Exhibit 10.4

PROMISSORY NOTE

 

$12,800,000.00   August 30, 2013

FOR VALUE RECEIVED FLAGSHIP PROPERTIES Ill, LLC, a Delaware limited liability
company, as maker, having its principal place of business at 1600 Broadway Suite
1490, Denver, Colorado 80202 (“Borrower”), hereby unconditionally promises to
pay to the order of C-III COMMERCIAL MORTGAGE LLC, a Delaware limited liability
company, having an address at 5221 North O’Connor Boulevard, Suite 600, Irving,
Texas 75039 (together with its successors and permitted assigns “Lender”), or at
such other place as the holder hereof may from time to time designate in
writing, the principal sum of TWELVE MILLION EIGHT HUNDRED THOUSAND AND NO/100
DOLLARS ($12,800,000.00), in lawful money of the United States of America, with
interest thereon to be computed from the date of this Note at the Applicable
Interest Rate (defined below), and to be paid in installments as provided
herein.

 

1. CERTAIN DEFINED TERMS

As used herein the following terms shall have the meanings set forth below:

(a) “Accrual Period” means the period commencing on the first (1st) day of a
calendar month and ending on the last day of such calendar month; provided that
if this Note is dated as of any date other than the first (1st) day of a
calendar month, the first Accrual Period shall (i) consist of only the date
hereof, if the date hereof is the last day of a calendar month, or (ii) commence
on the date hereof and shall end on the last day of the current calendar month.

(b) “Applicable Interest Rate” shall mean an interest rate equal to 5.73% per
annum.

(c) “Business Day” shall mean any day other than a Saturday or a Sunday or a day
on which federally insured depository institutions in the State of New York are
authorized or obligated by law, governmental decree or executive order to be
closed.

(d) “Cash Management Agreement” shall mean that certain Cash Management and
Security Agreement of even date herewith made by Borrower and Lender and, as
applicable, joined in by property manager.

(e) “Loan” shall mean the loan evidenced by this Note.

(f) “Loan Agreement” means that certain Loan Agreement dated as of the date
hereof made by Borrower and Lender providing for the loan evidenced by this
Note, as the same may hereafter be modified, consolidated, supplemented,
renewed, or otherwise amended.

(g) “Loan Documents” shall mean this Note, the Loan Agreement, the Security
Instrument, and any other documents or instruments which now or shall hereafter
wholly or partially secure or guarantee payment of this Note or which have
otherwise been executed by Borrower and/or any other person in connection with
the Loan.

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(h) “Lockout Period Expiration Date” shall mean two years and one day from the
“startup day” of any “real estate mortgage investment conduit” (as such terms
are defined in Sections 860G and 860D, respectively, of the Internal Revenue
Code of 1986, as amended or any successor statute thereto) which may acquire the
Loan.

(i) “Maturity Date” shall mean September 1, 2023.

(j) “Monthly Payment” shall mean a payment equal to $74,534.78.

(k) “Monthly Payment Date” shall mean the first (1st) day of each calendar month
prior to the Maturity Date commencing on (i) the first (1st) day of the next
succeeding calendar month after the date hereof if this Note is dated as of the
first day of a month, or (ii) the first (1st) day of the second succeeding
calendar month after the date hereof if this Note is dated as of a date other
than the first day of a month.

(1) “Security Instrument” shall have the meaning given to such term in the Loan
Agreement.

(m) “Securitization” means any deposit of this Note, the Security Instrument and
the other Loan Documents with a trust or other entity which may sell
certificates or other instruments to investors evidencing an ownership interest
in the assets of such trust, the assets thereof or the cash flow or profits
thereof, or other entity or securitization.

 

2. PAYMENT TERMS

(a) If this Note is dated as of a date other than the first (1st) day of a
calendar month, a payment shall be due from Borrower to Lender on the date
hereof on account of all interest scheduled to accrue on the principal sum from
and after the date hereof through and including the last day of the current
Accrual Period. The Monthly Payment shall be due from Borrower to Lender on each
Monthly Payment Date, with each Monthly Payment to be applied as follows:
(i) first, to the payment of interest which has accrued during the preceding
Accrual Period computed at the Applicable Interest Rate, and (ii) the balance
toward the reduction of the principal sum. The balance of the principal sum and
all interest thereon shall be due and payable on the Maturity Date. For purposes
of the timing of making payments hereunder, but not for purposes of calculating
the Accrual Period or the amount of interest accrued during that Accrual Period
or due on any Monthly Payment Date or on the Maturity Date, if the Monthly
Payment Date or the Maturity Date occurs on a day that is not a Business Day,
then amounts due on such date shall be due on the immediately preceding Business
Day. Interest on the principal sum of this Note shall be calculated by
multiplying the actual number of days elapsed in the period for which interest
is being calculated by a daily rate based on a 360 day year.

(b) Unless payments are made in the required amount in immediately available
funds at the place where this Note is payable, remittances in payment of all or
any part of the Debt (defined below) shall not, regardless of any receipt or
credit issued therefor, constitute payment until the required amount is actually
received by Lender in funds immediately available at the place where this Note
is payable (or any other place as Lender, in Lender’s sole discretion, may have
established by delivery of written notice thereof to Borrower) and shall be made
and accepted subject to the condition that any check or draft may be handled for
collection in accordance with the practice of the collecting bank or banks.

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3. DEFAULT AND ACCELERATION

(a) The whole of the principal sum of this Note, (b) interest, default interest,
late charges and other sums, as provided in this Note, the Security Instrument
or the other Loan Documents, (c) all other monies agreed or provided to be paid
by Borrower in this Note, the Security Instrument or the other Loan Documents,
(d) all sums advanced pursuant to the Security Instrument to protect and
preserve the Property and the lien and the security interest created thereby,
and (e) all sums advanced and costs and expenses incurred by Lender in
connection with the Debt (defined below) or any part thereof, any renewal,
extension, or change of or substitution for the Debt or any part thereof, or the
acquisition or perfection of the security therefor, whether made or incurred at
the request of Borrower or Lender (all the sums referred to in (a) through
(e) above shall collectively be referred to as the “Debt”) shall without notice
become immediately due and payable at the option of Lender if any payment
required in this Note prior to the Maturity Date is not paid on the date when
due or on the happening of any other default, after the expiration of any
applicable notice and grace periods, herein or under the terms of the Security
Instrument or any of the other Loan Documents (collectively, an “Event of
Default”).

 

4. DEFAULT INTEREST

Borrower does hereby agree that upon the occurrence of an Event of Default,
Lender shall be entitled to receive and Borrower shall pay interest on the
entire unpaid principal sum at a rate (the “Default Rate”) equal to the lesser
of (i) the Applicable Interest Rate plus five percent (5%) or (ii) the maximum
interest rate that Borrower may by law pay. The Default Rate shall be computed
from the occurrence of the Event of Default until the earlier of the date upon
which the Event of Default is cured or the date upon which the Debt is paid in
full. Interest calculated at the Default Rate shall be added to the Debt, and
shall be deemed secured by the Security Instrument. This provision, however,
shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to
Lender by reason of the occurrence of any Event of Default.

Borrower acknowledges that it would be extremely difficult or impracticable to
determine Lender’s actual damages resulting from any late payment or default,
and the default interest and late charges provided hereunder are reasonable
estimates of those damages and do not constitute a penalty. The remedies of
Lender in this Note or in the other Loan Documents, or at law or in equity,
shall be cumulative and concurrent, and may be pursued singly, successively or
together in Lender’s discretion. Time is of the essence with respect to all
matters concerning or relating to this Note. Borrower agrees to pay on demand
all expenses and costs of enforcement, administration and collection actually
incurred or paid by Lender including, but not limited to, reasonable attorneys’
fees and disbursements of Lender, whether or not with respect to retained firms,
or otherwise and whether or not any legal proceeding is commenced hereunder. The
foregoing amounts shall be paid together with interest thereon at the Default
Rate from the date paid or incurred by Lender until such expenses and costs are
paid by the Borrower.

 

5. PREPAYMENT; YIELD MAINTENANCE

(a) Except as otherwise expressly provided herein, Borrower shall not have the
right or privilege to prepay all or any portion of the unpaid principal balance
of this Note except on or following the First Open Period Payment Date
(hereinafter defined). As used herein, “First Open Period Payment Date” shall
mean the first Monthly Payment Date following and excluding the Monthly Payment
Date which is three (3) months prior to the Maturity Date. From and after the
First Open Period Payment Date, provided no Event of Default exists, the
principal balance of this Note may be prepaid, in whole but not in part, upon:
(i) not less than 30 days prior written notice (the “Prepayment Notice”) to
Lender specifying the scheduled payment date on which prepayment is to be made
(the “Prepayment Date”); (ii) payment of all accrued and unpaid interest on the
outstanding principal balance of this Note to and including the

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Prepayment Date together with a payment of all interest which would have accrued
on the principal balance of this Note to and including the last day of the
Accrual Period in which the Prepayment Date occurs, if such prepayment occurs on
a date which is not the first (1St) day of a calendar month (the “Shortfall
Interest Payment”) and (iii) payment of all other sums then due under this Note,
the Security Instrument and the other Loan Documents. Lender shall not be
obligated to accept any prepayment of the principal balance of this Note unless
it is accompanied by all sums due in connection therewith.

(b) (i) Prior to the First Open Period Payment Date, this Note may not be
prepaid, either in whole or part, provided, however, that at any time after the
Lockout Period Expiration Date, Borrower shall have the right and option to
prepay this Note in full only (except as otherwise herein expressly provided)
and obtain release of the Property from the lien of the Security Instrument upon
payment of, in addition to all other amounts payable hereunder and under the
other Loan Documents, the Prepayment Fee (as such term is defined below). This
Note may be prepaid in whole but not in part (except as otherwise expressly
provided herein) at any time after the date that is the third Payment Date prior
to the Maturity Date (the“Lockout Expiration Date”). Prepayment of this Note
permitted to be made by Borrower pursuant to the terms hereof shall be made upon
the following conditions (i) written notice of such prepayment is received by
Lender not more than sixty (60) days and not less than thirty (30) days prior to
the date of such prepayment, and (ii) such prepayment is made on a Monthly
Payment Date (or, if such prepayment is not received on a Monthly Payment Date,
interest is paid through the next Monthly Payment Date) and is accompanied by
all interest accrued hereunder and all other sums due hereunder or under the
other Loan Documents (as hereinafter defined).

(ii) For purposes hereof, the “Prepayment Fee” shall be and mean (x) as to any
prepayment pursuant to this Section 5(b), a prepayment fee in an amount equal to
the Required Yield Maintenance (as hereinafter defined) and (y) as to any
prepayment pursuant to Section 5(c), the Required Prepayment Amount (as
hereinafter defined). Such Prepayment Fee shall be in addition to any other sums
due hereunder or under any of the other Loan Documents. No tender of a
prepayment of this Note with respect to which a Prepayment Fee is due shall be
effective unless such prepayment is accompanied by the prepayment fee. For
purposes hereof, “Required Yield Maintenance” shall mean an amount equal to the
greater of the greater of: (A) one (1%) percent of the principal amount of this
Note being prepaid; and (B) the present value of a series of payments each equal
to the Payment Differential (hereinafter defined) and payable on each Monthly
Payment Date over the remaining original term of this Note and on the Maturity
Date discounted at the Reinvestment Yield (hereinafter defined) for the number
of months remaining from the date of the repayment (the “Repayment Date”) to
each such Monthly Payment Date and the Maturity Date. The term “Reinvestment
Yield” as used herein shall be equal to the lesser of (a) the (i) yield on the
U.S. Treasury issue (primary issue) with the same maturity date as the Maturity
Date; or (ii) if no such U.S. Treasury issue is available, then the interpolated
yield on the two U.S. Treasury issues (primary issues) with maturity dates (one
prior to and one following) that are closest to the Maturity Date; or (b) the
(i) yield on the U.S. Treasury issue (primary issue) with a term equal to the
remaining average life of the Debt, or (ii) if no such U.S. Treasury issue is
available, then the interpolated yield on the two U.S. Treasury issues (primary
issues) with terms (one prior to and one following) that are closest to the
remaining average life of the Debt, with each such yield being based on the bid
price for such issue as published in The Wall Street Journal on the date that is
14 days prior to the Repayment Date (or, if such bid price is not published on
that date, the next preceding date on which such bid price is so published) and
converted to a monthly compounded nominal yield. The term “Payment Differential”
as used herein shall be equal to (x) the Applicable Interest Rate minus the
Reinvestment Yield, divided by (y) 12 and multiplied by (z) an amount equal to
the principal sum being repaid on such Repayment Date after application of the
Monthly Payment (if any) due on the date of the Default Repayment, provided that
the Payment Differential shall in no event be less than zero. In no event,
however, shall Lender be required to reinvest any repayment proceeds in U.S.
Treasury obligations or otherwise.

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(c) For purposes of this Note, the term “Default Repayment” shall mean a
repayment of all or any portion of the principal amount of this Note made during
the continuance of any Event of Default or after an acceleration of the Maturity
Date under any circumstances, including, without limitation, a repayment
occurring in connection with reinstatement of the Security Instrument provided
by statute under foreclosure proceedings or exercise of a power of sale, any
statutory right of redemption exercised by Borrower or any other party having a
statutory right to redeem or prevent foreclosure, any sale in foreclosure or
under exercise of a power of sale or otherwise. Except as otherwise expressly
provided in Section 5(d) below, and notwithstanding any provisions of this Note
or any other Loan Document to the contrary if, prior to the First Open Period
Payment Date any Default Repayment is made, simultaneously with each such
Default Repayment occurring prior to the First Open Period Payment Date,
Borrower shall pay to Lender an amount equal to the sum (the “Required
Prepayment Amount”) of (1) one percent (1%) of an amount equal to the principal
amount of this Note being prepaid, and (2) the greater of: (A) one (1%) percent
of the principal amount of this Note being prepaid; and (B) the present value of
a series of payments each equal to the Payment Differential and payable on each
Monthly Payment Date over the remaining original term of this Note and on the
Maturity Date discounted at the Reinvestment Yield for the number of months
remaining from the Repayment Date to each such Monthly Payment Date and the
Maturity Date. In no event, however, shall Lender be required to reinvest any
repayment proceeds in U. S. Treasury obligations or otherwise.

In the event that any Prepayment Fee is due hereunder (whether pursuant to
Section 5(b) or 5(c) hereof), Lender may at its option or on Borrower’s request
deliver to Borrower a statement setting forth the amount and determination of
the Prepayment Fee, and Borrower shall not have the right to challenge the
calculation or the method of calculation set forth in any such statement in the
absence of manifest error. Such calculation may be made by Lender on any day
during the thirty (30) day period preceding the date of such prepayment. With
regard to any prepayment made hereunder (except for a prepayment resulting from
the application of condemnation or insurance proceeds), if prior written notice
required in Section 5(b)(i) above has not been received by Lender, the
prepayment shall be increased by an amount equal to the lesser of (x) thirty
(30) days’ unearned interest computed on the outstanding principal balance of
this Note so prepaid and (y) unearned interest computed on the outstanding
principal balance of this Note so prepaid for the period from, and including,
the date of prepayment through the Maturity Date.

(d) Partial prepayments of this Note shall not be permitted, except (i) partial
prepayments resulting from Lender applying insurance or condemnation proceeds to
reduce the outstanding principal balance of this Note as provided in the Loan
Agreement or Security Instrument, in which event ho Prepayment Fee shall be due
and (ii) partial prepayments made for a Partial Release in accordance with the
terms and conditions of Section 8.2 of the Loan Agreement and this Note. No
notice of prepayment shall be required under the circumstance specified in
clause (i) of the preceding Sentence. No principal amount repaid may be
re-borrowed. All such proceeds shall be payable to Lender unless prohibited by
law, regulation, operation of such policy or the specific terms of the Loan
Documents. Partial payments of principal shall be applied, in such order and
priority as determined by Lender, to the unpaid principal balance evidenced
hereby on the next succeeding Payment Date following Lender’s determination to
apply insurance or condemnation proceeds to the partial prepayment of the
outstanding principal balance of this Note.

(e) Except as otherwise expressly provided in Section 5(d)(i) above, the
Prepayment Fees provided above shall be due, to the extent permitted by
applicable law, under any and all circumstances where all or any portion of this
Note is paid prior to the Lockout Expiration Date, whether such prepayment is
voluntary or involuntary, even if such prepayment results from Lender’s exercise
of its rights upon Borrower’s default and acceleration of the Maturity Date of
this Note (irrespective of whether foreclosure proceedings have been commenced),
and shall be in addition to any other sums due

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hereunder or under any of the other Loan Documents. No tender of a prepayment of
this Note with respect to which a Prepayment Fee is due shall be effective
unless such prepayment is accompanied by the Prepayment Fee.

 

6. SECURITY

This Note is secured by the Security Instrument and the other Loan Documents.
The Security Instrument is intended to be duly recorded in the public records of
the county where the Property is located. All of the terms, covenants and
conditions contained in the Security Instrument and the other Loan Documents are
hereby made part of this Note to the same extent and with the same force as if
they were fully set forth herein.

 

7. SAVINGS CLAUSE

This Note is subject to the express condition that at no time shall Borrower be
obligated or required to pay interest on the principal balance due hereunder at
a rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the maximum interest rate which Borrower is
permitted by applicable law to contract or agree to pay. If by the terms of this
Note, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of such maximum rate, the
Applicable Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to such maximum rate and all previous payments
in excess of the maximum rate 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 Lender for the use, forbearance, or detention of the Debt,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Note until payment
in full so that the rate or amount of interest on account of the Debt does not
exceed the maximum lawful rate of interest from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained in this Note or any of the other Loan
Documents, neither the Applicable Interest Rate or the Default Rate provided
hereunder shall at any time exceed the Maximum Rate. The term “Maximum Rate,” as
used herein, shall mean, on any day, the highest nonusurious rate of interest
(if any) permitted by applicable law on such day.

The parties hereto do not intend to contract for, charge or receive any interest
or other charge which is usurious, and by execution of this Note or the Security
Instrument, Borrower agrees that Lender has no such intent. This Note, the
Security Instrument, the other Loan Documents and all other agreements between
Borrower and Lender or any other holder hereof, which are now existing or
hereafter arising, whether written or oral, are hereby expressly limited so that
in no event whatsoever, whether by reason of acceleration of maturity hereof; or
otherwise, shall the amount paid, or agreed to be paid, to Lender or any other
holder hereof for the use, forbearance or detention of the money to be due
hereunder or otherwise, or for the payment or performance of any covenant or
obligation contained herein or in any other document evidencing, securing or
pertaining to the debt, exceed the Maximum Rate. If from any circumstance
whatsoever fulfillment of any provisions hereof or other document, at the time
performance of such provisions shall be due, shall involve transcending the
valid limits prescribed by law, then ipso facto, the obligation to be fulfilled
shall be reduced to the Maximum Rate, and if from any such circumstance Lender
or any other holder shall ever receive as interest or otherwise an amount which
will exceed the Maximum Rate, such amount which would be

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excessive interest shall be applied to the reduction of the principal amount
owing hereunder (without prepayment premium or penalty) or on account of any
other principal indebtedness of Borrower to the holder and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
hereof and such other indebtedness, such excess shall be refunded to Borrower.
All sums paid and agreed to be paid to Lender or any other holder for use,
forbearance or detention of the indebtedness of Borrower shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the period until payment in full on the Note (or any renewals,
extensions and rearrangement thereof) so that the actual rate of interest on
account of the debt is uniform throughout the term of this Note (and all
renewals, extensions and rearrangements hereof) and does not exceed the Maximum
Rate. The terms and provisions of this Section 7 shall control and supersede any
other provision of this Note and the other Loan Documents.

 

8. LATE CHARGE

If any sum payable under this Note is not paid on the date on which it is due,
regardless of whether such failure shall constitute an Event of Default,
Borrower shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of the unpaid sum or the maximum amount permitted by applicable law
to defray the expenses incurred by Lender in handling and processing the
delinquent payment and to compensate Lender for the loss of the use of the
delinquent payment and the amount shall be secured by the Security Instrument
and the other Loan Documents.

 

9. NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

 

10. JOINT AND SEVERAL LIABILITY

If Borrower consists of more than one person or party, the obligations and
liabilities of each person or party shall be joint and several.

 

11. WAIVERS, ETC.

All payments required hereunder shall be made irrespective of, and without any
deduction for, any setoff, defense or counterclaim. Borrower and all others who
may become liable for the payment of all or any part of the Debt do hereby
severally waive presentment and demand for payment, notice of dishonor, protest
and notice of protest and non-payment and all other notices of any kind, other
than notices specifically required by the terms of this Note, the Security
Instrument and the other Loan Documents. No release of any security for the Debt
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 Security
Instrument or the other Loan Documents made by agreement between Lender or any
other person or party shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower, and any other person
or entity who may become liable for the payment of all or any part of the Debt,
under this Note, the Security Instrument or the other Loan Documents. No notice
to or demand on Borrower shall be deemed to be a waiver of the obligation of
Borrower or of the right of Lender to take further action without further notice
or demand as provided for in this Note, the Security Instrument or the other
Loan Documents. In addition, acceptance by Lender of any payment in an amount
less than the

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amount then due shall be deemed an acceptance on account only, and the failure
to pay the entire amount then due shall be and continue to be an Event of
Default. If Borrower is a partnership, the agreements herein contained shall
remain in force and applicable, notwithstanding any changes in the individuals
comprising the partnership, and the term “Borrower,” as used herein, shall
include any alternate or successor partnership, but any predecessor partnership
and their partners shall not thereby be released from any liability. If Borrower
is a corporation or limited liability company, the agreements contained herein
shall remain in full force and applicable notwithstanding any changes in the
shareholders or members comprising, or the officers and directors or managers
relating to, the corporation or limited liability company, and the term
“Borrower” as used herein, shall include any alternative or successor
corporation or limited liability company, but any predecessor corporation or
limited liability company shall not be relieved of liability hereunder. (Nothing
in the foregoing sentence shall be construed as a consent to, or a waiver of,
any prohibition or restriction on transfers of interests in a partnership,
corporation or limited liability company which may be set forth in the Security
Instrument or any other Loan Document.)

 

12. TRANSFER

Upon the transfer of this Note, Borrower hereby waiving notice of any such
transfer, Lender may deliver all the collateral mortgaged, granted, pledged or
assigned pursuant to the Security Instrument and the other Loan Documents, or
any part thereof, to the transferee who shall thereupon become vested with all
the rights herein or under applicable law given to Lender with respect thereto,
and Lender shall thereafter forever be relieved and fully discharged from any
liability or responsibility in the matter; but Lender shall retain all rights
hereby given to it with respect to any liabilities and the collateral not so
transferred.

 

13. JURISDICTION; WAIVER OF TRIAL BY JURY

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF
OR RELATING TO THIS NOTE MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR
STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING AND APPELLATE COURTS FROM ANY THEREOF. BORROWER DOES HEREBY DESIGNATE
AND APPOINT:

Corporation Service Company

80 State Street

Albany, New York 12207-2543

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND BORROWER AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID

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SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED IN THE LOAN
AGREEMENT SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.
BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS
AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE
A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR LOCATED IN NEW YORK, NEW YORK.

BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT,
TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION
FOR THE LOAN, THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
ACTS OR OMISSIONS OF LENDER OR BORROWER, RESPECTIVELY, OR THEIR RESPECTIVE
OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

 

14. EXCULPATION

Notwithstanding anything herein that may be construed to the contrary, the terms
of Article 11 of the Loan Agreement are incorporated herein by reference as if
fully set forth herein.

 

15. AUTHORITY

Borrower represents that Borrower has full power, authority and legal right to
execute and deliver this Note, the Security Instrument and the other Loan
Documents and that this Note, the Security Instrument and the other Loan
Documents constitute valid and binding obligations of Borrower.

 

16. APPLICABLE LAW

THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND DELIVERED TO LENDER
BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED
PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS)

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AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES
THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT TO THE SECURITY INSTRUMENT AND OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE,
COMMONWEALTH OR DISTRICT, AS APPLICABLE, IN WHICH THE RELATED PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, COMMONWEALTH OR DISTRICT, AS APPLICABLE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT, THE LOAN AGREEMENT AND THE NOTE, AND THIS AGREEMENT, THE LOAN
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

 

17. COUNSEL FEES

In the event that it should become necessary to employ counsel to collect the
Debt or to protect or foreclose the security therefor, Borrower also agrees to
pay all reasonable fees and expenses of Lender, including, without limitation,
reasonable attorney’s fees for the services of such counsel whether or not suit
be brought.

 

18. NOTICES

All notices or other written communications hereunder shall be delivered in
accordance with Section 14.1 of the Security Instrument.

 

19. MISCELLANEOUS

(a) Wherever pursuant to this Note (i) Lender exercises any right given to it to
approve or disapprove, (ii) any arrangement or term is to be satisfactory to
Lender, or (iii) any other decision or determination is to be made by Lender,
the decision of Lender to approve or disapprove, all decisions that arrangements
or terms are satisfactory or not satisfactory and all other decisions and
determinations made by Lender, shall be in the sole and absolute discretion of
Lender and shall be final and conclusive, except as may be otherwise expressly
and specifically provided herein.

(b) Whenever used, the singular shall include the plural, the plural shall
include the singular, and the words “Lender” and “Borrower” shall include their
respective successors, assigns, heirs, executors and administrators.

(c) BORROWER HEREBY ACKNOWLEDGES THAT INTEREST IN THIS NOTE IS TO BE CALCULATED
BY LENDER ON THE BASIS OF A THREE HUNDRED SIXTY (360) DAY YEAR AND IS FULLY
AWARE THAT SUCH CALCULATIONS MAY RESULT IN AN ACCRUAL AND/OR PAYMENT OF INTEREST
IN AMOUNTS GREATER THAN CORRESPONDING INTEREST CALCULATIONS BASED ON A THREE
HUNDRED SIXTY-FIVE (365) DAY YEAR.

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(d) THE PARTIES ACKNOWLEDGE THAT THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year
first above written.

 

BORROWER:   Flagship Properties III, LLC, a Delaware limited liability company  
By: Gator Carolina Manager, LLC, a Colorado limited liability company   By:  
LOGO [g817586image01.jpg]    

 

  Name: James E. Powers   Title: Manager and Member

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STATE OF Colorado )                                     )ss. COUNTY OF Denver )

On the 26th day of August in the year 2013 before me, the undersigned,
personally appeared JAMES E. POWERS, proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity (ies), and that by his/her/their signature(s) on the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.

 

LOGO [g817586image02.jpg] Notary Public Printed Name: Paula S. Heeren My
Commission Expires: 11/26/16 [Seal]

 

LOGO [g817586image03.jpg]