EXHIBIT 10-1
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This Third Amendment to Loan and Security Agreement (hereinafter
referred to as the "Third Modification Agreement") is made as of the 25th day of
August, 1997, by and among TAMMAC FINANCIAL CORP., a Delaware Corporation,
having its principal office located at 000 Xxxxxxxx Xxxxxxxxx, Xxxxxx-Xxxxx,
Xxxxxxxxxxxx 00000 (hereinafter referred to as the "Lender"), and ILX
INCORPORATED, an Arizona Corporation, having its principal place of business
located at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000
(hereinafter referred to as the "Borrower").
RECITALS:
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A. On or about August 25, 1995, Borrower entered into a certain Loan
and Security Agreement dated as of that date providing for Lender to advance
certain sums to Borrower on a secured basis up to a maximum principal sum of Ten
Million ($10,000,000) Dollars (the "Loan Agreement").
B. The obligations of the Borrower as more particularly set forth in
the Loan Agreement, are evidenced by, among other documents, that certain
Promissory Note, dated as of August 25, 1995, executed and delivered by Borrower
to Lender in the principal sum of up to TEN MILLION ($10,000,000) DOLLARS (the
"Note").
C. To secure the payment and performance of the Borrower's obligations
pursuant to the Loan Agreement and the Note, the Borrower executed and delivered
to Lender: (i) that certain Deed of Trust, Assignment of Rents and Security
Agreement, made as of August 25, 1995, designating the Borrower as "Trustor,"
First American Title Insurance Company as "Trustee," for the benefit of Lender,
as "Beneficiary," which Deed of Trust was recorded in the Official Records of
Gila County, Arizona on September 13, 1995, as Fee No. 95-671002, covering the
"Premises" and "Trust Property" more particularly described therein. The
aforesaid Deed of Trust was thereafter modified and amended by: (i) that certain
Deed of Trust Spreader and Amendment Agreement and Amendment to Loan Documents,
made as of April 12, 1996, by and between Borrower and Lender, which was
recorded in the Official Records of Gila County, Arizona on June 24, 1996 as Fee
No. 96-009607 (the "Spreader Agreement"); and (ii) that certain Modification to
Deed of Trust and Amendment to Loan Documents, made as of December 31, 1996, by
and between Borrower and Lender, which was recorded in the Official Records of
Gila County, Arizona on February 27, 1997, as Fee No. 97-702708 (the
"Modification to Deed of Trust", which together with the Deed of Trust and the
Spreader Agreement, as same may be modified, amended or supplemented, are
hereinafter collectively referred to as the "Deed of Trust").
D. In conjunction with the Loan, and to perfect the security interests
granted by the Borrower to Lender in and to the Collateral described in the Loan
Agreement, the Borrower executed and delivered to Lender certain Uniform
Commercial Code Financing Statements, which
were amended (herein, the "UCCs"), which UCCs were filed or recorded in the
Offices of the Secretary of State of Arizona and the Official Records of Gila
County, Arizona.
E. In conjunction with the Loan, the Borrower executed and delivered or
caused to be executed and delivered to Lender an Environmental Indemnity
Agreement with respect to the Premises, Incumbency Certificates, Corporate
Resolutions, an Estoppel Certificate, a Governmental Regulation Compliance
Affidavit, Agency Agreement, an Intercreditor Agreement and related documents
(collectively, the "Other Loan Documents").
F. The Loan Agreement, the Note, the Deed of Trust, the UCC's and the
Other Loan Documents, all as amended, modified, renewed, substituted or
replaced, whether contemporaneously herewith or at any time hereafter, are
hereinafter sometimes collectively referred to as the "Loan Documents."
G. Pursuant to the terms of the Loan Agreement, the Draw Period expires
on August 24, 1997.
H. The Borrower has requested that Lender extend the Draw Period until
March 7, 1998, reduce the Advance Limit and amend and modify certain additional
terms and conditions of the Loan Agreement.
I. The Lender has agreed, subject to the terms and conditions
hereinafter provided, to enter into this Third Modification Agreement.
NOW, THEREFORE, in consideration of Lender's present agreement to
modify the Loan Documents as set forth herein, Borrower has agreed to execute
and deliver this Third Modification Agreement and in consideration of the mutual
covenants, promises and agreements herein contained, it is agreed as follows:
1. Definitions:
Unless otherwise defined herein, all capitalized and defined terms used
herein shall have the same meaning set forth in the Loan Documents.
2. Recitals:
The recitals set forth above are hereby incorporated herein as if set
forth at length. The Borrower acknowledges and confirms that all of the
aforesaid recitals are true, accurate and correct in all respects.
3. Estoppel with Regard to Present Principal Balance Due.
Borrower acknowledges and agrees that the outstanding unpaid principal
balance remaining due to Lender under the Loan, without offset, defense or
counterclaim, as of August 15, 1997, is: $1,905,326.71.
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4. Continued Validity of Loan Documents:
Borrower hereby acknowledges, ratifies, confirms and affirms: (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 Lender pursuant to the Loan
Documents, the Loan Documents constitute a valid third mortgage lien upon the
Premises and Trust Property and a continuing valid first perfected lien upon the
other collateral therein described which security interests and liens secure the
payment and performance of the Obligations now or hereafter due and owing under
the Loan Documents. The Borrower warrants and represents that all
representations 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 it is in full compliance with all the terms and conditions thereof
and has performed all obligations on its part to be performed therein.
5. Representations, Warrants and Covenants:
The Borrower hereby represents, warrants and covenants as follows:
A. The Borrower has disclosed its current financial condition and
circumstances to Lender. Any and all substantial and/or material or adverse
changes in its financial condition and circumstances which shall occur after the
date of the disclosure of its financial condition shall be immediately brought
to the attention of Lender by Borrower and Lender shall be promptly notified in
writing of same by Borrower.
B. To the best of Borrower's knowledge, information and reasonable
belief, its execution, delivery and performance in accordance with the terms of
this Third 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 it may be bound.
C. The financial disclosures made by the Borrower accurately and fairly
presents its financial condition and circumstances as of the date of this Third
Modification Agreement and there had been no further substantial and/or material
adverse changes in its financial condition and circumstances as of the date of
this Third Modification Agreement.
D. There are no actions, suits or proceedings pending (nor to the
Borrower's knowledge any actions, suits or proceedings threatened, nor is there
any basis therefore), against or in any way relating adversely to its properties
in any court or before any arbitrator of any kind or before any governmental or
non-government body which, if adversely determined, would singularly or in the
aggregate have a material adverse affect on its financial condition.
E. The Borrower has no knowledge of any material violations of and has
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 Premises or any portion thereof.
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6. Modifications to All of the Loan Documents:
From and after the date of this Third Modification Agreement, the Loan
Agreement is hereby modified as follows:
A. Wherever the sum of TEN MILLION ($10,000,000.00) DOLLARS appears in
the Loan Documents, same shall be deleted and the sum of FIVE MILLION
($5,000,000.00) DOLLARS shall be inserted in lieu thereof.
B. Wherever the word or words "Note" or "Promissory Note" shall appear,
said term or terms shall be deemed to mean the Amended and Restated Promissory
Note executed contemporaneously with this Third Modification Agreement.
7. Modifications to the Loan Agreement. From and after the date of this
Third Modification Agreement, the Loan Agreement is hereby modified as follows:
A. Subsection (xiii) of Section I.1 is deleted and replaced with the
following:
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) a timeshare
interest defined in and created by the Project Documents, which satisfy the
following requirements, and which are in all other respects acceptable to
Lender: . . . (xiii) an Acceptable Contract shall not include a contract where
the Consumer shall have filed for protection under any bankruptcy or insolvency
laws or shall have been the subject of a prior or existing judgment,
repossession, attachment, garnishment, tax lien, foreclosure or any charge-off
relating to any account; and . . . .
B. Section I.4 is deleted and replaced with the following:
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: (i) $5,000,000.00; or (ii) the product of eighty-five (85%)
percent multiplied by the aggregate remaining principal balance of the
Acceptable Contracts in which Lender is granted a security interest hereunder.
C. Section 1.25 is deleted and replaced with the following:
25. Related Documents: "Related Documents" means, as
applicable to each Contract, the credit package, which shall include, but not be
limited to, a credit report relating to each of the Consumers executing said
Contract issued by a nationally recognized credit reporting agency or service,
security agreements, mortgages, mortgage deeds, deeds of trust securing the
Contracts and encumbering the Timeshare 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, receipt of said prospectuses and public offering statements,
truth-in-
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lending disclosure statements, information, documents, records and 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.
D. Section 2.2(a) is deleted and replaced with the following:
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
on March 7, 1998 (the "Draw Period"), provided, however, that 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.
E. Section II.7 is deleted in its entirety and replaced with the
following:
7. Maturity Date: The unpaid principal, the accrued interest
and all costs and expenses relating to the Loan shall be payable on March 7,
2004, unless sooner demanded in accordance with the terms and provisions set
forth herein.
F. Section II.8 is modified by inserting the following at the end of
this Section:
Without in any way limiting the obligations of Borrower
pursuant to this Agreement, upon the occurrence of an Excess Borrowing
situation, Borrower shall, within five (5) business days after receiving notice
of the existence of a Delinquent Contract, at Borrower's option, repurchase or
replace same with an Acceptable Contract if the Contract became delinquent
during the Draw Period, or repurchase said Delinquent Contract if the Contract
became delinquent after the Draw Period.
G. Section II.9(a) is deleted and replaced with the following:
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 seventy-seven (77)
consecutive minimum monthly payments each in an amount equal to ninety-four
(94%) percent 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 herein above 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 October, 1997 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
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and/or interest on the Loan the Borrower shall pay the interest and/or principal
insufficiency on the first of each month as aforesaid.
H. The Second sentence of Section IV.4 is deleted and replaced with the
following:
. . . No other person has or will have any right, title,
interest, claim or lien therein, thereon of thereto, other than: (a) the
existing first lien on the Premises maintained by Litchfield Financial
Corporation ("Litchfield"), as assignee of Bank One, Arizona, NA, formerly known
as The Valley National Bank, with a principal balance due thereunder of no more
than $1,500,000.00; (b) the existing second lien on the Premises maintained by
Xxxx'x Ranch Associates, securing an original principal balance of $367,750.00;
(c) the authorized borrowings as hereinafter provided; (d) customary equipment
lease agreements or purchase money financing of equipment entered into by
Borrower and 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; (e) the fourth mortgage lien on the Premises maintained by
Litchfield, with a maximum principal balance of $5,000,000.00; (items 4.(a),
(b), (c), (d) and (e) above being hereinafter sometimes referred to as the
"Permitted Lien(s)") and (f) the rights, if any, of the Consumers.
I. The first sentence of Section IV.12 is deleted and replaced with the
following:
The Borrower's Chief Executive Office, principal place of
business and books and records relating to the Collateral pledged hereunder are
located at 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 and at
the Premises.
J. The following Affirmative Covenant is added at the end of Section V:
27. Conversion and Upgrades of Contracts: Borrower agrees to
pay to Lender a conversion or upgrade fee equal to one hundred and twenty-five
dollars ($125.00) for each Contract constituting an Acceptable Contract
hereunder and pledged to Lender as security for the Borrower's Obligations,
which Contract is upgraded, converted, transferred or exchanged to, for, or with
an interest in any timeshare condominium project now or hereafter owned by, or
under the direct or indirect control of Borrower, or any subsidiary or affiliate
of Borrower, including, but not limited to the Golden Eagle Resort at the Crags
Lodge, located in Xxxxx Park, Colorado, being developed by the Borrower, the
Varsity Clubs of America-South Bend Chapter, located in South Bend, Indiana,
being developed by VCA South Bend Incorporated, or Sedona Vacation Club at Los
Abrigados, located in Sedona, Arizona, being developed by Los Abrigados Partners
Limited Partnership (a "Conversion[Upgrade Contract"). Said fee shall be due and
payable contemporaneously with the acceptance of the Conversion/Upgrade Contract
by the Borrower or any such subsidiary, affiliate or controlled person or
entity.
8. Documentation to be furnished to Lender: Lender's Agreement to enter into
this Third Modification Agreement as herein set forth is expressly conditioned
upon Lender's and its counsel's receipt, review and acceptance, prior to the
execution and delivery of this Third Modification Agreement (unless otherwise
noted), of the following documentation and information:
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A. True copies of the existing Consumer documentation, if same differs
from the Consumer documentation previously approved by Lender and its counsel or
a statement to the effect that the existing Consumer Documentation has not
changed.
B. The filed Certificate or Articles of Incorporation and By-Laws, as
amended to date, for the Borrower. This requirement may be satisfied by a
written certification that the Certificate or Articles of Incorporation and
By-Laws of the Borrower, which are currently in Lender's possession, have not
been amended or modified in any respect.
C. The names and titles of all current officers and directors of the
Borrower.
D. A certificate of good standing for the Borrower, or such other
documentation as is reasonably satisfactory to Lender, in all jurisdictions in
which Borrower is authorized or licensed to do business.
E. Corporate franchise tax searches and/or certificate from the
Director of Revenue, or such other documentation as is reasonably satisfactory
to Lender, that no taxes are due to the taxing authorities having jurisdiction
over the Borrower.
F. Continuation Uniform Commercial Code financing searches for the
Borrower in all applicable jurisdictions where the Borrower is conducting
business.
G. An updated, completed and signed Environmental Questionnaire
relating to the Resort.
H. Federal tax lien, state tax lien, and judgment searches for the
Borrower.
I. Evidence of continuing compliance with all applicable federal, state
and local environmental laws, rules, regulations and ordinances relating to the
Resort and the Borrower.
J. An updated listing and copy of all certificates, permits and
licenses required in connection with the use and operation of the Resort and the
sale and financing of Timeshare Estates.
K. A listing and description of all pending lawsuits or similar
proceedings involving the Borrower or the Resort, in which the Borrower or the
Resort is a defendant or otherwise defending any claim which is in excess of ten
thousand ($10,000.00) dollars.
L. Intentionally Omitted.
M. An endorsement to the title insurance policies previously issued to
Lender by First American Title Insurance Company which confirms that the
modification to the Deed of Trust, being executed contemporaneously herewith,
has been properly indexed and recorded in the Official Records of Gila County,
Arizona and that there are no exceptions, liens, mortgages, encumbrances,
restrictions or similar or dissimilar clouds on title, except for Permitted
Liens or other exceptions that are approved by the Lender and its counsel.
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N. Written authorizations and/or waivers from any creditors authorizing
the transactions contemplated herein if so required pursuant to said lender's
loan documents or satisfactory evidence that no such authorizations or waivers
are required.
O. Evidence that all fees, dues, charges, assessments and the like
relating to the Timeshare Estates are current and that there are no liens or
encumbrances relating thereto, and if not current, Borrower shall furnish a
current list of all delinquencies.
P. A true copy of the current and proposed budget of the homeowners or
property owners association managing and administering the affairs of the
Resort.
Q. Evidence that all Project Documents and all amendments thereto have
been properly registered with or approved by the appropriate authorities having
jurisdiction over the Resort, or evidence that all Project Documents and any
amendments thereto do not require registration or approval, as aforesaid.
R. A true copy of any and all agreements relating to the use and/or
operation of the Resort, which have not previously been delivered to Lender.
S. Execution and delivery of this Third Modification Agreement, the
Amended and Restated Note, the Third Modification of Deed of Trust, an
Incumbency Certificate, authorizing resolutions, estoppel certificate and all
other documentation or information required or requested by Lender, in such form
and substance as is satisfactory to Lender.
9. Further Assurances: Borrower agrees that it shall execute and/or deliver to
Lender any documents, information or agreements as may be reasonably requested
by Lender 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.
10. Release and Discharge of Lender: Borrower hereby releases and discharges
Lender of and from all claims, causes of action, demands, damages or suits, at
law or in equity, which it may, as of the date of this Third Modification
Agreement, have or claim to have against the Lender relating to, rising out of
or resulting from its lending relationship with Lender, or with respect to the
Obligations due to Lender as evidenced by the Loan Documents or the Premises or
the other Collateral.
11. Governing Law: This Third 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.
12. Binding Effect: This Third Modification Agreement is binding upon, inures to
the benefit of and is enforceable by the successor and assigns of the parties
hereto. This Third Modification Agreement is not assignable by Borrower.
13. Non-Waiver: No failure or delay on the part of Lender, or its successors and
assigns, in the exercise of any right, power or privilege pursuant to the Loan
Documents or this Third Modification Agreement is to be construed to be or
operate as a waiver. Partial exercise of any
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right, power or privilege by Lender is not to preclude any further right, or
power or privilege nor be deemed a waiver. Any waiver or modification of this
Third Modification Agreement or any other document, instrument or agreement
executed by Borrower is to be in writing signed by the Borrower and Lender.
Lender may, in its sole discretion, release, impair or surrender all or any of
the interest granted hereunder or any other agreement executed by the Borrower
without waiving, exhausting or impairing any of Lender's rights and remedies
available pursuant to the Loan Documents, including this Third Modification
Agreement.
14. Inconsistent Rights or Remedies: In the event that any of the Loan
Documents, including this Third Modification Agreement, contain any inconsistent
rights or remedies otherwise available to Lender, the rights and/or remedies
accorded to Lender giving the Lender the greatest protection and/or affording
Lender the greater rights and remedies shall control, the determination of which
shall be left to the sole and exclusive discretion of Lender.
15. Representation by Counsel; Drafting of Agreement: Borrower acknowledges that
it has had the opportunity to consult independent counsel of its own selection
in connection with the matters covered by this Third Modification Agreement and
that it has executed and delivered this Third Modification Agreement (and any
other documents referred to herein or in connection herewith) with the benefit
of counsel and of its own free will and volition. Borrower also acknowledges and
agrees that the terms of this Third Modification Agreement have been negotiated
in good faith by the parties and that said terms shall be construed in a neutral
fashion without regard to the draftsmanship of this Third Modification
Agreement.
16. Severability: In the event that any portion of this Third 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 Third Modification Agreement and all such remaining terms and conditions of
this Third Modification Agreement are to continue in full force and affect.
17. Continued Effectiveness of Loan Documents: Except as specifically modified
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. It is the intention of the
parties hereto that this Third 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.
IN WITNESS WHEREOF, the parties have executed and delivered this Third
Modification Agreement or caused this Third Modification Agreement to be duly
executed and delivered by
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their proper and duly authorized officers or representatives as of the day and
year first above written.
ATTEST: ILX INCORPORATED,
an Arizona Corporation, Borrower
By:
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Xxxxxxxxx X. Xxxxxxxxxx, Secretary Xxxxx X. Xxxxx, President
WITNESS/ATTEST: TAMMAC FINANCIAL CORP.,
a Delaware corporation, Lender
By:
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Xxxxxx X. Xxxxxxxxxx, Vice President Xxxx X. Xxxxx, President
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