HomeMy WebLinkAboutresolution.council.008-99 RESOLUTION NO. ~;/
Series of 1999
A RESOLUTION OF THE CITY OF ASPEN, COLORADO, APPROVING A
CONSTRUCTION LOAN AGREEMENT, PROMISSORY NOTE, AND DEED
OF TRUST BETWEEN THE CITY OF ASPEN AND ASPEN COUNTRY INN I,
L.P. RELATING TO THE CONSTRUCTION OF THE ASPEN COUNTRY INN
AFFORDABLE HOUSING PROJECT, AND AUTHORIZING THE CITY
MANAGER TO EXECUTE SAID DOCUMENT(S) ON BEHALF OF THE CITY
OF ASPEN, COLORADO.
WHEREAS, there has been submitted to the City Council a Construction
Loan Agreement, a Promissory Note, and a Deed of Trust relating to a proposed
loan from the City to Aspen Country Inn I, L.P. for the construction of an affordable
housing project, a copy of such documents are annexed hereto and made a part
hereof.
NOW, WHEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF ASPEN, COLORADO:
Section One
That the City Council of the City of Aspen hereby approves that Construction
Loan Agreement, Promissory Note, and Deed of Trust as referenced above, and does
hereby authorize the City Manager of the City of Aspen to execute the Construction
Loan Agreement on behalf of the City of Aspen.
' s. eS,May
I, Kathryn S. Koch, duly appointed and acting City Clerk do certify that the
foregoing is a tree and accurate copy of that resolution adopted by the City Council
of the City of Aspen, Colorado, at a meeting held ,
1999.
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JPW-OI/21/99-G:\john\word\resos\asp-countryinn.doc
CONSTRUCTION LOAN AGREEMENT
limited partnerfs~'~ ("B~rUr~wIer"), and CITY OF ASPEN, a body corporate and politic
(''Lender").
RECITAL:
WHEREAS, Borrower desires to borrow certain sums from Lender, and Lender is willing
to lend such sums to Borrower for the purpose of paying the costs of constructing the
Improvements (as hereinafter defined) and related costs upon the terms, conditions and provisions
hereinafrer set forth;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1 General Purpose, Amount, Security and Fees.
1.1 General Purpose: Amount. Except as the amount of the loan may be limited
hereinafcer, Lender agrees to make and Borrower agrees to accept a loan in the maximum amount
of Three Million Four Hundred Thousand and 00/100 Dollars ($3,400,000.00) for the purpose of
providing funds for the construction of a 40 unit complex, together with all associated parking,
landscaping and other site improvements (collectively the "Improvements"), on the real property
described in the deed of trust referred to below (the "Property") (the Improvements and the
Property are hereinat~er sometimes collectively referred to as the "Project") according to this
Agreement. The construction work on the Improvements is described in the plans and
specifications which have heretofore been or which shall be submitted to and approved by Lender
in accordance with Section 2. 1(A) below ("Plans and Specifications"). The Borrower will
arrange for a contractor (the "Contractor") to construct the Improvements.
1.2 Promissory Note. The loan shall be evidenced by one (1) promissory note of
Borrower (the "Promissory Note") payable to the order of Lender in the full amount of the loan.
In the event of any inconsistency between the Promissory Note and this Agreement, this
Agreement shall prevail.
1.3 Deed of Trust. The repayment of the loan shall be secured by, among other things,
a deed of trust, assignment of leases and rents, and fixture filing (the "Deed of Trust") constituting
a first lien on the Project as described therein subject only to current taxes and assessments not
yet due or payable and such exceptions as Lender may agree to in writing. Such fixture filing
shall be executed by Borrower as debtor, in favor of Lender as secured party, in form and
substance acceptable to Lender, to be filed in the official records of the County of Pitkin.
195035.5
1.4 Owner. Borrower is the owner of the Property and will construct the
Improvements or cause the same to be constructed in accordance with Plans and Specifications.
1.5 Assignment; Contract Documents. Borrower hereby assigns to Lender and grants
to Lender a security interest in all construction contracts, subcontracts, plans and specifications
(including but not limited to the Plans and Specifications), architectural renderings or models and
any other "contract documents" and any and all proceeds thereof as collateral for Lender's loan.
1.6 Assignment: Leases. The Deed of Trust shall also include an assignment of the
Lessor's interest in all leases for the Project executed and to be executed by Borrower, as Lessor,
and Borrower agrees to execute and deliver to Lender an assignment of its interest in the leases,
in form satisfactory to Lender, and such other documents as may be required by Lender in
connection with the assignment of the leases.
1.7 Security; Personal Property. The loan shall also be secured by such personal
property security agreements as Lender may require. Notwithstanding anything to the contrary
herein, the liability of Borrower for payment of the indebtedness evidenced and payable under the
Promissory Note, and Borrower's obligations under the Deed of Trust and hereunder, shall be
limited to Borrower's leasehold interest in the property (real and personal) described in the Deed
of Trust, including the rents, issues and profits derived therefrom (collectively the "Secured
Property"), and in the event of default by Borrower, the Holder (as defined in the Promissory
Note) shall look solely to the security of such Secured Property for collection and shall not be
entitled to assert or obtain a deficiency judgment personally against Borrower, provided,
however, that nothing herein contained shall be interpreted or construed to be a release or
impairment of said indebtedness or the security therefor, or to preclude or otherwise impair the
institution of foreclosure proceedings or the sale or other disposition of Borrower' s leasehold
interest in the Secured Property in the event of default by Borrower.
1.8 Loan Fee. Borrower shall pay to Lender, concurrently with the recording of the
Deed of Trust, a "Loan Fee" in the amount of Thirty Four Thousand and 00/100 Dollars
($34,000,00). The Loan Fee shall be earned upon the recordation of the Deed of Trust and shall
be in addition to all out-of-pocket expenses to be borne by Borrower.
Section 2 Disbursement of Loan Proceeds.
2.1 Disbursement Conditions. Lender agrees to disburse the loan proceeds at the
times and in the manner set forth in Section 2.2 hereof, but Lender shall be under no obligation to
make any advance until each of the following conditions has been met:
(A) Copies of preliminary working Plans and Specifications for the
Improvements have been delivered to Lender for Lender's approval. Additionally, the letter
regarding Plans and Specifications attached as Exhibit B hereto C'Plans and Specifications
Letter"), with Borrower's approval, its contractor's approval and its architect's approval indorsed
thereon, has been furnished to Lender and has been approved by Lender in writing. Said
preliminary Plans and Specifications are those identified in the Plans and Specifications Letter,
2 195035,5
which shall be updated from time to time as necessary to specifically identify the final Plans and
Specifications (which have not yet been approved by Lender) and all of the other plans and
specifications for the Project.
(B) All permits and approvals required under Federal, State or local law or
regulation in connection with the Project have been obtained, are in force, and are not subject to
appeal or to conditions which have not been met.
(C) Borrower has delivered to Lender the duly executed Promissory Note, this
Agreement, the Deed of Trust, the other documents, instruments and fees required by Section 1
hereof and such other documents that Lender may reasonably require.
(D) Borrower has fumished Lender with:
(1) A policy or policies of fire insurance, in form and in companies
acceptable to Lender, with Lender's loss payable indorsemerit (Form 438 BFU) in favor of
Lender, attached, in an mount satisfactory to Lender and including indorsements of extended
coverage vandalism, malicious mischief, builder's risk completed value form, and a course of
construction clause (indorsement MLB 103 or equivalent).
(2) A certificate of comprehensive general public liability insurance
protecting Borrower and Lender in an amount acceptable to Lender and providing that Lender, as
mortgagee, shall receive thirty (30) days notice prior to cancellation. The policy shall also cany an
indorsement naming Lender as an additional insured, as its interest may appear.
(3) Such other insurance as Lender may require pursuant to the terms
of the Deed of Trust, including, but not limited to, flood and rental interruption insurance.
0i) The Deed of Trust has been recorded, and there has been issued to Lender,
by a responsible title insurance company acceptable to Lender, an "American Land Title
Association, Loan Policy, Additional Coverage - 1970", LP-10 package form of title insurance
policy, together with such indorsemerits as Lender may require, which shall insure the Deed of
Trust as a first lien upon the Project as described in the Deed of Trust, subject to no exceptions
except those referred to above. During the course of construction and following completion
thereof, Lender may require additional indorsements which Borrower will cause to be issued at
Borrower's expense, including, but not limited to, a ALTA Indorsement No. 122 (or equivalent)
at the time of each loan disbursement.
(F) Borrower is not then in default in the performance of any of its warranties,
representations, covenants or agreements coutalned herein or in the Promissory Note or Deed of
Trust.
(G) The Improvements to be constructed and the Project as a whole have been
approved by the City of Aspen and the County of Pitkin and by any other governmental authority
3 195035.5
whose approval Lender may reasonably require and all governmental regulations and controls
have been complied with.
(H) Borrower has furnished to Lender a line item cost breakdown and a cost
schedule of Plans and Specifications based upon actual bids and as prepared by Borrower or by
Borrower's architect on behalf of Borrower and Borrower has furnished Lender with a schedule
of estimated monthly disbursements.
(I) All contracts and subcontracts for the work of improvement which Lender
has asked to review have been submitted to and approved in advance by Lender.
(J) Borrower has furnished Lender with soils tests and foundation
recommendations acceptable to Lender by a qualified registered engineer approved by Lender and
with evidence satisfactory to Lender that such recommendations have been incorporated in the
Plans and Specifications for the Improvements.
(K) All leases of the Project then in existence have been approved by Lender
and are in full force and effect and Borrower has furnished Lender with an assignment of Lessor's
interest therein, said assignment to be in form and substance satisfactory to Lender.
(L) Borrower has delivered to Lender a survey certified by a registered
surveyor or architect and in form and substance satisfactory to Lender. Said survey shall show
the boundaries of the Property and that all proposed Improvements are within the lot and building
lines, shall indicate the location of all easements, utilities, improvements, streets and fights of way,
whether above or below ground, and shall show to the satisfaction of Lender that the
contemplated Improvements will not encroach upon any easement or be damaged by the use of
any easement.
(M) Borrower and Lender have agreed as to the form and substance of the
budget for the loan, a copy of which is attached as Exhibit A ("Budget").
2.2 Disbursements. When all the conditions set forth in Section 2.1 hereof have been
complied with, and for so long as Borrower is not in default hereunder or under the Promissory
Note or Deed of Trust, Lender agrees to disburse the loan proceeds on the following conditions
and in the following manner:
(A) A condition precedent to each disbursement shall be the submission to
Lender, in form and substance satisfactory to Lender, of each of the following documents:
(1) such architect's certificates as Lender may require;
(2) a certificate subscribed by Borrower and approved by Lender,
setting forth the total cost of the work performed to date and the cost of all work performed since
the last previous disbursement;
4 195035.5
(3) a conditional lien waiver (either upon progress payment or upon
final payment, as appropriate) on Lender's approved form executed by each subcontractor and
material supplier intended to be paid out of the particular disbursement and covering all labor,
services, equipment and materials performed or supplied by the particular subcontractor or
material supplier since the last previous disbursement;
(4) an unconditional lien waiver (either upon progress payment or upon
final payment, as appropriate) on Lender's approved form executed by each subcontractor and
material supplier intended to be paid out of the last previous disbursement covering all labor,
services, equipment and materials performed or supplied by the particular subcontractor or
material supplier prior to the last previous disbursement; and
(5) written evidence in form and substance satisfactory to Lender that
the Contractor has been paid in full for all labor, services, equipment and materials performed or
supplied by the Contractor prior to the last previous disbursement.
(B) A further condition precedent to each disbursement shall be that Borrower
is not in default under any agreement contained herein or in the Promissory Note or Deed of
Trust; that there are no unreleased and unbonded mechanics' liens or stop notices; and that no
action, suit or proceeding is then pending or threatened against Borrower or the Project under or
pursuant to the California Environmental Quality Act of 1970 or the National Environmental
Policy Act, or the regulations issued pursuant to either such Act. After recordation of the Deed
of Trust and as a condition precedent to each disbursement under this Section 2, Borrower shall
(if required by Lender) at its own cost and expense, deliver or cause to be delivered to Lender
from time to time such continuation and date-down endorsements to be attached to the Title
Insurance Policy referred to above, in form and substance satisfactory to Lender, as Lender
reasonably deems necessary to insure the priority of the Deed of Trust as a valid first lien on the
Project as of the date of and including the mount covered by each such disbursement, and
Borrower agrees to furnish to the Title Company such surveys and other information as are
required by Lender or the Title Company to enable the Title Company to issue such endorsements
to Lender.
(C) Upon recordation of the Deed of Trust, an initial disbursement shall be
made to Borrower for the payment of certain costs and expenses set forth in Loan Disbursement
Instructions to be prepared by Lender and delivered to escrow at, or prior to, the recordation of
the Deed of Trust.
(D) The remaining proceeds of the loan shall be paid by Lender, as required,
for deposit in a construction loan account ("Construction Loan Account") for disbursement at
Lender's option either by check to Borrower or directly to contractors, subcontractors, laborers
and materialmen in accordance with the Budget. In the event that Borrower becomes aware of
any change in the approved construction costs which would increase the total cost of construction
of the Improvements as shown in the Budget, then Borrower shall immediately advise Lender
thereof in writing and promptly submit to Lender for its approval a revised Budget. In no event
shall Lender be required to disburse any mount which, in Lender's opinion, will either (i) reduce
5 195035.5
the total undisbursed mount of the Loan below the mount necess~y to pay for the balance of
the work, labor and materials necessary to fully complete construction of the Improvements and
the payment of all costs in connection therewith, or (ii) reduce the undisbursed mount of Loan
proceeds allocated to the costs described in any paragraph contained in the Budget or in any cost
category set forth in any schedule of values approved by Lender below the amount which Lender,
in Lender' s opinion, deems sufficient to pay in full the costs to which such amount is allocated
(the deficiencies described in clauses (i) and (ii) of this sentence being hereinafter collectively
referred to as "Loan Deficiency"). Borrower hereby agrees that if Lender determines that a Loan
Deficiency exists, Borrower shall, upon five (5) days' written notice from Lender, either (A)
deposit with Lender the mount that Lender, in its sole opinion, deems necessary to pay for the
balance of the costs of completing the construction of the Improvements or the costs in the Cost
Category described in any paragraph contained in the Disbursement Schedule or in any such
schedule of values, as the case may be, less the undisbursed mount of the Loan or undisbursed
portion thereof under the Cost Category in question, or (B) furnish Lender with paid invoices,
bills and receipts indicating that Borrower has paid, from Borrower's own funds, for the costs of
completing the construction of the Improvements or the entire balance of the costs in the cost
category in question, as the case may be, in a sufficient amount to make the undisbursed amount
of the Loan or the undisbursed portion thereof under the cost category in question sufficient to
pay for the entire balance of the costs of completing the construction of the Improvements or the
entire balance of the costs in such cost category, as the case may be. All mounts deposited by
Borrower pursuant to this Section shall be disbursed in accordance with the terms of this
Agreement for the payment of the cost of construction of the Improvements prior to any further
disbursements of the Construction Advance. Notwithstanding anything to the contrary set forth
in this paragraph, in determining the Loan Deficiency, Lender, at its option, may determine what
sums are available by reallocating between specific line items and may also review the amount of
any holdback.
Oi) Subject to the terms and conditions of this Section 2.2, funds will be
disbursed by Lender on or about the tenth (10th) day of each month, or at such other and more
frequent intervals as Lender may agree to, from said Construction Loan Account in amounts
equal to ninety percent (90%) of the mount expended by Borrower and Borrower's Contractor,
if any, during the previous month for labor, services, equipment and materials incorporated in the
Improvements and for major materials "suitably stored" (as defined below) at the site during the
preceding month C'Hard Costs") and for one hundred percent (100%) of the actual amount
expended by Borrower for the following "Soft Costs" of the Project: architects fees, loan
interest, title insurance fees, construction insurance premiums, as evidenced by receipted bills
appropriately identified, and such other costs approved by Lender; all such Soft Costs shall be
indicated by invoices, statements or other written evidence approved by Lender. "Suitably
stored" shall mean fenced, adequately insured, bonded and guarded, if required by Lender.
Notwithstanding the foregoing, Borrower agrees that Lender shall have the
right, without further notice to or authorization by Borrower, to use loan proceeds to pay, when
due, payments of delinquent obligations on any senior lien which encumbers the Property, legal
fees and disbursements of Lender's legal counsel which are payable by Borrower hereunder or
95035.5
under any document evidencing or securing the loan, or any other sums as may be owing from
time to time by Borrower to Lender under any document evidencing or securing the loan.
Borrower further agrees that Lender shall also be entitled to withhold and
pay out such funds as Lender may be required to withhold or pay out pursuant to any agreement
or instrument of credit Lender may be required to enter into with or give to the City of Aspen or
the County of Pitkin or to any bonding company in connection with the completion of and
payment for off-site improvements or other parts of the Project.
(F) To the extent loan proceeds are available, Lender will disburse the
remaining ten percent (10%) of the Hard Costs upon the completion of each of the following:
(I) timely recordation of notice of completion;
(2) expiration of the lien period and the absence of any unreleased
mechanics' liens or stop notices;
(3) completion of the Improvements in accordance with the Plans and
Specifications to the satisfaction of Lender;
(4) issuance of a certificate or certificates of occupancy for the Project
by the appropriate governmental authority;
(5) issuance of an architect's certificate of completion in accordance
with the Plans and Specifications;
(6) issuance of a certificate signed by Borrower and a licensed
engineer, certifying the final cost of the completed Improvements;
(7) delivery to Lender of unconditional lien waivers on Lender's
approved form executed by any party that has recorded a preliminary notice of lien against the
Project and by each subcontractor and material supplier providing labor or materials for the
Project, together with such other proof as Lender may require that all of the costs and expenses of
the construction of the Project have been paid; and if requested by Lender, delivery of executed
AIA Form G706 (Contractor' s Affidavit of Payments of Debts), AIA Form GT06A (Contractor' s
Aftdavit of Kelease of Liens) or AIA Form G707 (Consent of Surety of Finai Payment) or
equivalents thereof; and
(8) acceptance and approval of the Improvements by any appropriate
person whose approval Lender may reasonably require.
2.3 Use of Proceeds. Borrower agrees that:
(A) the deposit of said sums in the Construction Loan Account shall be
conclusively deemed full and complete consideration for said Promissory Note and Deed of Trust
195035.5
and that such consideration shall be deemed to have been fully passed and paid to Borrower.
Such Construction Loan Account shall be utilized only for the receipt and disbursement of
construction funds and shall be drawn upon only for paying the actual costs of construction work
contemplated by this Agreement as set forth in the Budget. Borrower shall pay interest on funds
disbursed by Lender from the Construction Loan Account from the date of disbursement. Any
and all funds deposited in said Construction Loan account shall be and remain the property of
Lender until any checks drawn on said Construction Loan Account for construction work have
been cleared through the Construction Loan Account and have been paid, and to more fully
protect Lender in this respect, Borrower hereby irrevocably assigns to Lender all of its present
and future fight, title and interest in the Construction Loan Account, and all moneys to be placed
therein. Borrower agrees that the funds disbursed to it or for its account from the Construction
Loan Account shall be used solely for the payment of construction work, and not for the payment
of general creditors of Borrower;
(B) in the event the Improvements (or any portion thereof) are completed prior
to total disbursement of all of the budget categories on the Budget (or those budget categories
that relate to the portion completed), Lender will not be obligated to reallocate undisbursed
amounts to other budget categories on the Budget and such undisbursed amounts may be retained
by Lender; and
(C) disbursements on account of the direct costs of constructing the
Improvements shall be limited to the lesser of(a) the actual cost to Borrower of work and labor
performed on the Improvements and materials incorporated into the Improvements or suitably
stored on the Property or (b) the amounts allocated to the work, labor and materials in question
on budgets and schedules of values approved by Lender multiplied by the percentage of
completion (as determined by Lender) of such work, labor and materials.
Section 3 Representations, Warranties. Covenants and A~reements.
Borrower represents, warrants, covenants and agrees as follows:
3.1 Valid: Binding. This Agreement, and all instruments herein required, when
executed and delivered, shall be valid and binding upon Borrower.
3.2 Consents. All required consents, permission and licenses required by any
governmental regulatory body or authority to which Borrower or the construction of the Project
is subject, which may be necessary in relation to this Agreement, the borrowing hereunder, and
the construction of the Project, have been obtained.
3.3 U~figation. As of the date of this Agreement, there is no litigation, proceeding or
dispute pending against Borrower, the adverse determination of which might affect the ability of
Borrower to repay the loan or to construct the Improvements.
3.4 Changes in Plans or Specifications. No changes shall be made in the Plans and
Specifications without the approval of Lender.
195035.5
3.5 Compliance of Improvements. Borrower has examined and is familiar with all the
easements, covenants, conditions, restrictions, reservations, building laws, regulations, zoning
ordinances and Federal, State and local requirements affecting the Project. The contemplated
Improvements will, in all respects, conform to and comply with the requirements of said
easements, covenants, conditions, restrictions, reservations, building laws, regulations, zoning
ordinances and Federal, State and local requirements and all construction and installation of said
Improvements shall conform, in all respects, therewith and with all applicable ordinances and
statutes, will not encroach upon any easement or be damaged by the use or maintenance of any
easement and shall be in accordance with all requirements of the regulatory authorities having
jurisdiction thereof.
3.6 Construction. Borrower shall fully satisfy all of the conditions and provisions of
Section 2.1 hereof, and shall complete the construction in substantial accordance with the Plans
and Specifications no later than the maturity date of the Promissory Note. Borrower shall cause
construction of the Improvements to be prosecuted and completed with due diligence and in good
faith and without delay. Borrower shall cause the Improvements to be constructed in a good and
workmanlike manner in accordance with the Plans and Specifications and in all respects in
compliance with all applicable laws, rules, permits, requirements and regulations of any
governmental authority, and Borrower will not cause, permit or allow any deviations from the
Plans and Specifications without the prior written consent of Lender thereto. Upon written
demand from Lender, Borrower shall, at Borrower's sole cost and expense, correct any defect in
the Improvements or any departure from the Plans and Specifications not theretofore approved in
writing by Lender and it is expressly understood and agreed that the advancement by Lender of
any Loan proceeds shall not constitute a waiver of Lender' s right to require compliance with this
covenant with respect to any such defects or departures from the Plans and Specifications not
theretofore approved by Lender in writing.
3.7 Off-Site Improvements. Borrower shall commence and complete any off-site
improvements of the public streets, walks and like areas, which are part of the Project, as required
and provide utilities and other facilities in accordance with the approved Plans and Specifications
and requirements of the governmental body having jurisdiction thereof: Any such off-site
improvements shall be deemed a part of the work of improvement of the Project, except to the
extent including such off-site improvements as part of such improvement is inconsistent with this
Agreement. Borrower expressly agrees to indemnify Lender and to hold it harmless against any
claim of any surety furnishing a bond for such work to the governmental body having jurisdiction,
whether such claim be founded upon existing or future liability, and whether such liability be
express or implied.
3.8 Subcontractor Liens. Borrower shall pay promptly all valid charges for material
and labor and such charges of subcontractors. Should any claims of lien be filed or recorded or
any stop notice served, Borrower shall forthwith pay and discharge the same and cause the same
to be released, or furnish Lender with evidence of proper indemnity by satisfactory bond or
otherwise.
9 195035.5
3.9 Purpose of Funds. All funds received and to be received by Borrower hereunder
are and will be received in trust for the purpose of paying in full all contractors, subcontractors,
materialmen, and laborers, and the same shall not be used for any other purpose, except for such
other purposes as may be specified in Section 2.2(A) hereof.
3.10 No Conditional Sales Contracts. Borrower shall not incorporate in the
Improvements and shall not permit any other person to incorporate therein any property acquired
under conditional sales contract, or under lease, or under any contract whereby the vendor retains
title thereto or a security interest therein.
3.11 Statements. Borrower shall furnish to Lender, monthly, verified written
statements, in such form and detail as Lender may require, showing (i) all items, amounts paid and
remaining to be paid for labor and materials and subcontracts to be furnished, for which payment
has not been made, and the amounts to be paid therefor, (ii) all other development and
construction activities and (iii) all leasing and sales activities, if applicable.
3.12 Accounts and Records. Borrower shall keep detailed accounts and records, in
accordance with sound accounting practices, and shall make available to Lender, at all times, all
books, statements, invoices, receipted bills, orders and other records relating to the Project, and
to furnish Lender with copies of the same.
3.13 Survey. Borrower shall furnish to Lender, within ten (10) days after completion of
the foundations, a survey, certified by a licensed land surveyor, or such other evidence as may be
acceptable to Lender, showing the foundations to be entirely within the Property lines and without
any encroachment upon any easement, and not in violation of any covenants, conditions or
restrictions of record, or of any law or regulation of any public authority and shall furnish to
Lender upon completion of construction a survey, cefftfied by a licensed land surveyor, showing
Improvements in place, lot and street lines, access to public streets, encroachments and easements
and shall correct any violation unless waived by Lender.
3.14 Insurance. Borrower shall maintain all the insurance referred to in Section 2. I(E)
hereof, and shall pay the premiums thereon when due, shall carry or cause the contractor and
subcontractors to cany worker's compensation insurance adequate to protect Lender against any
claims aris'mg out of the construction of the Improvements and shall pay or shall cause its
contractor and subcontractors to pay promptly all amounts withheld on account of employees'
income taxeS, labor fringe benefits, union contributions, unemployment compensation and
disability benefits.
3.15 Restoration. If the Property or the Improvements are damaged or destroyed by
flood, earthquake, wind, fire or by any other means, Borrower shall promptly restore such
Property and Improvements to the condition in which they were before such damage or
destruction, all at Borrower's expense, but Borrower shall not be obligated to restore such
Property and Improvements unless Lender permits Borrower to use any insurance proceeds which
are payable in connection therewith for the payment of the cost of restoration. If any of these
contingencies occurs, Lender shall not be obligated to make any further advances until the
10 ~so~s,s
Property and Improvements have been restored to the same condition existing before the
contingency.
3.16 Proceeds for Improvements: Deficiencies. The proceeds of the loan shall be
sufficient to complete the Improvements in accordance with the Plans and Specifications, but that
if and when the total loan funds contemplated hereby are not sufficient, in the reasonable
judgment of Lender, to pay in full for the completion of the contemplated Improvements, or to
pay for any other item in the Budget, including, but not limited to, interest on the loan, then, upon
written demand, Borrower shall forthwith pay and deposit with Lender in a non-interest bearing
account an amount equal to such deficiency, as estimated by Lender, within ten (I0) days of such
demand. Lender shall have no obligation to make any further disbursements hereunder until such
deposit is made. Lender's determination of the amount of such deficiency, made in good faith,
shall be conclusive upon the parties. Borrower hereby grants to Lender a security interest in all
funds deposited with Lender which shall attach immediately upon deposit of such funds with
Lender. In the event of a default hereunder or under the Promissory Note or Deed of Trust,
Lender may apply the funds deposited by Borrower pursuant to this paragraph 3.16, in such order
or priority as Lender shall deem appropriate, to the repayment of Borrower's obligations with
respect to the loan contemplated under this Agreement. Any additional funds required to
complete the Improvements may be advanced by Lender, at its option, in which event such
advances shall constitute an additional loan to Borrower, repayable upon demand, bearing
Additional Interest Damages, as set forth in the Promissory Note, which additional loan shall be
secured by the Deed of Trust.
3.17 Inspections. Borrower shall permit Lender, its agents or representatives, to enter
upon the Property and to inspect the Improvements at any time. If any of the work, in the opinion
of Lender, is not being done in accordance with good building practices, or in accordance with the
approved Plans and Specifications, or is otherwise unsatisfactory, Lender shall have the right to
stop said work and order its replacement or correction, whether or not said unsatisfactory work
has theretofore been incorporated in the Improvements, and shall be entitled to withhold all
further disbursements until said unsatisfactory work has been corrected. Failure of Borrower to
make said corrections within fifteen (15) days after demand from Lender shall constitute a default
hereunder.
3.18 Coordination: Building Practices. Borrower shall coordinate the construction of
the Project and all work and materials shall be in accordance with good building practices and in
conformity with all governmental laws and regulations and in strict accordance with the Plans and
Specifications, as approved by the parties.
3.19 Taxes: Assessments. Borrower shall pay, when due, all taxes and assessments.
3.20 Fees. Borrower shall pay to Lender, or to the persons entitled thereto, all title,
escrow, tax service charges, costs of survey, attorneys' fees, appraisal fees, insurance premiums,
inspection fees, engineering fees and any other expenses or charges in connection with making
this loan.
I 1 195035.5
3.21 Authorization to Pay Fees. Lender is authorized to pay any and all of the items
referred to in Sections 3.19 and 3.20 for the account of Borrower, in the event such charges are
not paid when due by Borrower and in the further event that Lender, in its discretion, determines
that such charges are reasonable, in which case Borrower shall repay the same to Lender on
demand, or Lender at its option may pay the same from the proceeds of the loan.
3.22 Business Activities. Borrower will not engage in any business activities
substanf~ally different from or unrelated to its present business activities and operations.
3.23 No Additional Borrowing. Borrower will not borrow any money in connection
with the Project, except that provided for hereunder.
3.24 Recordation; Commencement. Borrower will not permit the commencement of
any work, or the furnishing of any material, upon or in connection with the Improvements (which
include "off-site" work), including demolition, surveying or digging of test holes or the like, until
the Deed of Trust has been recorded or adequate indemnity arrangements have been made with
the title company insuring the Deed of Trust securing this loan, and Lender has consented to the
commencement of the work. If any work should be done, or materials furnished, contrary to the
foregoing, Lender shall not be obligated to advance any funds hereunder, and Borrower shall be
obligated to pay all fees, costs, interest and expenses incurred hereunder.
3.25 Performance. Borrower shall faithfully perform all of the terms, covenants and
conditions of all leases of the Project which it may enter into and shall not mend, modify or alter
the same without the express written consent of Lender and shall not accept any mount payable
thereunder in advance of its due date.
3.26 Indemnification. Borrower shall indemnify, defend and hold Lender harmless
against any claim for a broker's commission with respect to Borrower's application for and the
making of this loan.
3.27 Financial Statements. All financial statements, information and other data
furnished by Borrower to Lender in connection with any seeking of credit are, in all material
respects, accurate and correct; such financial statements have been prepared in accordance with
generally accepted accounting principles and practices, and no adverse changes have occurred
since the date of such statements.
3.28 Contractor Information. Upon demand by Lender, Borrower shall furnish to
Lender from time to time correct lists of all contractors, subcontractors and material suppliers
employed in connection with the construction of the Improvements. Each list shall include the
name, address and telephone number of each such contractor, subcontractor or material supplier,
a general statement of the nature of the work to be done, the labor and materials to be supplied,
the names of the laborers' materialmen if known, and the approximate dollar value of such labor
.~., or work with respect to each. Lender shall have the right to make direct contact with each
/ contractor, subcontractor and material supplier to verify the facts disclosed by each list or for any
~. purpose. All contracts let by Borrower or Contractor relating to construction of the
12 195035.5
Improvements shall require them to disclose to Lender information sufficient to make said
verification.
Section 4 Events of Default and Remedies.
4.1 Events of Default. The occurrence of any one or more of the following shall
constitute an "Event of Default" under this Agreement (provided however that if Borrower cures
any such default as provided herein or in a manner satisfactory to Lender as evidenced in a writing
by Lender, then such event shall not be an Event of Default hereunder):
(A) Failure by Borrower to pay any monetary mount when due under any
Loan Document and the expiration of twenty (20) days niger written notice of such failure by
Lender to Borrower without Borrower's payment thereo£
(B) Failure by Borrower to perform any obligation not involving the payment
of money, or to comply with any other term or condition applicable to Borrower under any
document described in Section 2. I(B) hereof CLoan Documents") and the expiration of forty five
(45) days at~er written notice of such fa'dure by Lender to Borrower.
(C) Any representation or warranty by Borrower in any Loan Document is
materially false, incorrect, or misleading as of the date made.
(D) The occurrence of any event (including, without limitation, a change in the
financial condition, business, or operations of Borrower for any reason whatsoever) that
materially and adversely affects the ability of Borrower to perform any of its obligations under the
Loan Documents and the expiration of forty five (45) days after written notice of such event by
Lender to Borrower and failure of Borrower within such forty five (45) day period to cure.
(E) Borrower (i) is unable or admits in writing Borrower's inability to pay its
monetary obligations as they become due, (ii) fails to pay when due any monetary obligation,
whether such obligation be direct or cunfingent, to any person in excess of Five Thousand and
No/100 Dollars ($5,000.00), (iii) makes a general assignment for the benefit of creditors, or (iv)
applies for, consents to, or acquiesces in, the appointment of a trustee, receiver, or other
custodian for Borrower or the property of Borrower or any part thereof, or in the absence of such
application, consent, or acquiescence a trustee, receiver, or other custodian is appointed for
Borrower or the property of Borrower or any part thereof, and such appointment is not
discharged within sixty (60) days.
(F) Commencement of any case under the Bankruptcy Code, Title 11 of the
United States Code, or commencement of any other bankruptcy arrangement, reorganization,
receivership, custodianship, or similar proceeding under any federal, state, or foreign law by or
against Borrower and with respect to any such case or proceeding that is involuntary, such case
or proceeding is not dismissed within sixty (60) days of the filing thereof.
13 195035.5
(G) Any litigation or proceeding, including but not limited to any action
alleging noncompliance with the Environmental Quality Act of 1970 (Division 13 of the Public
Resources Code) or the National Environmental Policy Act, or the regulations issued pursuant to
such Acts, is commenced before any governmental authority against or affecting Borrower or the
property of Borrower or any part thereof and such litigation or proceeding is not defended
diligently and in good faith by Borrower and the expiration of thirty (30) days after written notice
thereof by Lender to Borrower and failure of Borrower within such thirty (30) day period to cure.
(H) A final judgment or decree for monetary damages or a monetary fine or
penalty (not subject to appeal or as to which the time for appeal has expired) is entered against
Borrower by any governmental authority, which together with the aggregate amount of all other
such judgments and decrees against Borrower that remain unpaid or that have not been
discharged or stayed, exceeds Five Thousand and No/100 Dollars ($5,000.00) is not paid and
discharged or stayed within thirty (30) days after the entry thereof.
(I) Commencement of any action or proceeding which seeks as one of its
remedies the dissolution of Borrower.
(J) All or any part of the property of Borrower is attached, levied upon, or
otherwise seized by legal process, and such attachment, levy, or seizure is not quashed, stayed, or
released within twenty (20) days of the date thereof.
(K) The occurrence of any Transfer (as defined in the Deed of Trust), unless
prior to such Transfer the holder of the Note has delivered to Borrower the written consent of
such holder to such Transfer.
(L) Inability of Borrower to satisfy any condition for the receipt of a
disbursement hereunder, or to resolve the situation to the satisfaction of Lender, for a period in
excess of thirty (30) days after written notice from Lender unless (i) such inability shall have been
caused by conditions beyond the control of Borrower, including without limitation, acts of God or
the elements, fire, strikes, labor disputes, delays in delivery of material and disruption of shipping;
(ii) Borrower shall have made adequate provision acceptable to Lender for the protection of
materials stored on-site and for the protection of the Improvements to the extent then constructed
against deterioration and against other loss or damage or theft; ('fii) Borrower shall furnish to
Lender satisfactory evidence that such cessation of construction will not adversely affect or
interfere with the rights of Borrower under material contract or subcontracts relating to the
construction or operation of the Improvements; and (iv) Borrower shall furnish to Lender
satisfactory evidence that the completion of the Improvements can be accomplished by the
Completion Date.
(M) Any failure, breach, or default by Borrower under the Other Loans (defined
herein), it being the intention and agreement of Lender and Borrower to cross-default the Loan
and the Other Loans with one another. As used in this Paragraph, "Other Loans" shall mean any
and all other indebtedness, of any kind or nature, from Lender to Borrower, whether existing on
- - the Closing Date or thereafter arising.
95035.5
CN) Any cessation of work on the Project for a period often (10) days for any
reason other than strikes, lockouts, acts of God or other reasons beyond the control of Borrower
occurs and the expiration often (10) days after written notice thereof by Lender to Borrower and
failure of Borrower within such ten (10) day period to cure.
(O) Any execution, attachment, or other writ is levied against the Project or the
loan proceeds and remains in effect for fifteen(15) days.
(P) Any receiver is appointed for Borrower or for the Project.
(Q) Any mechanics lien or any stop notice is filed and not be bonded against or
released within ten (10) days.
4.2 Remedies.
(A) Notwithstanding any provision to the contrary herein or any of the Loan
Documents, upon the happening of any Event of Default under this Agreement, or upon an Event
of Default under any of the Loan Documents: (i) Lender's obligation to make further
disbursements of the Loan shall abate, and (ii) if the Event of Default shall not be cured within the
applicable notice and cure periods, then Lender shall, at its option, have the remedies provided in
the Loan Document breached by Borrower, including, without limitation, the option to declare all
outstanding indebtedness to be immediately due and payable without presentment, demand,
protest or notice of any kind, and the following remedies: Lender' s obligation to make further
disbursements to Borrower shall terminate; Lender may, at its option, apply any of Borrower's
funds in its possession to the outstanding indebtedness under the note whether or not such
indebtedness is then due; Lender may exercise all rights and remedies available to it under any or
all of the Loan Documents; and Lender shall have the right to cause an independent contractor
selected by Lender to enter into possession of the Premises and to perform any and all work and
labor necessary for the completion of the Project substantially in accordance with the Plans and
Specifications and to perform Borrower's obligations under this Agreement. All sums expended
by Lender for such purposes shall be deemed to have been disbursed to and borrowed by
Borrower and shall be secured by the Deed of Trust on the Premises.
0El) Borrower hereby constitutes and appoints Lender, or an independent
contractor selected by Lender, as its true and lawful attorney-in-fact with full power of
substitution for the purposes of completion of the Project and performance of Borrower' s
obligations under this Agreement in the name of the Borrower, and hereby empower said
attorney-in-fact to do any or all of the following upon the occurrence of an Event of Default:
(1) to use any of the funds of Borrower, including any balance of the
Loan, as applicable, and any funds which may be held by Lender for Borrower, for the purpose of
effecting completion of the Improvements in the manner called for by the Plans and
Specifications;
15 195035.5
(2) to make such additions, changes and corrections in the Plans and
Specifications as shall be necessary or desirable to complete the Improvements in substantially the
manner contemplated by the Plans and Specifications;
(3) to employ any contractors, subcontractors, agents, architects and
inspectors required for said purposes;
(4) to employ attorneys to defend against attempts to interfere with the
exercise of power granted hereby;
(5) to pay, settle or compromise all existing bills and claims which are
or may be liens against the Premises, the Improvements or the Project or may be necessary or
desirable for the completion of the Improvements or clearance of objections to or encumbrances
on title;
(6) to execute all applications and certificates in the name of Borrower,
which may be required by any other construction contract;
(7) to prosecute and defend all actions or proceedings in connection
with the Project and to take such action, require such performance and do any and every other act
as is deemed necessary with respect to the completion of the Improvements which Borrower
might do on its own behalf~
(8) to let new or additional contracts to the extent not prohibited by
their existing contracts;
(9) to employ watchmen and erect security fences to protect the
Project from injury; and
(10) to take such action and require such performance as it deems
necessary under any of the bonds or insurance policies to be furnished hereunder, to make
settlements and compromises with the sureties or insurers thereunder, and in connection therewith
to execute instruments of release and satisfaction.
(I 1) Lender, at its option, and without declaring a total default
hereunder, may enter the Property and cause to be performed and furnished any and all labor or
work and materials it may deem necessary or desirable for the protection and completion of the
Project either in accordance with the Plans and Specifications, or otherwise as Lender shall
determine, and, to this end, Lender may do any act and enter into any contract and incur such
costs therefor as it deems proper for such purpose, and may pay therefor any part or all of the
unexpended proceeds of the loan, and any stuns so expended shall be deemed disbursements of
the loan to Borrower. Should the amounts expended, including incidental expenses and attorneys'
fees, exceed the unexpended balance of the loan, Borrower agrees to pay such excess to Lender
on demand, together with Additional Interest Damages thereon as set forth in the Promissory
16 195035.5
Note, and the mount thereof, with said interest, if not paid, shall be secured by said Deed of
Trust with the same effect as if originally part of the loan.
It is understood and agreed that the foregoing power of attorney shall be deemed to be a power
coupled with an interest which cannot be revoked until repayment of the Loan.
Section 5 General Provisions.
5.1 Deed of Trust: Security. The Deed of Trust to be given by Borrower shall include
appropriate provisions whereby it is made security for the performance of all of the terms,
conditions and provisions hereot~
5.2 No Obligation of Lender to Construct. Borrower agrees that Lender is under no
obligation to construct or supervise construction of the Improvements, that inspection by Lender
of the construction of the Improvements is solely for the purpose of protecting the security of
Lender, and that nothing in this Agreement is to be construed as a representation or warranty by
Lender that all compliances have been or will be made by Borrower or that the construction is or
will be flee from faulty material or workmanship, or that the construction is in accordance with
any agreement between Borrower and any contractors, subcontractors, purchasers, lessees, or
others.
5.3 Lender's Right to Appear. Borrower agrees that Lender shall have the right, but
not the obligation, to appear in or defend any action or proceeding purporting to affect the Project
or the rights or duties of the parties hereunder, or the payment of any funds in connection
herewith, and in that regard Lender may pay all necessary expenses, employ counsel and pay
reasonable attorneys' fees and costs, all of which Borrower agrees to repay to Lender upon
demand, together with Additional Interest Damages as set forth in the Promissory Note.
5.4 Lender as Agent. Borrower hereby irrevocably appoints, designates, empowers
and authorizes Lender, as its agent, to file or record any notice of completion, cessation of labor,
or any other notice that Lender deems necessary to file or record to protect the interest of Lender
under the provisions of this Agreement, the Promissory Note or the Deed of Trust.
5.5 No Trust Fund. Nothing heroin contained shall establish a trust fund for the
benefit of any person or persons not parties to this Agreement, nor shall any such person or
persons have any rights hereunder, nor shall anything heroin impose any liability upon Lender to
pay or be chargeable with any claims for labor or materials. This Agreement is personal to
Borrower and may not be assigned, except with the written consent of, and under such conditions
as may be unilateraIly imposed by, Lender. This Agreement shall inure to the benefit of Lender
and its successors and assigns.
5.6 No Waiver. No disbursement of proceeds of the Loan shall constitute a waiver of
any conditions to Lender's obligation to make further disbursements, and in the event Borrower is
unable to satisfy any conditions thereof, and no disbursement of proceeds of the Loan (or any
waiver of any such conditions) shall have the effect of precluding Lender from thereafter declaring
17 195035.5
such inability to constitute a default under this Agreement. Any waiver by Lender of any term,
condition or requirement of this Agreement shall not constitute a waiver of any other term,
condition or requirement hereof or for any other purpose.
5.7 No Secondary Financing. There shall be no secondary financing of the Project,
and Borrower agrees not to execute or permit any junior lien on the Project or any part thereo£
5.8 Survival. All representations, warranties, covenants and agreements herein
contained on the part of Borrower shall sundve the making of the loan and the execution of
Borrower's Promissory Note or notes, and shall be effective as long as any interest on or principal
of the loan remains unpaid. In accepting each advance of loan proceeds, Borrower shall be
deemed to have reaffirmed to Lender as of the date of said acceptance, the truth and correctness
of each of Borrower's representations and warranties set forth herein.
5.9 Attorneys' Fees. In the event Borrower makes any claims or demands upon
Lender, or in the event of any legal action between Borrower and Lender in connection with this
Agreement, or any documents executed pursuant hereto, or any promissory note issued
hereunder, or the transaction contemplated hereby (whether or not the loan contemplated hereby
is funded), Borrower shah pay upon demand all reasonable attomeys' fees and costs incurred by
Lender in connection with such claim, demand or action, including any appeal therefrom, with
interest thereon from the date of demand at the interest rate in Section 7 of the Deed of Trust,
unless Borrower prevails in an action against Lender by obtaining a final judgment against Lender
for the damages or other relief sought by Borrower. Without limiting the foregoing, Borrower's
obligation to pay Lender's attorneys' fees and costs as set forth in the preceding sentence shall
apply: (i) whether or not Borrower actually files an action against Lender, and (ii) if Borrower
files an action against Lender but fails to obtain a final judgment against Lender for the damages
or other relief sought by Borrower for any mason, including but not limited to Borrower failing to
pursue such action, settlement of such action or Lender prevailing in such action. If after Lender
makes any demand for attorneys' fees and costs Lender is forced to take legal action to collect
such fees and costs, all attorneys' fees and costs incurred as a result of such action shall be paid by
Borrower. This provision is intended to survive the repayment of the loan evidenced hereby and
shall have application to any actions or proceedings commenced subsequent to the term of this
loan or of the Promissory Note.
5.10 Notice. Any notice or demand which shall be required or permitted by law or any
provision of this Agreement shall be in writing, and if the same is to be served upon Lender, may
be personally delivered to Lender, or shall be deposited in the United States mail, certified, return
receipt requested, postage prepaid, addressed to Lender as follows:
City of Aspen
530 E. Main
Aspen, Colorado 81611
Attn:
18 ~ ~oas .s
If such notices or demands are to be served upon Borrower, said notices or demands may be
personally delivered to Borrower, or shall be deposited in the United States mail, certified, return
receipt requested, postage prepaid, addressed to Borrower as follows:
Aspen Country Inn I, L.P.
530 E. Main
Aspen, Colorado 81611
Attn: Executive Director of AsperFPitkin Housing Authority
5. I 1 Advances. As a part of the consideration to Lender, Borrower grants to Lender
the right to make any given advance of loan proceeds when the Borrower shall be entitled to the
same in accordance with this Agreement, notwithstanding that the Borrower shall not have
requested such advance or shall have refused to accept the same.
5.12 Authority to File Notices. Borrower irrevocably appoints Lender as its attorney-
in-fact, with full power of substitution, to f~e for record, at the Borrower's cost and expense and
in Borrower' s name, any notices of completion, notices of cessation of labor, or any other notices
that Lender considers necessary or desirable to protect its security.
5.13 Inconsistencies in Loan Documents. In the event of any inconsistencies between
the terms of this Agreement and any terms of any of the Loan Documents, the terms of this
Agreement shall govern and prevail.
5.14 Lender Approval of Instruments and Parties. All proceedings taken in accordance
with transactions provided for herein; all surveys, appraisals and documents required or
contemplated by this Agreement, and the persons responsible for the execution and preparation
thereof, shall be satisfactory to and subject to approval by Lender, which approval shall not be
unreasonably withheld or destroyed. Lender's counsel shall be provided with copies of all
documents which they may reasonably request in connection with the Agreement.
5.15 Third-Party Consultants. Lender may hire such third-party consultants as it
reasonably deems necessary, the costs of which shall be paid by Borrower, to provide the
following services: (a) review final Plans and Specifications and final construction cost
breakdown and the construction schedule; (b) conduct compliance inspections with respect to the
progress of construction of the Project and approve each element of a request for disbursement
relating to construction costs; and (c) perform such other services as may, from time to time, be
required by Lender. This obligation on the part of Borrower shall survive the closing of the Loan
and the repayment thereof. Borrower hereby authorizes Lender, in its discretion, to pay such
expenses, charges, costs and fees at any time by a disbursement of the Loan.
5.16 Payment of Expenses. Borrower shall pay all taxes and assessments and all
expenses, charges, costs and fees provided for in this Agreement or relating to the Loan or
construction of the Improvements, including, without limitation, any fees incurred for recording
or filing any of the Loan Documents, title insurance premiums and charges, tax service contract
fees, fees of any consultants, Lender's processing and closing fees, reasonable fees and expenses
19 ~95o35.s
of Lender's counsel, printing, photostating and duplicating expenses, air freight charges, escrow
fees, costs of surveys, premiums of hazard insurance policies and surety bonds and fees for any
appraisal, appraisal review, market or feasibility study required by Lender. Borrower hereby
authorizes Lender to disburse the proceeds of the Loan to pay such expenses, charges, costs and
fees notwithstanding that Borrower may not have requested a disbursement of such mount;
provided that Borrower acknowledges that Lender has no obligation to disburse amounts listed
under "Borrower's Equity" on the Budget. Such disbursement shall be added to the outstanding
principal balance of the Note. The authorization hereby granted shall be irrevocable, and no
further direction or authorization from Borrower shall be necessary for Lender to make such
disbursements. However, the provision of this Section 12.10 shall not prevent Borrower from
paying such expense, charges, costs and fees from its own funds. All such expenses, charges,
costs and fees shall be Borrower' s obligation regardless of whether or not Borrower has
requested and met the conditions for a disbursement of the Loan. The obligations on the part of
Borrower under this Section 12.10 shall survive the closing of the Loan and the repayment
thereof.
5.17 Indemnification. To the fullest extent permitted by law, Borrower agrees to
protect, indemnify, defend and hold harmless Lender, its directors, officers, agents and employees
from and against any and all liability, expense or damage of any kind or nature from any suits,
claims or demands, including reasonable legal fees and expenses on account of any matter or thing
or action or failure to act by Lender, whether in suit or not, arising out of this Agreement or in
connection herewith, other than such claims and liabilities as arise solely fi'om the gross
negligence or intentional misconduct of Lender. Upon receiving knowledge of any suit, claim or
demand asserted by a third party that Lender believes is covered by this indemnity, Lender shall
give Borrower notice of the matter and an opportunity to defend it, at Borrower's sole cost and
expense, with legal counsel satisfactory to Lender. Lender may also require Borrower to so
defend the matter. The obligations on the part of Borrower under this Section 12.12 shall survive
the closing of the Loan and the repayment thereof.
5.18 Titles and Headings. The rifles and headings of sections of this Agreement are
intended for convenience only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
5.19 Change, Discharge, Termination or Waiver. No provision of this Agreement may
be changed, discharged, terminated, or waived except in writing signed by the party against whom
enforcement of the change, discharge, termination, or waiver is sought. No failure on the part of
Lender to exercise and no delay by Lender in exercising any right or remedy under the Loan
Documents or under the law shall operate as a waiver thereof.
5.20 Disbursements in Excess of Loan Amount. In the event the total disbursements by
Lender exceed the amount of the Loan, the total of all disbursements shall be secured by the Deed
of Trust. All other sums expended by Lender pursuant to this Agreement or any other Loan
Documents shall be deemed to have been paid to Borrower and shall be secured by, among other
things, the Deed of Trust.
20 195035.5
5.21 Right of Set-Off Borrower (i) as security for payment and performance of the
obligations evidenced by the Loan Documents grants to Lender a continuing security interest in
any and all deposits (general, special, time, or demand, whether provisional or final) at any time
held and any other indebtedness at any time owing by Lender for the credit or for the account of
Borrower, and (ii) authorizes Lender at any time and from time to time at~er any failure by
Borrower to timely pay or perform any of the obligations under the Loan Documents, without
notice to Borrower (any notice being waived by Borrower), to segregate or set-off and apply such
deposits and indebtedness tO or for such obligations, regardless of whether such deposits or
indebtedness are contingent or matured.
5.22 Signs. Lender shall have the right to erect one or more signs of Lender's design
referring to this financing on the Property, and Lender shall have the right at any time to publicize
this financing as Lender may deem appropriate.
5.23 Keal Estate Taxes. Borrower shall provide real estate tax services by a tax service
company acceptable to Lender.
5.24 Debtor and Creditor Relationship. Nothing herein contained shall in any manner
be construed as creating any relationship between Borrower and Lender other than that of debtor
and creditor.
5.25 Time. Time is of the essence of this Agreement.
5.26 Construction. In this Agreement personal pronouns shall be construed as though
of the gender and number required by the context, the singular shall include the plural and the
plural the singular as may be required by the context and, if this Agreement is signed by more than
one person as "Borrower," all obligations of Borrower hereunder shall be joint and several
obligations of said parties.
IN WITNESS WHEREOF, this Agreement has been executed the day and year first
hereinabove written.
BORROWER: LENDER:
ASPEN COUNTRY INN I, L.P., CITY OF ASPEN,
a Colorado limited partnership a body cor ate '~~
By: Aspen/Pitkin County Housing Authority, By: ~
a Colorado corporation Its:
Its: ~~~~
2 1 195035.5
PROMIS SORY NOTE
SECURED BY DEED OF TRUST
$3,400,000 ,1998
Pitkin County, Colorado
1. FOR VALUE RECEIVED, the undersigned ASPEN COUNTRY INN I, L.P., a
Colorado limited partnership C'Makef'), promises to pay to CITY OF ASPEN, a body corporate
and politic, or order C'Holder") at 530 E. Main, Aspen, Colorado 81611, or at such other place
as the Holder of this Promissory Note ("Note") may designate in writing, the sum of Three
Million Four Hundred Thousand Dollars and 00/100 Dollars ($3,400,000.00), or so much thereof
as is disbursed to Maker, together with interest on unpaid principal until paid at the rate of six
percent (6%) per annum compounded annually.
2. This Note is secured by that certain Deed of Trust and Assignment of Rents
C'Deed of Trust") of even date herewith given by the Maker, as Trustor, to the Public Trustee of
Pitkin County, Colorado, as Trustee, for the benefit of Holder, as the Beneficiary, which Deed of
Trust is to be recorded against the leasehold estate of Maker in that certain real property (the
"Real Property") in the County of Pitkin, State of Colorado and more particularly described in the
Deed of Trust.
3. Capitalized terms that are not defined herein shall have the meanings in the
Construction Loan Documents (as defined herein), and the following terms as used in this Note
shall have the meanings given herein unless expressly provided to the contrary:
3.1 "Construction Loan Documents" means that certain Construction Loan
Agreement of even date herewith C'Construction Loan Agreement") by and between Maker and
Holder, this Note and the Deed of Trust and other documents and instruments securing or
pertaining to the indebtedness evidenced by this Note.
3.2 '~,/et Proceeds" means the proceeds of any Loan secured by the Project,
less the repayment of any Senior Construction Loan made prior in time to said Loan and less any
fees or charges paid out of the gross proceeds related to such Loan, including without limitation
reasonable and customary broker's commissions and fees, Loan commitment fees or other charges
assessed by the lender for making the Loan, normal closing costs, title insurance premiums, and
attorney' s fees.
3.3 "Permanent Loan" means any loan, the Net Proceeds of which are used in
part to pay any Senior Construction Loan.
3.4 "Project" means the Property and the development of the Property with a
forty (40) unit apartment project.
3.5 "Property" means Maker's leasehold interest in the Real Property.
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195021.2
3.6 "Senior Construction Loan" means a loan or loans obtained by Maker from
an institutional lender or other lender making such loans in the normal course of its business to
finance a part of Maker's cost of the Project, which loan or loans shall be secured by a first Lien
on the Project.
4. The unpaid principal balance of this Note and unpaid interest accrued thereon shall
be due and payable on the earlier of(i) sixteen (16) months after the date of this Note, or (ii) the
initial funding of a Permanent Loan.
5. The principal of this Note and any unpaid interest accrued thereon may be prepaid
in whole or in part at any time without premium or penalty.
6. In the event of default in payment of principal hereunder or interest accrued
thereon occurring for more than ten (10) days, or upon maturity of this Note (whether by
acceleration or otherwise), interest shall thereafter accrue on said unpaid principal until said
default is cured at the rate of six percent (6%) per annum, or the maximum amount allowed by
applicable usury law if less than said rate, which interest shall be "Additional Interest Damages"
and shall be immediately due and payable as accrued to the Holder of this Note.
7. In the event of any default by Maker in payment hereof or under any terms,
covenants or conditions contained herein, in the Construction Loan Documents, Deed of Trust or
in any other instrument securing this Note, or under any modification, extension or renewal hereof
or thereof, then the entire principal sum of this Note and all interest accrued thereon shall become
immediately due and payable at the option of the Holder of this Note. Failure to exercise such
option shall not constitute a waiver of the fight to exercise such option in the event of any further
or subsequent default.
8. Principal, interest and all other sums due hereunder shall be payable in lawful
money of the United States of America. Maker agrees to pay all costs and expenses of collection
of this Note, including, but not limited to, reasonable attorneys' fees whether collected by suit or
otherwise. Neither the failure to accelerate the indebtedness hereof by reason of any default or
under any provision hereof nor the acceptance of any past-due payment shall constitute a waiver
of the right of the Holder of this Note thereafter to enforce strict compliance of the terms,
covenants and conditions hereo£ This Note may be extended or renewed in whole or in part by
the Holder hereof and any related right or security therefor may be waived, exchanged,
surrendered or otherwise dealt with, all without affecting the liability of Maker. Maker hereby
waives presentment for payment, demand, protest, notice of protest, and notice of dishonor. Time
is of the essence heroin.
9. In the event any term, covenant, condition or other provision contained in this
Note or in any instrument securing this Note is for any reason held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect, alter,
modify or impair in any manner whatsoever any other term, covenant, condition or other
provision contained in this Note or in any instrument securing this Note, the provisions of which
shall continue to apply as if such invalid, illegal or unenforceable provision was not contained
herein or therein.
2
'195021.2
10. Whenever reference is made herein to "Maker" or "Holder", such reference shall
be deemed to refer to and inelude the heirs, executors, legal representatives, successors and
assigns thereof, it being expressly agreed that the rights and obligations of all parties named herein
or liable hereunder shall inure to the benefit of and be binding upon such parties and their
respective heirs, executors, legal representatives, successors and assigns. This Note and all
provisions hereof shall be governed by and construed in accordance with the laws of the State of
Colorado.
11. For the purpose of assuring compliance with the payment of this Note,
representatives of the Holder shall have a reasonable right of accesi to the Project and the books
and records of Maker pertaining to the Project, during normal business hours, upon at least
twenty four (24) hours prior notice to Maker, including but not limited to the inspection of the
books and records for determining the net cash flow a~er debt sexvice.
12. Notwithstanding any other provisions herein to the contrary, in the event of the
sale, transfer, encumbrance or other disposition of the Project securing this Note or any portion
thereof or any interest therein, whether voluntary or involuntary, without the prior written consent
of the Holder of this Note, then the same shall constitute a default under this Note and the Deed
of Trust and other instruments securing this Note, and the entire principal sum of this Note and all
interest accrued thereon shall become immediately due and payable at the option of the Holder of
this Note. Failure to exercise such option shall not constitute a waiver of the right to exercise such
option in the event of any such further or subsequent default.
13. Notwithstanding anything to the contrary herein, the liability of Borrower for
payment of the indebtedness evidenced and payable hereunder, and Borrower's obligation under
the Deed of Trust or Construction Loan Agreement, shall be limited to Borrower's leasehold
interest in the Property (real and personal), including the rents, issues and profits derived
therefrom (collectively the "Secured Property"), and in the event of default by Borrower, the
Holder of this Note shall look solely to the security of such Secured Property for collection and
shall not be entitled to assert or obtain a deficiency judgment personally against Borrower,
provided, however, that nothing herein contained shall be interpreted or construed to be a release
or impairment of said indebtedness or the security therefor, or to preclude or otherwise impair the
institution of foreclosure proceedings or the sale or other disposition of Borrower's leasehold
interest in the Secured Property in the event of default by Borrower.
[Balance of Page Left Intentionally Blank]
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195021.2
IN WITNESS WHEREOF, the undersigned Maker has caused this Note to be executed
on the day, month and year first written above.
ASPEN COUNTRY INN I, L.P.,
a Colorado limited partnership
By: Aspen/Pitkin County Housing Authority,
a Colorado co ation
General
By: ~
Name: ~>~v,ij "'T~/,-.~
Title: ~s-'~,-./¢;~'~ ~'7~,'t~o~
4
195021.2