1875 LAWRENCE STREET, TENTH FLOOR PENDLETON ‘DENVER, COLORADO 80202-1898 FRIEDBERG ‘TELEPHONE: 303.839.1204 WILSON & FACSIMILE: 303.831.0786 HENNESSEY PC. ‘www-penberg.com DES AND COUNSELORS ATLA L-Jay Labe E-mail: jlabe@penbere com Licensed in Colorado and Wyoming January 4, 2008 Michael J. Glade, Esq. INMAN FLYNN & BIESTERFELD, P.C, 1660 Lincoln Street, Suite 1700 Denver, Colorado 80264 Re: Robinson Construction Co. v. Lake Village Owners Association One, Inc., et al. District Court, Routt County, Case No. 2007CV185 Our clients: Mountain Adventure Property Investments, LLC. (“MAPI”), et al Our file: 09298.0001 Dear Mr. Glade: My letter of November 29, 2007, demanded that Robinson Construction Co. dismiss its second claim for relief (lien foreclosure) and release its statement of lien on the Villages of Hayden (“Villages”). Robinson refused and responded with your letter of December 8, 2007," suggesting that it had been “wrongly accused” of overstating its claim. As you will see, Robinson’s attempt to refute our position is based upon a misguided accounting that is entirely at variance with the facts. Indeed, Robinson’s $1,411,090.76 mechanic’s lien is grossly overstated, and the suggestion that it is not entirely unsupported by the written record. For the reasons that will be explained in greater detail below, and without waiver of any rights or defenses, my clients renew their previous demand for the immediate dismissal of Robinson’s second claim for relief and the immediate release of the subject property from the subject Robinson mechanic’s lien. Robinson’s continuation of this litigation only serves to aggravate the damages being sustained by my clients. To facilitate this discussion the following exhibits from my letters of November 29, 2007, and December 4, 2007, have been attached, along with an excerpt from a Loan Agreement between MAPI and Vectra Bank conceming the Villages project: Exhibit A. (From letter of 12/4/07). A spreadsheet showing each of the fifteen (15) pay applications prepared by Robinson Construction Co. in which Robinson certified both the amount of work it performed and the payment it was entitled to receive. Pay * Your original letter of December 7, 2007, was corrected and amended by telefax dated December 8, 2007 (00288999.00c2}Michael J. Glade, Esq. INMAN FLYNN & BIESTERFELD, P.C, January 4, 2008 Page 2 of 6 applications were submitted by Robinson on the Villages project totaling $4,925,140.68. Exhibit B. (Letter of 11/29/07). A spreadsheet listing the payments made by or on behalf of 4S to Robinson in response to the Villages of Hayden pay applications, showing the check number, check date, check amount, and identity of the paying bank, (The payments to Robinson for the Villages of Hayden project total $4,929,715.20.) Exhibit C. (Letter of 11/29/07). Bank generated copies of cancelled cheoks that were received and negotiated by Robinson in the same order as those listed on Exhibit B. Exhibit D. Loan Agreement dated September 29, 2006 between Mountain Adventure Property Investments, LLC and Vectra Bank Colorado, National Association concerning Real Property to be developed to be known as “The Villages at Hayden, located in Hayden, Colorado” (See 41.1). Exhibit D also includes a copy of the ‘Unconditional Guarantees of Payment for this Vectra Bank Joan and related signature pages for each “guarantor/borrower.” ‘An accurate understanding of the compensation Robinson received for its work on the Villages of Hayden project requires a review of each of the payments listed on Exhibit B. It also requires an assessment of the reasonable expectations and legal obligations imposed upon the parties at the time each payment was made and received, To the extent that their are no notations on a check that explain its intended application, the underlying source of the funds, documents restricting use of those funds, Robinson’s own project pay applications and the written record will leave no doubt as to exactly how each of these payments should have been applied by Robinson and how the payor intended each payment to be applied. Let’s start this review with the earliest of the payments to Robinson. Your letter of December 8, 2007, Robinson contends that the $5,000,000 Promissory Note to Robinson & Sons, LLC (Exhibit 2 to your letter of December 8, 2007), was driven by the need for Robinson to “carry $5 million until June 1, 2007.” For ease of reference, your spreadsheet has been reproduced below (Table 1). It shows a $5,091,863.20 balance due on all three projects. Your spreadsheet clearly shows that “$1,234,674,30” was due on the Villages: (00288999 D0c2} PENDLETON, FRIEDBERG, WILSON & HENNESSEY RC.Michael J. Gade, Esq INMAN FLYNN & BIESTERFELD, P.C, January 4, 2008 Page 3 of 6 = ete-G0s7_o4tarl Pian Biaraeeld Brant Aer ata att 2 e [rw Bate Pay App Number | Arvount Hidden Springs 07/31/0006 | £Rev 334,383.57, Hidden Springs | 67/83/2008 [2 {Ss arom ‘i 68/35/2006 [3 i Heges soins t ‘Subtotal $719,328.42, \ aagesot nayd uy/zaf2008 [a Rev eae 0S a “Villages of Hayden | 07/31/2006 2 Samer Vilages of Hayden | 08/15/2005 13 $373,139. : ~ [everest —__ 153.235, 57430¢ - 2721} ‘Mt Harris” ‘Tisi/2006 | 2 he '$2,350.9; ho Harris. ya/33j2006 [2 115,922.08 _| Mit. Harri ‘os/is/2006 [3 __[ss7i0ania | [subtotal [$3437,960.48. [oral | $,082,888.20 Table 1. Mr. Glade’s Reconciliation of Pay Applications (from 12/7/07 letter). Now let’s take a look at what was actually paid to Robinson and how these payments were funded. As you have noted, two checks paid to Robinson from 4S Development's First State Bank of Altus Account in September and October, 2006. These include check number 5047 in the sum of $1,300,000 and check number 5051 in the sum of $1,420,058.72 and check number 5053 in the sum of $781,395.46. (These checks are listed and described on Exhibit B.) Copies of the cancelled checks themselves are part of Exhibit C.) Funding of each of these checks came from wire transfers of funds obtained by MAPI from a Vectra Bank loan that was dedicated exclusively for use on the Villages of Hayden and could not be used for any other purpose.’ (See, MAPI/Vectra Loan Agreement, Exhibit D). A review of Exhibit D will show that David P. Bruni of Vectra Bank Colorado, executed the loan agreement and was clearly aware of restrictions governing the use of its loan proceeds. (See, Exhibit C, p. 36). Various “borrowers” executed the Loan Agreement, including members of MAPI. Unconditional Guarantees of Payment were executed by Don Anderson, Ronald D. Sills, Shane Sills, and Roger Johnson I. Each of these borrowers can be assumed to have clearly understood that Joan proceeds were restricted to the development of The Villages at Hayden and that the funds were not available for use in developing Hidden Springs or Mount Harris at Grassy Creek ? The MAPW/VectraBank Loan Agreement specifically states that: "The Real Property is to be developed into a subdivision consisting of ... to be known at The Villages at Hayden" ({1.1) which is defined as being Schedule A to ‘the Loan Agreement, and {2.4, which requires certification that work is an improvement to the Villages at Hayden. See also $93.0, 3.7, 4.0,4.2, 43, 9.1, 10.1 and 11.0. {00288999.00¢2) PENDLETON, FRIEDBERG, WILSON & HENNESSEY PC.Michael J. Glade, Esq INMAN FLYNN & BIESTERFELD, P.C, Fanuary 4, 2008 Page4of6 Attached as Exhibits E, F and G you will find three “Outgoing Wire Transfer Order/Records” of the proceeds of the subject Vectra Bank Loan for the Villages. These documents show that wire transfers of loan proceeds were made at the request of Don Anderson and his Altus, Oklahoma MAPI office, with the approval of David P. Bruni of Vectra Bank. 4S Development's $1,300,000 check #5047 to Robinson Construction was funded by the Vectra Bank Wire transfer of $1,300,000 attached as Exhibit E. Don Anderson personally made application for this Vectra Bank wire transfer. Further, check #5047 also bears the notation “Villages of Hayden.” Any suggestion by Robinson that this payment was for a Robinson project other than the Villages is implausible and entirely unfounded. At the time cheok #5047 was paid, Robinson’s invoices for work at the Villages (through Pay Application No. 5) totaled $1,831,692.02. As you can see from Table 2, the payment represented by check #5047 left a balance due of $531,892.02 on Robinson’s Village account. Involos# Invoice Date VOH Invoice BeevoT — 7iRAz008 $502,908.05 TREO ‘gosos 7/st/e008, $272,827.24 seraez7.24 s960¢ 8/15/2008 $379,198.04 '5579,199,08 39605 9181/2008, $355,208.19 ge5se570 ($208,802.40) ‘eas08 9/18/2006 $231 800.62 $0.00 ($281,809.82) ‘SubTotal: 31,881;602.02 ‘s1d00(000.00 {ss01,602.02) 6 9807 sis0rz008 ss692[028.29 $9892,028729 ‘30°00 7 9¢08 10/11/2008 '3729,08259 ‘$723,032 53: 8000, subTotals: $1,420,058:02 $1.420,058:82 . (s831,s02102) ‘7a 0846 Sodar0sd Table 2. Reconciliation of Robinson Pay Applications 1-7, Although there is no similar notation on check #5051 for $1,420,058.72, it is clear that this payment was also funded by a Vectra Bank’s wire transfer of $1,093,782 in Villages loan proceeds. (See Exhibit F). Further, when check #5051 in the sum of $1,420,058 was issued by 48 Development, Robinson's Villages Pay Applications No. 6 ($692,026) and No. 7 ($728,032) totaling $1,420,058, were then payable. Thus, any suggestion that check #5051 was for a project other than the Villages is implausible and entirely unfounded. ‘Now lets tum to the third payment on the Exhibit B list of Payments to Robinson: 4S Development check number 5053 in the sum of $781,395.46 dated 10/29/2006. First, please note that check #5053 was issued on the same date as the Vectra Bank wire transfer ftom the Villages loan and was funded by that loan. (See the Outgoing Wire Transfer Order/Record dated (0288999.D0¢2} PENDLETON, FRIEDBERG, WILSON & HENNESSEY PC.Michael J. Glade, Bsq, INMAN FLYNN & BIESTERFELD, P.C, January 4, 2008 Page 5 of 6 10/26/2006, attached as Exhibit G). ‘As you will see on Table 2, a balance of $531,692.02 was then due and owning on the Villages to Robinson, leaving a $249,703.44 credit towards the Villages, which was the sole project to which proceeds of the Vectra Bank loan could have been legally applied. Your letter of December 8, 2006, suggests that application of the funds described by my clients would have resulted in an “unlikely overpayment.” Given the fact that substantial work remained to be performed on the Villages, that a $246,979.89 credit was in fact applied’, and that the direct source of the funds was a Vectra Bank loan dedicated solely to the Villages of Hayden, the intent to establish a credit is far more likely that an intent you suggest, which was to misapply Vectra Bank funds by making a payment to Robinson for work on Hidden Springs or Mount Harris at Grassy Creek that would have directly violated the obligations of MAPI and its ‘Members (including Robinson & Sons, LLC) to Veetra Bank. ‘As an aside, it should also now be clear that any need for Robinson to provide short term “financing” or “carry” the Villages of Hayden project had entirely evaporated as of October, 29, 2006. By that time Robinson’s involvement as a “lender” for the Villages had been superseded by Vectra Bank funding. Payments of Robinson Village Pay Applications 8 through 12 followed a simple pattem, Each payment was for exactly the same amount as Robinson’s Village invoice. This pattem is visible on Table 3: PayApp _Involoe# Invoice Date. VOHInvolee VOHPmt Check @ 69609, 10/2572008 «$644,715.68 $644,715.60 1011 FNBR 9 e961 1115/2008 «= $S4TIBOR.IZ © §847\BOR.17 194FNER {0 OAK ia HTHRAOGS §=— Said AT GU0,TBELta’ SOSGFSHA 4 éoer2 tB/15/2006: $58,778.25 $88,765 S078 FSBA 12, e963 12/26/2007 $2245.67 —*$,245387 1120 FNBR Table 3. Reconciliation of Robinson Pay Applications 8-12. Thereafter, on January 31, 2007, Robinson submitted Pay Application 13 ($246,979.89) for payment. The $249,703 credit shown on Table 2 was applied to this Pay Application, leaving a credit balance of $2,723.15. Without waiver of (a) claims arising from the contractual and warranty issues described in my letter of December 4, 2007, (b) without waiver of other claims that my clients may have against your clients and (c) without conceding Robinson Pay Application/Invoice propriety or accuracy, my clients do not contend that Robinson Pay Application 14 (8/1/2007, $175,982.94) > See Pay Application No. 13 dated January 31, 2007 the sum of $246,979.89 to which all of the $249,703 credit, with the exception of a $2,723.15 overage was actually applied. {00288559.D0¢2) PENDLETON, FRIEDBERG, WILSON & HENNESSEY PC.Michael J. Glade, Esq. INMAN FLYNN & BIESTERFELD, P.C, January 4, 2008 Page 6 of 6 or Robinson Pay Application 15 (9/20/2007 for $97,611.16) were paid. These two unpaid invoices, however, add up to only $273,594.10. After deduction of the remaining $2,723.15 in credit due on check number 5053 (See Table 2), the most that Robinson could have claimed to be due and owing for labor and material supplied to the Villages of Hayden project was $270,870.95. Instead, Robinson chose to file a Mechanic’s Lien for $1,411,090.76, which was, and is, $1,140.219.81 more than Robinson had any conceivable, non-frivolous, right to serve or record. ‘We will establish that Robinson knowingly filed an excessive mechanic’s lien against the Villages of Hayden project that is five times greater than any sum for which Robinson had any reasonable claim. Robinson’s conduct is a direct violation of C.R.S. § 38-22-128 which provides as follows: “any person who files a lien under this article for an amount greater' than is due without a reasonable possibility that said amount claimed is due and with’ the knowledge that said amount claimed is greater than the amount that is then due, and that fact is shown in any preceding under this article, shall forfeit all rights to such lien plus such person shall be liable to the person against whom the lien was filed in an amount equal to the costs and all attorneys fees,” ‘My clients remain intent upon mitigating damages before they become exponentially greater. My clients renew their demand that you forthwith file a notice of dismissal with prejudice of Robinson’s second claim for relief, and that you immediately provide this office - with a fully executed release of Robinson’s statement of lien. ‘Nothing in this letter constitutes a waiver of any claims my clients may have arising from. Robinson’s filing of its excessive mechanics lien, its initiation of this foreclosure action or its filing of a lis pendens. This demand is without waiver of the rights of my clients to recover damages, attomeys fees and expenses they have already incurred, or may incur in the future as a result of your commencement of this proceeding. In that regard, our clients reserve all rights they may have to assert contract claims against Robinson based on its failure to properly perform contract work, its breach of any warranties, and any other deficiencies in its work which may be documented in the future. LIL:srs Enclosures ce: Ron Sills, MAPT J. Richard Tremaine, Esq. JA {00288999.D0c2) PENDLETON, FRIEDBERG, WILSON & HENNESSEY RC.Robinson Construction Invoices - Villages of Hayden Payment Payment Amount Application Application Date Certified T 582,908.05 2 7/31/2008 $272,627.21 3 8/15/2006 $379,139.04 4 9/1/2006 $365,208.10 5 9/15/2006 $231,809.62 6 9/29/2006 $692,026.29 ? 10/15/2006 $728,032.53 8 10/25/2006 $644,715.63 9 11/14/2006 $347,893.17 10 41/29/2006 $99,185.19 aL 32/15/2006 $58,776.25 12 42/26/2006 $2,245.67 33 4/30/2007 $246,979.89 14 8/1/2007 $175,982.94 45 9/20/2007 $97,611.16 TOTAL — $4,925,140.68. EXHIBITRobinson Construction Payments - Villages of Hayden Date Check Bank Payor Payee Signed by Amount. 9/24/2006 5047 First State Bank of Altus 45 Development Robinson Construction _Shane Sill $1,300,000.00 10/19/2008 5051 First State Bank of Altus 45 Development Robinson Construction _—Ron Si $1,420,058.72 10/26/2006 5053 First State Bank of Altus 48 Development Robinson Construction _Shane Sills $781,395.46 11/6/2006 1011 First National Bank of Rockies «45 Development Robinson Construction _—David Lee $644,715.63 11/23/2008 1046 First National Bank of Rockies «45 Development Robinson Construction _—_—David Lee $347,893.17 12/6/2006 5058 First State Bank of Altus 48 Development Robinson Construction $20,846.47 12/21/2008 5059 First State Bank of Altus 4S Development Robinson Construction _—Ron Sill $99,185.13 18/2007 5075 First State Bank of Altus 45 Development Robinson Construction _Don Anderson $58,776.25 1/18/2007 1129 First National Bank of Rockies «45 Development | Robinson Construction David Lee $2,245.67 3/7/2007 1176 First National Bank of Rockies 45 Development Robinson Construction Shane Sills $120,000.00 3/18/2007 2059 Vectra Bank coot Robinson Construction Bill Grissom $81,485.12 3/25/2007 1184 First Natlonal Bank of Rockies «45 Development Robinson Construction _—_Shane Sills $53,113.58 TOTAL $4,929,715.20 EXHIBITSingle Item Request Printed on 11/29/2007 30/02/2008 eiasoezeo2 ass 793K294 42103208 2452 ao90sBe sou? 0130000000" TOPOITOS BOSOSE OAT TITIES ‘seeccoossa Otte ove sear itooneee E scoavei IF s7ORTES FOSASE SOIT TIESTO, EXHIBIT SoSingle Item Request Printed on 11/29/2007 RET cence este Teas Ana teen cory ot D7 EE7O6 ao/eave00% cazscoa2203 WtiDa 408 2490 ADsOIBSOS =O ALZODSAP EY BOSISE SUS TASSOSE TE SMooozer sonesngyey sone /evee 1O7BS7O6 BOSTTT SUSY T4ZCTSESingle Item Request Printed on 11/29/2007 a Sia opi ga 3 euoxinazuae” ra0s0%G* 5053 yonzayadsuee wetosioa2ee: —annoneesoss —vaoraisastee 20/27/06 BO90T8 75.395.26 seceventss noverderon Seetneasss wo2 tee i i iE if i t FATS6 BOISE SOST THLITS. TEROCKIES, November 21, 2007, 12:52:05 48 DEVELOPMENTLTD COLORADO LIMITED PARTNERSHE POBOK 416 HAYDEN, CO 81639-0416 fs aay an i 1 aavoaszonn 1 SERIE ne a 2M) iernmcce rssat frees 7 sot ostictad soni, ei Be Fit Eh tisap sat tend fas no Yao Banas (EE ation tan tne a 2031440048307" 2044 PODEGL? eit WwEA0 240 LSWAIED 20444100 183070" Dba MODELL TASHA | “TIN0/2006 #1011 $644715.63 SE Shtaoeaee SSibenoroce srecaastes Medeendee Ti/o72006 HOLL $644715.63ROCKIES, November 21, 2007, 13:47:38 48 DEVELOPMENT LID ‘COLORADO LIMITED PARTNERSHIP PO BOX 416 HAYDEN, CO 81639-0416 sSdeveoPMeNT LTD aavaqveomu ooss30275Ge4 exeg0002203 WiAO 240 SWB 420 b bh 100 483070 AOLG OOTL 785170" 127012006 #1046 $347893.17 ae Es Pees rete eae 5 2S. 4 a 122006 F046 $347893.17Single Item Request Printed on 11/28/2007 22713706 aa/uave0oe 5403 108 24912 BoNogae S058 OOO 20B4BKI¥ GOSSSe 50ST FSETE. TF ocazee FTUSTOS SIROGT GOES DORTETSingle Item Request Printed on 11/29/2007 | raz3a002203_ 92/08/2007 003322538703, ASPEVELOPNENT, LTD. ABE ses 6059 moatoszner — ranTONEY S059 yogoaainsiar wniD3i0a2L9 = g09098"s05a 0009918513" EOSGSE BOSS SHES TS a vi a 9502 =2eeexss— erates foouses e STTESTOT FODOSE 50ST SSTAS TESingle Item Request Printed on 11/29/2007 ‘azaon2203 02/30/2007 ‘D03s37279188 | | E0S08H SETS ayebooorers Shed i$ aenseeates eaoe/et7%0 # i i 3 E z E STERTOT GOS0SE BOTS TERIT. TEROCKIES, November 21, 2007, 13:48:37 48 DEVELOPMENT LTD COLORADO LIMITED PARTNERSHIP POBOX 416 HAYDEN, CO 81639-0016 48 DEVELOPMENT LTD COLORADO LIMITED PARTNERSHIP Po pox a0 FH eroz7e2176 HAYDEN, cO Bie3e-416 ait eit roe VOb WOR AO ASKANEZOR EL AOO RB SOME RED OOOO 2 2458.7 O1RsR007 #1129 $2245.67 KINO USOC UDR Oe YNVESS aodeao aHL OWAVa,» enedstome, 01/25/2007 #1129 $2245.67ROCKIES, November 21,2007, 13:51:03 48 DEVELOPMENT LID ‘COLORADO LIMITED PARTNERSHIP PO BOX 416 HAYDEN, CO 81639-0416 gy — we 2) BOOS ewes comms — 8] ranean oe ti ae * euohiro wiozioEsteEHROs4ioNIBIOTe goo zo000Gee esezno02203 wOOH?Er «=| WEADZIOASHAIE R2ONMLAODABIO7 — 004200000" Oa/isn007 #1176 liebe aL Ni GASAO07 #1176 $120000.00Page 1 of 1 Fiea000z207 03/26/2007 woo20s9e op3g34soNs32 yeh evratn ccm tee COLORADO OAs pevELORMET LC 2059 ‘ “ea : bine plaza UBS Robinson Gineteiiag 8 arysta LlGiaj ae Tecate Raided tilhy Tid cgnt “na — sons BE REE Ses AG “igheosw monsnisy tus soo wera AAD Z003 E54 WB LOO AB 7Bbe #0008 tha Siar ahtooozat estesices covastzyee “Sy poon tate estewssny apoasteee Do nol ora wie blow Be Bd Date:03/27/07 Sequence Num:34136954 Account:4810016784 Serial:2059 Amount:$81,485.12 Dep Seq- hitps:/fafs.cs.zionsbarik.coni/scripts/afv/afsweb/AlsWeb.dil?Process?_application=eVisio... 11/29/2007ROCKIES, November 21, 2007, 13:51:59 48 DEVELOPMENTLTD (COLORADO LIMITED PARTNERSHIP POBOK 416 HAYDEN, CO 81639-0416 io oS SE ae oS 7 eb reese DM _raprvsetonnas a hosartitenan stone ous soot WODMMBh# = -WIELOZAONSHAM G2ORaNAONIOM =— OOS bas 04/04/2007 #184 $5313.58 re | Sette sts Boo ofthat) 8 Heide, Bison | og Bee chelate BEBE atte | siylet BEE | ses ———_ Cheasute | | yelsave 1 cede | | zIOLSRBTZOLANIOOIEION —yoousaLtaser 04/042007 Hil84 $53113.58LOAN AGREEMENT THIS AGREEMENT is made and entered into ai of the 29th day of September, 2006, MOUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado limited liability company, whose address is P.O. Box 881870, Steamboat Springs, Colorado 80488, (hereinafter called "Borrower"), and VECTRA BANK COLORADO, NATIONAL, ASSOCIATION, 2 national banking association, whose address is 2155 Resort Drive, Suite 300, Steembost Springs, Colorado 80487 (hereinafter called "Bank"), for and in consideration of the recitals and mutual promises contained herein, confirm and agree as follows: SECTION 1. RECITALS; DEFINITIONS 11 A&D Loan. Borrower has applied to Bank for the A&D Loan for the purpose of refinancing the acquisition costs of the Real. Property, and constructing thereon the A&D Improvements according to the A&D Plans and Specifications. The Real Property is to be developed into a subdivision consisting of eighty-six (86) single-family lots and one (I) mult family lot to be known as The Villages at Hayden, located in Hayden, Colorado. 12 RLC. Borrower has applied to Bank for the RLC against which Borrower may, from time to time during the tema, make draws, repay'all or part ofthe same and then draw additional sums, subject fo the terms, conditions and provisions set forth herein, for the purpose of constructing single family residential homes on any of the 86 single family lots on the Real Property, according to the RLC Plans and Specifications. 13 Definitions. For the purposes of this Agreement, unless thé context otherwise requires, the following terms shall have the respective meanings assigned to them in this Paragraph 1.3: GA&D Advance” and “A&D Advances” means individually a disbursement and collectively disbursements under the A&D Loan. “a&D Budget” means the A&D Budget attathed hereto as Schedule "BY and by this reference incorporated herein. “A&D Disbursement Request” means a completed, written request for an AG Advance, in form and content acceptable to or specified by Bank. “A&D Improvements” means offsite and onsite improvements including, without limitation, paving, curbs, sidewalks, landscaping, water, sewer and other utilities necessary to make the Real Property suitable for the construction’ of 86 single family residences and 6 multi-family units. “A&D Loan” means the loan from Bank to Borrower contemplated hereby for refinancing the acquisition costs of the Real Property and the construction of the A&D Improvements, in the amount of $3,225,000,00- “A&D Loan Fee” means a non-refundable fee in the amount of $16,125.00 due at closing. EXHIBIT b D“A&D Note” means the Promissory Note, dated of even date herewith, executed by Borrowér, payable to the order of Bank in the original principal amount of $3,225,000.00, as it may be amended, modified, extended, renewed, restated or supplemented from time to time. “A&D Plas and Specifications” means the final plans and specifivations approved by Bank for the construction of the A&D Improvements. “ACSM” means American Congress on Surveying and Mapping. “ALTA” means American Land Title Association. “Advances” means A&D Advances and RLC Advances. “Agreement” means this Loan Agreement, as it may be amended, restated and otherwise modified from tithe to time. “Appraisal” means an appraisal of the Real Property and the A&D Improvements or of a Unit @ ordered by Bank, (ii) prepared by an appraiser satisfactory to Bank, (iii) in compliance with all federal and state standards for appraisals, (iv) reviewed by Bank, and (v) in form and substance satisfactory to Bank in its sole and absolute discretion. “Borrower's Cost” means actual expenditures for labor performed and material supplied in accordance with the A&D Plans and Specifications or the RLC Plans and Specifications under the construction contract for construction of a Unit, lot acquisition and development costs, professional fees associated with lot acquisition and development (appropriately allocated over all Units benefitted by such professional services), financing costé, permit fees and, subject to Bank's approval, additional development costs and appropriate allocation of administration and, overhead expenses incurred in connection with development and construction of that Unit, but shall not include any profit of Borrower or any affiliate of Borrower. ‘Borrower's Funds Account” means ai interest bearing account selected by Bank in its sole and absolute discretion. “Closing Date” means the date hereof, “Collateral” is defined in Section 6.1. “Contingent Contract(s)” means a contract to purchase a Unit executed by a third party, which contract is contingent upon the sale of the third party's existing home. “Deed of Trust” means one or more Deeds of Trust, Assignment of Rents, Security Agreement and Fixture Filing executed by Borrower, as trustor; to Bank, as beneficiary, covering the Real Property and-securing payment of among other things, the Loans, as it may be amended, modified, extended, renewed, restated, or supplemented from time to time. “ERISA” means the Employee Retirement Income Security Act of 1974 anid the regulations and published interpretations thereunder, as amended from time to time. 2 ‘Steamboat DatalVexts Bank utan Adventue\DacumentlLaan Agreement.V3“Event of Default” means the occurrence of any of the events or conditions listed in Paragraph. 14.1 her “Facility Expiration Date” means the twenty-four (24) month anniversary date of the Closing Date. wot “GAAP” means generally accepted accounting principles consistently applied. “Governmental Authority” means the Town of Hayden or any other governmental entity or subdivision thereof that exercises governmental powers over the Real Property. “Guarantor(s)” means Ronald D. Sills, 4S Development Ltd., LLLP, Roger Johnson, Il, Grassy Creek Holding Company, LLC, F. Don Anderson, Oasis Development, LLC and Robert Keys. “Improvements” means the A&D Improvements and the RLC Improvements. “Letters of Credit” shall mean all standby letters of credit issued by Lender for the account of Borrower pursuant to this Agreement, and all amendments, renewals, extetisions or replacements thereof. “Letter of Credit Obligations” shall mean, at the time of determination, the sim of (i) the aggregate undrawn amount of all Letters of Credit outstanding at such time plus (ji) the aggregate amount of all drawings under Letters of Credit for which Lender has not at such time been reimbursed. “Letter of Credit Sublimit” shall mean an amount not to exceed $500,000.00. “Loans” means the A&D Loan and RLC Loans. “Loan Documents” means this Agréement, the Notes, the Security Documents end any other agreements, documents, or instruments evidencing, guarantying, securing or otherwise relating to the Note, or executed or delivered in connection with the Loan, as such agreements, documents, and instruments may be amended, modified, extended, renewed or supplemented ftom time to time. “Loan Expenses” is defined in Section 16.7. “Lot Release Price” means (j) for any single family lot an amount equal to the greater of 85% of the Net Sales Price of such Unit or $50,000.00 and (ii) for the multi-family lot an amount equal to the greater of 85% of the Net Proceeds or $40,000.00. “Maturity Date” means the twelve (12) month anniversary of the Closing Date or, if extended as provided in Section 2.6 below, the eighteen (18) month anniversary of the ‘Closing Date “Model Units” mean those single-family residential units used as models. “Net Sales Price” shall mean the gross price to be paid for a Unit under a bona fide sale to a third party, less title insurance premiums, tax pro-rations and customary settlement charges, a ‘Steamboat DasiVecra Bancuri AdvenireDocument.aan Agreement V3which in the aggregate shall not exceed 5% of the gross sales price and real estate commissions not to exceed 6% of the gross sales price. “Notes” means the A&D Note and the RLC Notes. “Obligations” shall mean all of the direct and indirect, matured or unmatured financial and other obligations, covenants and agreements to be performed by Borrower to or for the benefit of Lender under any of the Loan Documents, including, without limitation, (a) Borrower's obligation to repay to Lender all principal and interest due under the A&D Loan and RLC Loans, (b) all of Borrower’s Letter of Credit Obligations, and (c) any and all obligations, contingent or otherwise, whether now existing or hereafter arising of Borrower to Lender arising under’or in connection with this Agreement or any of the Loan Documents. “Plans and Specifications” means the A&D Plans and Specifications and the RLC Plans and Specifications “Presold Units” means those single family residential units for which a bona fide, non- contingent purchase contract satisfactory to Bank has been signed, for which an edmest deposit in the minimum amount of $10,000.00 has been made, and for which the purchaser has been pre~ qualified for permanent mortgage financing by a permanesit lender approved by Bank. “Project” means the Real Property and Improvements. “REC” means the revolving commitment from Bank to Borrower contemplated hereby for the construction of the Units, which shall not exceed the amount of $1,000,000.00 in the aggregate. “RLC Advance” and “RLC Advances” means individually a disbursement and collectively disbursements under a RLC Loan. “RLC Budget” means tie individual construction budget for that Unit to be approved by the Bank as provided herein. “RLC Disbursement Request” means a conipleted, writtesi request for an RLC Advance, in form and content acceptable to or specified by Bank. “RLC Improvements” means severally or collectively the Units “RLC Loan” shall mean therindividual loans to-be made under the RLC. “RLC Loan Fee” shall mean an amount equal to .5% of the maximum amount of each RLC Loan. “RLC Note” means the Promissory Note, dated of even date herewith, executed by Botrower, payable to the order of Bank, in the original principal amount of $1,000,000.00, as it may be amended, modified, extended, renewed, restated or supplemented from time to time. RLC Plans and Specifications” means the final plans and specifications approved by Bank for the construction of the Units. he ‘Stern DataVéetn BankdMountxa AdventurdDocurentin Agresment V3“Real Property” means the real property described on Schediile A attached hereto ‘and by this reference incorporated herein. “Retention Funds” means five percent (5%) of the costs of construction. “Security Documents” means each Deed of Trust and any other agreements, documents or instruments required by Bank to grant and perfect the liens and security interests required herein, as such agreements, documents, and instruments may be amended, modified, extended, renewed or supplemented from time to time. “Spec Units” means those single femily residential units immediately available for séle that do not satisfy the requirements of a Presold Unit, and shall include Units sold under Contingent Contracts. “Special District” means (i) Special Districts established pursuant to Title 32, as amended, of Colorado Revised Statutes, (ii), General Improvement Districts established pursuant to Section 31-25-601 et sea.,-Colorado Revised Statutes, as amended, (iii) Special Improvement Districts established purstiant to Section 31-25-501 et sea., Colorado Revised Statutes, as amended, (iv) Local Improvement Districts established pursuant to section 30-20-601 et sea., Colorado Revised Statutes, as amended, (v) Public Improvement Districts established pursuant to Section 30-20- 501 gt sea., Colorado Revised Statutes, as amended, or (vi) any other type of district created, pursuant to Titles 29, 30, 31, and 32, as amended, of Colorado Revised Statutes, or any similar governmental or quasi-governmental entities. Title Policy” means an ALTA extended coverage beneficiary's title insurance policy [ALTA Policy - 1992] or similar policy acceptable to Bank, “Unie” and “Units” means Presold Unit(s), Spec Unit(s) and Model Unit(s). “Unit Maturity Date” means the date that is twelve (12) months from the date that the RLC. Loan for that Unit is closed, based on the date of the RLC Note. SECTION 2. A&D LOAN COMMITMENT; A&D ADVANCES 2.1 A&D Commitment. Subject to the conditions herein set forth, Bank agrees to make the A&D Loan available to or for the benefit of Borrower, and Borrower agrees to draw upon the A&D Loan, in the manner and upon the terms and conditions herein expressed, amounts that shall not exceed the sum of $3,225,000.00, less the Letter of Credit Obligations. 2.2 A&D Note. The A&D Loan shall be evidenced by the A&D Note and shall be payable upon the terms and conditions contained therein, 23 A&D Advances. Bank shall make A&D Advances, subject to all of the terms and, conditions provided in this Agreement, in the following ménner, only in the amounts and for the cost items set forth in the A&D Budget: ‘Steamboat DaaVecta Beigua Aéventure\Documensioan Agseinent¥3(a) Initially, Bank shall make an A&D Advance in an amount not to exceed the amounts set forth on the A&D Budget to pay the A&D Loan Fee, Loan Expenses incurred to.date, the release price for refinancing the Real Property and for such other items as Bank may approve. (b) The portion of the A&D Loan allocated on the A&D”Budget for interest reserve ($280,000.00), shall be held by Bank as an interest reserve, and Bank shall make A&D Advances thereof to pay interest when due under the A&D Loan. If fimds are not available from the interest reserve to pay interest due under the A&D Loan, Borrower shall pay such interest from. its own finds. (©) The amount of the Letter of Credit Obligations shall be reserved under the A&D Loan and not available to be drawn other than to pay drafts presented on Letters of Credit. (@ Bank shall make A&D Advances of the remaining portion of the A&D Loan, less the Letter of Credit Obligations, allocated on the A&D Budget for direct and indirect costs and expenses for construction of the A&D Improvements, in accordance with and subject to the conditions stated in this Agreement. Borrower shall provide Bank with an A&D Disbursement Request twice each month on or before a date or dates agreed upon by Borrower and Bank. Upon receipt by Bank of an A&D Disbursement Request, together with all of the items described in Paragraph 2.4 hereof that are required by Bank in ‘connection with that A&D Advance, Bank shall make A&D Advances no more frequently than bi-weekly, as construction progresses, in amounts equal to: (i) expenditures for labor performed and material supplied under the construction contract for construction of the A&D Improvements in accordance with the A&D Plans and Specifications during the period immediately preceding that A&D Advance plus (i) indirect construction costs actually paid or iricurred by Borrower that have not been covered by previous A&D Advances. "Indirect construction costs shall mean those costs related to the construction of the A&D Improvements, other than the cost of labor and materials, and include, ‘but are not limited to, ttle insurarice premiums, permit fees, architect and engineering fees, legal fees, loan fees, taxes and interest during construction, but do'not include any profit to Borrower or any Guarantor or any affiliate of Borrower or any Guarantor. Notwithstanding the foregoing, at Bank's option, Bank may hold back the Retention Funds. Subject to the provisions for A&D ‘Advances contained herein, and so long as there is no Event of Default hereunder, Bank may disburse a portion of the Retention Funds for the scopes of work related thereto. Subject to the provisions of this Agreement, and so long as there is no Event of Default hereunder, any temaining Retention Funds and, at Bank's sole discretion, the remainder of the A&D Loan proceeds representing cost savings, if any, shall be. disbursed upon a date to be determined at Bank's discretion but not later than forty-five (45) days after receipt by Bank of the items specified above and receipt and approval by Bank of the items described in Paragraph 2.5 hereof. 24 A&D Disbursement Request. When Borrower desires an A&D Advance, Borrower shall furnish Bank with the following, all in form and content satisfactory to Bank: (@) An A&D Disbursement Request, together with AIA Forms G702 and G703 (and/or such other forms as may from time to time be approved or required by Bank), setting forth such details concerning the construction of the A&D Improvements as Bank may require, including the amounts expended to the date of the A&D Disbursement Request for the A&D. Improvements, the amounts then due and unpaid for construction of the Ad&D Improvements and an itemized estimate of the amount necessary to complete the A&D Improvements. Any & Stes DasiVerra BaniiMounsn Advetue\Docimentsiaan Agreement V3materials covered by an A&D Disbursement Request must be suitably stored at the construction site, inventoried, and safeguarded and insured against loss, damage, and theft. (b) Tae certification by Borrower, the supervising architect, if any, the contractor, and at Bank's option an independent architect or engineer of Bank's selection, that: (j) all work performed is in substantial accordance with the A&D Plans and Specifications; (i) all governmental licenses and permits required for the A&D Improvements as then completed have been obtained and will be exhibited fo Bank upon request; (iii) the A&D Improvements as then completed do not violate, and, if further completed in accordance with the A&D Plans and Specifications, will not violate, any law, ordinance, rule or regulation; and (iv) the remaining undisbursed proceeds of the A&D Loan plus the then existing balance of any Borrower's Funds Account, if any, held by Bank and allocated to the A&D Loan are sufficient to pay for the completion of the A&D Improvements. (©) The certification by Borrower that no Event of Default exists, and no event: has occurred and no condition exists that, after notice or lapse of time, or both, would constitute an Event 6f Default @ Lien waivers relating to the construction of the A&D- Improvements for all work through the date of the previous A&D Disbursement Request and invoices. for all work covered by the current A&D Disbursement Request. (©) Evidence that any inspection required by any state, city or other govemmental authority has been completed with results satisfactory to that authority. (Q, required by Bank, such additional endorsements to the Title Policy, as-Bank may require, insuring Bank's interest under the Deed of Trust as a valid lien on the Real Property and Improvements, excepting only such items as shall have been approved in writing by Bank and providing affirmative insurance therein against the mechanic's liens, materialmen's liens or claims or liens in the nature thereof 6n account of any construction of the Improvements. (g) Such other information and documents as Bank inay reasonably require. 2.5 Completion D Improvements. Upon completion of the A&D Improvements, Borrower shall fumnish Bank, at Borrower's expense, with the following, all in form and content satisfactory to Bank, as a condition precedent to disbursement of any remaining Retention Funds: (@) Such additional endorsements to the Title Policy, as Bank may require, insuring Bank's interest urider the Deed of Trust as a valid lien on the Real Property, excepting only such items as shall have been approved in waiting by Bank and providing affirmative insuiatice therein against mechanios' liens, materialmen's liens or claims or liens in the nature thereof on account of any construction of the A&D Improvements; (b) If reqiiested by Bank, the excoution of AIA Form G704 or other document satisfactory to Bank by Borrower's engineer, contractor (if any) and Borrower; (©) lf requested by Bank, 2 notice of completion on Bank's approved form executed by Borrower and duly recorded in the county recarder's office where the Real Property is located: a ‘Steanbes! DatsWesta BankiMountaia AdveturdDocumentLéan Agresnent¥3(@ requested by Bank, an'ALTA/ACSM improvement survey plat of the Real Property or other satisfactory evidence, showing the location of the completed A&D Improvements, the ocation.of all points of access to the Real Property and the A&D Improvements and the location of all easements affecting the Real Property and certifying that there are tio enctoathments of the A&D Improvemients onto any easements affecting the Real. Property or onto any adjoining ” property and that all applicable setback requirements and other restrictions have been complied with; (©) [requested by Bank, "as-built" plans and specifications of the A&D Improvements, showing the final specifications of all A&D Improvements; (® requested by Bank, the execution of AIA Form G706 (Contractor's Affidavit of Payment of Debts), ATA Form G706A (Contractor's Affidavit of Release of Liens), and ATA Form G707 (Consent of Surety of Final Payment); (@ Unconditional lien waivers on Bank's approved form from any party that has recorded a preliminary notice of lien against the Real Property and A&D Improvements; and () Ifrequested by Bank, final offsite acceptance letter from the applicable governmental authority 2s may be necessary fo evidence completion and preliminary acceptance of the A&D Improvements, and payable on the Maturity Date; provided, that Borrower shall be entitled to a single six © month extension of the Maturity Date, subject to the following: 2.6 Maturity of A&D Loan: All A&D Advances and all accrued interest thereon shall be due (® There shall not exist on the extension date an Event of Default, nor shall there exist any event that, with the giving of notice or the passage of time, or both, would constitute an Event of Default. (®) Borrower shall have given Bank notice ofits intention to exercise the option prior to the initial Maturity Date; and (© Borrower shall have paid, ftom its own fimds, @ non-refimdable extension fee of $16,125.00 on or before the initial Maturity Date. 2.7 Letter of Credit Facility. (@) Borrower may apply to Lender for the issuance of letters of credit in the aggregate amount not to exceed the Letter of Credit Sublimit to be issued to the Town of Hayden, Colorado in conjunction with the Project. Subject to the terms and conditions of this Agreement and the letter of credit application documents, if any, which the Lender may reasonably require, the Lender agrees to issue to Letters of Credit required under the land use approvals for the Project as the Borrower may request, in 2 form reasonably acceptable to Lender; provided, however, that the aggregate of all Letter of Credit Obligations outstanding at any time shall not exceed the Letter of Credit Sublimit and Lender shall have no obligation to issue or renew any Letter of Credit subsequent to the occurrence of an Event of Default. 8 ‘Steamboat DaalVecra Bantounain AdvenireDocumentlaen Agreement V3(©) Each request for the issuance of a Letter of Credit shall be submitted by Borrower to Lender at least two business days Prior to the request of date of issuance.‘ Upon Lender’s request, Borrower shall execute a letter of credit application and agreement on Lender's then current form as a condition to the issuance of any Letter of Credit. The issuance and expiration date of a Letter of Credit shall comply with any such related letter of credit documents. No Letter of Credit shall have an original expiration date more than one year Srom the date of issuance or, if extended, an expiration date beyond the Maturity Date. The Letters of Credit shall contain terms of drawing as are acceptable to Lender and Borrower. Lender may provide that the Letters of Credit shall be subject to the Uniform Customs and Practices, in which case the UCP may be incorporated by referenced therein and deemed in all respects to be a part thereof. Any renewal or extension of any Letter of Credit shall, for the purposes hereof, be treated in all respects as the same as the issuance of a new Letter of Credit hereunder. (©) Inthe event of any drawing under any Letter of Credit, Borrower shall be deemed to have requested that the Lender make an Advance on the A&D Note in the amount of the drawing on such Letter of Credit, the proceeds of which will be used to satisfy the Borrower's reimbursement obligations or, if for any reason the A&D Note has been cancelled or there is insufficient availability under the A&D Note to accommodate the draw, then Borrower shall reimburse Lender, upon Lender's demand, all amounts dravm on any Leiter of Credit. Amounts drawn shall bear interest at the interest rate stated in the A&D'Note from the date the Lender pays the draw under the Letter of Credit. The Borrower's reimbursement obligations hereunder shal] be absolute and unconditional under. all circumstances irrespective of any rates of setoff, counterclaim or defense to payment the Borrower may claim or have against the Lender, the beneficiary of the Letter of Credit drawn upon or any other Person, including, without limitation, a defense based upon any failure of the Borrower to receive consideration ‘or the legality, validity, regularity or unenforceability of the Letter of Credit or any non-compliance of the party dtawing upon the Letter of Credit with the strict terms and conditions of the Letter of Credit. In addition to all other obligations under this Agreenient, the Borrower agrees to defend, indemnify and hold Lender harmless from and against any and all claims, demands, liabilities; damages, costs, losses, charges and expenses (including reasonable attomeys fees) that the Lender may incur or be subject to ds a consequence, direct or indirect, of the iséuance of any Letter of Credit ‘or the failure of the Lender to honor a drawing under a Letter of Credit as a result of any governmental acts, As between the Borrower and the Lender, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof, Lender shall not be iesponsible: (j) for the fom, validity, sufficiency, accuracy, genuineness or any legal effect of any document submitted by any party in comection with the application for and issuance of any Letter of Credit, even if it should, in fact, prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent ox forged; (i) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer ot assign any Letter of Credit or the rights or benefits thereunder or. ‘Proceeds thereof, in whole or in part, that ‘may prove to be invalid or ineffective or any reason; (if) for errors, omissions, interruptions ot - clays in the transmission or delivery of any messages, by mail, cable, telegraph, telex, or otherwise, whether or not they be in cipher; (iv) for a loss ot delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or the proceeds thereof, and (¥) for any consequences arising from causes beyond the control of the Lender including, without limitation, any governmental acts. In furtherance, and not in 2 Stemboat DaaVeors SankiMoimtin Adventre\Documens\Loan Agreement. V3limitation of the specific provisions set forth herein, any action taken or omitted by the Lender, under or ixi connection with any Letter of Credit or the related certificates, if taken or omitted in g00d faith, shall not put Lender under any resulting liability to, the Borrower. =It is the intention. of the parties that this Agreement shall be construed and applied to protect and indemnify the Lender against-ny and all risks involved in the issuance of the Letteis of Credit, all of which ~ risks are assumed by the Borrower. In the event of any conflict between the terms of this Agreement and any letter of credit document (including any letter of credit application), this Agreement shall control SECTION 3. RLC COMMITMENT; RLC ADVANCES 3.1 RLC Commitment. Subject to the conditions herein set forth, Bank agrees to make RLC Loans to Borrower, and Borrower agrees to draw upon the RLC for the purpose of constructing the RLC-Tmprovements, in the manner and upon the terms end conditions herein expressed, provided that the aggregate amounts outstanding under all RLC Loans shall not exceed, at any one time, the lesser of (i) $1,000,000.00, or (ii) im the aggregate, the maximum amount that may be advanced for construction of all Units, as provided in Paragraph 3.4 hereof, for which an RLC Loan has been made or requested and for which @ Unit Release Price has not been paid, 3.2 Revolving Commitment. The RLC shall be a revolving commitment, against which RLC Loans may be requested by Borrower, repaid by Borrower, and additional RLC Loans made to Borrower, provided that Bank shall have no obligation to make any RLC Loan (including an initial RLC.Loan on a new Unit) that would canse the maximum principal balance available “under all RLC Loans in the aggregate, plus any amounts that are cominitted hereunder and not yet advanced (including amounts allocated to a new Unit for which an initial RLC Loan is requested) to exceed the limitations of Paragraph 3.1 above. 3.3 RLC Note. RLC Loans shall be evidenced by the RLC Notes and shall accrue interest at the same rate as the A&D Note, with interest payable monthly, and shall otherwise be payable upon thé terms arid conditions contained therein, 3.4 Maximum RLC Advances. The RLC shall be allocated and advanced for the Units for which Borrower is permitted to commence construction under the terms hereof. The maximum amount of the RLC that may be allocated and advanced for each Unit shall ‘not exceed a sum equal to the following: ForPresold Units 80 % of the base appraised retail value of that Unit as shown on the ‘most recent Appraisal, but not to exceed 90% of Borrower's Cost for that Unit, For Spec Units 75% of the base appraised retail value of that Unit as shown on the most recent Appraisal, but not to exceed 90% of Borrower's Cost for that Unit. ForModel Units _75% of the base appraised retail value of that Unit as shown in the ‘most recent Appraisal, but not to exceed 85% of Borrower's cost for that Unit. 10. Stemboat DatsiVects BantMounais Adventurs\Documentltonn Agresmtst. V3Any shortfill created by approved Borrower's Costs being in excess of the amount of the RLC allocated to @ Unit shall be contributed by Borrower from its own funds upon or prior to that Unit's first RLC Advance. . 3.5 Statt Limitations. Except as provided below, Borrower shall be limited t6 four (4) Spec Units and not more than four (4) Model Units at any one time, not to’ exceed the average absorption, as determined by the Bank, for the previous three (3) months. Unused Spec Unit availability may be utilized for Units sold under Contingent Contracts.” If the purchase contract on a Presold Unit is terminated and such Unit is not resold within thirty (30) days thereof, then such Unit shall be considered to be a Spec Unit only for the purposes of the Spec Unit limitation, If the conversion of a Presold Unit into a Spec Unit causes Bozzower to exceed the Spec Unit limitation herein, then Borrower shall not be entitled to start a new Spec Unit prior to satisfying such Spec Unit limitation. 3.6 RLC Advances. Upon compliance with or satisfaction of all of the conditions for a RLC Loan for a Unit and the conditions for RLC Advances, Bank shall make RLC Advances under the RLC Loan for that Unit, in the following manner and in amounts not to exceed the cost items and the amounts listed as being funded from the RLC as set forth on the RLC Budget: (@ Initially, Bank shall make an RLC Advance in the amount necessary to: (f) pay the inspection fee for that Unit as provided in the RLC Budget, (li) pay the RLC Loan Fee for that Unit, and (i) pay all or a portion of the Lot Release Price as set forth on the RLC Budget (upon payment in full of the A&D Loan such release price shall no longer be available for disbursement). (b)_ The sum set forth on the RLC Budget for interest reserve, if aay, for that Unit shall be held by Bank as an interest reserve and Bank shall make RLC Advances thereof to pay interest on the portion of the RLC Loan allocated to that Unit when due under the RLC Loan. If famds are not available from the interest reserve to pay interest due under the RLC Loan, Borrower shall pay such interest from its own funds. (©) Bank shall make RLC Advances of the remaining portion of the RLC allocated for that Unit, subject to the provisions of Paragraph 3.4 above, in accordance with and subject to the conditions stated in this Agreement. Borrowet shall provide Bank with an RLC Disbursement Request each month on or before 2 date or dates agreed upon by Borrower and Bank. Upon receipt by Bank of an RLC Disbursement Request, together with all of the items described in Paragraph 3.7 hereof that are required by Bank in connection with that RLC Advance, Bank shall make RLC Advances no more frequently than monthly, as constriction progresses, and the amount of each RLC Advance for the construction of a Unit shall be (i) the product of (A) the aggregate maximum allowed RLC Advances for such Unit under this Subparagraph 3.6(¢), and @) the percentage of completion of such Unit as determined by Bank in its absolute and sole discretion rounded down to.the nearest five percent (5%), less (ii) the aggregate amount of all previous RLC Advances for such Unit under this Subparagraph 3.6(c). 3.1 RLC Disbursement"Request. When Borrower desires an RLC Advance for a Unit, Borrower shall furnish Bank with the following, all in form and content satisfactory to Bank: oe Steanbost DaalVects BankMountsin AdventureDocumentean Agreement V3: (@_An REC Disbursement Request (including all documentation required thereby) duly executed and swom to by Borrower with al-blanks appropriately filled in. :: + (b) At Banks request, at the initial RLC Advance for a Unit only, a list of names and material dealers, laborers and subcontractors with whom written agreements have beeir made by Borrower with respect to the construction of the Unit or Units in question.':°" .." (©). Receipted invoices or bills of sale shall be available for Bank's review together with unconditional releases and waivers of liens from each materjal dealer, supplier, laborer and subcontractor who has done work or furnished materials in connection with the construction of the Unit or Units in question (@ At Bank's request, evidence that any required inspection by any state, city or other governmental authority has been satisfactorily completed, (©) Such other invoices, bills and statements as may be required by Bank to substantiate the RLC Disbursement Request. (® Such other information as Bank may reasonably request, including, without limitation, building permits with respect to the Units in question. (g) Throughout the course of construction of the Units, Bank shall have the right to employ, at Borrower's sole cost and expense, an inspector or inspectors who shall review as agent for Bank all construction activities undertaken in regard to the RLC improvements, which review shall be satisfactory to Bank: (h) If required by Bank, Borrower shall have (j) deposited with Bank the amount that Bank deems necessary to pay for the balance of the costs of completing thet Unit and to pay all costs, fees and expenses contained in the RLC Budget for that Unit, less the undisbursed amount of the RLC allocated for that Unit, and/or (ii) furnished Bank with paid invoices, bills, receipts end lien waivers indicating that Borrower has paid, from Borrower's own funds, for the entire difference between the available RLC proceeds for that Unit and the total costs of completing the construction of that Unit, together with all costs, fees and expenses contained in the RLC Budget for that Unit. All amounts deposited by Borrower pursuant to this paragraph shall be deposited in the Borrower's Funds Account and shall be disbursed by Bank in accordance with the terms of this Agreement for the construction of Units prior to any further RLC Advances, 3.8 Maturity of RLC Advances and Facility Expiration Date. All RLC Advances for an individual Unit shall be due and payable on its respective Unit Maturity Date. The right to any new RLC Loan for new Units for which a RLC Loan has not already been closed shall terminate on the Facility Expiration Date; however, Borrower shall continue to be entitled to RLC Advances tmder RLC Loans that were closed prior to the Facility Expiration Date in accordance with the terms hereof. SECTION 4, GENERAL PROVISIONS FOR ALL ADVANCES 4.1 Inspections. Borrower shall pay for all inspections, whether made by an independent “architect, engineer, or other inspector, or by Bank. To the extent provided for in the A&D an ‘Smambost Dat\Vecis BaniMountn AdventuceDoctmentsi.oan Agreement. V3Budget Bank shall make ati A&D Advance to pay such costs on the Closing Date and to the extent provided for in the RLC Budget, Bank shall make an Advance to pay such costs fora Unit as part of the initial RLC Advatce for such Unit. Otherwise, Bozrower shall pay such costs fom funds other than the proceeds of the Loans. 42° Method of Advance, Any Advance made by Bank under any option for disbursetnent, or so much thereof es Bank may consider proper, may be disbursed to Borrower or its order or, at Bank's election, directly to the persons furnishing labor and/or materials, or to both. Bank shall have no obligation to see that the disbursements made by it are actually used by that party to pay for labor and materials furnished for constriction of the Improvements. Borrower acknowledges {hat this is its responsibility, and Borrower assumes all risks in connection with any disbursement ‘made purstant to this paragraph. 43° Protection of Bank, Bank may withhold ffom any Advance or, on account of subsequently discovered evidence, withhold from a later Advance, or require Borrower to repay to Bank any catlier Advance, as Bank in its reasonable discretion considers necessary to protect Bank from Joss on account of (j) defective work on the Improvernents that has not been remedied, (ii) any obligation required by this Agreement to have been performed that has not béen performed, (i) liens filed against the Real Property and Improvements or reasonable evidence that such liens will be filed (other than in connection with work, the cost of which is being properly contested in accordance with-the provisions hereof), (iv) failure of Borrower to make ‘payments to contractors or subcontractors for material or labor (other than in connection with work, the cost of which is being properly contested in accordance withthe provisions hezeo!) or (v) a reasonable doubt by Bank that construction of the Improvements can be completed with the undisbusséd proceeds of the Loans, plus any amounts deposited by Borrower into the Borrower's Funds Account, Unless Bank is provided with an indemnification or other assurance satisfactory to Bank in ite discretion, Bank may impound such Advances as may be required to enable Bank to comply with the provisions of Colorado Revised Statutes, Section 38-22-126, as amended, Subject to the other provisions of this Agreement, any amount so withheld or impounded ‘shall be disbursed after the basis for such withholding or impoundment has been cured or removed. 44 Withholding Advances. Under any option for Advances, Bank, in its discretion, may withhold any payment or portion thereof until Bank has received releases of lien, waivers of lien or paid bills in form satisfactory to it. Bank shall have no obligation to require and/or obtain lien waivers or receipts, and, although Bank may require presentation to it of lien waivers and/or receipts, Bank shall have no responsibility ‘for the validity thereof rior for the correciness of thie amounts indicated thereon. No Advance by Bank shall constitute approval of any certification or relieve any person making such certification of responsibility therefor. 4.5 Advances for Insurance, Taxes. Assessments and Liens. Bank, from time to time, may, bat shall not be obligated to, make Advances in payment of insurancé premiums, taxes, assessments, liens or encumbrances existing against the Real Property and Improvements, and any charges and expenses that are the obligation of Borower under this Agreement of any Security Document and any charges or matters necessary to preserve the Real Property and the Improvements or to cure any Event of Default. 4.6 Satisfaction of Conditions. Although Bank shall have no obligation to make any Advance unless and until all of the conditions and prior performances set forth herein have been Kept, “3. ‘Steanboat DatVecta BantiMoursin Adventte\DacumensLoun Apress. V3fulfilled or performed, and until all inspections, certifications, releases, waivers, or paid bills or ., other requirements set forth in-Sections 2 or 3, as the case may be, have been made, delivered and complied with, Bank, at its sole discretion, may make Advances prior to that time without waiving or releasing any of the requirements or conditions of this Agreement; but Borrower shall continue to be strictly obligated and subject thereto, and all such conditions, prior performances . and other requirements shall nevertheless be strictly and punctually complied with, fulfilled and. performed; and, notwithstanding any such disbursement, Bank, at its sole discretion, may discontinue any further Advances at any time until all of the conditions, prior performances and other requirements of this Agreement have been strictly fulfilled; performed and complied with. 47 Disputes. In the event of any dispute that, in the good faith opinion of Bank, may endanger the timely ‘completion of the Improvements or the fulfillment of any condition precedent or covenant herein, Bank may agree to make Advances for the account of Borrower without prejudice to Borrower's rights, if any, to recover such funds from the party to whom paid. Such agreement or agreements may take any form that Bank in its reasonable discretion deems proper, including, without limitation, agreements to indemnify a title insurer against possible assertion of lien claims and agreements to pay disputed amounts to contractors in the event Borrower is unable or unwilling to pay the same. All sums paid or agreed to be paid pursuant to such agreement shall be for the account of Borrower and shall be charged as an Advance. 4.8 Right'to Advances. Borrower shall have no right to any Advance other than to have the same disbursed by Bank in accordance with one or more of the disbursement provisions contained in this Agreement. Any assignment or transfer, voluntary or involuntary, of this Agreement or any right hereunder shall not be binding upon or in any way affect Bank unless Bank, in its sole discretion, has consented thereto in writing; Bank may make Advances under one or more of the disbursement provisions herein, notwithstanding any such assignment or transfer, 4.9 Excess Advances, Borrower shall immediately repay any Advance received by Borrower in excess of the amount Borrower is entitled to under the provisions of this Agreement. SECTION 5. LOAN AND DOCUMENTATION FEES. $1 _A&D Loan Fee. Bank has eamed and Borréwer has paid or shall pay to Bank on or before the Closing Date, the A&D Loan Fee. To the extent provided for in the A&D Budget, Bank shall make A&D Advances to pay such fees. Otherwise, Borrower shall pay such fees in cash from funds other than the proceeds of the A&D Loan. 5.2 RLC Loan Fees. The RLC Loan Fee shall be earned and payable to Bank at the time of the first RLC Advance under each RLC Loan, 5.3. Letter of Credit Fees. Borrower shall pay to the Bank its standard letter of credit fees at the time any Letter of Credit is issued. ot ‘Steamboat Data\Vecra Bank)Mounian Adventurd\DocurentLoan Agreement. V3SECTION 6. SECURITY; RELEASES heey 61 Security. . Borrower shall cause the Loans aad Borrower's obligations under this ‘Agreement and the Loan Documents to be secured by the following (“Collateral”): (a) The Deed of Trust constituting a first and ptior lien on the Real Property for the A&D Loan and, for each RLC Loan, the Lot on which the Unit is to be constructed and Improvements and on other property described therein, subject only to such matters as specifically approved by Bank therein. (b) Valid and effectual assigaments of Borrower's interest in the Plans and Specifications, all construction, architects' and engineers’ contracts, all operating, management and supervision agreements, and all other documents relating to the ownership, development, construction, maintenance, leasing, management and operation of the Real Property and Improvements; (©) A security agreement constituting a valid and perfected first priority security interest and lien on all personal property of the Borrower, now owned or hereafter acquired, related to, ‘used in, connection with, located on or appurtenant to the Real Property, together with any UCC financing statements for filing and/or recording and any other items required by Bank to fully perfect the liens and security interests of Bank. 6.2 A&D Loan Releases. Provided that no Event of Default exists, and subject to the terms and conditions contained herein and the Deed of Trust, subdivided lots constituting the Real Property shall be entitled to inclusion within a RLC Loan for the construction of Units upon being released from the Deed of Trust upon the payment to Bank, from the RLC Loan and/or from Borrower's own funds, of the Lot Release Price. In addition, the Deed of Trust provides for the partial release of subdivided lots constituting the Real Property prior to or without their inclusion within the RLC, upon the terms and conditions contained herein and in the Deed of ‘Trust, including the payment of the Lot Release Price for each Lot. From and after a release from the Deed of Trust, Bank shall have no obligation to make any A&D Advance with respect to such Lot or the Unit theredn. Each Lot Release Price received in connection with the A&D Loari shall be applied as a prepayment of the outstanding principal balance under the A&D Note in the manner provided therein for prepayments of principal. .So long as there are proceeds committed but not yet advanced under the A&D Loan (including the Letter of Credit Obligations), Borrower shall continue to make Lot Release Price payments to Bank. If no principal balance then remains outstanding, such Lot Release Price payments shall be deposited ‘with Bank into a Bomower's equity account, until the balance in such account equalls the amount of proceeds committed but not yet advanced under the A&D Loan, and Bank shall disbinrse such fands to prepay A&D Advances when made under the A&D Loan or to pay draws on Letters of Credit if and when made. All finds at any time in such Borrower's equity account are hereby assigned to Bank as additional security for the A&D Loan and all other indebtedness of Borrower arising hereunder, Regular payments of interest due under the A&D Note shall not apply toward any release price. 2 63 RLC Releases. The release price for any Unit under a RLC Loan shall be the entire amount of the RLC Loan. “15: Steumost DualVectra BankMountin Adventre\Documentoen Agreement V3SECTION 7. CONDITIONS PRECEDENT FOR CLOSING AND ADVANCES The obligation of Bank to make the A&D Loan, any RLC Loan arid each and every Advance is subject to the following express conditions precedent: 7. Loan Documents. Borrower shall have executed (or obtained the execution or issuing of) and delivered to Bank the following documents, all in form and substance satisfactory to Bank: (a) The Notes; (b) The Security Documents: (i) Deed of Trust; (ji) Assignment of A&D Plans and Specifications and Rights Under Engineering Contract; (iii) Assignment of RLC Plans and Specifications and Rights Under Architectural Contract; (iv) Assignment of Rights Under Construction Contract; (v) UCC-1 Financing Statement(s); (c) Unconditional Guarantee(s) of Payment executed by Guarantors; and (¢) Environmental Indemnity Agreement executed by Borrower arid Guarantors. ses 7.2 Initial Loan Fees. Bank shall have received the A&D Loan Fee and the Loan Exp incurred prior to the Closing Date. 7.3 Other Conditions. Borrower, at its expense, shall have obtained and delivered to Bank (except that the Appraisal required below shail be ordered by Bank at Borrower's expense) prior to the Closing Date the following items, all of which shall be in form and content reasonably satisfactory to Bank and shall be subject to approval in writing by Bank: (8) The. A&D Plans and Specifications approved. by any required Governmental Authority (b) A cument Appraisal showing a value for the Real Property and completed A&D Improvements satisfactory to Bank. (©) A copy of the final recorded plat of the Real Property or, if required by Bank, a current survey of the Real Property and the A&D Improvements by a licensed surveyor acceptable to Bank describing the boundaries of the Real Property and showing all means of ingress and egress, rights-of-way, easements (each of which shall be identified by docket and page or recording number where recorded) and all other customary and relevant information pursuant to ALTA/ACSM standards and any title company requirements. All surveys shall be certified to Bank and the title company issuing the Title Policy. (@_An imevocable commitment from a title insurance company satisfactory to Bank to issue a Title Policy, with the Title Policy being issued within a reasonable time after the recording of the Deed of Trust, with such endorsements as Bank may require, in the aggregate amount of the Loans insuring the lien of the Deed of Trust to be a first and prior lien upon the Real Property as security for all Advances pursuant to the terms of this Agreement, subject only. to such exceptions as Bank may expressly approve in writing, “and insuring against any lien Claims that could arise out of the construction of the Improvements on the Real Property. (©) A soils report, including drainage, boring end compacting data, together with such hydrology and other engineering reports that Bank may require, all of which shall be acceptable 16 ‘Steamboat DaalVects Bank Moutin Adventure\DocumensiLoan Agreement V3to Bank, shall be by engineers acceptable to Bank and shall indicate that the condition of the Real Property is suitable for construction of the Improvements without extraordinary land. preparation. Any recommendations in’ the approved soils, hydrology and other engineering reports must be complied with and incorporated into the Plans and Specifications. (® A curtent preliminary environmental assessment (Phase I assessment) of the Real Property and adjacent property, plus any sampling and analysis (Phase II assessment) or special limited assessment that Bank may require after review of the Phase I assessment, together with’ any other environmental investigations and reports that Bank may require, all of which shall be by an environmiental consulting firm acceptable to Bank and none of which shall reveal any existing or potential environmental condition adversely affecting the use or value’ of the Real Property. (g) Evidence that the Real Property is properly zoned for the Improvements and their intended use and that such zoning is final and not subject to challenge. () Policies of insurance providing the following: @ Policies of insurance evidencing bodily injury, death or property damage liability coverages in amounts not less than $1,000,000.00 (combined single limit), and an excess/umnbrella Hability coverage in an amount not less than $2,000,000.00 shall be in’ effect with respect to Borrower. Such policies must be written on’an occurrence basis so as to provide blanket contractial liability, broad form property damage coverage, and coverage for products and completed operations. ()___ “Special Cause of Loss” insurance on the Improvements in an amount not less than the fall insurable value on a replacement cost basis of the insured Improvements and personal property related thereto. -During the construction period, such policy shall be written in the so-called "Builder's Risk Completed Value Non-Reporting Form" (or “Reporting Form” if the Improvements are a single family residential development) with no coinsurance requirement and shall contain a provision granting the insured pemmission to complete, (ii) If applicable, evidence of workers compensation insurance covérage satisfactory to Bank. (iv) __If the Real Property, or any part thereof, lies within a "special flood hazard ea" as designated on maps prepared by the Department of Housing and Urban Development, a National Flood Insurance Association standard flood insurance policy, plus insurance from a private insurance carrier if necessary, for the duration of the Loan in the amount of the full insurable value of the Improvements. () Such other insurance as Bank may require, which may include, ywithout limitation, errors and omissions insurance with respect to the contractors, architects and ‘engineers, earthquake insurance, rent abatement and/or business loss. oe All insurancé policies shall (i) be issued by an insurance company having a rating of “A” VIE or better by A.M. Best Co., in Best’s Rating Guide, (ji) name Bank as an additional insured on all liability insurance and as mortgagee and loss payee on all casualty insurance, (iii) provide that an Steamboat Dsa\VgetraBankMouniain Adventi\Doctmensoan Agreement V3Bank is to receive thirty (30) days written notice prior to non-renewal or cancellation, (iv) be evidenced by a certificate of insurance to be held by Bank, and (v) be in’ form and amounts acceptable to Bank. - - mie kal wg (Evidence whether the Real Property, or any part thereof, Hes within a “special flood hazard area" as designated on maps prepared by the Department ‘of Housing and Urban Development. @ Evidence that all utilities and services to the Real Property and Improvements, including wittiout limitation water, sewer; gas, electric and telephone, are available, or will be available as required, and will be provided in amounts that are sufficient to service future onsite improvements for their intended use. (k)_Upon issuance, copiés of all grading permits and all building permits issued by the municipality having jurisdiction over the Real Property and Improvements and permitting construction of the Improvements in accordance with the Plans and Specifications. @ Copies of all lease agreements, if any, affecting the Real Property and Improvements. (m) Copies of all other agreements between Borrower and any architects, engineers, managers or supervisors related fo the construction and maintenance of the Real Property and Improvements, together with written agreements by such-persons or entities that they will perfomm for Bank the services contracted to Borrower, notwithstanding the occurreace of any Event of Default and any foreclosure of the Deed of Trust or other transfer of ownership of the Project (provided that such persons or entities continue to receive payments under their respective contracts), and the consent of such persons or entities to the collateral assignment by Borrower to Bank of their respective contracts. (a) If required by Bank, a list of the contractor, all subcontractors, suppliers and materialmen employed or retained to be employed in connection with the construction of the Improvements, together with, if required by Bank, copies of each such contract. Such list shall show the name, address and telephone number of each such person, a general statement of the nature of the work to be done, the labor and material to be supplied, the names of materialmen if known, and the approximate dollar value of such labor or. work with respect to each. Upon the request of Bank, from time to time, Borrower shall promptly supplement such list or provide additional lists. , Bank shall have the right to telephone or otherwise communicate with the contractor, each subcontractor and materiaiman to verify the facts disclosed by said list or by any disbursement request, or for any other purpose. ) Copies of any development agreement, any Declaration of Covenants, Conditions and Restrictions and related documents pertaining to the Real Property and the Improvements. (p) Evidence that all taxes and assessments levied against or affecting the Real Property have been paid current, together with, if requested by Bank, a tax service contract for the Real Property satisfactory to Bank. (q) If Borrower, any partner or member in Borrower or any Guarantor is other than a natural person: (i) a'copy of the organizational documents for that entity; (li) evidence of the ae ‘Stsumboat Das\Veeta Beokountin Adventur\DooumentLoan ApreementV3proper formation and good standing of that entity in the state of its organization, (fii) evidence of qualification or registration of that entity in the State of Colorado, if Colorado is not the state of its organization, and (iv) proper resolutions, .authorjzations, -certificates, -and such - other documents as Bank may require, relating to the existence and good standing of that entity and the authority of any person executing documents on behalf of that entity. If Borrower or any Guarantor is a trust, a copy of the trast agreement and such’ other doctiments as Bank may require, relating to the existence of the trust and the anthority of any person executing documents on behalf of the trust. No change shall be made to any organizational documents previously submitted to Bank without Bank's prior written approval ®)_A job progress schedule showing the planned timing, progress of eénstruction and completion date for the Improvements. (‘Copies of a firm and binding fixed price contract for construction of the A&D Improvements with a contractor that has been approved in writing by Bank. (9. Such other information and documents as Bank may reasonably require. 7.4 Representations True. All representations and warranties by Borrower shall be true and correct as of the Closing Date and as of the date of each Advance and all agreements that Borrower is to have performed or complied with by the date hereof and by the date of each Advance shall have been performed or complied with 7.5 NoBvent of Default. As of the Closing Date and.as of the date of each Advance, no Event of Default exists, and no event has occured and no condition exists that, after notice or lapse of time, or both, would constitute an Event of Default. SECTION 8. ADDITIONAL CONDITIONS FOR RLC LOANS ‘The obligation of Bank to make any RLC Loan, and each and every RLC Advance, is subject to the following additional express conditions precedent, all of which shall have been satisfied prior to the initial RLC Advance for any Unit: 8.1 Satisfaction of Prior Conditions. All of the conditions precedent provided in Section 7 hereof shall have been satisfied. 82 Other Conditions. Borrower, at its expense, shall have obtained and delivered to Bank the following ifems, all of which shall be in form and content satisfactory to Bank and shall be Subject to approval in writing by Bank: . (a) The final RLC Plans and Specifications for each type of Unit; (b) A current Appraisal of each type of Unit showing. value satisfactory to Bank, Bank may require re-Appraisals from time to time of each type of Unit at Bomower's expense"Bank reserves the right to change the RLC Budget based upon the results of any such Appraisal or re- Appraisal; Ag. ‘Steanbont DatlVecra Bank&Mountia Adventr\DoounenttLoan Agrem=nt.V3(©) _A copy of the building pemait for each Unit for which an’ RLC Advance is requested,» issued by the municipality having jurisdiction over the Real Property and permitting construction of that Unit in accordance with the RLC-Plans and Specifications; 7 (@ Borrower shall notify Bank whether the Unit isa Pregold Unit, a Spee Unit or Model. Unit and, if'a Presold Unit, a copy of the contract; : Bye (©) Borrower shall provide Bank with evidence that the Unit satisfies the requirements of a Presold Unit.as set forth herein; (QA final plat shall have been recorded for the Lot; (® The RLC Plans and Specifications; (h) A fixed price construction contract for the Unit to be built from a contractor approved by the Bank; @ The RLC Budget for the Unit; @_ Proof of availability of all utilities for the Unit, stubbed to, the Lot-line with all tap fees paid; (K)_ Am executed RLC Note for the RLC Loan and all Security Documents for the RLC ‘Loan on the Bank’s standard forms; @ A title insurance commitment insuring the lien of the Deed of Trust for such RLC Loan 2s a first priority lien, subject only to such exceptions as Bank may approve with endorsements as Bank may require; and (im) Altother documents provided for herein: . SECTION 9. REPRESENTATIONS AND WARRANTIES Borrower represents and wazrants to Bank as follows: 9.1 Recitals and Statements. The recitals inthis Agreement are true and correct. "9.2, Organization and Good Standinig. If Borrower is a corporation, limited liability company, partnership, or limited liability partnership, Borrower (and, if applicable, each partner or member of Borrower) is duly organized, validly existing and in good standing under the laws of the state of its organization and is, to the extent required by levi, qualified to do business and is in good ‘standing in the State of Colorado and in each state in which it is doing business, . . Borrower has full power and authority to own its properties and assets and to-carry ~ -On its business as now being conducted. The execution,:delivery and performance of the Loan Documents has been duly authorized by all requisite action on the part of Borrower. 20 ‘Sicarost DasVeca Bani ounsn AdventoreDosumenstoan Agreement. V394 “Authority. Borrower is fully authorized and permitted to enter into this Agreement, t0 ‘execute any and all documentation required herein, to bortow the amounts contemplated herein upon the tems set forth herein and to perform the terms of this Agreement, none of which. conflicts with any provision of any law, rule or regulation applicable to Borrower or any of the documents under which Borrower, if not fnatural person, is organized. The Loan Documents are valid and binding legal obligations of Borrower, and each is enforceable in accordance with its tens, subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to the rights of creditors generally and general principles of equity. 9.5 Broken Priority. Borrower warrants tuat no labor or material hes been or will be furnished for construction of the Improvements until the Deed of Trust has been recorded and the title company has committed to issue the Title Policy; or, if construction has commenced, Borrower has assured that all necessary indemnification or other agreements are made, in form satisfactory to the title company, so that Bank has received the Title Policy without exception for mechanics’ or materialmen's liens, as required herein: 9.6 Enforceable Liens. The liens, security interests and assignments created by the Seourity Documents will, when granted and recorded or filed, be valid, effective, properly perfected and enforceable liens, security interests and assignments. 9.7 Enforceable Guarantees. Each Unconditional Guarantee of Payment and each Guarantee of Completion and Performance referred to in Paragraph 7.1 hereof constitutes legal, valid and binding obligations of each Guarantor named therein according to the terms thereof. 9.8 No Breach. The execution, delivery and performance by Borrower of the Loan Documents will not result in any breach of the terms, conditions or provisions of, or constitute a default under, any agreement or instrument under which Borrower is a party or is obligated. Borrower is ‘not in default in the performance or observance of any covenants, conditions or provisions of any such agreement or instrument. 9.9 No.Actions. Except as disclosed to Bank in writing prior to the date of this Agreement, no actions, suits or proceedings are pending or threatened against Borrower o: the Project that might materially and adversely affect the repayment of the Loans, the performance by Borrower under this Agreement or the financial condition, business or operations of Borrower or the condition of the Project. 9.10 Licenses. Borrower has obtained and theré remain in full force and effect all licenses, permits, consents, approvals and authorizations necessary or appropriate for the construction of the Improvements. 9.11. Financial Statements True, All financial statements, profit and loss statements, statements as to ownership and other statements or reports previously or hereafter given to Bank by or on behalf of Borrower or any Guérantor are and shall be true, complete and correct as of the date thereof, There has beea no material adverse change in the Gnancial condition or the results of” the operation of Borrower or any Guarantor since the latest financial statements of Borrower or such Guarantor given to Bank. ae ‘Steamboat DatVecrs Bank&Mountin AdventurelDocumentson Agreement V39.12 Filing of Taxes. Borrower has filed all federal, state and local tax retums and has paid all of its current obligations before delinquent, including all federal, state and local taxes and all other payments required under federal, state or local law. 9.13 Affirmation of Representations and Warranties. Each request by Borrower for an Advance shall constitute an affirmation on the part of Borrower that the representations and werranties contained herein are true and correct as of the time of such request and that the conditions precedent set forth in Sections 7 and 8 hereof have been fully satisfied. All representations and ‘warranties made herein shall survive the execution of this Agreement, all Advances and the execution and delivery of ail other documents and instruments in connection with the Loans, so Jong as Bank bas any commitment to lend to Borrower hereunder and until the Loans and ell indebtedness hereunder have been paid in full and all of Borrower's obligations hereunder have been fully discharged. 9.14 Compliance with ERISA. Borrower and each Guarantor are in, compliance with ERISA. No Reportable Event or Prohibited Transaction (as defined in ERISA) or termination of any plan has occurred and no notice of termination has been filed with respect to any plan established or maintained by Borrower or any Guarantor and subject to BRISA. Neither Borrower nor any Guarantor has incurred any material funding deficiency within the meaning of ERISA of any material liability to the Pension Benefit Guaranty Corporation in comection with any such plan established or maintained by Borrower or any Guarantor. Neither Borower nor any Guarantor is a party to any Multiemployer Plan (as defined in ERISA). 9.15 A&D Budget. To the best knowledge and belief of Borrower, the ARD Budget is a true and correct itemization of the gross costs, including all direct and indirect costs, for the A& D Improvemerits which can be completed for the price stated therein. SECTION 10. AFFIRMATIVE COVENANTS So long as Bank has any commitment to lend to Borrower hereunder and until the Loans and all other indebtedness hereunder have been paid in full and all of Borrower's obligations hereunder have been fully discharged: 10.1 Payment of Construction Costs. Borrower shall promptly pay for all labor, materials, equipment and fixtures used in connection with the construction ef the Improvements and all other costs relating to the Improvements except that Borrower may conitest in good faith the validity or amount thereof provided that Borrower shall have fiamished to Bank a cash deposit or other appropriate security in an amount and form satisfactory to Bank to protect Bank against the creation of any lien on, or any sale or forfeiture of, any property encumbered by the Security Documents. Upon the final determination of Borrower's contest, Borrower shall promptly pay all sums, if any, determined to be due. Any deposit or security provided by Borrower shall be returned to Borrower upon the final determination of Borrower's contest and the payment by Borrower of the sums, if any, determined to be due. 10.2 Completion of A&D Improvements. Borrower shall commence constriction of tlie A&D Improvements within a reasonable time (not more than thirty (30) days) after the recording of the Deed'of Trust, proceed without interruption and promptly complete the A&D Improvements not later than the Maturity Date in a good and workmanlike manner according to the A&D Plans and 2 Stermbont DatalVects BankiMounnin Adventue\DocumentlLarn Agreement. V3Specifications, free from all liens and encumbrances, and in accordance with all applicable ordinances and statutes, including zoning laws, all covenants and restrictions rimning with the land, and all regulations and building codes of any govemmmental or municipal agericy having jurisdiction over the A&D Improvements. ESE oP aE % 10.3 Completion of RLC Improvements.’ Borrower shall commence construction of each Unit within a reasonable time (not more than thirty (30) days) after the initial RLC Advance for such ‘Unit, proceed without interruption and promptly complete each Unit. Each Unit shall be constructed in a good and workmanlike manner according to the RLC Plans and Specifications, free from all liens and encumbrances, and in accordance with all applicable ordinances and statutes, including zoning laws, all covenants and restrictions running with the land, and all regulations and building codes of any governmental or municipal agency having jurisdiction over the RLC Improvements. 10.4 Appraisals. Bank shall have the right to order Appraisals of the Real Property and the A&D Improvements and Units from time to time. Each Appraisal is subject to review and approval by Bank. Borrower agrees upon demand by Bank to pay to Bank the cost and expense for such Appraisals and a fee prescribed by Bank for review of each Appraisal by Bank. However, Borrower's obligation to pay such cost and expense shall be limited to one Appraisal per year for the Real Property and A&D Improvements and each plan type of Unit, unless an Appraisal is ordered after the occurrence of an Event of Default or as a result of federal regulatory requirements. 10.5 Enforcement _of Contracts. Borrower shall strictly enforce thé contracts for the construction of the Improvements to ensure that the contractors are required to promptly and diligently perform all of their obligations thereunder and! in such a uianner as to preserve Bank's security in the Real Property and Improvements. No change, amendment or modification shall be .made to such contracts without the prior written consent of Bank except changes, amendments or modifications that are to implement changes to the Plans and Specifications permitted hereby. 10.6 No Other Security Interests. No’ materials, equipment, fixtures or any other part of the Improvements shall be purchased or installed under any security agreement or other arrangements wherein the seller reserves or purports to reserve the right to remove or to repossess any such items or to consider them personal property after. their incorporation into the Improvements. 10.7 Maintenance of Licenses and Permits. Borrower shall maintain in full force and effect all rights and licenses necessary to carry on its business, and all permits, licenses, consents and approvals necessary for the construction and maintenance of the Improvements. Borrower shall maintain its present existence and shall maintain executive personnel and management at 2 level . of experience and ability equivalent to present personnel and management. 10.8 Maintenance of Insurance. Borrower shall maintain in full force and effect at all-times all insurance coverages requited to be provided as a condition of any Advance, If required by Bank, Borrower shall provide Bank with the insurance policies required herein in original form. 2B Steamboat DtalVects dantaMouniain Adventue\Docamentsi-oan Agreement. V325-109 Compliance with Loan Documents. Borrower shall meke all payments of interest and ‘Principal on the Loans when due and shall keep and comply with all terms, conditions and 4 jen. Provisions of the Loan Documents : i 10.10 Publicity. After the execution of this Agreement, any and all publicity releases to newspapers of general or limited ciréulation or trade publications announcing any of the financing by Benk provided for herein shall be issued by or subject to prior approval by Bank. Bank may erect a sign upon the Real Property indicating that Bank is the source of the financing of the construction of the Improvements. 10.11 Payment of Taxes. Borrower shall pay all of its current obligations before delinquent, including all federal, state and local taxes and all other payments required under federal, state ot local law. 10.12 Books and Records: Access. Borrower shall maintain, in 4 safe place, proper and acourate books and records relating to its operations and its business affairs. Bank shall have the Tight from time to time to, examine, and to make abstracts from and photocopies of, Borrower's books and records and to discuss Borrower's businéss, operations and financial condition with ‘Borrower's officers and accountants. 10.13 Financial Reports. Borrower shall maintain a standard, modem system of accounting that reflects the application of GAAP or such other accounting principles as are satisfactory to Bank, Borrower shall furnish to’ Bank or cause to be furnished to Bank the following in form satisfactory to Bank: (@) Within one hundred and twenty (120) days after the close of each fiscal year, financial statements of Borrower, including a balance sheet, statement of income and expenses and statement of cash flows that include the results of the financial operation of the Project, all in reasonable detail and prepared according to GAAP or such other accounting principles as are satisfactory to Bank, Year-end statements shall be company prepared. Year end statements shall be certified by Borrower, if Borrower is an individual, by the chief financial officer of Borrower, if Borrower is a corporation, by the manager or a member of Borrower, if Borrower is a limited liability company, or by a general partner of Borrower, if Borrower is a partnership or limited liability partnership. (&) Within thirty (30) days after the end of each. fiscal quarter, internally prepared financial statements, including a balance sheet and statement of income and expedses. (©) _ Within thirty (30) days after'the close of each calendar year, personal financial statements of each Guarantor who is a natural person in form and level of detail satisfactory to Bank. (@ __ Within ten (10) days of filing, but in no eveat later than one hundred and twenty (120) days following year-end, a complete copy, including all schedules and attachments, of the Federal Income Tax Retums of Borrower. (© __ Within ten (10) days of filing, but in no event later than one hundred and twenty (120) days following year-end, a complete copy, including al! schedules and attachments, of the mh ‘Stamibost Duets BenkiMounain AdvenurdDecamentLoan AgeementV3Federal Income Tax Returns of each Guarantor and, if filed, copies of al extensions for fling - such retums within five (5) days of ing the same. E () * When requssted by Bane, stich firther information eo:Bank’ may reasonably request relating to Borrower, any Guarantor, any financial statements andlor the operation ofthe Real Property and Improvements. . 10.14 Subsequent Actions. Borrower shall inimediately inform Bank of any actions, suits or proceedings involving Borrower or the Project that could materially and adversely affect the repayment of the Loans, the performance by Borrower under this Agreement, or the financial condition, business or operations of Borrower, or the condition of the Project. 10.15 Compliance with FHA or VA. If applicable, Borrower shall obtain or assure compliance with all requirements of any HUD regulations, any FHA or VA loan insurance or Joan guaranty commitment or any conventional loan commitment applicable to any individual lots or units included in the Real Property. 10.16 Further Assurances. Borrower shall execute and deliver such additional documents and do such other acts as Bank may reasonably require in connection with the Loans. 10.17 Borrower's Funds Account. If.at any time or from timé to time Bank, in the exercise of its reasonable business judgment, determines that the remaining undisbursed proceeds of the A&D Lon or any RLC Loan plus the then existing balance of the Borrower's Funds Account allocated to the A&D Loan or the RLC Loan, respectively, are insufficient to pay the total cost for the completion of the A&D Improvements or the then approved RLC Improvements, Bank may demand that an amount equal to such deficiency be deposited with Bank into the Borrower's Funds Account to insure such completion and payment. Although held in a single account, all sums deposited in the Borrower's Funds Account shall be allocated to the A&D Loan ot the RLC Loan as appropriate. All funds deposited into the Borrower's Funds Account shall be disbursed by Bank in the manner provided herein for A&D Advances or RLC Advances, as appropriate, prior to, in conjunction with ‘or after any or all Advances. AI funds at any time in the Borrower's Funds Account are hereby assigned to Bank as additional secuity for the Loans and all other indebtedness of Borrower arising hereunder. 10.18 Borrower Notices. Borrower shall promptly give notice in writing to Bank of (j) the occurrence of any Event of Default, (ji) any change in the name of Borrower, and‘in the case of a reorganization, any change in name, identity or corporate structure, or (ii) any Joss through fire, theft, liability or property damage. 10.19 Cross-Collateralization. At Bank’s request, Borrower agrees to provide cross- collateralization: for all projects of Borrower then financed by Bank and all interest rate risk management agreements with Bank, all in form and substance acceptable to Bank. 10.20 «Notice of Special District. Borrower shall immediately give notice to Bank ‘of any notification or advice that Borrower may receive ftom any municipality or other third party of any intent or proposal to include all or any part of the Real Property in a Special District.. Bank shall have the right to file a written objection to the inclusion of all or any part of the Real 25. StexmbortDaa\Veca BarkMountin AdventreWDocumensLoan Apeemeat. V3Property in a Special District, either in its own name or in the name of Borrower, and to appear at, and participate in, any hearing with respect to the formation of any such district. 10.21 ERISA. Borrower and each Guarantor will fund each Defined Benefit Plan and Defizied Contritution Plan (ag such terms are defined in ERISA) established or maintained by Bonower or such Guarantor so that there is never an Accumulated Funding Deficiency (as defined in Section 412 of the Internal Revenue Code of 1986, as amended). Borrower shall furnish to Bank (@ promptly upon becoming aware of the occurrence of or forthcoming occwzence of ‘any Reportable Event or any Probibited Transaction (as defined in ERISA) in connection with any pension plan subject to ERISA or any trust created to hold the assets of such pension plan, written notice specifying the mature thereof, what action Borrower or such Guarantor hes taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Intemal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Comporation with respect thereto; (ii) all notices received by Borrower or such Guarantor of the Pension Benefit Guaranty Corporation's intent to terminate any pension plan or to have a trustee appointed fo administer any pension plan; and (iii) such other information about any pension plan as Bank may reasonably request from time to time, promptly upon such request SECTION Li: | NEGATIVE COVENANTS So long as Bank has any commitment to lend to Borrower hereunder and until the Loans and all other indebtedness hereunder have been paid in full and all of Borrower's obligations hereunder have been fully discharged, Borrower shall hot, without receiving the prior written consent of Bank: 11.1 Dissolution or Liquidation.’ Dissolve or liquidate, or merge or consolidate with or into any other entity, or turn over the management or operation of its property, assets or business to any ofher person, firm or corporation. 1).2 Due on Sale or Encumbrance. Except as provided in Section 6, assign, transfer or convey any of its right, title and interest in any property whether real or personal encumbered by the Security Documents; create or suffer to be created any mortgage, pledge, security interest, encumbrance or other lien on any property encumbered by the Security Documents (other than liens arising from work the cost of which is being properly contested in accordance with the terms hereof); or create or suffer to be created any mortgage, pledge, security interest, encumbrance or other lien on any other property or assets'which it now owns or hereafter acquires except in consideration of the contemporaneous receipt by it of benefits equal or greater jin value to the lien created. 11.3 Changes to Plans and Specifications. Make or permit (a) any change in the A&D Plans and Specifications, which increases the cost of the A&D Improvements by more than ten percent (102%) of the provision for hard cost contingéncy in the A&D Biidget; as to any single change, or by more than five (5%) of such provision; as'to all changes in the aggtegate, or (b) any iméterial change in the RLC Plans and Specifications. With respect to'any chénge in the Plans and Specifications described in the preceding sentence, the’ remainder of the subsection shall apply. ‘Any requested changes shall be submitted on a form acceptable to Bank and accompanied by a copy of the portion of the Plans and Specifications applicable to the changes. Prior to 26. _Seaiost DaVerra Bale Mountain Adventure\DocimeisLosn Agreement. V3implementing any change order, Borrower shall deposit with Bank sufficient cash to cover the. cost of all change orders that increase the cost of the Improvements or provide evidence, satisfactory to Bank that the inorease in cost has already been paid by Borrower. “All such funds shall be held by Bank and disbursed in the manner provided herein for the Borrower's Funds Account and are hereby assigned to Bank as additional security for the Loan and all other ” indebtedness of Borrower arising hereunder. 11.4. Change in Accounting Period. Change the times of commencement or termination of its fiscal year or other accounting periods; or change its methods of accounting other than to conform to GAAP or such other accounting principles as are satisfactory to Bank. 11.5 Inclusion in Special District. Consent to, or vote in favor of, the inclusion of all or any part of the Real Property in any Special District. 11.6 A&D Loan to Value. Permit the unpaid principal balance of the A&D Loan plus all amounts committed and not yet advanced thereunder to exceed séventy-five percent (75%) of the bulk wholesale value of the Real Property and the A&D Improvements, as if completed, as approved or determined by Bank in its sole discretion after its review of the latest Appraisal. If for any reason the loan-to-value percentage exceeds said percentage, then Borrower shall upon Bank's demand, immiediately reduce the unpaid principal balance of the Loan to reduce the loan- to-value percentage to, at or below said percentage. SECTION 12. _ INSPECTION BY BANK; STOPPAGE OF CONSTRUCTION 12.1 Entry on Real Property. Bank shall have thé right, upon twenty-four (24) hour telephonic or other notice, but not the obligation, to enter at any reasonable times upon the Real Property and Improvements to determine if the construction of the Improvements is in conformity with the Plans and Specifications and all other requirements hereof to inspect the Real Property and ‘Improvements and to examine and make copies and extracts of any books, récords, accounting data and other documents, including without limitation all permits, licenses, consents and approvals of governmental authorities having jurisdiction over Borrower, the Improvements and the contractor and all subcontractors supplying labor and/or materials in connection with the Improvements. 12.2 No‘Duty to Inspect. Bank shall have no duty to supervise or inspect any construction or to inspect any books and records or the Real Property and Improvements; any inspection by Bank shall be for the sole purpose of protecting Bank's security and preserving ‘Bank's rights hereunder. Failure by Bank to inspect any work shall not constitute a waiver of any of Bank's rights hereunder. Inspection not followed by notice of an Event of Defuult shall not constitute a waiver of any Event of Default then existing. Any inspection by Bank shall not be a representation by Bank that there hes been or will be compliance with the Plans and Specifications or that the construction is free from defective materials or workmanship, nor shall any inspection by Bank constitute approval of any certification given to Bank or relieve any person niaking such certification of responsibility therefor. 12.3. Stoppage of Construction, Upon discovery by Bank of any material deviation fom the Plans and Specifications or of defective or unworkmanlike labor or materials being used in the construction of the Improvements, Bank may immediately order stoppage of construction and a ‘Steambort DatiVeces Bank\Mouninin AdventreDocumentLotn Agreement. V3demand that any unsatisfactory work be replaced and that the condition be corrected, whether or not any unsatisfactory work has already been incorporated info the improvements. After issuance, of such an order in yiriting, the condition shall be corrected within: fifteén (15) days -afrom the date of stoppage by Bank.. Bank shell have the right to withhold all further Advances until the condition is corrected and no other work shall be done on the Improvements without the prior written consent of Bank unless, and until, such condition has been fully corrected. 12.4 Appointment of Agent. Borrower irrevocably appoints, designates, and authorizes Bank as its agent (said agency being coupled with an interest) to file for record any notices of completion or any other notice that Bank deems necessary or desirable to protect its interest under the Loan Documents. This power of sttomey is solely for the benefit and protection of Bank, and its successors and assigns, and’Bank shall have no obligation to exercise this power in any event. This power of attorney is a power coupled with an interest and shall be irrevocable so long as any part of the Loans or any indebtedness or obligations of Borrower to Bank arising in connection with the Loans remain unpaid or unperformed. SECTION 13. WAIVER 13.1 Delay or Omission. No delay or omission by Bank in exercising’ any right, power or remedy hereunder, and no indulgence given to Borrower, with respect to any teria, condition or provision set forth herein, shall impair any right, power or remedy of Bank under this Agreement, or be construed as a waiver by Bank of, or acquiescence in, any Event of Defiilt Likewise, no such delay, omission or indulgence by Bank shall be construed as a variation or waiver of any of the terms, conditions or provisions of this Agreement. Any actual waiver by Bank of any Event of Default shall only be effective if in a writing signed by the Bank and shall not be a waiver of eny other prior or subsequent Event of Default or of the same Event of Default after notice to Borrower demanding strict performance, SECTION 14. DEFAULT 14.1 Event of Default. The occurrence of any of the following events or conditions shall constitute an Event of Default under this Agreement: (@) Any failure to pay any principal or interest under any of the Notes or any other sum due under the Loan Documents, in cach case when the same shall become due and payable, and such failure continues for ten (10) days thereafter. (b) Any failure’or neglect to perform or observe any of the covenants, conditions or provisions of the Loan Documents (other than a failure or neglect described in one or more of the other provisions of this Paragraph 14.1) by. Borower or any Guarantor and such failure or neglect either cannot be remedied or, if it can be remedied, it continues untemedied for a period of thirty (30) days after notice thereof to Boixower, (©) Any warranty, reptesentation or statement contained in the Loan Documents, or made or furnished to Bank by or on behalf of Borrower or any Guaraiitor, that shall be or shall prove to have been false when made or furnished. : 2 Steambost DatlVetra BenkAMounisin Adventr!DacumenLoan Agreement. V3@ , The filing by Borrower or any Guarantor (or against Borrower or such Guarantor to Which Borrower or such Guarantor acquiesees or that is not dismissed within forty-five (45) days after the filing thereof) of any proceeding under the federal bankniptey‘laws now-or hereafter’:> forming or constituting any partnership, joint Venture, merget or consolidation of Borrower and ‘Bark for any purpose or in any respect. ee 15.5 Setoff Borrower hereby grants to Bank'2 security iiterest in, and Bank is hereby authorized at any time and from time to time, without prior notice to Borrower (any such notice being expressly waived by the Borrower), to set off and apply, any and all accounts and deposits (general or special, time or demand, provisional or final) at any time held by Bank, or any branch, subsidiary, or affiliate of Bank, and all other indebtedness at any time owing by Bank or any branch, subsidiary, or affiliate of Bank, to or for the credit or the account of Borrower Gncluding all accounts held jointly with another, but excluding any IRA or Keogh accounts, or any trust aécounts for which a security interest would be prohibited by law), against any and all of the obligations of Borrower now or hereafter existing under the Loan Documents. Such security interest may be enforced, and such right of setoff may be exercised, by Bank irrespective of (i) whether or not Bank shall have made any demand under the Loan Docuiments and (ii) whether such obligations are contingent, matured, or unmatured. Bank agrees promptly to notify Borrower after any such setoff and application, provided that the failure to give such notice shall not affect the validity or such’setoff and application. The rights of Bank under this paragraph are in addition to other rights and remedies (including, without limitation, other rights of setofi) which Bank may have. SECTION 16. GENERAL 16.1 Survival and Severability. This Agreement shall survive the making of the Loan and shall continue so long as any part of the Loan, ot any extension or renewal thereof, remains outstanding. If any provision of this Agreement is held to be invalid, illegel, or unenforceable in any, jurisdiction, the validity, legality and enforceability of that provision in any -other Jurisdiction, and the validity, legality and enforceability of the remaining provisions hereof in all jurisdictions, shall not be affected or impaired in any way. 16.2 Discretionary Rights. All rights, powers and remedies granted Baik herein, or otherwise available to Bank, are for the sole benefit and protection of Bank, and Bank may exercise any such right, power or remedy at its option and in its sole and absolute discretion without any obligation to do so.’ In addition, if, under the terms hereof, Bank is given two or more alternative courses of action, Bank may elect any alternative or combination of altematives, at its option and in its sole and absolute discretion. All monies advanced by Bank under the terms hereof and all amounts paid, suffered or incurred by Bank in exercising any authority granted herein, including reasonable attorneys! fees, shall be secured by the Security Documents, shall bear interest at the highest rate payable on the Loans until paid, and shall be due and payable by Borrower to Bank immediately without demand. : "16.3 indemnity. Borrower shall indemnify and hold Bank harmless fromand against all claims, « Gosts,. expenses, actions, suits, proceedings, losses, damages and liabilities of any kind whatsoever, including but not limited to attomeys' fees and expenses, arising out of any xnatter relating, directly or indirectly, to the Loans, to the ownership, development, construction, or sale of the Real, Property and Improvements, whether resulting ftom ‘intemal disputes of Borrower, ale Steznboat DatiVeera Banstosntsn Adventse\Document\Loa Agseemet V3disputes between Borrower and any guarantor, or whether-involving other third persons or entities, or out of any other matter whatsoever related to any of the Loan Documents, or any property encumbered thereby, but excluding any claim.or liability which "arises as the direct result.of the gross negligence or willful misconduct of Baik. “This indemnity provision shall ‘continue in full force and effect and shall survive not only’ the making ofthe Loans and the Advances but shall also survive the repayment of the Loans and the performance of all of Borrower's other obligations hereunder. 16.4 Joint and Several. If Borrower consists of more, than one person or entity their Liability shall be joint and several. The provisions hereof shall apply to the paities according to the context thereof and without regard to the number or gender of words or expressions used. sence. Time is expressly made of the essence of this Agreement. 16.5 Time 16.6 Notices. All notices required or petmitted to be given hereunder shall be in writing and may be given in person or by United States mail, by delivery service or by electronic transmission. Any notice directed to a party to this Agreement shall become effective upon the earliest of the following: (i) actual receipt by that party; (ii) delivery to the designated address of that party, addressed to that party; or (ii) if given by certified or registered United States m: twenty-four (24) hours after deposit with the United States Postal Service, postage prepai addressed to that party at its designafed address. The designated address of a party shall be the address of that party showm at the beginning of this Agreement or such other address as that party, from time to time, may specify by notice to the other parties. 16.7 Payment of Costs. Borrower shall pay upon demand all costs and expenses arising from the preparation of this Agreement, the closing of the Loans, the making of Advances and the monitoring and administration of the Loans, including but not limited to title insurence premiums, other title company charges, recording and filing fees, costs of Uniform Commercial Code searches, Bank's in-house and outside attomeys’ fees, if any, Bank's inspection fees, environmental review fees, appraisal and appraisal review fees, any intangible or recording taxes and any other charges that may be imposed on Bank as a direct result of this transaction (collectively “Loan Expenses”): 16.8 Choice of Law. This Agreement shall be govemed by and construed according to the laws of the State of Colorado, without givitig effect to conflict of laws principles. 16.9 Successors. Except as otherwise provided herein, this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their successozs and assigns, 16.10 Headings. The headings or captions of sections and paragraphs in this Agreement are for reference only, do not define or limit the provisions of such sections or paragraphs, and shall not affect the interpretation of this Agreement. 16.11 Assignments and Participations. Bank, at any time, shall have the right to sell, assign, “transfer, or negotiate the Loan and the Loan Documents, in whole or in part, and to grant participation interests in the Loan and the Loan Documents. Borrower hereby acknowledges and agrees that any such disposition shall give rise to 2 direct obligation of Borrower to each such assignee or participant. Bank is authorized, without any limitations whatsoever, to famnish to any 32. ‘Steamboat DatlVect Bank Wounaia AdventureDacumentLoan Agreement V3actual or prospective assignee or participant any information or document that Bank may have or obtain regarding the Loan, the Loan Documents, the Project, Borrower, or aniy guarantor of the Loan...In addition, Bank is authorized, without any limitations whatsoever~to: furnish uch ‘information to its affiliates or affiliates of Zions First National Bank. : Se 16.12 - Counterparts, This Agreement may be executed in counterparts, all of which executed counterparts shell together constitute a single document. Signature pages may be detached from’ the counterparts and attached to a single copy of this’ Agreement to physically form one document, 16.13 WAIVER OF SPECIAL DAMAGES. BORROWER WAIVES,: TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER MAY HAVE TO CLAIM OR RECOVER FROM BANK IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 16.14 JURY WAIVER. BORROWER AND -BANK HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, ANY OTHER LOAN DOCUMENT OR ANY RELATIONSHIP BETWEEN BANK AND BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS. 16.15 ARBITRATION DISCLOSURES. 1. ARBITRATION IS FINAL AND BINDING ON. THE PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. 2. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. 3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT. 4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR TO SEEK MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED. 5. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY. 6. ARBITRATION WILL APPLY TO ALL DISPUTES BETWEEN THE PARTIES, NOT JUST THOSE CONCERNING THIS AGREEMENT. 7, IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT: YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION. 3 Stambist DasiVecta BankiMountin AdventreDocuens\Loan Agreemeat. V3. (@) . Any claim or controversy ("Dispute") between or among the parties and their employees, agents, affiliates,’ and ‘assigns, including, buf not limited to, Disputes arising out of or Telating to this. agreement, ‘this arbitration provision. ("arbitration clause"), or any related. agreements ‘or instruments relating hereto or’ delivered in connection herewith ("Related Agreements"), and including, but not limited to, a Dispute based.on or arising from an alleged tort, shall at the request of any party be resolved by binding arbitration in accordance with the applicable arbitration rules of the: American Arbitration Association (the "Administrator"). ‘The provisions of this arbitration clause shall survive any termination, amendment, or expiration of this agreement or Related Agreements. The provisions of this arbitration clause shall supersede eny prior arbitration agreement between or among the parties. (b) The arbitration proceedings shall be conducted in a city mutually agreed by the parties. Absent such an agreement, arbitration will be conducted in Denver, Colorado or such other place as may be determined by the Administrator. The Administrator and the arbitrator(s) shall have the authority’ to the extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrator(s)' award issued within 150 days of the filing of the Dispute with the Administrator. The arbitrator(s) shall have the authority to impose sanctions on any party that fails to comply with time periods imposed by the Administrator or the arbitrator(s), including the sanction of summarily dismissing any Dispute or defense with prejudice. The arbitrator(s) shall have the authority to resolve any Dispute regarding the terms of this agreement, this arbitration clause, or Related Agreements, including any claim or controversy regarding the arbitrability of any Dispute. ll limitations periods applicable to any Dispute or defense, whether by statute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s) shall have the authority to decide whether any Dispute or defense is bazred by a limitations period and, if so, to summarily enter an award dismissing any Dispute or defense on that basis. ‘The doctrines of compulsory counterclaim, tes judicata, and collateral estoppel shall apply to any arbitration proceeding hereunder so that @ party must state as a counterclaim in the arbitration proceeding any claim or controversy which arises out of the transaction or occurrence that is the subject matter of the Dispute. The arbitrator(s) may in the arbitrator(s)* discretion and at the request of any party: (1) consolidate in a single arbitration proceeding any other claim arising out of the same transaction involving another party to that transaction that is bound by an arbitration clause with Lender, such as borrowers, guarantors, sureties, and owners of collateral; and (2) consolidate or administer multiple arbitration claims or controversies as a class action in accordance with the provisions of Rule 23 of the Federal Rules of Civil Procedure. (©) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitrator shall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by a majority vote of the three arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be a practicing attomey. The arbitrator(s) shall award to the prevailing party recovery of all costs and fees (including attorneys’ fees and costs, arbitration administration fees and costs, and avbitrator(s)' fees). The arbitrator(s), either a4 ‘Steamboat DealVecirs Bank&Mountin AdventteiDocumentLoan Agreement V3during the pendency of the arbitration proceeding or as part of the arbitration award, also may grant provisional or ancillary remedies including but not limited: to an award of injunctive relief, foreclosure, sequestration, attachment, teplevin, garnishment, or.the*: = .appointment of a receiver. « . - : (@ Judgment upon an arbitration award may be entered in any court having jurisdiction, subject to the following limitation: the arbitration award is binding upon the parties only if the amount docs not exceed Four Million Dollars ($4,000,000); if the award exceeds that limit, any party may demand the right to a court trial. Such a demand must be filed with the Administrator within 30 days following the date of the arbitration award; if such a demand is not made within that time period, the amount of the arbitration award shall be binding. The computation of the total amount of an arbitration award shall include amounts awarded for attomeys' fees and costs, arbitration administration-fees and costs, and arbitrator(s)’ fees. (© No provision of this arbitration clause, nor the exercise of any rights hereunder, shall limit the right of any party to: (1) judicially or non judicially foreclose against any real or personal property collateral or other security; (2) exercise self-help remedies, including but not limited to repossession and setoff rights; or (3) obtain from a court having jurisdiction thereover any provisional or ancillary remedies including but not limited to injunctive relief, foreclosure, sequestration, attachment, replevin, ‘gamishment, or the appointment of a receiver. Such rights can be exercised at any time, before or after initiation of an arbitration proceeding, except to the extent such action is. contrary to the arbitration award. The exercise of such rights shall not constitute a waiver of the right to submit any Dispute to arbitration, and any claim or controversy related to the exercise Of such rights shall be a Dispute to be resolved under the provisions of this arbitration clause. Any party may initiate arbitration with tlie Administrator. If any party desires to arbitrate a Dispute asserted against such party in a complaint, counterclaim, * cross-claim, or third-party complaint thereto, or in an answer or other reply to any such ‘pleading, such party must make an appropriate motion to the trial court seeking to compel atbitration, which motion must be filed with the court within 45 days of service of the pleading, or amendment thereto, setting forth such Dispute. If arbitration is compelled afier commencement of litigation of a Dispute, the party obtaining an oider compelling arbitration shall commence arbitration and pay the Administrator's filing fees and costs within 45 days of entry of such order. Failure to do so shall constitute an agreement to proceed with litigation and waiver of the right to arbitrate. In any arbitration commenced by.a consumer regarding 2 consumer Dispute, Vectra Bank Colorado, Netional Association shall pay one half of the Administrator's filing fee, up to $250. (Q _ Notwithstanding the applicability of any other law to this agreement, the arbitration clause, or Related Agreements between or airiong the parties, the Federal Arbitration Act, 9 U.S.C. § 1 et seq, shall apply to the construction and interpretation of this arbitration clause. If any provision of this arbitration clause should be determined to benmenforceable, all other provisions of this arbitration clause shall remain infull force and effect.” 35: ‘Steamboat DetaVeevs Banktounain Adventue\DocumeatLonn Agreement V3BORROWER: “ MOUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado limited liability company F. Don Anderson, Manager BANK: VECTRA BANK COLORADO; NA, a national banking association _ —

‘.20| RETO Wau oesienatLowince | cco] Sa am] Sool aoe). megan ‘8200|pemare ress samy] Gop deo] sane | agent ss00|enrnruohagexr 30] ato), 500] “ont 5 éo00| Sen : too] tes scat Seo] oon 200] ae rues coo] bao mo] Goo! bao * $3.00 once nr) soo] 60} cama foric0| Fenn sm) ae. 200]: apo] soos #5200] Re tong dre 42s). oa S00), cern ntatauty and Indemnification. (2) For value received, and in consideration ofand a: sn indvoement for Lender to make the Loans to or forthe account of Borower, Guarantorhereby ‘moonditionally guarantees the prompt payment of the Indebtedness, upon demand, when due, by reason of acceleration or otherwise, (b) Guarantor farther agrees to indemnify Lender for all cooc, 1 SwanbouDanVecira BeitMounain AGventr\Decoment\Gosrany of Payment AndersenUNCONDITIONAL GUARANTY OF PAYMENT This Unconditional Guaranty of Payment ("Guaranty") is dated as of the 29th day of September, 2006, between RONALD D. SILLS ("Guarantor"), whose address is 27482 Brandon Circle, Steamboat Springs, Colorado 80487 and VECTRA BANK COLORADO NATIONAL ASSOCIATION, a national banking association ("Lender"), whose address is 2115 Resort Drive, Suite 300, Steamboat Springs, Colorado 80487. ‘RECITALS: A. MOUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado Jimited liability cmpany ("Borrower") has requested that Lender extend to Borrower a development Joan in the maximum principal amount of Three Million Two Hundred Twenty-Five Thousand and 00/100 Dollars ($3,225,000.00) ") pertaining to the refinancing and development of an 86 single- fanily and 6 multi-funily lot subdivision to be laiown as The Villages at Hayden, located in Hayden, Colorado and a revolving guidance line in the amount of One Million and 00/100 Dollars (S1,000,000.00) under which Borrower may obtain loans for the constraction of single-family residences within the Subdivision ( the development loan and all construction loans are collectively Tefetred to herein as the “Loans”). Lender is willing to extend the Loans to Borrower on the. condition that Guarantor unconditionally guarantees the promp! payment of the amounts described below now or hereafter owed by Borrower to Lender under the terms and conditions as stated herein, B. _. Asacondition of the Loans, the undersigned has agreed to execute this Guaranty for the benefit of Lender. AGREEMENT 1. Indebtedness. As used herein, the term "Indebtedness" shall mean any and all existing or future (2) loans, advences, credit, indebtedniess, letters of credit and other financial accommodations now or hereafter owed by Borrower to Lender; (b) all obligations owed by Borrower to Lender under the Loans; and (c) all interest, post-maturity interest, default interest, interest accruing subsequent to the filing of a petition for protection under the United States Bankruptcy Code, costs, expenses, late charges, prepayment penalties, amounts advanced to protect. ‘Lender's interest in any collateral, and any other amounts chargeable under the terms of such loans, indebtedness or financial accommodations. Any ofthe above may be offered, advanced or extended to Borrower by Lender, from time to time, without notice to or consent of Guarantor and without limitation as to the amount thereof. Unless otherwise defined herein, all capitalized terms shall have the meaning provided in the Loan Agreement. 2. Guaranty and Indemnification. (2) For value received, and in consideration of and as an inducement for Lender to make the Loans to or for the account of Borrower, Guarantor hereby unconditionally guarantees the prompt payment of the Indebtedness, upon demand, when due, by reason of acceleration or otherwise. (b) Guarantor further agrees to indemnify Lender for all costs le ‘SteamboatData\VecirsBank'Mountain Adventure\Decument\Guaranty of PaymentSills V2e a UNCONDITIONAL GUARANTY OF PAYMENT “___This Unconditional Guaraniy of Payment ("Guaranty") is dated a of the 25th day of September, 2006, between 4S DEVELOPMENT, LTD., LLLP, a Colorado limited lability limited Partnership, (‘Guarantor’), whose address is P.O. Box 881870, Steamboat Springs, Colorado 80488 and VECTRA BANK COLORADO NATIONAL ASSOCIATION; national banking association (Lender), whose address is 2115 Resort Drive, Suite 300, Steamboat Springs, Colored 80487, RECITALS: A. MOUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado limited liability company ("Borrower") has requested that Lender extend to Borroweradevelopment Joan in the maximum principal amount of Three Million Two Hundred Twenty-Five Thoosand and 00/100 Dollars (53,225,000.00) ") pertaining to the refinancing and development ofan 86 single: Graily and 6 multifamily lot subdivision to be known as The Villages at Hayden, located in Hayden, Colorado and a revolving guidance line in the amount of One Million and 00/100 Dolla. ($1,000,000.00) under which Borrower may obtain loans far the construction of single-family residences within the Subdivision (the development loan and all construction loans ae collectively referred to herein as the "Loans”). Lender is willing to extend the Loans to Borrower on the condition that Guarantor uncontitionaily guarantees the prompt payment of the amounts described below now or hereafter owed by Borrower to Lender under he terms and conditions as stated herens B.__Asacondition of the Loans, the undersigned has agreed to execute this Guaranty for the benefit of Lender. AGREEMENT 1. puyuiebtedness. As used herein, the ferm "Indebtedness" shall mean any and all existing or future (a) Joans, advances, credit, indebtedness, letters of eredit and other financial sccommodations now or hereafter owed by Borrower to Lender; (b) all obligations owed by Borrower to Lender under the Loans; and (c) all interest, post-maturity interest, default interest, interest accruing subsequent to the filing of a petition for protection under the United State. Bankruptcy Code, costs, expenses, late charges, prepayment penalties, amounts advanced to protect Lender's interest in any collateral, and any other amounts chargeable under the terms of sucks loans, indebtedness or financial accommodations. Any of the above maybe offered, advanced or extended to Borrower by Lender, from time to tiie, without notice to or consent of Guarantor and without limitation as to the amount thereof. Unless otherwise defined herein, all capitalized terms shall have the meaning provided in the Loan Agreement. 2." Guaranty and Indernmification. (a) For value received, and in consideration of and as an inducement for Lender to make the Loans fo or for the account of Borrower, Guarantorhereby \nconditionally guarantees the prompt payment of the Indebtedness, upon demand, when due, by vreason of acceleration or otherwise. (b) Guarantor further agrees to indemnify Lender for all eostc ET Srambont DalVeers BankiMounsin Adventr\Document\Guarnyof Payments Development Via UNCONDITIONAL GUARANTY OF PAYMENT This Unconditional Guaranty of Payment ("Guaranty") is dated as of the 29th day of September, 2006, between ROGER JOHNSON, IT (“Guarantor”), whose address is P.O. Box 774406, Steamboat Springs, Colorado 80477 and VECTRA BANK COLORADO NATIONAL ASSOCIATION, @ national banking association ("Lender"), whose addrese is 2115 Resort Drive, Suite 300, Steamboat Springs, Colorado 80487. A i MOUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado jimited liability company ("Borrower") has requested that Lender extend to Box rower a development Joan in the maximum principal amount of Three Million ‘Two Hundred Twenty-Five Thousand and (0/100 Dollars ($3,225,000.00) ") pertaining to the refinancing and development of an 86 single- fantily end 6 multi-family lot subdivision to be known as The Villages at ‘Hayden, located in Hayden, Colorado and a revolving guidance line in ‘the amount of One Million ‘and 00/100 Dollars ($1,000,000.00) under. which Borrower may obtain loans for.the construction of single-family residences within the Subdivi ion ( the development loan and all construction loans are. collectively referred to herein as the “Loans”). Lender is willing to extend the Loans to Borrower on the B. 77/58 condition of the Loans, the undersigned has agreed to execute this Guaranty for the benefit of Lender. AGREEMENT I. Indebtedness. As used herein, the term “Indebtedness” shall mean any and all cxisting or future (a) loans, advances, credit, indebtedness, letters of exedit and other financial pvommodations now or hereafter owed by Bosrower to Lender; (4) all obligations owed by Borrower to Lender under the Loans; and (c) all interest, post-maturity interest, default interest, interest accruing subsequent to the filing of a petition for protection under the United States Bankruptcy Code, costs, expenses, late charges, prepayment penalties, amounts advanced to protect Lender's interestin any collateral, and any other amounts chargeable nde the terms of such loans, indebtedness or financial accommodations. Any of the above may be offered, advanced or extended fo Borrower by Lender, from time to time, without notice to or consent ot Guarantor and without limitation as to the amount thereof. Unless otherwise defined ‘herein, all capitalized terms shall have the meaning provided in the Loan Agreement. 2 cegysteauty and Indemnification. (2) For value received, and in consideration of and as an inducement for Lender to make the Loans to or forthe account of Borrower, Guarantor hereby ally guarantees the prompt payment of the Indebtedness, upon demand, when due, by reason of acceleration or otherwise. (b) Guarantor further agrees to indemnify Lender for all costs Le StamboatDaalVenrs Balivounan AdventurdDocumeat\Guareny of Payment lohan} / |UNCONDITIONAL GUARANTY OF PAYMENT This Unconditional Guaranty of Payment ("Guaranty") is-dated as of the 29th day of September, 2006, between GRASSY CREEK HOLDING COMPANY, LLC, a Colorado limited liability company, ("Guarantor"), whose address is 3813 Greenwood Road, Sedalia, Colorado 80135 and VECTRA BANK COLORADO NATIONAL ASSOCIATION, a national banking association ("Lender"), whose address is 2115 Resort Drive, Suite 300, Steamboat Springs, Colorado 80487. RECITALS: A. MOUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado limited ability company ("Borrower") has requested that Lender extend to Borrower a development Joan in the maximum principal amount of Three Million Two Hundred Twenty-Five Thousand and 00/100 Dollars ($3,225,000.00) and a revolving guidance line in the amount of One Million and 00/100 Dollars ($1,000,000.00) under which Borrower may obtain loans for the construction of single-family residences within the Subdivision (collectively, "Loans") pertaining to the refinancing and developmenit of an 86 single-family and 6 multi-family lot subdivision to be known as The Villages at Hayden, located in Hayden, Colorado. Lender is willing to extend the Loans to Borrower on the condition that Guarantor unconditionally guarantées the prompt payment of the amounts described below now or hereafter owed by Borrower to Lender under the terms and conditions as Stated herein. B. _Asacondition of the Loans, the undersigned has agreed to execute this Guaranty for the benefit of Lender. AGREEMENT. 1. Indebtedness. As used herein, the term "Indebtedness" shal] mean any and all existing or future (a) loans, advances, credit, indebtedness, letters of credit and other financial accommodations now or hereafter owed by Borrower to Lerider; (b) all obligations owed by Borrower to Lender under the Loans; and (c) al] interest, post-maturity interest, default interest, interest accruing subsequent to the filing of a petition for protection under the United States Bankruptcy Code, costs, expense’, late charges, prepayment penalties, amounts advanced to protect ‘Lender's interest in any collateral, and-any other amounts chargeable under the terms of such loans, indebtedness or financial accommodations. Ay of the above may be offered, advanced or extended to Borrower by Lender, from time to time, without notice to or consent of Guarantor and without limitation as to the amount thereof. Unless otherwise defined herein, all capitalized terms shall have the meaning provided in the Loan Agreement. 2. Guaranty and Indemnification. (a) For valué received, and in consideration of and as an inducement for Lender to make the Loans to or for the account of Borrower, Guarantor hereby unconditionally guarantees the prompt payment of the Indebtedness, upon demand, when due, by a SteambottData\VesraBaniiMoonsin Advenur\Documens\Guarany af Payment. Grey. ViG 8 UNCONDITIONAL GUARANTY OF PAYMENT ‘This Unconditional Guaranty of Payment ("Guaranty") is dated as of the 29th day of September, 2006, between ROBERT L. KEYS ("Guarantor"), whose address is 9901 Bast Foothills Drive, Scottsdale, Arizona 86265 and VECTRA BANK, COLORADO NATIONAL ASSOCIATION, 2 national banking association ("Lender"), whose address is 2115 Resort Drive, Suite 300, Steamboat Springs, Colorado 80487. RECITALS: A. MOUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado Jimited liability company ("Borrower") has requested that Lender extend to Borrower a development Joan in the maximum principal amount of Three Million Two Hundred Twenty-Five Thousand and 00/100 Dollars ($3,225,000.00)") pertaining to the refinancing and development of an 86 single- family and 6 multi-family lot subdivision tobe knovin as The Villages zt Hayden, located in Hayden, Colorado and @ revolving guidance line in the amount of One Million and 00/100 Dollars (S1,000,000.00) under which Botrower may obtain loans for the construction of single-family residences within the Subdivision ( the: ‘development loan and all construction Joans are collectively teferred to herein as the "Loaus”). Lender is willing to extend the Loans to Borrower on the condition that Guarantor unconditionally guarantees the prompt payment of the amounts described below now orhereafter owed by Borrower to Lender under the terms and conditions as stated herein, B. Asa condition ofthe Loans, Lender required personal guarantees and the undersigned presented a jointly prepared financial statement and have agreed to execute this Guaranty for the benefit of Lender. AGREEMENT 1. Indebtedness. As used herein, the term "Indebtedness" shall mean any and all existing or future (a) loans, advances, credit, indebtedneés, letters-of credit and other Snancial accommodations now or hereafter owed by Borrower to Lender; (b) all obligations owed by Borrower to.Lender under the Loans; and (c) all interest, post-maturity interest, default interest, interest accruing subsequent to the filing of a petition for protection under thé Uniied States Bankruptcy Code, costs, expenses, late charges, prepayment penelties, amounts advanced to protect. Lender's interest in any collateral, and any other amounts chargeable under the terms of such loans, indebtedness or financial accommodations. Any of the above may be offered, advanced or extended to Borrower by Lender, from time to time, without notice to or consent of Guarantor and without litnitation as to the amount thereof. Unless otherwise defined herein, all capitalized terms shall have the meaning provided in the Loan Agreement. 2, Guaranty and Indemnification. (a) For Value received, and in consideration of and asan inducement for Lender to make the Loans to or for the account of Borrower, Guarantor hereby ‘conditionally guarantees the prompt payment of the Indebtedness, upon demand, when due, by - StambosiOaa\VecraBaniéMounain Adveqnure\Dacumens\Geapnty of Payment Keys.¥2@ UNCONDITIONAL GUARANTY OF PAYMENT This Unconditional Guaranty of Payment ("Guaranty") is dated as of the 29th day of September, 2006, between OASIS DEVELOPMENT, LLC an Oklahoma limites liabilitycompany, ("Guarantor"), whose address 721 North Main Street, Altus, Oklahoma 73521 and VECTRA BANK COLORADO NATIONAL ASSOCIATION, a national banking association ("Lender"), ‘whose address is 2115 Resoit Drive, Suite 300, Steamboat Springs, Coloreds B48? RECITALS: A ai OUNTAIN ADVENTURE PROPERTY INVESTMENTS, LLC, a Colorado limited liability company ("Borrower") hes requested that Lender extend to Borrowera development Joan in the maximum principal amount of Three Million Two Hundred ‘Twenty-Five Thousand and 00/100 Dollars (S3,225,000.00) ") pertaining to the refinancing and development of an 86 single- ‘amily and 6 multi-family lot subdivision to be known as The Villages at Hayden, located in Hayden, Colorado and a revolving guidance line in the amount of One Million cu 00/100 Dollars ($1,000,000.00) under which Borrower may obtain Ipans for the construction of single-family zesidences within the Subdivision (the development fozn and all construction loans arecollectively referred to herein as the “Loans”). Lender is willing to extend the Loans to Borrower on the Pondition that Guarantor unconditionally guarantees the prompt payment of the amounes described below now or hereafter owed by Borrower to Lender under the terms and conditions as stated herein, B. _ Asacondition of the Loans, the undersigned has agreed to execute this Guaranty for the benefit of Lender. AGREEMENT, 1 qu idebtedness. As used herein, the term "Indebtedness" shall mean any and all cxisting or future (a) loans, advances, credit, indebtedness, letters of eredit and other financial Bacnmodstions now or hereafter owed by Borrower to Lender; (b) all obligations owed by Bottower to Lender under the Loans; and (c) all interes, post-maturity interest, default interest, interest accnving subsequent to the filing of a petition for protection wniee the United States Bankruptcy Code, costs, expenses, late charges, prepayment [ander interest in any collateral, and any other amounts chargeable under the tone of such loans, indebtedness or nancial accommodations. Any ofthe above may be offered, advanced or extended to Borrower by Lender, from time to time, without notice to or consent of Guarantor and without imitation aso the amount thereof. Unless otherwise defined here ll capitalized terms shall have the meaning provided in the Loans Agreement. 2 cee ntstauty and Indemnification, (3) For value received, and in consideration ofand asan inducement for Lender to make the Loans to or-for the accommt of Borrower, Guarantor hereby \nconditionally guarantees the prompt paymnent of the Indebtedness, upon demand, when due, by reason of acceleration or otherwise. (b) Guarantor further agrees to indemnify Lender for all costs StarmboaiDaa\VeeraBankountain Advenre\Documents\Gurany of Payment Osis Dev.