Execution Version
PROMISSORY NOTE

$13,944,000.00    May 6, 2019
FOR VALUE RECEIVED, 3032 WILSHIRE INVESTORS LLC, a Colorado limited liability
company (“Maker”), promises to pay to the order of READYCAP COMMERCIAL, LLC, a
Delaware limited liability company, d/b/a Ready Capital Structured Finance
(together with any subsequent holder of this Note, and their respective
successors and assigns, “Holder”), at such address as Holder may from time to
time designate in writing, the maximum principal sum of THIRTEEN MILLION NINE
HUNDRED FORTY-FOUR THOUSAND AND 00/100 DOLLARS ($13,944,000.00), together with
interest thereon and all other sums due and/or payable under any Loan Document;
such principal and other sums to be calculated and payable as provided in this
Promissory Note (this “Note”). This Note is being executed and delivered in
connection with, and is entitled to the rights and benefits of, that certain
Loan Agreement of even date herewith between Maker and Holder (as amended,
modified and supplemented and in effect from time to time, the “Loan
Agreement”). Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Loan Agreement.
Maker agrees to pay the principal sum of this Note together with interest
thereon and all other sums due and/or payable under any Loan Document in
accordance with the following terms and conditions:
1.Interest Rate. Interest shall accrue on the Principal Indebtedness at the
Interest Rate (as defined below) commencing on the date of this Note. Interest
shall be computed on the actual number of days elapsed based on a 360-day year.
For purposes hereof, the following terms shall have the following respective
meanings:
(a)    “Initial Interest Accrual Period” means the period commencing on the
Closing Date and continuing to and including May 9, 2019.
(b)    “Interest Accrual Period” means the Initial Interest Accrual Period, and
thereafter each period running from and including a Payment Date (as defined
below) to and including the calendar day preceding the next Payment Date during
the term of the Loan.
(c)    “Interest Rate” means, for any Interest Accrual Period, the sum of (i)
the greater of (x) LIBOR for such Interest Accrual Period, and (y) the LIBOR
Floor, plus (ii) the LIBOR Spread; provided, that while an Event of Default
exists, the Interest Rate shall be the Default Rate (as defined below).
(d)    “LIBOR” means, with respect to any Interest Accrual Period, the rate per
annum (rounded upwards, if necessary, to the nearest one-sixteenth (1/16th) of
one percent (1%)) reported on the day that is two (2) LIBOR Business Days prior
to the applicable Interest Accrual Period by the Intercontinental Exchange
Benchmark Administration Limited (as published by Bloomberg or other firm
selected by Holder) as the non-reserve adjusted London Interbank Offered Rate
for U.S. dollar deposits having a one (1) month term and in an amount of
$1,000,000.00 or more (all as determined by Holder in its sole but good faith
discretion). In the event that (i) more than one such rate is provided, the
average of such rates shall apply, or (ii) no such rate is published, then LIBOR
shall be determined from such comparable financial reporting company as Holder
in its sole but good faith discretion shall determine. LIBOR for any Interest
Accrual Period shall be adjusted from time to time by increasing the rate
thereof to compensate Holder for any aggregate reserve requirements (including,
without limitation, all basic, supplemental, marginal and other reserve
requirements and taking into account any transitional adjustments or other
scheduled changes in reserve requirements during any Interest Accrual Period)
which are required to be maintained by Holder with respect to “Eurocurrency
Liabilities” (as presently defined in Regulation D of the Board of Governors of
the Federal Reserve System) of the same term under Regulation D, or any other
regulations of a Governmental Authority having jurisdiction over Holder of
similar effect. The establishment of LIBOR by Holder and Holder’s calculation of
the rate of interest applicable to this Note shall, in the absence of manifest
error, be final and binding.
(e)    “LIBOR-Based Rate” means the Interest Rate at such time as the same is
determined using LIBOR pursuant to the terms of this Note.
(f)    “LIBOR Business Day” means any day on which banks are open for dealing in
foreign currency and exchange in London, England.
(g)    “LIBOR Floor” means 2.467%.
(h)    “LIBOR Spread” means four hundred twenty-five basis points (i.e., 4.25%);
provided, however, that upon the occurrence of the Stabilization Threshold, the
LIBOR Spread shall mean three hundred seventy-five basis points (i.e., 3.75%).
(i)    “Minimum Interest Amount” means an amount equal to Nine Hundred Thirty
Four Thousand and 00/100 Dollars ($934,000.00), which is an amount equal to
twenty-four (24) months of Interest on the Initial Advance (using the
forward-looking LIBOR curve plus the LIBOR Spread), as determined by Holder,
which determination shall be conclusive and binding on Maker absent manifest
error.
(j)    “Minimum Interest Fee” means as of the date of determination, an amount
equal to the difference (but only if positive) between (a) the Minimum Interest
Amount; and (b) the aggregate amount of Interest previously paid by Maker to
Holder with respect to the Loan (as determined by Holder, which determination
shall be conclusive and binding on Maker absent manifest error).
(k)    “Prime-Based Rate” means, at the time of any determination thereof, the
annual rate of interest equal to the greater of: (i) the LIBOR Floor plus the
LIBOR Spread; and (ii) the Prime Rate plus the LIBOR Spread less the Prime-Based
Rate Differential (with the “Prime Rate” being the annual rate of interest
published in The Wall Street Journal from time to time as the “Prime Rate,” and
if The Wall Street Journal ceases to publish the “Prime Rate,” Holder shall
select an equivalent publication that publishes such “Prime Rate,” and if such
“Prime Rates” are no longer generally published or are limited, regulated or
administered by a governmental or quasi-governmental body, then Holder shall
select a reasonably comparable interest rate index).
(l)    “Prime-Based Rate Differential” means the difference (but to only if
positive), at the time of the conversion of the Interest Rate from a LIBOR-Based
Rate to a Prime-Based Rate, between (1) the Prime Rate, less (2) LIBOR.
2.    Payments; Maturity; Extension Option; Additional LIBOR Provisions.
(a)    Maker shall make the following payments to Holder:
i.On the Closing Date, a payment of interest-only for the Initial Interest
Accrual Period.
ii.On June 10, 2019, and on the same calendar day of each calendar month
thereafter (each, a “Payment Date”) during the term of the Loan, Maker shall pay
to Holder a monthly payment of interest-only in an amount equal to interest on
the unpaid Principal Indebtedness calculated at the Interest Rate which has
accrued through the last day of the Interest Accrual Period immediately
preceding such Payment Date.
iii.Commencing on the first Payment Date occurring subsequent to the Initial
Maturity Date (if the Initial Maturity is extended pursuant to and in accordance
with the terms, provisions, covenants and conditions of Section 2(c) hereof),
Maker shall pay to Holder a monthly payment of principal and interest in an
amount equal to interest on the unpaid Principal Indebtedness calculated at the
Interest Rate which has accrued through the last day of the Interest Accrual
Period immediately preceding such Payment Date, together with a principal
payment based upon an amortization period of twenty-five (25) years, as
determined by Holder.
iv.The entire outstanding Indebtedness shall be due and payable on the Payment
Date occurring in May, 2022 (the “Initial Maturity Date”), or on the Extended
Maturity Date (as defined below) if the Initial Maturity Date is extended
pursuant to and in accordance with the terms, provisions, covenants and
conditions of Section 2(c) hereof, or on such earlier date resulting from
acceleration of the Indebtedness by Holder.
(b)    For purposes of making payments hereunder, but not for purposes of
calculating Interest Accrual Periods, if the Payment Date of a given month shall
not be a Business Day, then the Payment Date for such month shall be the
preceding Business Day.
(c)    The Maker may request that Holder extend the Initial Maturity Date for a
period of twelve (12) months (the “First Extended Maturity Date”) upon the
satisfaction of the following conditions:
(i)    The Maker shall have delivered to Holder a written request to extend the
term of the Loan, as aforesaid, not earlier than ninety (90) days, and not later
than forty five (45) days, prior to the Initial Maturity Date;
(ii)    The Maker shall have paid to Holder the First Extension Fee on or before
the Initial Maturity Date;
(iii)    No Event of Default shall have previously occurred and be continuing at
the time Holder receives the Maker’s written request for the extension, nor on
the Initial Maturity Date;
(iv)    All representations and warranties under the Loan Agreement and the
other Loan Documents shall be true and correct in all material respects as of
the Initial Maturity Date, except to the extent that Holder accepted exceptions
to such representations and warranties on the Closing Date or any time
thereafter;
(v)    As of the Initial Maturity Date, the Loan to Value Ratio shall be not
more than sixty per cent (60%);
(vi)    Intentionally deleted;
(vii)    As of the Initial Maturity Date, the Stabilization Threshold shall have
occurred, as determined by Holder in its sole discretion, which shall be
conclusive and binding on Maker absent manifest error;
(viii)    Commencing on the Initial Maturity Date, the monthly payments of
interest at the Interest Rate payable by the Maker under the Loan shall be
amended to include principal payments based upon an amortization period of
twenty-five (25) years, as determined by Holder;
(ix)    The amount of funds required to be maintained in the Interest Reserve
Account and the Operating Expense Reserve Account shall be re-established by
Holder and, if applicable, fully funded by Maker;
(x)    The Interest Rate Protection Agreement shall be extended, or a new
Interest Rate Protection Agreement shall be provided, at Borrower’s sole cost
and expense, and with a “strike price” selected by Holder (in the same manner
and on the same basis as the “strike price” for the initial Interest Rate
Protection Agreement was selected), covering the period through and including
the First Extended Maturity Date;
(xi)    Maker shall execute any agreements, documents or amendments to the Loan
Documents reasonably requested by Holder to document such extension (which
amendments shall not change the terms of this Note other than to extend the term
hereof); and
(xii)    Maker shall pay all actual out-of-pocket costs and expenses incurred by
Holder in connection with such extension of the Initial Maturity Date, including
Holder’s reasonable attorneys’ fees.
(d)    The Maker may extend the First Extended Maturity Date (if the Initial
Maturity Date was previously so extended) for an additional period of twelve
(12) months (the “Second Extended Maturity Date,” and together with the Initial
Maturity Date and the First Extended Maturity Date, the “Maturity Date”) upon
the satisfaction of the following conditions:
(i)    The Maker shall have delivered to Holder a written request to extend the
term of the Loan, as aforesaid, not earlier than ninety (90) days, and not later
than forty five (45) days, prior to the First Extended Maturity Date;
(ii)    The Maker shall have paid to Holder the Second Extension Fee on or
before the First Extended Maturity Date;
(iii)    No Event of Default shall have previously occurred and be continuing at
the time Holder receives the Maker’s written request for the extension, nor on
the First Extended Maturity Date;
(iv)    All representations and warranties under the Loan Agreement and the
other Loan Documents shall be true and correct in all material respects as of
the First Extended Maturity Date, except to the extent that Holder accepted
exceptions to such representations and warranties on the Closing Date or any
time thereafter;
(v)    As of the First Extended Maturity Date, the Loan to Value Ratio shall be
not more than sixty per cent (60%);
(vi)    Intentionally deleted;
(vii)    As of the First Extended Maturity Date, the Stabilization Threshold
shall have occurred, as determined by Holder in its sole discretion, which shall
be conclusive and binding on Maker absent manifest error;
(viii)    Commencing on the First Extended Maturity Date, the monthly payments
of interest at the Interest Rate payable by the Maker under the Loan shall
continue to include principal payments based upon an amortization period of
twenty-five (25) years, as determined by Holder;
(ix)    The amount of funds required to be maintained in the Interest Reserve
Account and the Operating Expense Reserve Account shall be re-established by
Holder and, if applicable, fully funded by Maker;
(x)    The Interest Rate Protection Agreement shall be extended, or a new
Interest Rate Protection Agreement shall be provided, at Borrower’s sole cost
and expense, and with a “strike price” selected by Holder (in the same manner
and on the same basis as the “strike price” for the initial Interest Rate
Protection Agreement was selected), covering the period through and including
the Second Extended Maturity Date;
(xi)    Maker shall execute any agreements, documents or amendments to the Loan
Documents reasonably requested by Holder to document such extension (which
amendments shall not change the terms of this Note other than to extend the term
hereof); and
(xii)    Maker shall pay all actual out-of-pocket costs and expenses incurred by
Holder in connection with such extension of the First Extended Maturity Date,
including Holder’s reasonable attorneys’ fees.
(e)    The Maker may also request a short-term administrative extension of the
Maturity Date for a period of thirty (30) days in order to have additional time
within which to refinance the Loan, upon the satisfaction of the following
conditions
(i)    The Maker shall have delivered to Holder a written request for such
short-term administrative extension, as aforesaid, not earlier than forty-five
(45) days, and not later than thirty (30) days, prior to the Maturity Date;
(ii)    The Maker shall have paid to Holder an administrative extension fee in
an amount equal to Five Thousand and 00/100 Dollars ($5,000.00) at the same time
that the written request for such short-term administrative extension, as
aforesaid, is delivered to Holder;
(iii)    No Event of Default and/or fact or condition having a Material Adverse
Effect shall have previously occurred and be continuing at the time Holder
receives the Maker’s written request for the short-term administrative
extension;
(iv)    All representations and warranties under the Loan Agreement and the
other Loan Documents shall be true and correct in all material respects as of
the Maturity Date, except to the extent that Holder accepted exceptions to such
representations and warranties on the Closing Date or any time thereafter;
(v)    Maker shall execute any agreements, documents or amendments to the Loan
Documents reasonably requested by Holder to document such short-term
administrative extension (which amendments shall not change the terms of this
Note other than to extend the term hereof); and
(vi)    Maker shall pay all actual out-of-pocket costs and expenses incurred by
Holder in connection with such short-term administrative extension of the
Maturity Date, including Holder’s reasonable attorneys’ fees.
(f)    Maker shall pay to Holder all losses, costs and expenses incurred or
sustained (or expected to be incurred or sustained) by Holder in liquidating or
re-employing funds from third parties to effect or maintain the Loan or any part
thereof as a consequence of (i) the Loan, or any portion thereof, being repaid
for any reason whatsoever on any date other than a Payment Date (including,
without limitation, from Insurance Proceeds or Condemnation Proceeds); (ii) any
default in the payment or prepayment of the Principal Indebtedness or any part
thereof or interest accrued thereon, as and when due and payable (at the date
thereof or otherwise, and whether by acceleration or otherwise); (iii) the
conversion of the Interest Rate from the LIBOR-Based Rate to the Prime-Based
Rate in accordance with Section 2(g) or (h) below, including, without
limitation, such loss or expenses arising from interest or fees payable by
Holder to lenders of funds obtained by it in order to maintain the LIBOR-Based
Rate hereunder; (iv) any increased costs that Holder may sustain in maintaining
the Loan; (v) the reduction of any amounts received or receivable from Maker, in
either case, due to the introduction of, or any change in, law or applicable
regulation or treaty (including the administration or interpretation thereof),
whether or not having the force of law, or due to the compliance by Holder with
any directive, whether or not having the force of law, or request from any
central bank or domestic or foreign governmental authority, agency or
instrumentality have jurisdiction; and/or (vi) any other set of circumstances
not attributable to Holder’s acts (collectively, “Funding Losses”) in each case
incurred from time to time by Holder upon demand. Holder shall deliver to Maker
a statement for any such sums to which Holder is entitled to receive pursuant to
this Section 2(f), which statement shall be binding and conclusive absent
manifest error. Payment of Funding Losses hereunder shall be in addition to any
obligations of Maker to pay the Exit Fee, the Minimum Interest Fee and the other
amounts required under Section 4(a) hereof.
(g)    In the event that Holder shall have reasonably determined that, by reason
of circumstances beyond Holder’s reasonable control affecting the interbank
Eurodollar market, LIBOR cannot be determined as provided herein, then Holder
shall forthwith give notice by telephone of such fact, confirmed in writing, to
Maker at least one (1) Business Day prior to the last day of the Interest
Accrual Period in which such fact shall be determined. If such notice is given,
the Interest Rate shall be converted, from and after the first day of the next
succeeding Interest Accrual Period, to the Prime-Based Rate (and unless and
until the Interest Rate shall be converted back to the LIBOR-Based Rate,
“Interest Rate” shall mean and refer to the Prime-Based Rate). If, pursuant to
the terms of this clause (g), the Interest Rate has been converted to the
Prime-Based Rate but thereafter LIBOR can again be determined as provided
herein, Holder shall give notice thereof to Maker and convert the Interest Rate
back to the LIBOR-Based Rate by delivering to Maker notice of such conversion no
later than 12:00 p.m. (New York City Time), one (1) Business Days prior to the
first date of the next succeeding Interest Accrual Period, in which event the
Interest Rate shall be converted to the LIBOR-Based Rate after and including the
first day of the next succeeding Interest Accrual Period. Notwithstanding any
provision of this Agreement to the contrary, in no event shall Maker have the
right to elect to convert the Interest Rate to the Prime-Based Rate.
(h)    If the introduction of, or any change in, any law, regulation or treaty,
or in the interpretation thereof by any governmental authority charged with the
administration or interpretation thereof, shall make it unlawful for Holder to
maintain the LIBOR-Based Rate with respect to the Loan, or any portion thereof,
or to fund the Loan, or any portion thereof, in Eurodollars in the London
Interbank Market, then, (i) the Loan (or such portion of the Loan) shall
thereafter bear interest at the Prime-Based Rate, and (ii) Maker shall pay to
Holder the amount of Funding Losses (if any) incurred in connection with such
conversion. The accrual of interest at the Prime-Based Rate shall continue until
such Payment Date, if any, as the situation described in this Section 2(h) is no
longer in effect.
3.    Event of Default; Default Interest; Late Charge. Upon the occurrence of an
Event of Default, the Indebtedness shall (a) become due and payable as provided
in Article 8 of the Loan Agreement, and (b) bear interest at a per annum
interest rate equal to the lesser of (i) the Maximum Amount (as defined below),
and (ii) the Interest Rate plus five percent (5%) (the “Default Rate”). If Maker
fails to pay any sums due under the Loan Documents on the date when the same is
due (excluding the payment of the outstanding principal balance of the Loan upon
maturity or acceleration), Maker shall pay to Holder upon demand a late charge
on such sum in an amount equal to the lesser of (i) five percent (5%) of such
unpaid amount, and (ii) the maximum late charge permitted to be charged under
the laws of the State of where the Property is located (a “Late Charge”). Maker
will also pay to Holder, after an Event of Default occurs, in addition to the
amount due and any Late Charges, all reasonable costs of collecting, securing,
or attempting to collect or secure this Note or any other Loan Document,
including, without limitation, court costs and reasonable attorneys’ fees
(including reasonable attorneys’ fees on any appeal by either Maker or Holder
and in any bankruptcy proceedings).
4.    Prepayment.
(a)Maker may prepay the Loan in whole, but not in part, at any time upon not
less than thirty (30) days prior written notice to Holder, subject to payment of
the Exit Fee and the Minimum Interest Fee (and any applicable Funding Losses).
(b)If any such prepayment is not made on the last day of an Interest Accrual
Period, Maker shall also pay to Holder interest calculated at the Interest Rate
that would have accrued on such prepaid Principal Indebtedness through the end
of the Interest Accrual Period in which such prepayment occurs. No prepayment
shall be permitted after 12:00 noon, New York City time.
(c)Maker acknowledges that the provisions of this Section 4 were independently
bargained for and constitute a specific material part of the consideration given
by Maker to Holder for the making of the Loan.
(d)Notwithstanding any provision of this Note to the contrary, Maker’s notice of
prepayment in accordance with this Section 4 shall be irrevocable, and the
Indebtedness shall be absolutely and unconditionally due and payable on the date
specified in such notice.
5.    Method and Place of Payments; Application of Payments; Maker Obligations
Absolute.
(a)    Except as otherwise specifically provided herein, all payments under this
Note and the other Loan Documents shall be made to Holder not later than
12:00 noon, New York City time, on the date when due, and shall be made in
lawful money of the United States of America in federal or other immediately
available funds to an address specified to Maker by Holder in writing, and any
funds received by Holder after such time, for all purposes hereof, shall be
deemed to have been paid on the next succeeding Business Day.
(b)    All proceeds of payment, including any payment or recovery on the
Property, shall be applied to the Indebtedness in such order and in such manner
as Holder shall elect in Holder’s discretion.
(c)    Except as specifically set forth in any Loan Document, all sums payable
by Maker under any Loan Document shall be paid without notice, demand,
counterclaim (other than mandatory counterclaims), setoff, deduction or defense
and without abatement, suspension, deferment, diminution or reduction.
6.    Security. The obligations of Maker under this Note are secured by, among
other things, the Security Instrument and Liens of the other Loan Documents
granted in favor of Holder by Maker and/or encumbering or affecting the
Property.
7.    Waivers. With respect to the amounts due pursuant to this Note or any
other Loan Document, Maker waives the following: (a) all rights of exemption of
property from levy or sale under execution or other process for the collection
of debts under the Constitution or laws of the United States or any State
thereof; (b) demand, presentment, protest, notice of dishonor, notice of
nonpayment, notice of protest, notice of intent to accelerate, notice of
acceleration, suit against any party, diligence in collection of this Note and
in the handling of securities at any time existing in connection herewith, and
all other requirements necessary to enforce this Note except for notices
required by Governmental Authorities and notices required by the Loan Agreement;
and (c) any further receipt by Holder or acknowledgment by Holder of any
collateral now or hereafter deposited as security for the Loan. In addition,
Maker agrees and acknowledges and agrees that no release of any security for the
Loan or Indebtedness, or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of
this Note, the Loan Agreement or the other Loan Documents made by agreement
between Holder or any other Person shall release, modify, amend, waive, extend,
change, discharge, terminate or affect the liability of Maker, and any other
Person who may become liable for the payment of all or any part of the Loan or
Indebtedness, under this Note, the Loan Agreement or the other Loan Documents.
No notice to or demand on Maker shall be deemed to be a waiver of the obligation
of Maker or of the right of Holder to take further action without further notice
or demand as provided for in this Note, the Loan Agreement or the other Loan
Documents.
8.    Usury Savings Clause. This Note and the other Loan Documents are subject
to the express condition that at no time shall Maker be obligated or required to
pay interest on the Indebtedness at a rate which could subject Holder to either
civil or criminal liability as a result of being in excess of the maximum rate
of interest designated by applicable laws relating to payment of interest and
usury (the “Maximum Amount”). If, by the terms of this Note or the other Loan
Documents, Maker is at any time required or obligated to pay interest on the
Indebtedness at a rate in excess of the Maximum Amount, the Interest Rate shall
be deemed to be immediately reduced to the Maximum Amount and all previous
payments in excess of the Maximum Amount shall be deemed to have been payments
in reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Holder for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does not exceed the Maximum Amount from time to time in
effect and applicable to the Loan for so long as the Loan is outstanding.
9.    Modifications; Remedies Cumulative; Setoffs. Holder shall not by any act,
delay, omission or otherwise be deemed to have modified, amended, waived,
extended, discharged or terminated any of its rights or remedies, and no
modification, amendment, waiver, extension, discharge or termination of any kind
shall be valid unless in writing and signed by Holder and Maker. All rights and
remedies of Holder under the terms of this Note and applicable statutes or rules
of law shall be cumulative, and may be exercised successively or concurrently.
Maker agrees that there are no defenses, equities or setoffs with respect to the
obligations set forth herein as of the date hereof, and to the extent any such
defenses, equities, or setoffs may exist, the same are hereby expressly
released, forgiven, waived and forever discharged. If Maker is a partnership or
limited liability company, the agreements herein contained shall remain in force
and be applicable, notwithstanding any changes in the individuals or entities
comprising the partnership or limited liability company, and the term “Maker,”
as used herein, shall include any alternate or successor partnership or limited
liability company, but any predecessor partnership or limited liability company
and their partners or members shall not thereby be released from any liability.
If Maker is a corporation, the agreements contained herein shall remain in full
force and be applicable notwithstanding any changes in the shareholders
comprising, or the officers and directors relating to, the corporation, and the
term “Maker” as used herein, shall include any alternative or successor
corporation, but any predecessor corporation shall not be relieved of liability
hereunder. Nothing in the foregoing two sentences shall be construed as a
consent to, or a waiver of, any prohibition or restriction on transfers of
interests in such partnership, limited liability company or corporation, as
applicable, which may be set forth in the Loan Agreement, the Security
Instrument or any other Loan Document.
10.    Severability. Wherever possible, each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable Legal
Requirements, but if any provision of this Note shall be prohibited by or
invalid under applicable Legal Requirements, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Note.
11.    Release. Holder may, at its option, release any Property given to secure
the Indebtedness, and no such release shall impair the obligations of Maker to
Holder.
12.    Governing Law; Submission to Jurisdiction.
(a)    This Note shall be interpreted and enforced according to the laws of the
State where the Property is located (without giving effect to rules regarding
conflict of laws).
(b)    Maker hereby consents and submits to the exclusive jurisdiction and venue
of any state or federal court sitting in the county and state where the Property
is located with respect to any legal action or proceeding arising with respect
to this Note and waives all objections which it may have to such jurisdiction
and venue.
13.    Waiver of Jury Trial. MAKER AND HOLDER TO THE FULLEST EXTENT THAT THEY
MAY LAWFULLY DO SO, WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO
THIS NOTE OR THE OTHER LOAN DOCUMENTS. EACH OF MAKER AND HOLDER AGREES THAT THE
OTHER MAY FILE A COPY OF THIS WAIVER WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED AGREEMENT OF THE OTHER IRREVOCABLY TO WAIVE ITS
RIGHT TO TRIAL BY JURY, AND THAT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO
SO, ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN MAKER AND HOLDER SHALL INSTEAD
BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
14.    Sales and Assignments. Holder may assign, sell, securitize, participate,
pledge and/or otherwise transfer all or any portion of Holder’s right, title and
interest in, to and under this Note and/or the other Loan Documents in one or
more transactions as set forth in the Loan Agreement. Upon the transfer of this
Note, Maker hereby waiving notice of any such transfer, Holder may deliver all
the collateral mortgaged, granted, pledged or assigned pursuant to the Loan
Documents, or any part thereof, to the transferee who shall thereupon become
vested with all the rights herein or under legal requirements given to Holder
with respect thereto, and Holder shall thereafter forever be relieved and fully
discharged from any liability or responsibility in the matter; but Holder shall
retain all rights hereby given to it with respect to any liabilities and the
collateral not so transferred.
15.    Due on Sale; Due on Encumbrance. Maker understands that in making the
Loan, Holder is relying to a material extent upon the business expertise and/or
net worth of Maker and, if Maker is also an entity, its partners, members,
officers or principals and upon the continuing interest which Maker or its
partners, members, officers or principals will have in the Property and in
Maker, respectively, and that a violation of Section 6.1 of the Loan Agreement
may significantly and materially alter or reduce Holder’s security for this
Note. Accordingly, in the event that a violation of Section 6.1 of the Loan
Agreement occurs, then the same shall be deemed to increase the risk of Holder
and Holder may then, or at any time thereafter, declare the entire Indebtedness
immediately due and payable.
16.    Exculpation. Subject to the qualifications below, Holder shall not
enforce the liability and obligation of Maker to perform and observe the
obligations contained in the Loan Documents by any action or proceeding wherein
a money judgment shall be sought against Maker or its Affiliates, principals or
shareholders, except that Holder may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Holder to enforce and realize upon its interest and rights under the Loan
Documents, or in the Property, the Rents, the Insurance Proceeds, the
Condemnation Proceeds or any other collateral given to Holder pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be enforceable against Maker
only to the extent of Maker’s interest in the Property, the Rents, the Insurance
Proceeds, the Condemnation Proceeds and any other collateral given to Holder,
and Holder agrees that it shall not sue for, seek or demand any deficiency
judgment against Maker in any such action or proceeding under or by reason of or
under or in connection with any Loan Document. The provisions of this Section 16
shall not, however, (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by any Loan Document; (b) impair the right of
Holder to name Maker as a party defendant in any action or suit for foreclosure
and sale under the Security Instrument; (c) affect the validity or
enforceability of any of the Loan Documents or any guaranty made in connection
with the Loan or any of the rights and remedies of Holder thereunder; (d) impair
the right of Holder to obtain the appointment of a receiver; (e) impair the
enforcement of the Security Instrument; (f) constitute a prohibition against
Holder to seek a deficiency judgment against Maker in order to fully realize the
security granted by the Security Instrument or to commence any other appropriate
action or proceeding in order for Holder to exercise its remedies against all of
the Property; or (g) constitute a waiver of the right of Holder to enforce the
liability and obligation of Maker by money judgment or otherwise, to the extent
of any Losses incurred by Holder arising out of or in connection with the
following (each, a “Recourse Liability” and collectively, the “Recourse
Liabilities”):
(i)    fraud, intentional misrepresentation, or willful misconduct by Maker or
Guarantor in connection with the Loan;
(ii)    the breach of any representation, warranty, covenant or indemnification
provision in any Loan Document concerning Environmental Laws or Hazardous
Substances, and any indemnification of Holder with respect thereto contained in
any Loan Document;
(iii)    any act of material waste of the Property or any portion thereof by
Maker of Guarantor, or, during the continuance of any Event of Default, the
removal or disposal of any portion of the Property by Maker or Guarantor;
(iv)    the misapplication, misappropriation, or conversion by Maker, Guarantor,
or at the direction of Maker and/or Guarantor, of either of (A) any Insurance
Proceeds paid by reason of any Casualty, (B) any Condemnation Proceeds received
in connection with any Taking or (C) any Rents or security deposits;
(v)    failure to pay any real estate taxes, assessments or other impositions,
or any part thereof, heretofore or hereafter imposed upon or in respect of the
Property which become a Lien or charge upon Maker or the Property, (A) to the
extent that funds for the payment thereof were delivered to or received by
Lender for deposit into the Tax and Insurance Reserve Account (in accordance
with the Loan Agreement) or otherwise in sufficient time for Lender to make such
payment and Lender failed to make such payment or Lender has taken possession of
the Property following an Event of Default, has received the Rents from the
Property applicable to the period for which such taxes are due, and thereafter
fails to make such payments and (B) real estate taxes, assessments or other
impositions owed that are contested strictly in accordance with the terms of the
Loan Documents;
(vi)    failure to maintain or cause to be maintained any insurance policies
with respect to the Property as required under the Loan Documents, unless to the
extent that such failure is a result of the non-payment of the premium therefor
and funds for the payment thereof were delivered to or received by Lender for
deposit into the Tax and insurance Reserve Account in sufficient time for Lender
to make such payment and Lender failed to make such payment, or Lender has taken
possession of the Property following an Event of Default, has received the Rents
from the Property applicable to the period for which insurance is due, and
thereafter fails to make such payments;
(vii)    failure of Maker to follow and comply (or to use commercially
reasonable efforts to cause the property manager to comply, in the case
non-compliance is due to the non-collusive acts or omissions of the property
manager or its employees) with the Cash Management Protocols;
(viii)    failure to pay to Holder all reasonable actual costs and expenses,
including reasonable attorneys’ fees and expenses, incurred in collecting any
amount due and owing under the Loan Documents, but only in the event Maker
and/or Guarantor (or any other person acting at the direction of Maker and/or
Guarantor) is contesting any such collection efforts;
(ix)    a default occurs under Section 6.3 of the Loan Agreement and such
failure does not lead to a substantive consolidation of Borrower’s assets with
the assets of any other Person (excluding any covenants and provisions thereof
with respect to solvency or adequacy of capital to the extent that the Rents
from the Property are insufficient therefor, for which neither Borrower nor
Guarantor shall have any liability to Lender); or

(x)    failure of Maker to use the Reserve Funds disbursed pursuant to a
Disbursement Certification for their intended purposes.

Notwithstanding anything to the contrary in this Note or any of the Loan
Documents, (A) Holder shall not be deemed to have waived any right which Holder
may have under Section 506(a), 506(b), 1111(b) or any other provisions of the
U.S. Bankruptcy Code to file a claim for the full amount of the Indebtedness or
to require that all collateral shall continue to secure all of the Indebtedness
in accordance with the Loan Documents, and (B) Holder’s agreement not to pursue
personal liability of Maker as set forth above SHALL BECOME NULL AND VOID and
shall be of no further force and effect, and the Indebtedness shall be fully
recourse to Maker in the event that one or more of the following occurs (each, a
“Full Recourse Event”): (1) a default occurs under Section 6.1(a) or 6.2 of the
Loan Agreement; (2) a default occurs under Section 6.3 of the Loan Agreement and
such failure leads to a substantive consolidation of Borrower’s assets with the
assets of any other Person (excluding any covenants and provisions thereof with
respect to solvency or adequacy of capital to the extent that the Rents from the
Property are insufficient therefor, for which neither Borrower nor Guarantor
shall have any liability to Lender), (3) Maker files a voluntary petition under
the U.S. Bankruptcy Code or any other federal or state bankruptcy or insolvency
law, or (4) Guarantor (or anyone authorized to act on behalf of Guarantor), or
any officer, director, or authorized representative of Maker, files or
acquiesces in the filing of, or Maker acquiesces in the filing of, an
involuntary petition under the U.S. Bankruptcy Code or any other federal or
state bankruptcy or insolvency law against Maker, provided, however, that
Maker’s acquiescence in the filing of a bankruptcy or other insolvency petition
initiated by Lender or any party acting by, through or under Lender or at the
request of Lender (including any servicer of the Loan) shall not be a Full
Recourse Event.
17.    Notice. All notices or other written communications hereunder shall be
delivered in accordance with Section 11.6 of the Loan Agreement.

IN WITNESS WHEREOF, Maker has caused this Promissory Note to be properly
executed as of the date first above written and has authorized this Promissory
Note to be dated as of the day and year first above written.
MAKER:
3032 WILSHIRE INVESTORS LLC,
a Colorado limited liability company

By:          3032 Wilshire SM LLC,
                a Colorado limited liability company,
                its Manager

               
By:                                                                         
                Name: William R. Rothacker
Title: Manager
ADDENDUM TO NOTE
BY SIGNING BELOW, BORROWER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT, PURSUANT
TO THE TERMS OF THIS NOTE, BORROWER HAS AGREED THAT IT HAS NO RIGHT TO PREPAY
THIS NOTE PRIOR TO THE MATURITY DATE (EXCEPT AS EXPRESSLY SET FORTH TO THE
CONTRARY HEREIN OR IN THE SECURITY INSTRUMENT OR LOAN AGREEMENT), AND THAT IT
SHALL BE LIABLE FOR THE PAYMENT OF THE MINIMUM INTEREST FEE, EXIT FEE AND ANY
APPLICABLE FUNDING LOSSES FOR PREPAYMENT OF THIS NOTE UPON ACCELERATION OF THIS
NOTE IN ACCORDANCE WITH ITS TERMS EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN THE
SECURITY INSTRUMENT. FURTHER, BY SIGNING BELOW, BORROWER WAIVES ANY RIGHTS IT
MAY HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR
STATUTE, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT LENDER HAS MADE THE
LOAN IN RELIANCE ON THE AGREEMENTS AND WAIVER OF BORROWER AND THAT LENDER WOULD
NOT HAVE MADE THE LOAN WITHOUT SUCH AGREEMENTS AND WAIVER OF BORROWER.
[SIGNATURE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, Maker has duly executed this Addendum to Note as of the day
and year first above written.
                    MAKER:

3032 WILSHIRE INVESTORS LLC,
a Colorado limited liability company

By:          3032 Wilshire SM LLC,
                a Colorado limited liability company,
                its Manager

               
By:                                                                         
                Name: William R. Rothacker
Title: Manager

Promissory Note
Loan Number 201916813