SECURED PROMISSORY NOTE
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Phoenix, Arizona
$2,485,000.00 January 25, 1996
1. FUNDAMENTAL PROVISIONS.
The following terms will be used as defined terms in this Note:
Payee and Holder: BANK ONE, ARIZONA, NA, a national banking
association.
Maker: LOS ABRIGADOS PARTNERS LIMITED PARTNERSHIP,
an Arizona limited partnership.
Principal Amount: Two Million Four Hundred Eighty-Five
Thousand and No/100 Dollars ($2,485,000).
Interest Rate: One and one-quarter percent (1.25%) per
annum above the Index Rate. The Interest
Rate shall change from time to time as and
when the Index Rate changes.
Default
Interest Rate: Four percent (4%) per annum above the
Interest Rate. The Default Interest Rate
shall change from time to time as and when
the Interest Rate changes as a result of
changes in the Index Rate.
Index Rate: The rate of interest most recently announced
by Payee, or its successors, in Phoenix,
Arizona as its "prime rate." Any change in
the "prime rate" shall become effective as
of the same date of any such change.
Maturity Date: June 5, 1998.
Business Day: Any day of the year on which banks are
neither required nor authorized to close in
Phoenix, Arizona.
Deed of Trust: That certain Deed of Trust (With Assignment
of Rents and Security Agreement), dated
September 9, 1991, between Maker, as
Trustor, and Payee, as Beneficiary, as
amended by that certain First Amendment to
Deed of Trust and Collateral Assignment
dated October 4, 1994, and by that certain
Second Amendment to
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Deed of Trust and Collateral Assignment of
even date herewith, and as further amended
from time to time.
Loan Documents: The Loan Agreement, the Note, the Deed of
Trust and any other documents securing the
repayment of the Note.
Loan: The loan from Payee to Maker in the
Principal Amount and evidenced by this Note.
Loan Agreement: That certain Loan Agreement dated September
9, 1991, between Maker, as Borrower, and
Holder, as Lender, as amended by that
certain Modification dated October 22, 1993,
that certain Second Modification, dated
October 4, 1994, and that certain Third
Modification, of even date herewith, and as
the same may be further amended, modified,
restated, renewed or supplemented from time
to time.
2. PROMISE TO PAY.
For value received, Maker promises to pay to the order of Holder, at
its office at 241 North Central Avenue, Phoenix, Arizona 85004, or at
such other place as the holder hereof may from time to time designate
in writing, the Principal Amount, together with accrued interest from
the date of disbursement on the unpaid principal balance at the
Interest Rate.
3. INTEREST; PAYMENTS.
(a) Absent an Event of Default hereunder or under any of the Loan
Documents, this Note shall bear interest at the Interest Rate
in effect from time to time. Throughout the term of this Note,
interest shall be calculated on a 360-day year with respect to
the unpaid balance of the Principal Amount and, in all cases,
shall be computed for the actual number of days in the period
for which interest is charged, which period shall consist of
365-days on an annual basis.
(b) All payments of principal and interest due hereunder shall be
made (i) without deduction of any present and future taxes,
levies, imposts, deductions, charges or withholdings, which
amounts shall be paid by Maker, and (ii) without any other set
off. Maker will pay the amounts necessary such that the gross
amount of the principal and interest received by the holder
hereof is not less than that required by this Note.
(c) Principal and accrued interest shall be payable in monthly
installments commencing on February 1, 1996 and on the first
day of each month thereafter, each in an amount equal to the
sum of (i) $82,833.33 for application to the unpaid
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principal balance hereof, plus (ii) accrued interest on the
unpaid principal balance hereof at the Interest Rate. All
remaining principal, accrued interest and other amounts
outstanding pursuant to this Note or the Loan Documents and
not otherwise paid shall be due and payable in full on the
Maturity Date.
4. PREPAYMENT.
(a) Maker may prepay the Loan, in whole or in part at any time
without penalty or premium. All prepayments shall be applied
to payments due hereunder in the reverse chronological order
of maturity; provided that release payments pursuant to
Section 8.2 of the Loan Agreement shall be applied to
principal payments due pursuant to Section 3(c) hereof in the
chronological order of maturity.
(b) In no event shall Maker be entitled to reborrow any amounts
repaid or prepaid.
5. LAWFUL MONEY.
Principal and interest are payable in lawful money of the United States
of America.
6. APPLICATION OF PAYMENTS/LATE CHARGE.
(a) Absent the occurrence of an Event of Default hereunder or
under any of the other Loan Documents, (i) any payment of a
Release Price pursuant to Article VIII of the Loan Agreement
shall be applied to the principal balance of the Note, and
(ii) any other payments received by the holder hereof pursuant
to the terms hereof shall be applied first to sums, other than
principal and interest, due the holder hereof pursuant to the
Loan Documents, next to the payment of all interest accrued to
the date of such payment, and the balance, if any, to the
payment of principal. Any payments received by the holder
hereof after the occurrence of an Event of Default hereunder
or under any of the Loan Documents, shall be applied to the
amounts specified in this Paragraph 6(a) in such order as the
holder hereof may, in its sole discretion, elect.
(b) If any payment of interest and/or principal is not received by
the holder hereof within fifteen (15) days of the date such
payment is due, then in addition to the remedies conferred
upon the holder hereof pursuant to Paragraph 9 hereof and the
other Loan Documents, (i) a late charge of four percent (4%)
of the amount of the installment due and unpaid will be added
to the delinquent amount to compensate the holder hereof for
the expense of handling the delinquency, regardless of any
notice and cure periods, and (ii) the amount due and unpaid
(including, without limitation, the late charge) shall bear
interest at the Default Interest Rate, computed from the date
on which the amount was due and payable until paid.
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7. SECURITY AND GUARANTY.
This Note is secured by, inter alia, the Deed of Trust, which Deed of
Trust creates a lien on that certain real and personal property
described therein. This Note is guaranteed by that certain Repayment
Guaranty of even date herewith wherein ILX Incorporated, an Arizona
corporation, is guarantor (the "Repayment Guaranty").
8. EVENT OF DEFAULT.
The occurrence of any of the following shall be deemed to be an event
of default ("Event of Default") hereunder:
(a) default in the payment of principal or interest when due
pursuant to the terms hereof and the expiration of ten (10)
days after notice of such default is given by the holder
hereof to Maker without such default having been cured; or
(b) the occurrence of an Event of Default under any of the other
Loan Documents.
9. REMEDIES.
Upon the occurrence of an Event of Default, then at the option of the
holder hereof, the entire balance of principal together with all
accrued interest thereon, and all other amounts payable by Maker under
the Loan Documents shall, without demand or notice, immediately become
due and payable. Upon the occurrence of an Event of Default (and so
long as such Event of Default shall continue), the entire balance of
principal hereof, together with all accrued interest thereon, all other
amounts due under the Loan Documents, and any judgment for such
principal, interest, and other amounts shall, at the option of the
holder hereof, bear interest at the Default Interest Rate, subject to
the limitations contained in Paragraph 4 hereof. No delay or omission
on the part of the holder hereof in exercising any right under this
Note or under any of the other Loan Documents hereof shall operate as a
waiver of such right.
10. WAIVER.
Maker, endorsers, guarantors, and sureties of this Note hereby waive
diligence, demand for payment, presentment for payment, protest, notice
of nonpayment, notice of protest, notice of intent to accelerate,
notice of acceleration, notice of dishonor, and notice of nonpayment,
and all other notices or demands of any kind (except notices
specifically provided for in the Loan Documents) and expressly agree
that, without in any way affecting the liability of Maker, endorsers,
guarantors, or sureties, the holder hereof may extend any maturity date
or the time for payment of any installment due hereunder, otherwise
modify the Loan Documents, accept additional security, release any
Person liable, and release any security or guaranty. Maker, endorsers,
guarantors, and sureties
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waive, to the full extent permitted by law, the right to plead any and
all statutes of limitations as a defense.
11. CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
No provision of this Note may be changed, discharged, terminated, or
waived except in a writing signed by the party against whom enforcement
of the change, discharge, termination, or waiver is sought. No failure
on the part of the holder hereof to exercise and no delay by the holder
hereof in exercising any right or remedy under this Note or under the
law shall operate as a waiver thereof.
12. ATTORNEYS' FEES.
If this Note is not paid when due or if any Event of Default occurs,
Maker promises to pay all costs of enforcement and collection and
preparation therefor, including but not limited to, reasonable
attorneys' fees, whether or not any action or proceeding is brought to
enforce the provisions hereof (including, without limitation, all such
costs incurred in connection with any bankruptcy, receivership, or
other court proceedings (whether at the trial or appellate level)).
13. SEVERABILITY.
If any provision of this Note is unenforceable, the enforceability of
the other provisions shall not be affected and they shall remain in
full force and effect.
14. INTEREST RATE LIMITATION.
Maker hereby agrees to pay an effective rate of interest that is the
sum of the interest rate provided for herein, together with any
additional rate of interest resulting from any other charges of
interest or in the nature of interest paid or to be paid in connection
with the Loan, including, without limitation, any commitment fee and
any other fees to be paid by Maker pursuant to the provisions of the
Loan Documents. Holder and Maker agree that none of the terms and
provisions contained herein or in any of the Loan Documents shall be
construed to create a contract for the use, forbearance or detention of
money requiring payment of interest at a rate in excess of the maximum
interest rate permitted to be charged by the laws of the State of
Arizona. In such event, if any holder of this Note shall collect monies
which are deemed to constitute interest which would otherwise increase
the effective interest rate on this Note to a rate in excess of the
maximum rate permitted to be charged by the laws of the State of
Arizona, all such sums deemed to constitute interest in excess of such
maximum rate shall, at the option of the holder, be credited to the
payment of other amounts payable under the Loan Documents or returned
to Maker.
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15. NUMBER AND GENDER.
In this Note the singular shall include the plural and the masculine
shall include the feminine and neuter gender, and vice versa.
16. HEADINGS.
Headings at the beginning of each numbered section of this Note are
intended solely for convenience and are not part of this Note.
17. CHOICE OF LAW.
This Note shall be governed by and construed in accordance with the
laws of the State of Arizona without giving effect to conflict of laws
principles.
18. LOAN FEE.
Upon execution and delivery of this Note, and as a condition precedent
to any obligation of Holder to disburse any portion of the Loan, Maker
agrees to pay Holder the loan fees provided for in the Loan Agreement,
which fees are partial compensation for Holder agreeing to extend the
Loan to Maker.
19. INTEGRATION.
The Loan Documents contain the complete understanding and agreement of
the holder hereof and Maker and supersede all prior representations,
warranties, agreements, arrangements, understandings, and negotiations.
20. BINDING EFFECT.
The Loan Documents will be binding upon, and inure to the benefit of,
the holder hereof, Maker, and their respective successors and assigns.
Maker may not delegate its obligations under the Loan Documents.
21. TIME OF THE ESSENCE.
Time is of the essence with regard to each provision of the Loan
Documents as to which time is a factor.
22. SURVIVAL.
The representations, warranties, and covenants of the Maker in the Loan
Documents shall survive the execution and delivery of the Loan
Documents and the making of the Loan.
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23. ARBITRATION.
(a) Binding Arbitration. Payee and Maker hereby agree that all
controversies and claims of any nature between them arising
directly or indirectly out of this Note and the Loan
Documents, shall at the written request of any party be
arbitrated pursuant to the applicable rules of the American
Arbitration Association. The arbitration shall occur in the
State of Arizona. Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.
The Federal Arbitration Act shall apply to the construction
and interpretation of this arbitration agreement.
(b) Arbitration Panel. A single arbitrator shall have the power to
render a maximum award of one hundred thousand dollars. When
any party files a claim in excess of this amount, the
arbitration decision shall be made by the majority vote of
three arbitrators. No arbitrator shall have the power to
restrain any act of any party.
(c) Provisional Remedies; Self-Help; and Foreclosure. No
provisions of subparagraph (a) shall limit the right of any
party to exercise self help remedies, to foreclose against any
real or personal property collateral, or to obtain any
provisional or ancillary remedies (including but not limited
to injunctive relief or the appointment of a receiver) from a
court of competent jurisdiction. At Payee's option, it may
enforce its right under a mortgage by judicial foreclosure,
and under a deed of trust either by exercise of power of sale
or by judicial foreclosure. The institution and maintenance of
any remedy permitted above shall not constitute a waiver of
the rights to submit any controversy or claim to arbitration.
The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an
action brought by a party shall be applicable to any
arbitration proceeding.
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24. RESTATED PROMISSORY NOTE.
This Note is a restatement of, and supersedes and replaces, that
certain Secured Promissory Note dated October 4, 1994, of Maker in
favor of Holder.
LOS ABRIGADOS PARTNERS LIMITED
PARTNERSHIP, an Arizona limited
partnership
By: ILE Sedona Incorporated, an
Arizona corporation, General Partner
By: /s/ Nancy J. Stone
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Name: Nancy J. Stone
Title: Vice President
"Maker"
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