SETTLEMENT AGREEMENT
THE SETTLEMENT AGREEMENT is made as of the fifteenth (15th) day of
June, 1997 by and between Resort Funding, Inc., a Delaware Corporation, with
offices located at Xxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("RFI"), Los
Abrigados Partners Limited Partnership, an Arizona Limited Partnership, ("LAP")
ILE Sedona Incorporated, an Arizona corporation ("ILES"), ILX Incorporated, an
Arizona corporation ("ILX") and Xxxxxxx Enterprises Incorporated, an Arizona
corporation (collectively the "Developers"), all with offices located at 0000
Xxxx Xxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000. ("Agreement")
WHEREAS, RFI, LAP, ILES and ILX entered into a certain Management
Agreement, dated November 21, 1995, (the "Management Agreement") pursuant to the
terms of which RFI advanced to Developers the sum of Three Million Five Hundred
Thousand Dollars ($3,500,000.00) and Developers agreed to repay such advance to
RFI along with an annual twelve percent (12.0%) cost of funds factor in
thirty-six (36) equal monthly payments ("Indebtedness");
WHEREAS, the parties to the Management Agreement desire to
terminate said Management Agreement and to have ILX execute a promissory note
evidencing the outstanding indebtedness under the Management Agreement, which,
as of the date hereof, is Two Million Four Hundred Thousand Dollars
($2,400,000.00) and, by separate agreement, the additional sum to be advanced to
Developers in the amount of Five Hundred Fifty Thousand Dollars ($550,000.00)
and by affirmative covenant to pledge as security for the payment thereof
certain unsold interval units in Sedona Vacation Club, Xxxx'x Ranch Lodge,
Varsity Clubs of America: Notre Dame Chapter and Golden Eagle Report to RFI;
WHEREAS, to further secure payment of the Indebtedness, LAP desires
to execute a guaranty and subordination agreement absolutely and unconditionally
guarantying the obligation of ILX under the note;
WHEREAS, to further secure payment of the Indebtedness Xxxxxxx
Enterprises Incorporated desires to covenant and deliver to RFI One Million
(1,000,000) shares of currently issued ILX Incorporated common stock to RFI
until such times as the outstanding principle balance under the Note is One
Million Dollars ($1,000,000.00) or less;
NOW, THEREFORE, in consideration of the mutual covenants made
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, each of the parties hereto hereby agrees as follows:
1. The Management Agreement and all Collateral Assignments thereof are, as of
the date hereof, hereby terminated. Not withstanding the forgoing, the parties
acknowledge and affirm the continued existence and enforceability of the
Declaration of Trust referenced in Paragraph 3.4(d) of the Management Agreement,
which shall survive the termination of the Management Agreement as set forth
above.
2. ILX as executed a Promissory Note, dated June 15th, 1997, in the amount of
Two Million Four Hundred Thousand Dollars ($2,400,000.00) ("Note").
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(a) ILX shall pay to RFI One Hundred Forty Four Thousand Dollars
($144,000.00) as a financing charge in connection with the Note, such amount to
be paid upon execution of the Note by ILX, or within five (5) business days
thereafter.
(b) Interest shall accrue at the rate of twelve percent (12.0%) per annum
and shall be payable on the first day of each month commencing on July 1st,
1997.
(c) All outstanding amounts shall be due and payable on December 31th,
2002.
3. The Developers have executed an Assignment and Security Agreement, of even
date herewith, that pursuant to the terms of which:
(a) Xxxxxxx Enterprises Incorporated has pledged one million (1,000,000)
shares of currently issued common stock ("ILX Stock") to RFI and has delivered
stock certificates evidencing such shares to RFI. Such pledge shall remain in
full force and effect and RFI shall retain possession of such stock certificates
until such time as the outstanding principal balance under the Note is One
Million Dollars ($1,000,000.00) or less. Upon such reduction of the principle
balance of the Note RFI shall return to Xxxxxxx Enterprises Incorporated the
certificates for the ILX Stock.
(b) The Developers have covenanted to RFI as collateral for the Note the
following unsold interval unit inventory ("Unsold Inventory") and, beginning
July 1, 1998, shall pay to RFI to reduce the principle balance of the Note the
corresponding release fees upon the sale of each interval unit:
Property Number of Interval Units Release Fee per Interval Unit
-------- ------------------------ -----------------------------
Full Bi-Annual
---- ---------
Golden Eagle Resort 400 $ 500 250
Xxxx'x Ranch Lodge 1,250 500 250
Sedona Vacation Club 2,100 1,000 500
VCA: Notre Dame Chapter 1,650 1,000(1) 500(1)
1. Commencing after an additional 1,200 full Interval Units (or the equivalent
thereof) have been sold.
(i) The Developers warrant that, except for the interest granted
to RFI pursuant to the terms of the Assignment and Security Agreement and
those specifically disclosed in writing to RFI by Developers ("Disclosed
Liens"), the Developers are the owners of the Unsold Inventory free from
any adverse liens, security interests or encumbrances and the Developers
have the right and authority to give, grant, bargain, sell, assign,
transfer, convey and set over the same as aforesaid. The Developers agree
that they will provide RFI, by the last day of each month, a report of
all completed and pending sales from the immediately preceding month for
each of the Properties listed above.
(ii) The Developers further agree that they will warrant and defend
the Unsold Inventory against claims and demands of all persons at any
time claiming the same or any interest therein, and shall keep such
Unsold Inventory free from all claims, liens, security interest and other
encumbrances other than the Disclosed Liens.
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(iii) The Developers have assigned, effective June 15, 1997, all
reserves applicable to any receivables purchased by RFI generated from
the sale of timeshare interval units in Los Abrigados Report and Spa,
located in Sedona, Arizona. Such reserve amounts shall be applied toward
the reduction of the principle balance of the Note as such reserves
become available pursuant to the terms of the Contract of Sale of
Membership Agreement and Installment Purchase Agreements with recourse by
and between the Developers and RFI dated September 14th, 1993. Not
withstanding the termination of the Management Agreement, the advance
rate with respect to Eligible Receivables purchased by RFI generated from
the sale of Interval Units in Los Abrigados Resort and Spa shall be
ninety percent (90%).
4. Except for those rights the Developers may have upon the occurrence of any
default by RFI under the previous and current documentation executed in
connection with a certain project known as Varsity Clubs of America: Tucson
Chapter, the Developers on behalf of each of them, their successors and assigns,
together with their past, present and future officers, directors, agents,
representatives, partners, joint ventures, affiliates and the successors and
assigns of any and all of them, for good and sufficient consideration, the
receipt and sufficiency of which is hereby acknowledged, do hereby forever
waive, release and discharge RFI, its successors and assigns, from any and all
action, causes of action, suits, debts, covenants, contracts, controversies,
agreements, promises, damages, judgments, claims and demands whatsoever, at law
or in equity, which it ever had, now has, or hereafter can, shall or may have
against them for, upon, or by reason of any matter, cause or thing whatsoever
arising from or relating to any loan between the Developers or any of its
affiliates, successors, and/or assigns and RFI, its successors and assigns,
under the loan documents executed in connection therewith, the transactions and
interests contemplated or created thereby or pursuant to any provision of law,
or the interests conveyed, transferred or assigned pursuant to this Agreement,
whether known or unknown, asserted or unasserted, ("Released Claims") and hereby
further irrevocably agrees not to make any claim in respect thereof or commence
or join any suit, action or proceeding, at law or equity, in respect of any such
Released Claims.
5. The Developers hereby agree that until such time as all amounts are paid in
full pursuant to the terms of the Note they jointly and severally agree not to
mortgage, pledge, hypothecate, sell or otherwise encumber any of the assets of
the Developers covenanted or pledged pursuant to the terms hereof or the
assignment and Security Agreement, without the express written consent of RFI,
which shall not be unreasonably withheld.
6. The parties hereto agree that the Developers may conduct its business in the
ordinary course but may not do anything which shall materially affect its assets
or business or in anyway reduce, compromise or affect the covenants to or the
interests of RFI created herein and in the documents executed in connection
herewith, without the express written consent of RFI, which shall not be
unreasonably withheld.
7. None of the terms or provisions of this agreement maybe waived, amended,
supplemented or otherwise modified except by a written instrument executed by
all the parties to this Agreement. This Agreement is binding upon and for the
benefit of the parties hereto and their respective successors and assigns.
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8. This Agreement and the rights and obligations of the parties under this
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York without regard to the principles of
conflict of laws.
9. In any action to enforce the provisions of this Agreement, personal
jurisdiction and venue shall be, at the option of RFI, in the Supreme Court of
the State of New York, County of ONONDAGA or the United States District Court
for the Northern District of New York.
10. This Agreement may be executed by one or more of the parties hereto on any
number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered as of the date first above written.
RESORT FUNDING, INC. LOS ABRIGADOS, PARTNERS, LIMITED
PARTNERSHIP
By: ILE Sedona Incorporated
Its: General Partner
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------ ------------------------------
Xxxxxx X. Xxxxx, President Xxxxxx X. Xxxxxxx, Chairman
ILE SEDONA INCORPORATED ILX INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------ ------------------------------
Xxxxxx X. Xxxxxxx, Chairman Xxxxxx X. Xxxxxxx, Chairman
MARTOR ENTERPRISES INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx, Chairman
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