exercise of Lender's rights and remedies as against
the Premises.
12. Indemnification: The Borrower hereby agrees to and does hereby
indemnify, protect, defend and save harmless the Lender, its directors,
employees, agents and shareholders from and against any and all losses, damages,
expenses or liabilities of any kind or nature and from any suits, claims or
demands including reasonable counsel fees incurred in investigating or defending
such claim, suffered by any of them, and caused by, relating to, arising out of,
or resulting from this Agreement, the other Loan Documents and the transactions
contemplated herein, including, but not limited to: (a) any act or omission to
act by the Borrower in connection with ' this Agreement;, or (b) losses,
damages, expenses or liabilities sustained by the Lender pursuant to any
provisions contained in any local, state or federal law, statute or ordinance,
including any environmental law or regulation. The provisions of this paragraph
shall survive the termination of this Agreement, cancellation of the other Loan
Documents and the repayment of the Obligations.
13. Modification: This Agreement may not be modified, amended, altered
or changed orally or by course of dealing between Borrower and Lender, but only
by an agreement in writing duly executed on behalf of the party to whom
enforcement of any such waiver, change, modification or discharge is sought.
14. Severability: If any term or provision of this Agreement or the
application thereof shall to any extent be invalid or unenforceable, the
remainder of this Agreement, or the application of such terms or provisions
other than that which is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
15. No Third Party Beneficiary; No Joint Venture or Agency
Relationship. All sums advanced hereunder and evidenced by the Note shall be
strictly for the benefit of the Borrower and shall not inure to the benefit of,
nor be intended or construed to give any third parties any legal or equitable
right, remedy or claim under or through the Borrower, the relationship between
Lender and Borrower being strictly a contractual one evidencing a
creditor-debtor relationship. Borrower and Lender hereby expressly disclaim the
existence of any partnership, joint venture, employment or other agency
relationship between them by, virtue of this Agreement.
16. Cross Default; Cross Collateralization: All other agreements
between the Borrower and Lender and/or any of its affiliates or subsidiaries are
hereby amended so that a default under this Agreement is a default under all
other agreements and a default under any one of the other agreements is a
default under this Agreement. Further, that the Collateral under this Agreement
secures the Obligations now or hereafter outstanding under all other agreements
with Lender and/or its affiliates or subsidiaries and the collateral pledged
under any other agreement with Lender and/or its affiliates or subsidiaries
secures the Obligations under this Agreement.
17. Notices: Any notices under this Agreement shall be deemed duly
served on the Borrower on the date received if mailed by certified mail, return
receipt requested, postage prepaid addressed to Borrower at Borrower's last
address on the Lender's records. Any notices to Lender pursuant to this
Agreement shall be mailed to Lender by certified mail, return receipt requested,
postage prepaid at the address of set forth at the heading of this Agreement and
shall be deemed effective upon receipt by Lender.
18. Term of Agreement: This Agreement shall continue in full force and
effect and the liens of the Collateral granted hereby and the duties, covenants
and liabilities of Borrower hereunder and all terms, conditions and provisions
hereof relating thereto shall continue to be fully operative until all
Obligations created under this Agreement and, at Lender's option, all
obligations under any other Agreement or agreements between the Lender and
Borrower have been satisfied in full, concluded and/or liquidated. Borrower
expressly agrees that to the extent Borrower or any Consumer makes a payment or
payments to Lender, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential set aside
and are required to be repaid to a trustee, receiver or any other party under
any Bankruptcy Code, State or Federal Law, common law or equitable cause, then
to the extent of such payment or repayment, the Obligations or part thereof
intended to be satisfied, shall be revived and continued in full force and
effect as if said payment had not been made.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their 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
- ----------------------------------- -----------------------------------
STEPHANIE D. CASTRONOVA, NANCY J. STONE, Executive
Secretary Vice President
WITNESS/ATTEST: TOMMAC FINANCIAL CORP.
By: /S/ ANDY G. ROOSA
-----------------------------------
ANDY G. ROOSA, President
EXHIBIT "A"
No. DR-523645
PARCEL NO. 1:
Track K of KOHL'S TONTO CREEK RANCH PLAT "A", Map No. 356, as recorded in the
office of the Gila County Recorder, Gila County, Arizona located in a portion of
Homestead Entry Survey No. 567 lying within Section 21, Township 11 North, Range
12 East of the Gila and Salt River Base and Meridian, Gila County, Arizona, more
particularly described as follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 30 minutes 40 seconds East, along the Westerly line of
said H.E.S. No. 567, a distance of 751.85 feet to the Northwest corner of Lot 72
of said KOHL'S TONTO CREEK RANCH PLAT "A";
THENCE leaving said Westerly line, North 72 degrees 31 minutes 30 seconds East,
a distance of 108.23 feet to a point, said point being the intersection of the
North line of said Lot 72 extended and the East right-of-way of SHORT ROAD, said
point being the TRUE POINT OF BEGINNING;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the East right-of-way line of SHORT ROAD, a
distance of 725.49 feet (729.60 feet recorded) to the intersection with the East
right-of-way of STATE ROUTE 260, said intersection being a point on a curve
concave to the Northwest having a radius of 880.00 feet, a radial line through
said intersection bears South 62 degrees 57 minutes 16 seconds East;
THENCE Northeasterly 111.54 feet (107.43 recorded) alone said curve through a
central angle of 07 degrees 15 minutes 44 seconds to the beginning of a tangent
curve to the left, said curve being parallel to and 50.00 feet right of the
STATE ROUTE 260 centerline spiral curve having a rate of change in degree of
curvature, a = 4.8627 degrees, a full spiral deviation angle of 04 degrees 54
minutes 00 seconds, and a spiral distance of 141.96 feet;
THENCE Northeasterly continuing alone the East right-of-way line of STATE ROUTE
260, a distance of 146.24 feet along said curve to a point of tangency;
THENCE North 14 degrees 53 minutes 00 seconds East (North 14 degrees 49 minutes
10 seconds East recorded), continuing along the East right-of-way line of STATE
ROUTE 260, a distance of 288.61 feet (287.62 feet recorded) to the intersection
with the South right-of-way of BUENAGUA ROAD;
THENCE South 43 degrees 48 minutes 48 seconds East (South 44 degrees 15 minutes
10 seconds East recorded), along the South right-of-way of said BUENAGUA ROAD, a
distance of 159.16 feet (157.67 feet recorded);
THENCE South 38 degrees 12 minutes 48 seconds East (South 38 degrees 39 minutes
10 seconds East recorded), continuing along the South right-of-way of said
BUENAGUA ROAD, a distance of 223.06 feet;
THENCE South 29 degrees 35 minutes 48 seconds East (South 30 degrees 02 minutes
10 seconds East recorded), continuing along the South right-of-way of said
BUENAGUA ROAD, a distance of 19.24 feet (27.57 feet recorded);
THENCE South 22 degrees 45 minutes 51 seconds East (South 23 degrees 02 minutes
00 seconds East recorded), leaving the South right-of-way of said BUENAGUA ROAD,
a distance of 340.38 feet (332.09 feet recorded);
THENCE South 14 degrees 53 minutes 10 seconds East (South 15 degrees 19 minutes
10 seconds East recorded), a distance of 33.13 feet (33.15 feet recorded) to a
point on the West right-of-way of BUENAGUA ROAD;
THENCE South 05 degrees 03 minutes 48 seconds East (South 05 degrees 30 minutes
10 seconds East recorded), along the West right-of-way of said BUENAGUA ROAD, a
distance of 271.76 feet (271.74 feet recorded);
THENCE South 02 degrees 06 minutes 48 seconds East (South 02 degrees 33 minutes
10 seconds East recorded) continuing along the West right-of-way of BUENAGUA
ROAD, a distance of 36.58 feet;
THENCE South 30 degrees 43 minutes 12 seconds West (South 30 degrees 16 minutes
50 seconds West, recorded), leaving the West right-of-way of BUENAGUA ROAD, a
distance of 192.50 feet (193.61 feet recorded);
THENCE South 72 degrees 35 minutes 33 seconds West (South 72 degrees 20 seconds
30 minutes West recorded), a distance of 233.32 feet;
THENCE South 72 degrees 31 minutes 30 seconds West (South 72 degrees 20 minutes
30 seconds West recorded), a distance of 123.20 feet (123.81 feet recorded) to
the TRUE POINT OF BEGINNING;
EXCEPT that portion of Tract K, of KOHL'S TONTO CREEK RANCH PLAT "A", according
to the plat of record in the office of the County Recorder of Gila County,
Arizona, recorded in Map No. 356, located in a portion of Homestead Entry Survey
No. 567 lying within Section 21, Township 11 North, Range 12 East of the Gila
and Salt River Base and Merdian, Gila County, Arizona, being described as
follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 32 minutes 34 seconds East, along the line between
Corner No. 3 and No. 2 of said H.E.S. No. 567, a distance of 751.72 feet (752.78
feet recorded) to the Northwest corner of Lot 72, of KOHL'S TONTO CREEK RANCH,
according to the plat of record in the office of the County Recorder of Gila
County, Arizona, recorded in Map No. 112;
THENCE North 72 degrees 34 minutes 09 seconds East (North 72 degrees 51 minutes
East recorded), a distance of 107.81 feet (108.20 feet recorded) to a point
being the intersection of the Northerly line of said Lot 72 extended and the
Easterly right-of-way of SHORT ROAD;
THENCE North 11 dearees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the Easterly line of said SHORT ROAD, a
distance of 22.84 feet to the POINT OF BEGINNING;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), continuing along the Easterly line of SHORT ROAD, a
distance of 64.98 feet;
THENCE North 76 degrees 23 minutes 24 seconds East, a distance of 78.14 feet;
THENCE South 13 degrees 29 minutes 59 seconds East, a distance of 20.00 feet:
THENCE South 76 degrees 23 minutes 24 seconds West, a distance of 39.09 feet;
THENCE South 13 degrees 36 minutes 36 seconds East, a distance of 44.94 feet;
THENCE South 76 degrees 23 minutes 24 seconds West, a distance of 41.38 feet to
the POINT OF BEGINNING; and
EXCEPT that portion of Tract K, of KOHL'S TONTO CREEK RANCH PLAT "A", according
to the plat of record in the office of the County Recorder of Gila County,
Arizona, recorded in Map No. 356 located in a portion of Homestead Entry Survey
No. 567 lying within Section 21, Township 11 North, Range 12 East of the Gila
and Salt River Base and Meridian, Gila County, Arizona, being described as
follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 32 minutes 34 seconds East, along the line between
Corner No. 3 and No. 2 of said H.E.S. No. 567, a distance of 751.72 feet (752.78
feet recorded) to the Northwest corner of Lot 72, of KOHL'S TONTO CREEK RANCH,
according to the plat of record in the office of the County Recorder of Gila
County, Arizona, recorded in Map No. 112.
THENCE North 72 degrees 34 minutes 09 seconds East (North 72 degrees 51 minutes
East recorded), a distance of 107.81 feet (108.20 feet recorded) to a point
being the intersection of the Northerly line of said Lot 72 extended and the
Easterly right-of-way of SHORT ROAD;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the Easterly line of said SHORT ROAD, a
distance of 357.94 feet:
THENCE North 77 degrees 30 minutes 01 seconds East, a distance of 21.37 feet to
the POINT OF BEGINNING;
THENCE continuing North 77 degrees 30 minutes 01 seconds East, a distance of
11.18 feet;
THENCE South 12 degrees 47 minutes 54 seconds East, a distance of 5.97 feet;
THENCE South 77 degrees 30 minutes 01 seconds West, a distance of 11.18 feet;
THENCE North 12 degrees 47 minutes 54 seconds West, a distance of 5.97 feet to
the POINT OF BEGINNING; and
EXCEPT that portion of Tract K, of KOHL'S TONTO CREEK RANCH PLAT "A", according
to the plat of record in the office of the County Recorder of Gila County,
Arizona, recorded in Map No. 356 located in a portion of Homestead Entry Survey
No. 567 lying within Section 21, Township 11 North, Range 12 East of the Gila
and Salt River Base and Meridian, Gila County, Arizona, being described as
follows:
COMMENCING for a tie at Corner No. 3 of said H.E.S. No. 567;
THENCE South 11 degrees 32 minutes 34 seconds East, along the line between
Corner No. 3 and No. 2 of said H.E.S. No. 567, a distance of 751.72 feet (752.78
feet recorded) to the Northwest corner of Lot 72, of KOHL'S TONTO CREEK RANCH,
according to the plat of record in the office of the County Recorder of Gila
County, Arizona, recorded in Map No. 112;
THENCE North 72 degrees 34 minutes 09 seconds East (North 72 degrees 51 minutes
East recorded), a distance of 107.81 feet (108.20 feet recorded) to a point
being the intersection of the Northerly Line of said Lot 72 extended and the
Easterly right-of-way of SHORT ROAD:
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), along the Easterly line of said SHORT ROAD, a
distance of 710.49 feet to the POINT OF BEGINNING;
THENCE North 11 degrees 30 minutes 40 seconds West (North 11 degrees 46 minutes
50 seconds West recorded), continuing along the Easterly line of said SHORT
ROAD, a distance of 15.00 feet to the intersection with the Easterly
right-of-way of ARIZONA STATE ROUTE 260;
THENCE South 62 degrees 57 minutes 16 seconds East, a distance of 10.00 feet;
THENCE South 30 degrees 13 minutes 14 seconds West, a distance of 11.75 feet to
the POINT OF BEGINNING.
PARCEL NO. 2:
Tract "B", of KOHL'S TONTO CREEK RANCH, according to the plat of record in the
office of the County Recorder of Gila County, Arizona, recorded in Map No. 112,
described as follows:
COMMENCING at Corner No. 5 of said Homestead Entry Survey No. 567, said point
being the TRUE POINT OF BEGINNING;
THENCE South 22 degrees 45 minutes 51 seconds East (South 23 degrees 02 minutes
00 seconds East recorded), along the Easterly line of said H.E.S. No. 567, a
distance of 288.53 feet to a point on the Northerly right-of-way of BUENAGUA
ROAD:
THENCE North 38 degrees 12 minutes 48 seconds West (North 18 degrees 39 minutes
10 seconds West recorded), along said right-of-way, a distance of 145.99 feet;
THENCE North 43 degrees 48 minutes 48 seconds West (North 44 degrees 15 minutes
10 seconds West and North 43 degrees 43 minutes West recorded), continuing along
said right-of-way, a distance of 174.93 feet to the intersection with the East
right-of-way of STATE ROUTE 260;
THENCE North 14 degrees 53 minutes 00 seconds East (North 14 degrees 49 minutes
10 seconds East recorded), along said East right-of-way of STATE ROUTE 260, a
distance of 4.06 feet to the beginning of a tangent curve to the rights, said
curve being parallel to and 50.00 feet right of the STATE ROUTE 260 centerline
spiral curve having a rate of change in degree of curvature, a = 3.088 degrees,
and a full spiral deviation angle of 04 degrees 36 minutes 00 seconds;
THENCE Northeasterly 22.21 feet (23.96 feet recorded) along said curve to the
intersection with the North Line of H.E.S. No. 567;
THENCE South 89 degrees 50 minutes 00 seconds East (South 89 degrees 33 minutes
East and North 89 degrees 55 minutes East recorded), along the North line of
said H.E.S. No. 567, a distance of 93.01 feet (92.82 feet recorded) to the TRUE
POINT OF BEGINNING.
EXHIBIT B
LIST OF ACCEPTABLE CONTRACTS AS OF THE DATE OF THIS AGREEMENT
NONE.