February 27, 1996
VIA FACSIMILE
Mr. Malcolm Gentry
Lomacasi Resort
880 N. Hwy 89A
Sedona, AZ 86336
Re: First Amended Certificate of Limited Partnership
and Amended Agreement of the Sedona
Real Estate Limited Partnership #1
Dear Malcolm:
I have previously transmitted to you via facsimile a draft of the
above-captioned agreement (the "Partnership Agreement").
The following sets forth our collateral understandings relating to the
prospective operation of the Lomacasi Resort (the "Resort") and, in due course,
its conversion to a timeshare project:
(1) You, Malcolm Gentry, will serve as project manager of the Resort and
reside at the Resort in a cottage acceptable to the General Partner. For
the time being, at least, it is understood that you will reside in the
main house. Your monthly salary shall be $2,000 per month, $800 of which
shall be payable to you in cash and the balance ($1,200) of which, in
addition to your participation in the profits of the partnership, shall
be credited to your Capital Account under the Partnership Agreement. You
shall report to Edd Zielinski, Executive Vice President of ILX
Incorporated ("ILX") or otherwise as he directs. Your Capital Account
will be debited with any amounts paid by the partnership, subsequent to
March 1, 1996, to Janette Harvey and/or any assignee arising under that
certain Promissory Note in the amount of $110,000 dated November 28,
1995.
(2) Martha Jo Curtis shall serve the Resort and ILX in an advertising,
public relations and real estate brokerage capacity as from time to time
directed by Edd Zielinski. Her monthly salary shall be $2,500 per month,
$1,000 of which shall be payable to her in cash and the balance ($1,500)
of which, in addition to its participation in the profits of the
partnership, shall be credited to the Capital Account of the Curtis
Trust under the Partnership Agreement.
(3) The General Partner will initially contribute $25,000 to the capital of
the partnership. Additionally, it will loan funds to the partnership
initially and from time to time at an interest rate of 12.5% to provide
cash flow to the partnership, if necessary, to conduct its day to day
business.
(4) You have informed me, or I have otherwise learned, that the following
sums will be due from the partnership upon execution of the Partnership
Agreement:
(a) First Trust Deed - January and February 1996 $13,800.00
payments plus late charges
(b) Third Trust Deed - January and February 1996 9,557.72
payments
(c) Other Payables:
Painting Contractor $1,850.00
Mitsubishi Television 3,000.00
Insurance 1,100.00
Legal Counsel 2,000.00 7,950.00
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TOTAL: $31,307.72
You have indicated that there are "merchant account funds" in the
approximate amount of $7,000 to offset a portion of the above payables. It is my
understanding that all other payables are current. Assuming that we are in a
position to close, effective March 1, 1996, we should have an accounting of
proceeds on hand and any receivables accrued and payables incurred as of
February 29, 1996. Thereafter, we will require an accounting of your results of
operations for the months of January and February 1996.
If you have any questions concerning this letter, please call me at your
earliest convenience. If you and Martha Jo are in approval, please so signify in
the space provided below.
Yours very truly,
/s/ Joseph P. Martori
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Joseph P. Martori
Duly Authorized Representative
of Lomacasi Resort Incorporated
ACCEPTED AND APPROVED:
/s/ Malcolm Gentry 3-1-96
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Malcolm Gentry
/s/ Martha Jo Curtis 3/1/96
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Martha Jo Curtis