Exhibit 10.18

 

LOGO [g69911ex1017pg1.jpg]   Loan No. AC-TN-MM-10-002-001

LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”) is entered into as of February 24, 2010,
by and among Wells VAF – 300 Commerce Street, LLC, a Delaware limited liability
company (“Borrower”), and A10 Capital, LLC, a Delaware limited liability company
(“Lender”), on the following terms and conditions.

R E C I T A L S

A.      Lender intends to make a loan to Borrower in the principal amount of
$5,000,000.00, to be disbursed as follows: (i) Lender will disburse the
aggregate principal amount of $3,750,000.00 at funding, as follows:
$3,403,085.44 will be disbursed in accordance with a closing statement approved
by Borrower and Lender, $76,914.56 will be deposited in escrow pursuant to and
governed by an Escrow Agreement between Borrower and Lender, and $270,000.00
will be deposited in the Account as defined in Section 2.2 of this Agreement for
purposes stated therein; and (ii) a principal amount of up to $1,250,000.00 will
remain undisbursed committed funds, available for disbursement hereunder for
purposes of funding capital expenditures and funding potential future leasing
commissions and tenant improvements relating to the Real Property described
below.

B.      Lender is willing to make the loan to Borrower solely under the terms
and conditions specified in this Agreement and in the Loan Documents.

A G R E E M E N T

NOW, THEREFORE, for and in consideration of the approval and making of a loan by
Lender to Borrower, which includes proceeds necessary for tenant improvements
and capital expenditures, Borrower and Lender hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used herein, the following words and terms shall have the following meanings
when used in this Agreement:

“Account” means the Account as defined in Section 2.2.

“Advance” means a disbursement of funds from the Loan Fund or the Account, made
to Borrower or on Borrower’s behalf, on a multiple advance basis under the terms
and conditions of this Agreement.

“Agreement” means this Loan Agreement, as may be amended or modified from time
to time, together with all exhibits and schedules attached to this Loan
Agreement from time to time.

 

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“Architect’s Contract” means the architect’s contract between Borrower and the
architect for the Project.

“Borrower” means Wells VAF – 330 Commerce Street, LLC, a Delaware limited
liability company, and its successors and assigns.

“Capital Expenditures” means property repairs and capital improvement projects
for the Real Property as approved by Lender in its sole and absolute discretion.

“Carveout Guaranty” means that certain Nonrecourse Carveout Guaranty dated of
even date herewith, executed by Guarantor in favor of Lender, as the same may
hereafter be amended or restated.

“Completion Date” means the date of completion as set forth in each Construction
Contract.

“Construction Contract” means each contract between Borrower and Contractor, and
any subcontracts with subcontractors, materialmen, laborers, or any other person
or entity for performance of work on the Project or the delivery of materials to
the Project.

“Contractor” means the general contractor for each Project.

“Event of Default” has the meaning ascribed to such term in Article 10 of this
Agreement.

“Guarantor” means Wells Mid-Horizon Value-Added Fund I, LLC, a Georgia limited
liability company.

“Guaranty” means that certain Conditional Terminating Guaranty dated of even
date herewith, executed by Guarantor in favor of Lender, as the same may
hereafter be amended or restated.

“Hazardous Materials” has the meaning ascribed to such term in the Indemnity.

“Improvements” means all buildings, structures, facilities, fixtures, additions,
and other improvements, now or at any time hereafter situated, placed or
constructed upon the Real Property.

“Indebtedness” has the meaning ascribed to such term in the Mortgage.

“Indemnity” means that certain Environmental Indemnity Agreement dated of even
date herewith, executed by Borrower and Guarantor, in favor of Lender, as the
same may hereafter be amended or restated.

“Intercreditor Agreement” means that certain Intercreditor Agreement dated of
even date herewith, by and between Bank of America, N.A. and Lender, as the same
may hereafter be amended or restated.

 

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“Lender” means A10 Capital, LLC, a Delaware limited liability company, its
successors and assigns.

“Loan” means the loan or loans made to Borrower under this Agreement and the
Loan Documents.

“Loan Documents” mean (1) the Note, (2) this Agreement, (3) the Mortgage,
(4) the Indemnity, (5) UCC financing statements, (6) the Guaranty, (7) the
Carveout Guaranty, (8) the Intercreditor Agreement, (9) such assignments of
management agreements, contracts and other rights as may be required by Lender,
(10) all other documents now or hereafter executed by Borrower, Guarantor, or
any other person or entity, to evidence or secure the payment of the
Indebtedness or the performance of the Obligations, and (11) all modifications,
restatements, extensions, renewals and replacements of the foregoing.

“Loan Fund” means the funds deposited in the Account and the undisbursed
proceeds of the Loan under this Agreement together with any equity funds or
other deposits required from Borrower under this Agreement.

“Mortgage” means that certain (i) Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing dated of even date herewith, from
Borrower, as grantor, to William L. Rosenburg, as trustee, for the benefit of
Lender, as beneficiary, together with all modifications, restatements,
extensions, renewals and replacements thereof; and (ii) Assignment of Leases,
Rents and Profits dated of even date herewith, from Borrower, as assignor, to
Lender, as assignee, together with all modifications, restatements, extensions,
renewals and replacements thereof .

“Mortgaged Property” has the meaning ascribed to such term in the Mortgage.

“Note” means that certain Promissory Note dated of even date herewith, in the
original principal amount of $5,000,000.00 executed by Borrower and payable to
Lender, together with all modifications, restatements, extensions, renewals and
replacements thereof.

“Obligations” has the meaning ascribed to such term in the Mortgage.

“Plans and Specifications” mean all plans, specifications, shop drawings, and
other technical descriptions prepared for construction, repair or alteration of
the Project, which have been submitted to and approved by Lender in writing,
together with all amendments, modifications and additions thereof as may be
approved by Lender in writing.

“Project” means (i) the construction and completion of certain Capital
Expenditures associated or in any way connected to the building(s) or
structure(s) currently located on the Real Property, and (ii) as to each lease
agreement entered into between Borrower, as landlord, and a third party tenant,
for a portion of any building or structure currently located on the Real
Property, the construction and completion of future Tenant Improvements and
leasing commissions, installation of equipment and fixtures, landscaping, and
all other work necessary to complete the Tenant Improvements as required under
each such lease agreement, and make them usable for their intended purpose(s).

 

LOAN AGREEMENT - 3

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“Project Documents” mean the Plans and Specifications, all studies, data and
drawings relating to the Project, whether prepared by or for Borrower, the
Construction Contract, the Architect’s Contract, and all other contracts and
agreements relating to the Project or the construction of the Improvements.

“Real Property” means the real property located at 330 Commerce Street,
Nashville, TN 37201, as further described in Exhibit “A” attached hereto and
incorporated herein by this reference, together with any greater estate therein
which may be hereafter acquired by Borrower.

“Tenant Improvements” means any and all leasing commissions paid in connection
with any executed lease of the Real Property and any and all improvements made
to the currently existing Improvements and as required of Borrower under any
executed lease of all or any portion of the Real Property; provided, however,
such costs shall not exceed the total amount of $1,250,000.00.

“UCC” has the meaning ascribed to such term in the Mortgage.

Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Mortgage. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the
context may require. Unless specifically stated to the contrary, all references
to dollar amounts shall mean amounts in lawful money of the United States of
America. The Recitals set forth above are material, true and correct and are
incorporated by this reference into this Agreement as though fully set forth
herein.

ARTICLE 2

LOAN; USE OF PROCEEDS; DEPOSIT OF FUNDS

Section 2.1    Borrower hereby agrees that $1,250,000.00 of the Loan proceeds
shall be used solely for Tenant Improvements to and leasing commissions
associated with the Improvements already constructed on the Real Property. Such
Tenant Improvements and leasing commissions shall be approved by Lender, in its
sole and absolute discretion, prior to Borrower commencing any Tenant
Improvements or payment of any leasing commissions. Lender shall in no way be
obligated to make any Advances with respect to any Tenant Improvements or
leasing commissions not approved by Lender, in its sole and absolute discretion.

Section 2.2    On the funding date of the Loan and from the initial Advance
under the Loan, Borrower will direct Lender to deposit the sum of $270,000.00,
(the “Initial Deposit”) in an account in the name of Lender at a financial
institution of Lender’s choice (the “Account”), with Borrower assuming all risk
of loss. All amounts disbursed by Lender for deposit in the Account shall be
deemed disbursements of the Loan and shall begin bearing interest at the rate
applicable to the Loan immediately upon deposit into the Account, even though
such sums may not be disbursed on behalf of Borrower until a later date (or
applied to the Loan following the occurrence of an Event of Default under the
Loan Documents executed in connection with the Loan). In addition, Borrower
agrees that, commencing April 1, 2010 and continuing on the first business day
of each month thereafter until the maturity date of the Loan, Borrower will
deposit with Lender to be held in the Account the sum of $7,000.00 (each a
“Monthly Escrow Deposit”

 

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and, together with the Initial Deposit, collectively referred to herein as the
“Escrow Funds”) and Borrower hereby agrees that it shall have no right to direct
the investment of the Account, withdraw from the Account, close the Account, or
otherwise control the Account in any way. The funds in the Account shall be
invested by Lender (such investments are referred to as the “Investments”), with
any interest accruing thereon as a result of the Investments to be paid to
Lender. Lender shall have no liability whatsoever for the loss of any Escrow
Funds as a result of the failure of an investment or an institution into which
the Escrow Funds have been placed. The Escrow Funds will be part of the Loan
Fund and will be disbursed pursuant to the terms and conditions of this
Agreement for the purpose of Capital Expenditures only. Any undisbursed Escrow
Funds remaining after payment in full of the Loan will be returned to Borrower.

Section 2.3    Borrower hereby assigns to Lender, and grants to Lender a
security interest in, all Borrower’s right, title and interest in any and all
funds deposited in the Account as additional security for all of Borrower’s
obligations under the Loan and the other Loan Documents, and all amendments,
extensions, or renewals of all such documents, whether now existing or hereafter
arising. Borrower instructs and directs Lender as follows:

a.        All securities or other property in the form of an instrument or
security underlying any financial asset credited to the Account shall, as
applicable, be registered in the name of Lender, endorsed to Lender or in blank
or credited to another securities account maintained in the name of Lender, and
in no case shall any financial asset credited to the Account be registered in
the name of Borrower, payable to the order of Borrower or specially endorsed to
Borrower, except to the extent the foregoing have been specially endorsed to
Lender in blank;

b.        All financial assets and funds held by or delivered to Lender pursuant
to this Agreement shall be promptly credited to the Account;

c.        The Account shall be an account to which financial assets and funds
are or may be credited; and

d.        Each item of property (whether investment property, a financial asset,
a security, an instrument, cash, Escrow Funds, or Investments) credited to the
Account shall be treated as a “financial asset” (within the meaning of
Section 8-102(i) of the UCC).

ARTICLE 3

NO CONSTRUCTION PRIOR TO RECORDING OF MORTGAGE

Borrower shall not permit any work or materials to be furnished in connection
with the Project until (A) the Loan Documents are fully executed; (B) the
Mortgage has been duly recorded and the security interest of Lender in the
Mortgaged Property has been duly perfected; and (C) Lender has been provided
evidence, satisfactory to Lender, that Borrower has obtained all insurance
required under the Mortgage and this Agreement and that Lender’s liens on the
Mortgaged Property are valid perfected first liens, subject only to such
exceptions, if any, acceptable to Lender.

 

LOAN AGREEMENT - 5

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ARTICLE 4

CONDITIONS PRECEDENT TO EACH ADVANCE

Lender’s obligation to make each Advance under this Agreement shall be subject
to the fulfillment to Lender’s satisfaction, in its sole and absolute
discretion, of all of the conditions set forth in this Agreement, the Mortgage,
and in any other Loan Documents.

Section 4.1          Approval of Contractors, Subcontractors, and Materialmen.
Lender shall have approved a list of all contractors employed in connection with
the construction of the Tenant Improvements or Capital Expenditures, as
applicable, for the Project, showing the name, address, and telephone number of
each contractor, a general description of the nature of the work to be done, the
labor and materials to be supplied, the names of materialmen, if known, and the
approximate dollar value of the labor, work, or materials with respect to each
contractor or materialman. Lender shall have the right to communicate with any
person to verify the facts disclosed by the list or by any application for any
Advance, or for any other purpose.

Section 4.2          Plans, Specifications and Permits. Lender shall have
received and accepted a complete set of written Plans and Specifications setting
forth all proposed Tenant Improvements or Capital Expenditures, as applicable,
for the Project, and Borrower shall have furnished to Lender copies of all
permits and requisite approvals of any governmental body necessary for the
construction and use of the Project.

Section 4.3          Architect’s and Construction Contracts. Borrower shall have
furnished in form and substance satisfactory to Lender an executed copy of the
Architect’s Contract and an executed copy of the Construction Contract. Prior to
commencement of any Project, Borrower shall have executed a Collateral
Assignment of Contracts provided by Lender assigning to Lender all Project
Documents.

Section 4.4          Budget and Schedule of Estimated Advances. Lender shall
have approved detailed budget and cash flow projections of total Project costs
and a schedule of the estimated amount and time of disbursements of each
Advance.

Section 4.5          Borrower’s Authorization. Borrower shall have provided in
form and substance satisfactory to Lender properly certified resolutions, duly
authorizing the consummation of the Project. In addition, Borrower shall have
provided such other resolutions, authorizations, documents and instruments as
Lender, in its sole discretion, may require.

Section 4.6          Bond. If requested by Lender, Borrower shall have furnished
a performance and payment bond in an amount equal to 100% of the amount of the
Construction Contract, as well as a materialmen’s and mechanics’ payment bond,
with such riders and supplements as Lender may require, each in form and
substance satisfactory to Lender, naming Contractor as principal and Lender as
an additional obligee.

Section 4.7          Assignment of Project Documents. Borrower shall have
assigned to Lender, in form and substance satisfactory to Lender, the Project
Documents.

Section 4.8          Survey. If requested by Lender, Borrower shall have
furnished to Lender a survey of recent date, prepared and certified by a
qualified surveyor and providing that

 

LOAN AGREEMENT - 6

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following construction of the Tenant Improvements or Capital Expenditures, as
applicable, in accordance with the Plans and Specifications, the Improvements
shall lie wholly within the boundaries of the Real Property without encroachment
or violation of any zoning ordinances, building codes or regulations, or setback
requirements, together with such other information as Lender in its sole
discretion may require.

Section 4.9        Title Insurance. Borrower shall have provided to Lender an
ALTA extended coverage loan policy of title insurance, with such endorsements as
Lender may require, issued by a title insurance company acceptable to Lender and
in a form, amount, and content satisfactory to Lender, insuring that Lender’s
Mortgage is a valid first lien on the Real Property, free and clear of all
defects, liens, encumbrances, and exceptions except those specifically accepted
by Lender in writing. If requested by Lender, Borrower shall provide to Lender,
at Borrower’s expense, a Form 122 Future Advances endorsement (or such other
endorsement as Lender may require) to said loan policy concurrent with each
Advance, insuring the lien free completion of all Improvements completed on the
Real Property as of the date of issuance of such endorsement.

Section 4.10        Insurance. Borrower shall have delivered to Lender the
following insurance policies or evidence thereof: (a) a builders risk (course of
construction) insurance policy with extended coverage covering the Improvements,
issued in an amount and by a company acceptable to Lender, and containing a
lender’s loss payable or other endorsement satisfactory to Lender insuring
Lender as mortgagee, together with such other endorsements as may be required by
Lender, including stipulations that coverages will not be cancelled or
diminished without at least thirty (30) days prior written notice to Lender,
(b) Contractor’s general liability insurance, public liability and workmen’s
compensation insurance policies; and (c) all other insurance required by this
Agreement, the Mortgage, and any other Loan Documents.

Section 4.11        Workers’ Compensation Coverage. Provide to Lender a
certificate of insurance evidencing Contractor’s compliance with all applicable
workers’ compensation laws and regulations with regard to all work performed on
the Project.

Section 4.12        Payment of Fees and Expenses. Borrower shall have paid to
Lender all fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any other Loan Documents.

Section 4.13        Satisfactory Construction. All work usually done at the
stage of construction for which disbursement is requested shall have been done
in a good and workmanlike manner and all materials and fixtures usually
furnished and installed at that stage of construction shall have been furnished
and installed, all in compliance with the Plans and Specifications. Borrower
shall also have furnished to Lender such proof as Lender may require to
establish the progress of the work, compliance with applicable laws, freedom of
the Mortgaged Property from liens, and the basis for the requested Advance.

Section 4.14        Certification. Borrower shall have furnished to Lender a
certification by an engineer, architect, or other qualified inspector acceptable
to Lender that the construction of the Tenant Improvements or Capital
Expenditures, as applicable, has complied

 

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and will continue to comply with all applicable statutes, ordinances, codes,
regulations, and similar requirements.

Section 4.15        Project Review. Lender shall have reviewed, at Borrower’s
cost, the Project Documents and such other documents as may be required by
Lender in its sole discretion. Lender shall have received written confirmation
prior to each Advance from a construction progress inspector retained by Lender,
at Borrower’s expense, affirming the information provided to Lender by Borrower
or its agents pursuant to this Article 4.

Section 4.16        Lien Waivers. Borrower shall have obtained and attached to
each application for an Advance, including the Advance to cover final payment to
Contractor, executed acknowledgments of payment of all sums due and releases of
contractor’s, mechanic’s, and materialmen’s liens, satisfactory to Lender, from
any party having lien rights, which acknowledgements of payment and releases of
liens shall cover all work, labor, equipment, materials done, supplied,
performed, or furnished prior to such application for an Advance.

Section 4.17        No Event of Default. There shall not exist at the time of
any Advance a condition which would constitute an Event of Default under this
Agreement or under any other Loan Document.

ARTICLE 5

ADVANCES FROM THE LOAN FUND

Section 5.1        Application for Advances. Each application shall be stated on
a standard AIA payment request form or other form approved by Lender, executed
by Borrower, and supported by such evidence as Lender shall reasonably require.
With regard to Tenant Improvements, such requests and Advances shall (a) be in
increments of not less than $250,000.00 and (b) not exceed the aggregate amount
of $43.59 per square foot. With regard to Capital Expenditures, such requests
and Advances shall be for a minimum disbursement of $10,000.00. Borrower shall
apply only for disbursement with respect to work actually done by Contractor and
for materials and equipment actually incorporated into the Project. Each
application for an Advance shall be deemed a certification of Borrower that as
of the date of such application, Borrower is in compliance with all of the
provisions of this Agreement and the Loan Documents. If Lender determines, in
its sole and absolute discretion that all terms and conditions for the Advance
are met, Lender shall make the Advance, less ten percent (10%) of such amount as
retainage, within seven (7) business days of approval of the request. Lender
shall not be obligated to make more than one (1) Advance every thirty (30) days
per Tenant Improvements or Capital Expenditures project.

Section 5.2        Payments. At the sole option of Lender, Advances may be paid
in the joint names of Borrower and Contractor, subcontractor(s), or supplier(s)
in payment of sums due under the Construction Contract. At its sole option,
Lender may directly pay Contractor and any subcontractors or other parties the
sums due under the Construction Contract. Borrower appoints Lender as its
attorney-in-fact to make such payments. This power shall be deemed coupled with
an interest, shall be irrevocable, and shall survive an Event of Default under
this Agreement.

 

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Section 5.3          Projected Cost Overruns. If Lender at any time determines
in its sole discretion that the amount in the Loan Fund is insufficient, or will
be insufficient, to fully complete and pay for in full the Project, then within
ten (10) days after receipt of a written request from Lender, Borrower shall
deposit in the Loan Fund an amount equal to the deficiency as determined by
Lender. The judgment and determination of Lender under this Section 5.3 shall be
final and conclusive. Lender shall have no further obligation to disburse any
Loan proceeds until Borrower has deposited in the Loan Fund the deficiency
amount as determined by Lender, and Borrower agrees that any such amounts
deposited in the Loan Fund by Borrower shall be disbursed prior to any Loan
proceeds.

Section 5.4          Final Payment to Contractor. Upon completion of the Project
and fulfillment of the Construction Contract to the satisfaction of Lender, and
provided sufficient Loan proceeds are available in the Loan Fund, Lender shall
make an Advance to cover the final payment due to Contractor upon delivery to
Lender of a Form 122 Future Advances endorsement to the ALTA loan policy of
title insurance following the posting of the completion notice, as provided
under applicable law, or such other endorsements to the ALTA loan policy of
title insurance as may be required by Lender in its sole discretion.
Construction shall not be deemed complete for purposes of the final Advance
unless and until Lender shall have received all of the following:

a. Evidence satisfactory to Lender that all work under the Construction Contract
requiring inspection by any governmental authority with jurisdiction has been
duly inspected and approved by such authority, that a certificate of occupancy
has been issued, and that all parties performing work have been paid, or will be
paid, for such work;

b. A certification by an engineer, architect, or other qualified inspector
acceptable to Lender that the Tenant Improvements or Capital Expenditures, as
applicable, have been completed substantially in accordance with the Plans and
Specifications and the Construction Contract, that direct connection has been
made to all utilities set forth in the Plans and Specifications, and that the
Project is ready for occupancy;

c. Written confirmation from a construction progress inspector retained by
Lender, at Borrower’s expense, affirming the information provided to Lender
pursuant to subparagraphs a. and b. above;

d. Acceptance of the completed Tenant Improvements or Capital Expenditures, as
applicable, by Lender and Borrower.

e. Acceptance and occupancy of the completed Tenant Improvements by the
respective tenant.

Section 5.5          Construction Default. If Borrower fails in any respect to
comply with the provisions of this Agreement or any other Loan Documents, or if
construction ceases before completion of the Project regardless of the reason,
Lender, at its option, may refuse to make further Advances, may accelerate the
Indebtedness under the terms of the Note and other

 

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Loan Documents, and without thereby impairing any of its rights, power, or
privileges, may enter into possession of the Project’s construction site and
perform or cause to be performed any and all work and labor necessary to
complete the Improvements substantially in accordance with the Plans and
Specifications.

ARTICLE 6

REPRESENTATIONS, WARRANTIES AND COVENANTS

Borrower hereby represents, warrants and covenants to Lender, as of the date of
this Agreement, as of the date of each Advance, as of the date of any renewal,
extension or modification of the Loan, and at all times any Indebtedness exists,
all of the representations, warranties and covenants contained in the Mortgage
and other Loan Documents as if fully set forth herein. Borrower further
represents, warrants and covenants to Lender, as of the date of this Agreement,
as of the date of each Advance, as of the date of any renewal, extension or
modification of the Loan, and at all times any Indebtedness exists, as follows:

Section 6.1          Project Costs. The Project costs are true and accurate
estimates of the costs necessary to complete the Tenant Improvements or Capital
Expenditures, as applicable, in a good and workmanlike manner according to the
Plans and Specifications presented by Borrower to Lender, and Borrower shall
take all steps necessary to prevent the actual cost of the Tenant Improvements
or Capital Expenditures, as applicable, from exceeding the Project costs.

Section 6.2          Compliance with Governing Authorities. 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 Project will
at all times and in all respects conform to and comply with the requirements of
such easements, covenants, conditions, restrictions, reservations, building
laws, regulations, zoning ordinances, and federal, state, and local
requirements.

Section 6.3          Insurance Reports. Borrower shall furnish to Lender, upon
Lender’s request, reports on each existing insurance policy required pursuant to
this Agreement and the Mortgage, showing such information as Lender may
reasonably request, including, without limitation, the following: (i) the name
of the insurer, (ii) the risks insured; (iii) the amount of the policy; (iv) the
properties insured; (v) the then current property values on the basis of which
insurance has been obtained, and the manner of determining those values; and
(vi) the expiration date of the policy.

Section 6.4          Construction of the Project. Borrower shall cause the
Tenant Improvements or Capital Expenditures, as applicable, to be constructed
and equipped in a diligent and orderly manner and in strict accordance with the
Plans and Specifications approved by Lender, the Construction Contract, and all
applicable laws, ordinances, codes, regulations, and rights of adjoining or
concurrent property owners.

Section 6.5          Defects. Upon demand by Lender, Borrower shall promptly
correct any defect in the Tenant Improvements or Capital Expenditures, as
applicable, or any departure from the Plans and Specifications not approved by
Lender in writing before further work shall be done upon the portion of the
Improvements affected.

 

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Section 6.6          Project Claims and Litigation. Borrower shall promptly
inform Lender of (a) all material adverse changes in the financial condition of
Contractor; (b) any litigation and claims, actual or threatened, affecting the
Project or Contractor, which could materially affect the successful completion
of the Project or the ability of Contractor to complete the Project as agreed;
(c) any condition or event which constitutes an Event of Default; and (d) any
condition or event which constitutes a breach or default under any Project
Documents related to the Project.

Section 6.7          Payment of Claims and Removal of Liens. Borrower shall
(a) cause all claims for labor done and materials and services furnished in
connection with the Tenant Improvements or Capital Expenditures, as applicable,
to be fully paid and discharged in a timely manner, (b) diligently file or
procure the filing of a valid notice of completion of the Tenant Improvements,
or Capital Expenditures, as applicable, or such comparable document as may be
permitted under applicable lien laws, (c) diligently file or procure the filing
of a notice of cessation, or such comparable document as may be permitted under
applicable lien laws, upon the happening of cessation of labor on the Tenant
Improvements or Capital Expenditures, as applicable, for a continuous period of
thirty (30) days or more, and (d) take all reasonable steps necessary to remove
all claims of liens against the Mortgaged Property or any part thereof, or any
rights or interests appurtenant to the Mortgaged Property. Upon Lender’s
request, Borrower shall make such demands or claims upon or against contractors,
laborers, materialmen, subcontractors, or other persons who have furnished or
claim to have furnished labor, services, or materials in connection with the
Tenant Improvements or Capital Expenditures, as applicable, which demands or
claims shall under the laws of the State of Tennessee require diligent
assertions of lien claims upon penalty of loss or waiver thereof. Borrower
shall, within ten (10) days after the filing of any claim of lien that is
disputed or contested by Borrower, provide Lender with a surety bond issued by a
surety acceptable to Lender sufficient to release the claim of lien or deposit
with Lender an amount satisfactory to Lender for the possibility that the
contest will be unsuccessful. If Borrower fails to remove any lien on the
Mortgaged Property or provide a bond or deposit pursuant to this provision,
Lender may pay such lien, or may contest the validity of the lien, and Borrower
shall pay all costs and expenses of such contest, including Lender’s reasonably
attorneys’ fees.

Section 6.8          Modification of Contract. Borrower shall not make or permit
to be made any modification of the Project Documents, other than minor changes
involving no extra cost, without Lender’s prior written consent.

Section 6.9          Survival of Representations, Warranties and Covenants.
Borrower understands and agrees that in extending Advances, Lender is relying on
all representations, warranties, and covenants made by Borrower in this
Agreement, the Mortgage, or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement or the Loan Documents. Borrower further
agrees that regardless of any investigation made by Lender, all such
representations, warranties and covenants will survive the extension of each
Advance from the Loan Fund and delivery to Lender of the Loan Documents shall be
continuing in nature, shall be deemed made and redated by Borrower as of the
date each Advance is made, and shall remain in full force and effect until such
time as the Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.

 

LOAN AGREEMENT - 11

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ARTICLE 7

GENERAL PROJECT PROVISIONS

Borrower covenants and agrees with Lender that while this Agreement is in
effect, Borrower shall comply with the following provisions relating to the
construction and completion of the Project:

Section 7.1          Change Orders. All requests for changes in the Plans and
Specifications, except for changes which are less than $10,000.00 or 5% of any
individual line item in the construction budget, must be in writing, signed by
Borrower and the architect, and delivered to Lender for its approval. Borrower
shall not permit the performance of any work pursuant to any change order or
modification of the Construction Contract or any subcontract without the written
approval of Lender. Borrower shall obtain any required permits or authorizations
from governmental authorities having jurisdiction before approving or requesting
a new change order.

Section 7.2          Purchase of Materials; Conditional Sales Contracts. No
materials, equipment, fixtures, or articles of personal property placed in or
incorporated into the Project, shall be purchased or installed under any
security agreement or other agreement whereby the seller reserves or purports to
reserve title or the right of removal or repossession, or the right to consider
such items as personal property after their incorporation into the Project,
unless otherwise authorized by Lender in writing.

Section 7.3          Lender’s Right of Entry and Inspection. Lender and its
agents shall have at all times the right of entry and free access to the
Mortgaged Property and the right to inspect all work done, labor performed, and
materials furnished with respect to the Project. Lender shall have unrestricted
access to and the right to copy all records, accounting books, contracts,
subcontracts, bills, statements, vouchers, and supporting documents of Borrower
relating in any way to the Project.

Section 7.4          Lender’s Right to Stop Work. If Lender in good faith
determines that any work or materials do not conform to the approved Plans and
Specifications or sound building practices, or otherwise depart from any of the
requirements of this Agreement, Lender may require the work to be stopped and
withhold disbursements until the matter is corrected. In such event, Borrower
shall promptly correct the work to Lender’s satisfaction. No such action by
Lender will affect Borrower’s obligation to complete the Tenant Improvements or
Capital Expenditures, as applicable, on or before the Completion Date. Lender is
under no duty to supervise or inspect the construction or examine any books and
records. Any inspection or examination by Lender is for the sole purpose of
protecting Lender’s security and preserving Lender’s rights under this
Agreement. No default of Borrower will be waived by any inspection by Lender. In
no event will any inspection by Lender be a representation that there has been
or will be compliance with the Plans and Specifications or that the construction
is free from defective materials or workmanship.

Section 7.5          Limitation of Responsibility. The making of any Advance by
Lender shall not constitute or be interpreted as either (A) an approval or
acceptance by Lender of the work done through the date of the Advance, or (B) a
representation or indemnity by Lender

 

LOAN AGREEMENT - 12

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to any party against any deficiency or defect in the work or against any breach
of any contract. Inspections and approvals of the Plans and Specifications, the
Tenant Improvements or Capital Expenditures, as applicable, the workmanship and
materials used in the Tenant Improvements or Capital Expenditures, as
applicable, and the exercise of any other right of inspection, approval, or
inquiry granted to Lender in this Agreement are acknowledged to be solely for
the protection of Lender’s interests, and under no circumstances shall they be
construed to impose any responsibility or liability of any nature whatsoever on
Lender to any party. Neither Borrower nor any contractor, subcontractor,
materialman, laborer, or any other person shall rely, or have any right to rely,
upon Lender’s determination of the appropriateness of any Advance. No
disbursement or approval by Lender shall constitute a representation by Lender
as to the nature of the Project, its construction, or its intended use for
Borrower or for any other person, nor shall it constitute an indemnity by Lender
to Borrower or to any other person against any deficiency or defects in the
Project or against any breach of any contract.

Section 7.6          Cessation of Advances. Lender shall have no obligation to
make Advances or to disburse Loan proceeds under this Agreement or under any
other Loan Documents upon the occurrence of any Event of Default.

ARTICLE 8

DEFAULT

Any failure by Borrower or any Guarantor to perform, observe or comply with any
of the terms, conditions, agreements, covenants or provisions of this Agreement
(including, but not limited to, failure to construct the Tenant Improvements or
Capital Expenditures, as applicable, in accordance with the Project Documents)
or any other Loan Documents, shall constitute an “Event of Default” hereunder.

ARTICLE 9

REMEDIES

Upon the occurrence of any Event of Default and at any time thereafter, Lender
may, at its option, but without any obligation to do so, and in addition to any
other right Lender without notice to Borrower may have, exercise any or all of
the following rights, remedies and recourses, without notice to Borrower:

a.  institute appropriate proceedings to enforce the performance of this
Agreement;

b.  withhold further disbursement of the Loan Fund;

c.  expend funds necessary to remedy the Event of Default;

d.  take possession of the Mortgaged Property and continue construction of the
Project;

e.  exercise any other right or remedy which it has under the Note or Loan
Documents, or which is otherwise available at law or in equity or by statute;

 

LOAN AGREEMENT - 13

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f.        setoff against and/or use the funds in the Account (or any portion
thereof) for any purpose, including, without limitation (i) payment of any
Indebtedness secured by the Note, any other Loan Documents and this Agreement,
including, without limitation, principal prepayments and the prepayment premium
applicable to such prepayment (as applicable); (ii) reimbursement of Lender for
all losses and expenses (including, without limitation, reasonable legal fees
and disbursements) suffered or incurred by Lender as a result of such default;
or (iii) payment of any amount expended in exercising all rights and remedies
available to Lender at law or in equity or under this Agreement or under the
Loan Documents.

Borrower consents to such actions by Lender without any further instructions or
consents from Borrower. Borrower consents to, authorizes, and directs Lender to
comply with any “entitlement orders” within the meaning of Section 8-102(h) of
the Uniform Commercial Code (the “UCC”) regarding any funds held in the Account,
without any further action or consent by Borrower. Provided, however, that a
setoff by Lender or use of any funds in the Account by Lender shall not, under
any circumstances, be deemed a cure of an Event of Default, and, after the
occurrence of an Event of Default and a setoff by Lender or use of the funds in
the Account by Lender, Borrower shall continue to be in default and Lender shall
be entitled to exercise all rights and remedies available to Lender upon the
occurrence of such Event of Default. Nothing in this Agreement or the other Loan
Documents shall obligate Lender to apply all or any portion of the funds in the
Account on account of any default by Borrower or to repayment of the
Indebtedness secured by the Loan Documents or in any specific order of priority.

ARTICLE 10

COMPLETION OF IMPROVEMENTS BY LENDER

If Lender takes possession of the Mortgaged Property, it may take any and all
actions necessary in its judgment to complete construction of the Tenant
Improvements or Capital Expenditures, as applicable, including, but not limited
to, making changes in the Plans and Specifications, work, or materials and
entering into, modifying or terminating any Project Documents, subject to
Lender’s right at any time to discontinue any work without liability. If Lender
elects to complete the Tenant Improvements or Capital Expenditures, as
applicable, it will not assume any liability to Borrower or to any other Person
for completing the Tenant Improvements or Capital Expenditures, as applicable,
or for the manner or quality of construction of the Tenant Improvements or
Capital Expenditures, as applicable, and Borrower expressly waives any such
liability. Borrower irrevocably appoints Lender as its attorney-in-fact, with
full power of substitution, to complete the Tenant Improvements or Capital
Expenditures, as applicable, at Lender’s option, either in Borrower’s name or in
its own name. In any event, all sums expended by Lender in completing
construction of the Tenant Improvements or Capital Expenditures, as applicable,
will be considered to have been disbursed to Borrower and will be secured by the
Mortgaged Property. Any such sums that cause the principal amount of the Loan to
exceed the face amount of the Note will be considered to be an additional Loan
to Borrower, bearing interest at the rate set forth in the Note and being
secured by the Mortgaged Property. For these purposes, Borrower assigns to
Lender all of its right, title and interest in and to the Project Documents;
provided, however, Lender will not have any obligation under the Project
Documents unless Lender expressly hereafter agrees in writing to assume such
obligations. Upon the occurrence of an Event of Default, Lender will have the
right to exercise any rights of Borrower under the Project Documents. Except as
may be prohibited by

 

LOAN AGREEMENT - 14

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applicable law, all of Lender’s rights and remedies, whether evidenced by this
Agreement or by any other writing, shall be cumulative and may be exercised
singularly or concurrently.

ARTICLE 11

MISCELLANEOUS

Section 11.1        Amendments and Waivers; References. No amendment or waiver
of any provision of this Agreement shall be effective unless in writing and
signed by the party against whom enforcement is sought. This Agreement and the
other Loan Documents shall not be executed, entered into, altered, amended or
modified by electronic means. Any reference to a Loan Document, whether in this
Agreement or in any other Loan Document, shall be deemed to be a reference to
such Loan Document as it may hereafter from time to time be amended, modified,
supplemented and restated in accordance with the terms hereof.

Section 11.2        Attorneys’ Fees; Expenses. Borrower agrees to pay upon
demand all of Lender’s reasonable costs and expenses, including Lender’s
attorneys’ fees and legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Borrower shall pay the reasonable costs and expenses (i) in
connection with each Advance and (ii) with any enforcement of this Agreement.
Costs and expenses include Lender’s attorneys’ fees and legal expenses whether
or not there is a lawsuit, including attorneys’ fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection services.
Borrower also shall pay all court costs and such additional fees as may be
directed by the court.

Section 11.3        Authority to File Notices. Borrower appoints and designates
Lender as its attorney-in-fact to file for record any notice that Lender deems
necessary to protect its interest under this Agreement. This power shall be
deemed coupled with an interest and shall be irrevocable while any sum or
performance remains due and owing under any of the Loan Documents.

Section 11.4        Caption Headings. The article and section titles set forth
in this Agreement are inserted for convenience of reference only and shall in no
way alter, modify or define, or be used in construing, the text of such articles
or sections.

Section 11.5        Governing Law. This Agreement and all other Loan Documents
are being executed and delivered, and are intended to be performed, in the State
of Idaho, and the laws of the State of Idaho shall govern the rights and duties
of the parties hereto and the validity, construction, enforcement and
interpretation of this Agreement and the Loan Documents (without giving effect
to principles of conflicts of law), except to the extent otherwise specified in
this Agreement or any of the Loan Documents.

Section 11.6        No Waiver by Lender. Lender shall not be deemed to have
waived any rights under this Agreement unless such waiver is given in writing
and signed by Lender. No delay or omission on the part of Lender in exercising
any right shall operate as a waiver of such right or any other right. A waiver
by Lender of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender’s right otherwise to demand strict compliance with

 

LOAN AGREEMENT - 15

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that provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, shall constitute
a waiver of any of Lender’s rights or of any of Borrower’s obligations as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the sole
discretion of Lender.

Section 11.7        Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable, such provision shall be fully severable;
the Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof; the remaining
provisions thereof shall remain in full effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance therefrom; and
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of the Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible to be
legal, valid and enforceable.

Section 11.8        Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Lender and Borrower and their respective successors
and assigns. Borrower shall not, without the prior written consent of Lender,
assign any rights, duties or obligations hereunder.

Section 11.9        Time is of the Essence. Time is of the essence in the
performance of this Agreement.

Section 11.10        Jury Waiver. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN)
OR ACTION OF EITHER PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE
RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE LOAN OR THE
MORTGAGED PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR
CANCEL THE NOTE, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND ANY CLAIM OR
DEFENSE ASSERTING THAT THE NOTE, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WAS
FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A
MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE NOTE, THIS AGREEMENT AND THE
LOAN DOCUMENTS.

 

LOAN AGREEMENT - 16

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BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT AND
BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 24, 2010.

 

BORROWER:

Wells VAF – 330 Commerce Street, LLC,

a Delaware limited liability company

By:

 

Wells Mid-Horizon Value-Added Fund I, LLC,

 

a Georgia limited liability company,

its sole Member

 

By:

 

Wells Investment Management Company, LLC,

   

a Georgia limited liability company,

its Manager

   

By:

 

/s/ Kevin A. Hoover

     

 Kevin A. Hoover, President

   

LENDER:

   

A10 Capital, LLC,

    a Delaware limited liability company    

By:

 

  /s/ Dale Conder

     

Dale Conder, Chief Risk Officer

 

LOAN AGREEMENT - 17

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EXHIBIT “A”

Legal Description of Real Property

TRACT I:

Being a volume of air containing 3,200,912 cubic feet, more or less, with its
lower level boundary beginning at Elevation 529.69 which is the upper ceiling of
the seventh floor of the structure below and with its upper level boundary being
at Elevation 634.0 [said Elevations refer to mean sea level as established from
State of Tennessee Project No. M-3243 (S) Bench Mark being a tag bold fire
hydrant 270.00 feet south of Commerce Street as relocated on Second Avenue,
Elevation 429.43 (Sea Level Datum)], together with all structures, buildings and
improvements contained within said volume of air space and all real property
contained therein above a parcel of land in Nashville, Davidson County,
Tennessee, and being more particularly described as follows:

Beginning at the point of intersection of the westerly margin of Third Avenue,
North, and the northerly margin of Commerce Street; thence, with said northerly
margin, S 62° 30’ 03” W, 174.45 feet to the easterly margin of Printer’s Alley;
thence with said easterly margin, N 27° 40’ 45” W, 122.48 feet; thence
N 62° 20’ 37” E 1.00 feet; thence, continuing with the easterly margin of
Printer’s Alley, N 27° 32’ 23” W, 53.40 feet; thence, N 62° 08’ 37” E,
174.00 feet to a point in the westerly margin of Third Avenue, North; thence
with said westerly margin, S 27° 29’ 23” E, 54.00 feet; thence continuing with
said westerly margin of Third Avenue, North, S 27° 25’ 00” E, 122.96 feet to the
point of beginning.

TRACT II:

A leasehold estate pursuant to a lease dated as of December 1, 1985, by and
between Commerce Street Venture (Lessor) and Linville Properties Co. (Lessee), a
memorandum of said lease is recorded in Book 6739, Page 374, and re-recorded in
Book 6740, Page 822, and further re-recorded in Book 7075, Page 517, in the
Register’s Office for Davidson County, Tennessee, and subsequently assigned to
J.C. Bradford & Co. by Assignment of Lease recorded in Book 7902, Page 220, and
further assigned to K&M Enterprises by Assignment of Lease recorded at
Instrument No. 20001018-0103460, in said Register’s Office, and further assigned
to Ferrari Partners, L.P. by Assignment of Lease recorded at Instrument
No. 20020523-0062998, in said Register’s Office, and further assigned to Wells
VAF – 330 Commerce Street, LLC, by Assignment of Lease recorded at Instrument
No. 20071217-0144581, 20071217-0144582 and 20071217-0144583, in said Register’s
Office.

Being a portion of a parcel of land in Nashville, First Civil District,
Eighteenth Council District, Davidson County, Tennessee, and being more
particularly described as follows:

Beginning at the point of intersection of the westerly margin of Third Avenue,
North, and the northerly margin of Commerce Street; thence, with said northerly
margin, S 62° 30’ 03” W, 174.45 feet to the easterly margin of Printer’s Alley;
thence with said easterly margin, N 27° 40’ 45” W, 122.48 feet; thence
N 62° 20’ 37” E 1.00 feet; thence, continuing with the easterly margin of
Printer’s Alley, N 27° 32’ 23” W, 53.40 feet; thence, N 62° 08’ 37” E,
174.00 feet to a point in the westerly margin of Third Avenue, North; thence
with said westerly margin, S 27° 29’ 23” E, 54.00 feet; thence continuing with
said westerly margin of Third Avenue, North, S 27° 25’ 00” E, 122.96 feet to the
point of beginning.

TRACT III:

A reciprocal easement for ingress and egress, parking utilities and support as
contained in that certain Reciprocal Easement Agreement, of record in Book 6739,
Page 331, as re-recorded in Book 6740, Page 775, in the Register’s Office for
Davidson County, Tennessee, in and to a parcel of land in Nashville, First Civil
District, Eighteenth Councilmanic District, and being more particularly
described as follows:

 

LOAN AGREEMENT - 18

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Beginning at the point of intersection of the westerly margin of Third Avenue,
North, and the northerly margin of Commerce Street; thence, with said northerly
margin, S 62° 30’ 03” W, 174.45 feet to the easterly margin of Printer’s Alley;
thence with said easterly margin, N 27° 40’ 45” W, 122.48 feet; thence
N 62° 20’ 37” E 1.00 feet; thence, continuing with the easterly margin of
Printer’s Alley, N 27° 32’ 23” W, 53.40 feet; thence, N 62° 08’ 37” E,
174.00 feet to a point in the westerly margin of Third Avenue, North; thence
with said westerly margin, S 27° 29’ 23” E, 54.00 feet; thence continuing with
said westerly margin of Third Avenue, North, S 27° 25’ 00” E, 122.96 feet to the
point of beginning.

Together with the easement rights set forth in the instrument of record in
Book 7849, Page 627, in the Register’s Office for Davidson County, Tennessee.

Together with the easement rights set forth in the instrument of record in
Book 6739, Page 331, and re-recorded in Book 6740, Page 775, in the Register’s
Office for Davidson County, Tennessee; said instrument having been amended by
First Amendment to Reciprocal Easement Agreement recorded December 17, 2007 at
Instrument No. 200712170144580, in said Register’s Office.

Being the same property conveyed to Wells VAF – 330 Commerce Street, LLC, a
Delaware limited liability company, by Special Warranty Deed of record in
#20071217-0144579, Register’s Office, Davidson County, Tennessee, as corrected
by Scrivener’s Affidavit of record in Instrument No. 20100224-0014217, said
Register’s Office. (As to Tract I and III)

330 Commerce Street

Nashville, TN

 

LOAN AGREEMENT - 19