FOURTH AMENDMENT TO
FINANCING AGREEMENT AND
REAFFIRMATION OF LOAN DOCUMENTS
This Fourth Amendment to Financing Agreement and Reaffirmation
of Loan Documents (the "Fourth Modification Agreement"), dated as of September
7, 1996, is entered into by and between Tammac Financial Corp., a Delaware
corporation, with its principal office located at 100 Commerce Boulevard
Wilkes-Barre, Pennsylvania 18702 (hereinafter referred to as "TAMMAC") and Los
Abrigados Partners Limited Partnership (a/k/a Los Abrigados Limited Partners
Limited Partnership), an Arizona limited partnership, with its principal office
located at 2777 East Camelback Road, Phoenix, Arizona 85016 ("Developer") and
ILX Incorporated (f/k/a International Leisure Enterprises Incorporated), an
Arizona corporation, with its principal office located at 2777 East Camelback
Road, Phoenix, Arizona 85016 ("Guarantor").
RECITALS:
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A. The Developer and TAMMAC entered into a Financing Agreement
dated as of September 10, 1991 (the "Financing Agreement" or the "Agreement),
which set forth the terms and conditions regarding the Developer's sale and
TAMMAC's purchase of certain consumer installment obligations generated at that
certain timeshare condominium project known as Los Abrigados Resort & Spa, also
known as the Sedona Vacation Club, located at 160 Portal Lane, Sedona, Coconino
County, Arizona (the "Project").
B. The obligations due and owing to TAMMAC under the Financing
Agreement are secured, in part, by the liens and security interests granted by
Developer pursuant to a Security Agreement and a Deed of Trust, Assignment of
Rents and Security Agreement (the "Deed of Trust"), of even date with the
Financing Agreement.
C. Contemporaneously with the execution and delivery of the
Financing Agreement, the Guarantor executed and delivered a Continuing Guaranty
Agreement in favor of TAMMAC.
D. Contemporaneously with the execution and delivery of the
Financing Agreement, the Developer executed and delivered or caused to be
executed and delivered to TAMMAC various Uniform Commercial Code financing
statements, an Estoppel Certificate, an Incumbency Certificate and Partnership
Authorization, Incumbency Certificates, Corporate Resolutions, a Governmental
Regulation Compliance Affidavit and other related documentation.
E. TAMMAC and the Developer entered into a Modification
Agreement dated as of August 12, 1992, modifying certain terms and conditions of
the Financing Agreement (the "First Modification Agreement").
F. TAMMAC and the Developer again amended and modified the
Financing Agreement as evidenced by that certain Amendment to Commitment Letter,
Financing
Agreement, and Reaffirmation of Various Loan Documents dated as of March 31,
1993 (the "Second Modification Agreement").
G. In conjunction with the Second Modification Agreement, the
Developer executed and delivered a Modification to Deed of Trust, Assignment of
Rents and Security Agreement, modifying certain terms and conditions of the Deed
of Trust, which Modification to Deed of Trust, Assignment of Rents and Security
Agreement was recorded in the Coconino County Recorder's Office on May 17, 1993,
Docket 1562, page 974 (the "First Modification to Deed of Trust").
H. TAMMAC and the Developer again amended and modified the
Financing Agreement, as evidenced by that certain Third Amendment to Financing
Agreement dated as of September 7, 1994 (the "Third Modification Agreement").
I. In conjunction with the Third Modification Agreement, the
Developer executed and delivered or caused to be executed and delivered to
TAMMAC: (i) that certain Second Modification to Deed of Trust, Assignment of
Rents and Security Agreement dated as of September 7, 1994, recorded in the
Coconino County Recorder's Office on September 12, 1994, Docket No. 1705, page
897 (the "Second Modification of Deed of Trust"); (ii) an Environmental
Indemnity Agreement; and (iii) related documents including Uniform Commercial
Code financing statements, an Estoppel Certificate, Incumbency Certificate and
Partnership Authority, Incumbency Certificates, Corporate Resolutions and
related documents.
J. In conjunction with the Third Modification Agreement, the
Guarantor executed and delivered to TAMMAC an Amended and Restated Guaranty
Agreement (the "Guaranty Agreement").
K. Pursuant to the terms of that certain Commitment Letter
issued to International Leisure Enterprises Incorporated dated June 28, 1991,
the rights and obligations of which were assigned by International Leisure
Enterprises Incorporated to the Developer, as said Commitment Letter was amended
and modified by the First Modification Agreement, the Second Modification
Agreement, and pursuant to that certain Commitment Letter dated July 20, 1994,
issued by TAMMAC to the Developer (the aforesaid Commitment Letters, as amended
and modified, are hereinafter collectively referred to as the "Commitment
Letter"), TAMMAC's obligations to purchase Contracts expires on September 7,
1996.
L. The Developer has requested that TAMMAC extend the term of
the Commitment Letter for an addition eighteen (18) months and purchase up to an
additional Five Million ($5,000,000.00) Dollars of new Contracts to be generated
by the Developer at the Project.
M. The parties' desire to amend the terms and conditions of
the Financing Agreement and to affirm the extent and validity of the various
Loan documents executed in conjunction therewith.
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N. To that end, the parties wish to memorialize their
agreements by this writing.
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions. Unless otherwise defined herein, all
capitalized or defined terms used herein shall have the same meaning set forth
in the Commitment Letter, the Financing Agreement, the First Modification
Agreement, the Second Modification Agreement, the Third Modification Agreement,
the Deed of Trust, as modified by the First Modification to Deed of Trust and
the Second Modification to Deed of Trust, the Security Agreement and all of the
other Loan Documents.
2. Recitals. The recitals set forth above are hereby
incorporated herein as if set forth at length. TAMMAC, the Developer and
Guarantor each, jointly and severally, acknowledge and confirm that all of the
aforesaid recitals are true, accurate and correct in all respects.
3. Continuing Validity of Loan Documents. The Developer and
the Guarantor each, jointly and severally, hereby acknowledge, ratify, confirm
and affirm: (i) the extent and validity of the Loan Documents; (ii) that said
Loan Documents are and remain valid, enforceable in accordance with their
respective terms and are and remain in full force and effect as of the date
hereof; (iii) that the Loan Documents are not subject to any real or personal
defenses whatsoever; (iv) that pursuant to the security interests granted to
TAMMAC pursuant to the Loan Documents, the Loan Documents constitute a
continuing, valid mortgage lien upon the Project, a continuing, valid perfected
security interest and lien upon the property described in the Financing
Agreement, as modified, the Security Agreement and the various Uniform
Commercial Code financing statements relating thereto, which security interests
secure the payment and performance of the Obligations due and owing by the
Developer and the Guarantor pursuant to the Loan Documents. The Developer and
Guarantor each, jointly and severally, warrant and represent that all
representations and warranties contained in the Loan Documents are true and
complete as of the date hereof, no warranty therein contained has been breached
as of the date hereof, and they are each in full compliance with all the terms
and conditions thereof, and have performed all obligations on their part to be
performed therein. Guarantor consents to the extension, modification and
amendment of the Loan Documents as contemplated herein, and waives all notice of
any such change in terms and further waives any right or remedy that TAMMAC may
have or may be required to pursue against the Developer or any other party
liable thereunder or hereunder prior to commencing any action or enforcing the
provisions herein or therein contained or as contained in the Guaranty
Agreement.
4. Representations, Warranties and Covenants. The Developer
and the Guarantor each, jointly and severally, hereby represent, warrant and
covenant as follows:
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A. The Developer and the Guarantor have each
disclosed their respective current financial conditions and circumstances to
TAMMAC. Any and all substantial and/or material adverse changes in their
financial conditions and circumstances which shall occur after the date of the
disclosure of their financial conditions shall be immediately brought to the
attention of TAMMAC by the Developer and the Guarantor and TAMMAC shall be
promptly notified in writing of same by the Developer and the Guarantor.
B. To the best of the Developer's and Guarantor's
knowledge, information and reasonable belief, their execution, delivery and
performance in accordance with the terms of this Fourth Modification Agreement
do not violate any applicable law, rule, regulation or order of any governmental
authority or in any way conflict with or result in a breach of any of the terms,
conditions or provisions of any other agreement or instrument to which they may
be bound.
C. The financial disclosures made by the Developer
and the Guarantor accurately and fairly present their respective financial
conditions and circumstances as of the date of this Fourth Modification
Agreement and there have been no further substantial and/or material adverse
changes in their financial conditions and circumstances as of the date of this
Fourth Modification Agreement.
D. There are no actions, suits or proceedings pending
(nor to the Developer's or the Guarantor's knowledge, any actions, suits or
proceedings threatened, nor is there any basis therefor), against or in any way
relating adversely to either one or both of them or their properties in any
court or before any arbitrator of any kind or before any governmental or
non-governmental body which, if adversely determined, would singly or in the
aggregate have a material adverse effect on their financial condition.
E. The Developer and the Guarantor have no knowledge
of any material violations of and have not received written notice from any
governmental authority concerning any environmental, health, fire, safety,
building, engineering, or zoning or code violations with respect to the Project
or any portion thereof.
5. Modification of the Financing Agreement. Effective as of
the date of this Fourth Modification Agreement, the Financing Agreement is
hereby amended and modified as follows:
A. Section 2.1 is hereby amended in its entirety to
read as follows:
2.1. Subject to all of the terms
and conditions of the Financing Agreement,
as modified, from September 8, 1996, to
March 7, 1998, the Developer shall offer to
Tammac up to an additional $5,000,000.00 of
new Contracts to be generated by the
Developer at the Project, which shall
constitute "Phase II" funding. Developer
shall submit completed Credit Packages to
TAMMAC
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for review relating to said Transactions so
offered, which Credit Packages shall include
credit reports on each of the Consumers from
a nationally recognized credit reporting
service. Provided Developer has not
defaulted under the terms and conditions of
this Financing Agreement and the Guarantor
is not in default pursuant to the terms of
the Guaranty Agreement, and subject to the
terms and conditions of the Financing
Agreement, as modified, from September 8,
1996 to March 7, 1998, TAMMAC shall purchase
up to an additional $5,000,000 of new
Contracts which meet TAMMAC's lending
criteria and guidelines, as same shall be in
effect on the date that this Fourth
Modification Agreement is executed and
delivered by TAMMAC. A copy of TAMMAC's
current lending guidelines and criteria is
attached hereto and made a part hereof and
labeled as Exhibit "C". TAMMAC's lending
guidelines and criteria shall remain in
effect through March 7, 1998. TAMMAC shall
advise Developer in writing whether it
intends to purchase a particular
Transaction. Any approval to purchase a
Transaction shall be subject to the terms
and conditions contained in said approval.
B. Section 2.2 is hereby amended in its
entirety to read as follows:
2.2. Except as set forth in Section
2.8 of this Financing Agreement, TAMMAC
shall accept Contracts that meet TAMMAC's
lending guidelines and criteria and which
are written at a contract rate of
five-and-one-quarter (5.25%) percentage
points above the highest prime rate as
announced from time to time in The Wall
Street Journal (the "Acceptable Contract
Rate"). The Acceptable Contract Rate shall
be fixed for a period of six months from the
execution and delivery of this Fourth
Modification Agreement and shall be based on
the highest prime rate as announced in The
Wall Street Journal on the business day
preceding the execution and delivery of this
Fourth Modification Agreement ("Prime
Rate"). Thereafter, the Acceptable Contract
Rate is subject to change every six (6)
months following the execution and delivery
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of this Fourth Modification Agreement (the
"Change Date") and will be reset, if at all,
based upon the Prime Rate then in effect on
each Change Date. Notwithstanding anything
contained herein to the contrary, in the
event that the Prime Rate exceeds
nine-and-three-quarters (9.75%) percent per
annum, and provided the Developer and
Guarantor are not in default under the terms
of the Financing Agreement and/or any of the
other Loan Documents, TAMMAC shall continue
to purchase Contracts pursuant to the terms
hereof, provided TAMMAC's effective yield on
said Contracts (inclusive of any discounts
due to Tammac pursuant to Section 2.8
hereof) is at least fifteen (15%) percent
per annum. It is the intention of the
parties hereto that, in the event the Prime
Rate exceeds 9.75% per annum, the Developer
shall have the flexibility of offering
Contracts to Tammac written at less than 15%
per annum, provided said Contracts are
subject to the Developer's obligations to
equalize the yield as herein provided. In
that regard, this continuing obligation on
the part of TAMMAC shall not in any way
affect the definition of "Acceptable
Contract Rate," as it relates to the
Developer's obligations to equalize the
yield as herein provided. For so long as the
Prime Rate exceeds 9.75 percent, TAMMAC
shall have no further obligation to make
Interest Rate Differential Payments to the
Developer, as provided in Section 2.8 of
this Financing Agreement.
C. The third subparagraph of Section 9.1 is
hereby amended in its entirety to read as follows:
After March 7, 1998, or the
purchase by TAMMAC of an additional Five
Million ($5,000,000.00) Dollars of Contracts
pursuant to this Financing Agreement,
whichever occurs first, the Developer shall
not have the option of offering Replacement
Contracts to TAMMAC for delinquent
Contracts, and TAMMAC shall be under no
obligation to accept any Replacement
Contracts. From and after March 7, 1998, or
the purchase by TAMMAC of an additional Five
Million ($5,000,000.00) Dollars of
Contracts, whichever
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occurs first, the Developer must repurchase
the delinquent Contracts.
6. Documentation to be Furnished to TAMMAC. TAMMAC's Agreement
to enter into this Fourth Modification Agreement as herein set forth is
expressly conditioned upon TAMMAC's and its counsel's receipt, review and
acceptance, prior to the execution and delivery of this Fourth Modification
Agreement (unless otherwise noted), of the following documentation and
information:
A. Existing Consumer documentation, if same differs
from the Consumer documentation previously reviewed and approved by TAMMAC and
its counsel.
B. Certificates or Articles of Incorporation and
Bylaws as amended to date, for the Developer's corporate general partner
("General Partner") and the Guarantor, or a statement that the Certificates or
Articles of Incorporation and Bylaws for the General Partner and the Guarantor,
which are currently in TAMMAC's possession, have not been amended or modified in
any respect.
C. The names and titles of all officers and directors
of the General Partner and the Guarantor.
D. The names and percentage of ownership interest of
each of the shareholders of the General Partner and the names of all of the
general and limited partners of the Developer.
E. Certificates of good standing for the Developer,
the General Partner and the Guarantor in each jurisdiction in which said parties
are incorporated and/or authorized to do business.
F. Corporate franchise tax searches and/or
certificates from the Directors of Revenue, from all applicable jurisdictions
that no taxes are due thereto with respect to the Developer, the General Partner
and the Guarantor.
G. Continuation Uniform Commercial Code financing
searches with respect to the Developer from the Arizona Secretary of State's
office, the Coconino County Recording Office and the Maricopa County Recording
Office, and any other jurisdictions wherein the Developer is conducting
business.
H. An update of the existing title insurance policy
insuring TAMMAC's interest in the Project which shall confirm, inter alia, that
no liens or encumbrances affect the title to the Project and TAMMAC's security
interest therein, other than those liens and encumbrances which have been
approved in writing by TAMMAC and its counsel.
I. Federal tax lien, state tax lien and judgment
searches for the Developer, the General Partner and the Guarantor.
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J. Evidence of continuing compliance with all
applicable federal, state and local environmental laws, rules, regulations and
ordinances relating to the Resort and the Developer.
K. An updated listing and copy of all certificates,
permits and licenses required in connection with the use and operation of the
Project and the sale and financing of the Unit Weeks.
L. A listing and description of any pending lawsuits
or similar proceedings involving the Project, the Developer, the Guarantor or
the General Partner, in which the Project, the Developer, the Guarantor or the
General Partner are a defendant or otherwise defending any claim which is in
excess of $10,000.
M. Written authorizations, waivers and/or consents
authorizing or consenting to the transactions contemplated by this Fourth
Modification Agreement.
N. Evidence that all fees, dues, charges, assessments
and the like relating to that portion of the Project which is encumbered by the
Deed of Trust, as modified, due to the Association are current and that there
are no liens or encumbrances relating thereto.
O. A true copy of the Association's current and
proposed budget.
P. An updated Environmental Questionnaire.
Q. An opinion letter from the Developer's, the
General Partner's and the Guarantor's counsel.
R. All other documentation and information provided
for herein or which TAMMAC may request or require
7. Further Assurances. The Developer and the Guarantor each
hereby agree that they shall execute and/or deliver to TAMMAC any documents,
information or agreements as may be reasonably requested by TAMMAC or its
counsel at any time so long as any sums due or obligations to be performed under
the Loan Documents remain unpaid or unperformed.
8. Release and Discharge of TAMMAC. The Developer and the
Guarantor each, jointly and severally, hereby release and discharge TAMMAC of
and from all claims, causes of action, demands, damages or suits, at law and in
equity, which they may, as of the date of this Fourth Modification Agreement,
have or claim to have against TAMMAC relating to, arising out of or resulting
from their respective lending relationships with TAMMAC or with respect to the
Obligations due to TAMMAC as evidenced by the Loan Documents or with respect to
the Project or the other Collateral.
9. Governing Law. This Fourth Modification Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania, without regard to the principles of conflicts of laws.
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10. Binding Effect. This Fourth Modification Agreement is
binding upon, inures to the benefit of, and is enforceable by the successors and
assigns of the parties hereto. This Fourth Modification Agreement is not
assignable by the Developer.
11. Nonwaiver. No failure or delay on the part of TAMMAC, or
its successors and assigns, in the exercise of any right, power or privilege
pursuant to the Loan Documents or this Fourth Modification Agreement is to be
construed to be or operate as a waiver. Partial exercise of any right, power or
privilege by TAMMAC is not to preclude any further right, power or privilege,
nor be deemed a waiver. Any waiver or modification of this Fourth Modification
Agreement or any other document, instrument or agreement executed by the
Developer or the Guarantor is to be in writing signed by the Developer and/or
Guarantor and TAMMAC. TAMMAC may, in its sole discretion, release, impair or
surrender all or any of the interests granted hereunder or under any other
agreement executed by the Developer and/or the Guarantor without waiving,
exhausting or impairing any of TAMMAC's rights and remedies available pursuant
to the Loan Documents, including this Fourth Modification Agreement.
12. Inconsistent Rights or Remedies. In the event that any of
the Loan Documents, including this Fourth Modification Agreement, contain any
inconsistent rights or remedies otherwise available to TAMMAC, the rights and/or
remedies accorded to TAMMAC, giving TAMMAC the greatest protection and/or
affording TAMMAC the greater rights and/or remedies shall control, the
determination of which shall be left to the sole and exclusive discretion of
TAMMAC.
13. Representation by Counsel; Drafting of Agreement. The
Developer and the Guarantor acknowledge that they have had the opportunity to
consult independent counsel of their own selection in connection with the
matters covered by this Fourth Modification Agreement, and that they have
executed and delivered this Fourth Modification Agreement (and all other
documents referred to herein or in connection herewith) with the benefit of
counsel and of their own free will and volition. The Developer and the Guarantor
also acknowledge and agree that the terms of this Fourth Modification Agreement
have been negotiated in good faith by the parties, and that said term shall be
construed in a neutral fashion and without regard to the draftsmanship of this
Fourth Modification Agreement.
14. Severability. In the event that any portion of this Fourth
Modification Agreement is deemed unenforceable by a court of competent
jurisdiction, such provision declared to be unenforceable is to be deemed to
have been omitted from this Fourth Modification Agreement and all such remaining
terms and conditions of this Fourth Modification Agreement are to continue in
full force and effect.
15. Continued Effectiveness of Loan Documents. Except as
specifically modified or amended herein, all of the other terms and conditions
of the Loan Documents shall remain in full force and effect and the parties
hereto expressly confirm and ratify all of their respective liabilities,
obligations, duties and responsibilities under and pursuant to said Loan
Documents, as modified and amended. It is the intention of the parties hereto
that this Fourth Modification Agreement shall not constitute a novation and
shall in no way adversely affect or impair the lien priority of the Deed of
Trust, as modified, and the security interests granted pursuant to the Loan
Documents.
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IN WITNESS WHEREOF, the undersigned have hereunto set their
hands and seals or caused this Fourth Modification Agreement to be duly executed
and delivered by their proper and duly authorized officers or representatives as
of the day and year first above written.
LOS ABRIGADOS PARTNERS
LIMITED PARTNERSHIP,
an Arizona limited partnership, Developer
ATTEST: By: ILE Sedona Incorporated,
an Arizona corporation,
Sole General Partner
/s/ Stephanie Castronova By: /s/ Joseph P. Martori
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Stephanie Castronova, Secretary Joseph P. Martori, President
ATTEST: ILX INCORPORATED,
an Arizona corporation, Guarantor
/s/ Stephanie Castronova By: /s/ Nancy J. Stone
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Stephanie Castronova, Secretary Nancy J. Stone, President
ATTEST/WITNESS: TAMMAC FINANCIAL CORP.
/s/ Joseph J. Lombardi By: /s/ Andy G. Roosa
- -------------------------------- ------------------------------------
Joseph J. Lombardi, Asst. Secretary Andy G. Roosa, President
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