Exhibit 10.5

LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT (as amended, modified or supplemented from time
to time, this “Agreement”) is made and entered into effective as of October 5,
2010 (the “Effective Date”) by and between WELLS REAL ESTATE FUNDS, INC., a
Delaware corporation (together with its successors and assigns, participants and
transferees “Lender”) and WELLS CORE OFFICE INCOME OPERATING PARTNERSHIP, L.P.
(together with its permitted successors and assigns, “Borrower”).

RECITALS:

Borrower has applied to Lender for and Lender has agreed to provide, subject to
the terms of this Agreement, a revolving loan facility in the aggregate
principal amount not to exceed $10,000,000 for the purpose of funding
acquisitions and operations of commercial real estate properties consisting
primarily of high quality, income-generating office and industrial property
leased to creditworthy companies and governmental entities to be consolidated in
the diversified portfolio held and marketed for investment by Wells Core Office
Income REIT, Inc. (the “Guarantor”). It is contemplated that the indebtedness
under the Loan (as defined herein) shall be secured and repaid primarily by the
subscription proceeds collected by Guarantor from public investors. In
consideration of their mutual covenants and agreements hereinafter set forth and
intending to be legally bound hereby, the parties hereto covenant and agree as
follows:

Section 1.      DEFINITIONS

1.01    Certain Definitions.  In addition to words and terms defined elsewhere
in this Agreement, the following words and terms shall have the following
meanings, respectively, unless the context hereof clearly requires otherwise:

Affiliate as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such
Person, (ii) which beneficially owns or holds 10% or more of any class of the
voting or other equity interests of such Person, or (iii) 10% or more of any
class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by such Person.

Anti-Terrorism Laws shall mean any Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws
comprising or implementing the Bank Secrecy Act, and the Laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing Laws may from time to time be amended, renewed, extended, or
replaced).

Applicable Margin shall mean, as applicable:

      (A)      the percentage spread to be added to the Base Rate applicable to
Revolving Loans under the Base Rate Option shall be 1.50%, or

      (B)      the percentage spread to be added to the LIBOR Rate applicable to
Revolving Loans under the LIBOR Rate Option shall be 2.50%.

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Authorized Officer shall mean, with respect to Borrower and Guarantor, the
President, Senior Vice-President, Vice President, Treasurer or Assistant
Treasurer of the General Partner of Borrower or Guarantor, respectively, or such
other individuals, designated by written notice to the Lender from Borrower or
Guarantor, authorized to execute notices, reports and other documents on behalf
of Borrower and Guarantor required hereunder. Borrower and Guarantor may amend
such list of individuals from time to time by giving written notice of such
amendment to the Lender.

Base Rate shall mean, for any day, a fluctuating per annum rate of interest
equal to the highest of (a) the Prime Rate, and (b) the Federal Funds Open Rate,
plus 50 basis points (0.50%), and (c) the Daily LIBOR Rate, plus 100 basis
points (1.0%). Any change in the Base Rate (or any component thereof) shall take
effect at the opening of business on the day such change occurs.

Base Rate Option shall mean the option of the Borrower to have Loans bear
interest at the rate and under the terms set forth in either Section 4.01(a)(i)
[Revolving Loan Base Rate Option].

Borrowing Date shall mean, with respect to any Loan, the date for the making
thereof or the renewal or conversion thereof at or to the same or a different
Interest Rate Option, which shall be a Business Day.

Business Day shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be closed for
business in Atlanta, Georgia and if the applicable Business Day relates to any
Loan to which the LIBOR Rate Option applies, such day must also be a day on
which dealings are carried on in the London interbank market.

Closing Date shall mean October 5, 2010.

Code shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and
the rules and regulations thereunder, as from time to time in effect.

Collateral shall mean the collateral described herein and pursuant to (i) the
Pledge Agreement executed by Borrower, and (ii) the Pledge Agreement executed by
Guarantor.

Collateral Documents shall have the meaning specified in Section 6.09 [Liens in
the Collateral].

Control Agreement shall mean that certain Control Agreement executed by
Borrower, Guarantor and Deposit Bank in favor of Lender in connection with the
Loan, as the same may be amended, modified or supplemented from time to time.

Daily LIBOR Rate shall mean, for any day, the rate per annum determined by the
Lender by dividing (x) the Published Rate by (y) a number equal to 1.00 minus
the LIBOR Reserve Percentage on such day.

Deposit Bank shall mean Regions Bank, an Alabama corporation.

 

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Distributions shall have the meaning specified in Section 8.03 [Dividends and
Related Distributions].

Environmental Laws shall mean all applicable federal, state, local, tribal,
territorial and foreign Laws (including common law), constitutions, statutes,
treaties, regulations, rules, ordinances and codes and any consent decrees,
settlement agreements, judgments, orders, directives, policies or programs
issued by or entered into with an Official Body pertaining or relating to:
(i) pollution or pollution control; (ii) protection of human health from
exposure to regulated substances; (iii) protection of the environment and/or
natural resources; (iv) employee safety in the workplace; (v) the presence, use,
management, generation, manufacture, processing, extraction, treatment,
recycling, refining, reclamation, labeling, packaging, sale, transport, storage,
collection, distribution, disposal or release or threat of release of regulated
substances; (vi) the presence of contamination; (vii) the protection of
endangered or threatened species; and (viii) the protection of environmentally
sensitive areas.

Event of Default shall mean any of the events of default listed in the Note, the
Collateral Documents, this Agreement or in any of the other Loan Documents,
after the expiration of any applicable notice and cure period.

Excluded Taxes shall mean, with respect to the Lender or any other recipient of
any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) under the Laws of
which such recipient is organized or in which its principal office is located
or, in the case of the Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which Borrower is located,
(c) any federal, state, or local tax based upon, measured by, or arising out of
any payroll or wages paid by it to any person, (d) any federal, state, or local
tax based upon or arising out of its ownership of real or personal property or
measured by the value of such real or personal property, or (e) any federal,
state, or local tax based upon or arising out of its engagement in any
transaction with any person or entity other than the Borrower, or measured by
the value of any such transaction.

Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.

Expiration Date shall mean, with respect to the Revolving Loan Commitment,
April 5, 2011.

Federal Funds Open Rate for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as set forth on
the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such
other substitute Bloomberg Screen that displays such rate), or as set forth on
such other recognized electronic source used for the purpose of displaying such
rate as selected by the Lender (for purposes of this definition, an “Alternate
Source”) (or if such rate for such day does not appear on the Bloomberg Screen
BTMM (or any

 

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substitute screen) or on any Alternate Source, or if there shall at any time,
for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute
screen) or any Alternate Source, a comparable replacement rate determined by the
Lender at such time (which determination shall be conclusive absent manifest
error); provided however, that if such day is not a Business Day, the Federal
Funds Open Rate for such day shall be the “open” rate on the immediately
preceding Business Day. If and when the Federal Funds Open Rate changes, the
rate of interest with respect to any advance to which the Federal Funds Open
Rate applies will change automatically without notice to the Borrower, effective
on the date of any such change.

GAAP shall mean generally accepted accounting principles as are in effect from
time to time, subject to the provisions of Section 1.03 [Accounting Principles],
and applied on a consistent basis both as to classification of items and
amounts.

Guaranty shall mean that certain Guaranty executed and delivered by Wells Core
Office Income REIT, Inc. guaranteeing the Obligations of Borrower hereunder and
under the Loan Documents.

Indebtedness shall mean, as to any Person at any time, any and all indebtedness,
obligations or liabilities (whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, or joint or several)
of such Person for or in respect of: (i) borrowed money, (ii) amounts raised
under or liabilities in respect of any note purchase or acceptance loan
facility, (iii) reimbursement obligations (contingent or otherwise) under any
letter of credit loan agreement, (iv) obligations under any currency swap
agreement, interest rate swap, cap, collar or floor agreement or other interest
rate management device, (v) any other transaction (including forward sale or
purchase agreements, capitalized leases and conditional sales agreements) having
the commercial effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements (but not including trade payables
and accrued expenses incurred in the ordinary course of business which are not
represented by a promissory note or other evidence of indebtedness and which are
not more than thirty (30) days past due), or (vi) any guaranty of Indebtedness
for borrowed money.

Indemnified Taxes shall mean Taxes other than Excluded Taxes.

Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action
or proceeding with respect to such Person (i) before any court or any other
Official Body under any bankruptcy, insolvency, reorganization or other similar
Law now or hereafter in effect, or (ii) for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar
official) of Borrower or otherwise relating to the liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for the
benefit of creditors, composition, marshaling of assets for creditors, or other,
similar arrangement in respect of such Person’s creditors generally or any
substantial portion of its creditors; undertaken under any Law.

Interest Period shall mean the period of time selected by the Borrower in
connection with (and to apply to) any election permitted hereunder by the
Borrower to have Revolving Loans bear interest under the LIBOR Rate Option.
Subject to the last sentence of this definition, such period shall be 7 days,
one Month, two Months, three Months or six Months. Such Interest Period shall
commence on the effective date of such Interest Rate Option, which shall be
(i) the

 

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Borrowing Date if the Borrower is requesting new Loans, or (ii) the date of
renewal of or conversion to the LIBOR Rate Option if the Borrower is renewing or
converting to the LIBOR Rate Option applicable to outstanding Loans.
Notwithstanding the second sentence hereof: (A) any Interest Period which would
otherwise end on a date which is not a Business Day shall be extended to the
next succeeding Business Day unless such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, and (B) the Borrower shall not select, convert to or renew an
Interest Period for any portion of the Loans that would end after the Expiration
Date.

Interest Rate Option shall mean any LIBOR Rate Option or Base Rate Option.

IRS shall mean the Internal Revenue Service.

Knowledge shall mean the actual knowledge of any Authorized Officer of Borrower
following his or her receipt of written notification, specifically intending to
exclude deemed or imputed knowledge.

Law shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ,
decree, bond, judgment, authorization or approval, lien or award by or
settlement agreement with any Official Body, including Environmental Laws.

LIBOR Rate shall mean, with respect to the Loans to which the LIBOR Rate Option
applies for any Interest Period, the interest rate per annum determined by the
Lender by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg
Page BBAM1 (or on such other substitute Bloomberg page that displays rates at
which US dollar deposits are offered by leading banks in the London interbank
deposit market), or the rate which is quoted by another source selected by the
Lender which has been approved by the British Bankers’ Association as an
authorized information vendor for the purpose of displaying rates at which US
dollar deposits are offered by leading banks in the London interbank deposit
market (for purposes of this definition, an “Alternate Source”), at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for
U.S. Dollars for an amount comparable to such Loan amount and having a borrowing
date and a maturity comparable to such Interest Period (or if there shall at any
time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute
page) or any Alternate Source, a comparable replacement rate determined by the
Lender at such time (which determination shall be conclusive absent manifest
error)), by (ii) a number equal to 1.00 minus the LIBOR Reserve Percentage.
LIBOR may also be expressed by the following formula:

London interbank offered rates quoted by Bloomberg

 

LIBOR RATE

 

=

  

or appropriate successor as shown on Bloomberg Page BBAM1

1.00 – LIBOR Reserve Percentage

The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR
Rate Option applies that is outstanding on the effective date of any change in
the LIBOR Reserve

 

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Percentage as of such effective date. The Lender shall give prompt notice to the
Borrower of the LIBOR Rate as determined or adjusted in accordance herewith,
which determination shall be conclusive absent manifest error.

LIBOR Rate Option shall mean the option of the Borrower to have Loans bear
interest at the rate and under the terms set forth in Section 4.01(a)(ii)
[Revolving Loan LIBOR Rate Option].

LIBOR Reserve Percentage shall mean as of any day the maximum percentage in
effect on such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

Lien shall mean any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature whatsoever,
whether voluntarily or involuntarily given, including any conditional sale or
title retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security and any filed financing statement
or other notice of any of the foregoing (whether or not a lien or other
encumbrance is created or exists at the time of the filing).

Loan Documents shall mean this Agreement, the Note, the Pledge Agreements, the
Guaranty, the Control Agreement and any other instruments, certificates or
documents delivered in connection herewith or therewith.

Loan Request shall have the meaning specified in Section 2.03 [Revolving Loan
Requests].

Loans shall mean collectively and Loan shall mean separately all Revolving Loans
or any Revolving Loans.

Material Adverse Change shall mean any set of circumstances or events which
(a) has a material adverse effect upon the validity or enforceability of this
Agreement or any other Loan Document, (b) is material and adverse to the
business, properties, assets, financial condition or results of operations of
the Borrower and its Obligations, or (c) impairs materially the ability of the
Borrower to duly and punctually pay or perform any of the Obligations, or
(d) impairs materially the ability of the Lender, to the extent permitted, to
enforce its legal remedies pursuant to this Agreement or any other Loan
Document.

Month, with respect to an Interest Period under the LIBOR Rate Option, shall
mean the interval between the days in consecutive calendar months numerically
corresponding to the first day of such Interest Period. If any LIBOR Rate
Interest Period begins on a day of a calendar month for which there is no
numerically corresponding day in the month in which such Interest Period is to
end, the final month of such Interest Period shall be deemed to end on the last
Business Day of such final month.

Monthly Payment Date shall mean (a) the 15th day of each calendar month,
provided, however, that if the 15th day of any calendar month falls on a
Saturday, Sunday or Lender

 

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holiday, then the Monthly Payment Date for such calendar month shall be on the
immediately succeeding Business Day, and (b) the Expiration Date or upon
acceleration of the Note.

Note shall mean the promissory note executed pursuant to this Agreement
evidencing the Revolving Loans.

Obligation shall mean any obligation or liability of the Borrower or Guarantor,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under or in
connection with this Agreement, the Note, or any other Loan Document whether to
the Lender or its Affiliates or other persons provided for under such Loan
Documents.

Official Body shall mean the government of the United States of America or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

Other Taxes shall mean all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

Permitted Liens shall mean:

    (i)      Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business and which are not yet due and payable;

    (ii)     Liens, security interests and mortgages in favor of the Lender
securing the Obligations;

    (iii)    Liens or other security interests in favor of any third party
lender securing any Indebtedness approved in writing in advance by Lender; or

    (iv)    Liens resulting from final judgments or orders described in
Section 9.06 [Final Judgments or Orders] which are not discharged within thirty
(30) days of entry, and do not affect the Collateral or, in the aggregate, do
not materially impair the ability of Borrower to perform its Obligations
hereunder or under the other Loan Documents.

    (v)     Liens upon real property and improvements securing any Indebtedness
of Borrower or Guarantor, or their respective Subsidiaries, for the purchase of
such real property and improvements.

Person shall mean any individual, corporation, partnership, limited liability
company, association, joint-stock company, trust, unincorporated organization,
joint venture, government or political subdivision or agency thereof, or any
other entity.

 

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Pledge Agreements shall mean those certain Pledge Agreements executed and
delivered by each of Borrower and Guarantor in favor of the Lender in forms
acceptable to Lender.

PNC shall mean PNC Bank, a National Association.

Potential Default shall mean any event or condition which with notice or passage
of time, or both, will constitute an Event of Default.

Prime Rate shall mean the interest rate per annum announced from time to time by
PNC, as its then prime rate, which rate may not be the lowest or most favorable
rate then being charged commercial borrowers or others by the Lender. Any change
in the Prime Rate shall take effect at the opening of business on the day such
change is announced.

Prior Security Interest shall mean a valid and enforceable perfected
first-priority security interest under the Uniform Commercial Code in the
Collateral which is subject only to statutory Liens for taxes not yet due and
payable or Liens approved by Lender.

Published Rate shall mean the rate of interest published each Business Day in
The Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the rate at
which U.S. dollar deposits are offered by leading banks in the London interbank
deposit market for a one month period as published in another publication
selected by the Lender).

Relief Proceeding shall mean any proceeding seeking a decree or order for relief
in respect of Borrower or Guarantor in a voluntary or involuntary case under any
applicable bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of Borrower
or Guarantor for any substantial part of its property, or for the winding-up or
liquidation of its affairs, or an assignment for the benefit of its creditors.

Revolving Loans shall mean collectively and Revolving Loan shall mean separately
all Revolving Loans or any Revolving Loan made by the Lender to the Borrower
pursuant to Section 2.01 [Revolving Loan Commitment].

Solvent shall mean, with respect to any Person on any date of determination,
taking into account such right of reimbursement, contribution or similar right
available to such Person from other Persons, that on such date (i) the fair
value of the property of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person, (ii) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (iii) such Person is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature, and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person’s property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is

 

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engaged. In computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount which, in light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.

Subsidiary of any Person at any time shall mean any corporation, trust,
partnership, any limited liability company or other business entity (i) of which
more than 50% of the outstanding voting securities or other interests normally
entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person’s Subsidiaries, or (ii) the Board of Directors or similar
managing body of which is controlled or capable of being controlled by such
Person or one or more of such Person’s Subsidiaries; provided, however, that no
Person shall be considered a Subsidiary of any other Person solely as the result
of a contractual agreement for the provision of services or employees.

Taxes shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Official Body, including any interest, additions to tax or penalties applicable
thereto.

UCC Financing Statements shall mean all UCC financing statements relating to any
of the Collateral Documents.

USA Patriot Act shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

1.02    Construction.  Unless the context of this Agreement otherwise clearly
requires, the following rules of construction shall apply to this Agreement and
each of the other Loan Documents: (i) references to the plural include the
singular, the plural, the part and the whole and the words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and
similar terms in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document as a whole; (iii) article, section,
subsection, clause, schedule and exhibit references are to this Agreement or
other Loan Document, as the case may be, unless otherwise specified;
(iv) reference to any Person includes such Person’s successors and assigns;
(v) reference to any agreement, including this Agreement and any other Loan
Document together with the schedules and exhibits hereto or thereto, document or
instrument means such agreement, document or instrument as amended, modified,
replaced, substituted for, superseded or restated; (vi) relative to the
determination of any period of time, “from” means “from and including,” “to”
means “to but excluding,” and “through” means “through and including”; (vii) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights,
(viii) section headings herein and in each other Loan Document are included for
convenience and shall not affect the interpretation of this Agreement or such
Loan Document, and (ix) unless otherwise specified, all references herein to
times of day shall be references to Eastern Time.

 

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1.03    Accounting Principles.  Except as otherwise provided in this Agreement,
all computations and determinations as to accounting or financial matters and
all financial statements to be delivered pursuant to this Agreement shall be
made and prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP. In the event of any change after the
date hereof in GAAP, and if such change would affect the computation of any of
the financial covenants set forth in Section 8, then the parties hereto agree to
endeavor, in good faith, to agree upon an amendment to this Agreement that would
adjust such financial covenants in a manner that would preserve the original
intent thereof, but would allow compliance therewith to be determined in
accordance with the Borrower’s financial statements at that time, provided that,
until so amended such financial covenants shall continue to be computed in
accordance with GAAP prior to such change therein.

Section 2.      REVOLVING LOAN FACILITY

2.01    Revolving Loan Commitment.  Subject to the terms and conditions hereof
and relying upon the representations and warranties herein set forth, Lender
agrees to make Revolving Loans to the Borrower at any time or from time to time
on or after the date hereof to the Expiration Date; provided that after giving
effect to each such Loan the aggregate principal amount outstanding shall not
exceed Ten Million Dollars ($10,000,000.00). Within such limits of time and
amount and subject to the other provisions of this Agreement, Borrower may
borrow, repay and reborrow pursuant to this Section 2.01. The Obligation of the
Borrower to repay the aggregate unpaid principal amount of the Revolving Loans
made to it by the Lender, together with interest thereon, shall be evidenced by
the Note, dated the Closing Date payable to the order of the Lender in a face
amount equal to Ten Million Dollars ($10,000,000.00).

2.02    Nature of Lender’s Obligations with Respect to Revolving Loans.  The
failure of the Lender to perform its obligations hereunder shall not affect the
Obligations of the Borrower to any other party nor shall any other party be
liable for the failure of Lender to perform its obligations hereunder. Lender
shall have no obligation to make Revolving Loans hereunder on or after the
Expiration Date or as otherwise set forth herein.

2.03    Revolving Loan Requests.  Except as otherwise provided herein, Borrower
may from time to time prior to the Expiration Date request the Lender to make
Revolving Loans, or renew or convert the Interest Rate Option applicable to
existing Revolving Loans pursuant to Section 4.2 [Interest Periods], by
delivering to the Lender, not later than 10:00 a.m., (i) three (3) Business Days
prior to the proposed Borrowing Date with respect to the making of Revolving
Loans to which the LIBOR Rate Option applies or the conversion to or the renewal
of the LIBOR Rate Option for any Loans; and (ii) one (1) Business Day prior to
the proposed Borrowing Date with respect to the making of a Revolving Loan to
which the Base Rate Option applies or the last day of the preceding Interest
Period with respect to the conversion to the Base Rate Option for any Loan, of a
duly completed request therefor substantially in the form of Exhibit 2.03 (each,
a “Loan Request”). Each Loan Request shall be irrevocable and shall specify the
aggregate amount of the proposed Loan, and, if applicable, the Interest Period,
which amount shall be in integral multiples of $50,000 and not less than $50,000
for each Loan Request.

 

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2.04    Making Revolving Loans; Repayment of Revolving Loans.

  (a)      Lender shall, subject to Section 3 [Conditions of Lending], fund such
Revolving Loans to Borrower in U.S. Dollars and immediately available funds
prior to 2:00 p.m., on the applicable Borrowing Date.

  (b)      Borrower shall repay the Revolving Loans together with all
outstanding interest thereon on the Expiration Date.

2.05    Use of Proceeds.  The proceeds of the Loans shall be used to acquire
commercial real estate properties, including without limitation the payment of
acquisition costs and expenses and advisory fees.

Section 3.      CONDITIONS OF LENDING

The obligation of the Lender to make Loans hereunder is subject to the
performance by Borrower of its Obligations to be performed hereunder at or prior
to the making of any such Loans and to the satisfaction of the following further
conditions:

3.01.    Initial Advance.   On the Closing Date, proper evidence, execution,
and/or delivery to Lender of the following items in addition to this Agreement,
all in form and substance satisfactory to Lender and Lender’s counsel in their
sole discretion:

  (a)      Each of the other Loan Documents signed by an Authorized Officer of
the Borrower and Guarantor and all appropriate UCC financing statements.

  (b)      The Control Agreement whereby the Deposit Bank confirms Lender’s
perfected security interest in and control over one or more deposit accounts
held in the name of Borrower and Guarantor at the Deposit Bank.

  (c)      Favorable opinions from legal counsel, addressed to Lender,
acceptable to Lender and Lender’s counsel covering such matters as may be
reasonably requested by Lender or Lender’s Counsel.

  (d)      No action, proceeding, investigation, regulation, or legislation
shall have been instituted, or, to the knowledge of Borrower threatened or
proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of, this Agreement, the
other Loan Documents or the consummation of the transactions contemplated hereby
or thereby or which, in the sole discretion of the Lender, would make it
inadvisable to consummate the transactions contemplated by this Agreement or any
of the other Loan Documents;

  (e)      Certificates dated the Closing Date and signed by an Authorized
Officer of Borrower and Guarantor, certifying as appropriate as to: (a) all
necessary action taken by Borrower or Guarantor, as applicable, in connection
with this Agreement and the other Loan Documents; (b) the names of the
Authorized Officers authorized to sign the Loan Documents and their true
signatures; and (c) copies of its organizational documents as in effect on the

 

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Closing Date certified by the appropriate state official where such documents
are filed in a state office;

  (f)      Lender shall have completed or shall have caused to be completed, to
its satisfaction in form, scope, substance and in all other respects, a due
diligence review with respect to the assets, financial condition, operations,
business and prospects of Borrower and Guarantor;

  (g)      All consents required to effectuate the transactions contemplated
hereby;

  (h)      Payment to Lender or third parties of all fees and expenses required
by this Agreement or any other Loan Documents;

  (i)      Such other documents in connection with such transactions as the
Lender or its counsel may reasonably request; and

  (j)      In addition to the conditions listed above, there shall not have
occurred and be then continuing an Event of Default or Potential Event of
Default.

3.02    Conditions Precedent to Advances After Initial Advance.  Lender shall
not be obligated to make any advances of Loan proceeds after the initial advance
until all of the following conditions have been satisfied:

  (a)      Each and every one of the conditions stated in Section 3.01 of this
Agreement;

  (b)      Lender shall have received a duly executed and completed Loan Request
acceptable to Lender in its sole and absolute discretion;

  (c)      No Lien shall be attached to the Collateral except statutory Liens
for taxes not yet due and payable or as consented to by Lender;

  (d)      The representations and warranties of Borrower in any Loan Document
shall then be true and correct in all material respects as of the date made or
deemed made; and

  (e)      There shall not have occurred and be then continuing an Event of
Default or Potential Default.

3.03    Lender’s Ability to Lend.    Notwithstanding Borrower’s compliance with
Section 3.01 or 3.02, as applicable, Lender shall have no obligation to advance
any amount under this Agreement unless it has first received corresponding
funding under its credit facility with PNC.

Section 4.      INTEREST RATES

4.01    Interest Rate Options.  Borrower shall pay interest in respect of the
outstanding unpaid principal amount of the Loans as selected by it from the Base
Rate Option or LIBOR Rate Option set forth below applicable to the Loans, it
being understood that, subject to the

 

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provisions of this Agreement, Borrower may select different Interest Rate
Options and different Interest Periods to apply simultaneously to the Loans
comprising different Loan Requests and may convert to or renew one or more
Interest Rate Options with respect to all or any portion of the Loans comprising
any specific Loan Request; provided that if an Event of Default or Potential
Default exists and is continuing, Borrower may not request, convert to, or renew
the LIBOR Rate Option for any Loans and the Lender may demand that all existing
Loans bearing interest under the LIBOR Rate Option shall be converted
immediately to the Base Rate Option, subject to the obligation of the Borrower
to pay any indemnity under Section 5.05 [Indemnity] in connection with such
conversion. If at any time the designated rate applicable to any Loan made by
the Lender exceeds the Lender’s highest lawful rate, the rate of interest on
such Loan shall be limited to the Lender’s highest lawful rate.

  (a)      Revolving Loan Interest Rate Options.  Borrower shall have the right
to select from the following Interest Rate Options applicable to the Revolving
Loans:

     (i)      Revolving Loan Base Rate Option:  A fluctuating rate per annum
(computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed) equal to the Base Rate plus the Applicable Margin, such
interest rate to change automatically from time to time effective as of the
effective date of each change in the Base Rate; or

     (ii)      Revolving Loan LIBOR Rate Option:      A rate per annum (computed
on the basis of a year of 360 days and actual days elapsed) equal to the LIBOR
Rate plus the Applicable Margin.

  (b)      Rate Quotations. Borrower may call the Lender on or before the date
on which a Loan Request is to be delivered to receive an indication of the rates
then in effect, but it is acknowledged that such projection shall not be binding
on the Lender nor affect the rate of interest which thereafter is actually in
effect when the election is made.

4.02    Interest Periods.  At any time when the Borrower shall select, convert
to or renew a LIBOR Rate Option, Borrower shall notify the Lender thereof at
least three (3) Business Days prior to the effective date of such LIBOR Rate
Option by delivering a Loan Request. The notice shall specify an Interest Period
during which such Interest Rate Option shall apply. Notwithstanding the
preceding sentence, the following provisions shall apply to any selection of,
renewal of, or conversion to a LIBOR Rate Option:

  (a)      Each Loan Request shall be in integral multiples of $50,000 and not
less than $50,000; and

  (b)      In the case of the renewal of a LIBOR Rate Option at the end of an
Interest Period, the first day of the new Interest Period shall be the last day
of the preceding Interest Period, without duplication in payment of interest for
such day.

4.03    Interest After Default.  To the extent permitted by Law, upon the
occurrence of an Event of Default and until such time such Event of Default
shall have been cured or waived, and at the discretion of the Lender:

 

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  (a)      The rate of interest for each Loan otherwise applicable pursuant to
Section 4.01(a) shall be increased by 4.0% per annum;

  (b)      Each other Obligation hereunder if not paid when due shall bear
interest at a rate per annum equal to the sum of the rate of interest applicable
under the Revolving Loan Base Rate Option plus an additional 4.0% per annum from
the time such Obligation becomes due and payable and until it is paid in full;
and

  (c)      Borrower acknowledges that the increase in rates referred to in this
Section 4.03, reflects, among other things, the fact that such Loans or other
amounts have become a substantially greater risk given their default status and
that the Lender is entitled to additional compensation for such risk; and all
such interest shall be payable by Borrower upon demand by Lender.

4.04    LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available; Lender’s Rights.

  (a)      Unascertainable.  If on any date on which a LIBOR Rate would
otherwise be determined, the Lender shall have determined that:

     (i)      adequate and reasonable means do not exist for ascertaining such
LIBOR Rate, or

     (ii)      a contingency has occurred which materially and adversely affects
the London interbank eurodollar market relating to the LIBOR Rate, then the
Lender shall have the rights specified in Section 4.04(c) [Lender’s Rights].

  (b)      Illegality; Increased Costs; Deposits Not Available.  If at any time
the Lender shall have determined that:

     (i)      the making, maintenance or funding of any Loan to which a LIBOR
Rate Option applies has been made impracticable or unlawful by compliance by the
Lender in good faith with any Law or any interpretation or application thereof
by any Official Body or with any request or directive of any such Official Body
(whether or not having the force of Law), or

     (ii)      such LIBOR Rate Option will not adequately and fairly reflect the
cost to the Lender of the establishment or maintenance of any such Loan, or

     (iii)     after making all reasonable efforts, deposits of the relevant
amount in Dollars for the relevant Interest Period for a Loan, or to banks
generally, including without limitation PNC, to which a LIBOR Rate Option
applies, respectively, are not available to the Lender with respect to such
Loan, or to banks generally, including without limitation PNC, in the interbank
eurodollar market, then the Lender shall have the rights specified in
Section 4.04(c) [Lender’s Rights].

  (c)      Lender’s Rights.  In the case of any event specified in
Section 4.04(a) [Unascertainable] above, the Lender shall promptly so notify the
Borrower thereof, and in the

 

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case of an event specified in Section 4.04(b) [Illegality; Increased Costs;
Deposits Not Available] above, the Lender shall promptly so notify the Borrower
and endorse a certificate to such notice as to the specific circumstances of
such notice. Upon such date as shall be specified in such notice (which shall
not be earlier than the date such notice is given), the obligation of the
Lender, to allow the Borrower to select, convert to or renew a LIBOR Rate Option
shall be suspended until the Lender shall have later notified the Borrower, of
the Lender’s determination that the circumstances giving rise to such previous
determination no longer exist. If at any time the Lender makes a determination
under Section 4.04(a) [Unascertainable] and Borrower has previously notified the
Lender of its selection of, conversion to or renewal of a LIBOR Rate Option and
such Interest Rate Option has not yet gone into effect, such notification shall
be deemed to provide for selection of, conversion to or renewal of the Base Rate
Option otherwise available with respect to such Loans. If the Lender notifies
the Borrower of a determination under Section 4.04(b) [Illegality; Increased
Costs; Deposits Not Available], Borrower shall, subject to the Borrower’s
indemnification Obligations under Section 5.05 [Indemnity], as to any Loan of
the Lender to which a LIBOR Rate Option applies, on the date specified in such
notice either convert such Loan to the Base Rate Option otherwise available with
respect to such Loan or prepay such Loan in accordance with Section 5.03
[Voluntary Prepayments]. Absent due notice from Borrower of conversion or
prepayment, such Loan shall automatically be converted to the Base Rate Option
otherwise available with respect to such Loan upon such specified date.

4.05    Selection of Interest Rate Options.  If Borrower fails to select a new
Interest Period to apply to any Loans under the LIBOR Rate Option at the
expiration of an existing Interest Period applicable to such Loan in accordance
with the provisions of Section 4.02 [Interest Periods], the Borrower shall be
deemed to have converted such Loans to the Base Rate Option commencing upon the
last day of the existing Interest Period.

Section 5.      PAYMENTS

5.01    Payments.  All payments and prepayments to be made in respect of
principal, interest, or other fees or amounts due from the Borrower hereunder
shall be payable prior to 11:00 a.m. on the date when due without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by the Borrower, and without set-off, counterclaim or other deduction of any
nature, and an action therefor shall immediately accrue. Such payments shall be
made to the Lender at its principal office for the account of the Lender in U.S.
Dollars and in immediately available funds. The Lender’s statement of account,
ledger or other relevant record shall, in the absence of manifest error, be
conclusive as the statement of the amount of principal of and interest on the
Loans and other amounts owing under this Agreement and shall be deemed an
“account stated.”

5.02    Interest Payment Dates.  Interest on Loans shall be due and payable in
arrears on the Monthly Payment Date with respect to the amount due under each
Loan since the immediately preceding Monthly Payment Date. Interest on the
principal amount of each Loan or other monetary Obligation shall be due and
payable on demand after such principal amount or other monetary Obligation
becomes due and payable (whether on the stated Expiration Date, upon
acceleration or otherwise).

 

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5.03    Voluntary Prepayments.  Borrower shall have the right at its option from
time to time to prepay the Loans in whole or part without premium or penalty
(except as provided in Section 5.05 [Indemnity]). Whenever Borrower desires to
prepay any part of the Loans, Borrower shall provide a prepayment notice to the
Lender by 1:00 p.m. at least one (1) Business Day prior to the date of
prepayment of the Revolving Loans, setting forth the following information:

  (a)      the date, which shall be a Business Day, on which the proposed
prepayment is to be made; and

  (b)      a statement indicating the application of the prepayment between
Loans to which the Base Rate Option applies, and Loans to which the LIBOR Rate
Option applies.

All prepayment notices shall be irrevocable. The principal amount of the Loans
for which a prepayment notice is given, together with interest on such principal
amount except with respect to Loans to which the Base Rate Option applies, shall
be due and payable on the date specified in such prepayment notice as the date
on which the proposed prepayment is to be made. Except as provided in
Section 4.04(c) [Lender’s Rights], if the Borrower prepays a Loan but fails to
specify the applicable Loan which the Borrower is prepaying, the prepayment
shall be applied first to Loans to which the Base Rate Option applies, then to
Loans to which the LIBOR Rate Option applies. Any prepayment hereunder shall be
subject to the Borrower’s Obligation to indemnify the Lender under Section 5.05
[Indemnity].

5.04    Taxes.

  (a)      Payments Free of Taxes.  Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes; provided that if Borrower shall be required by applicable
Law to deduct any Indemnified Taxes (including any Other Taxes) from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) the Lender receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall timely pay the full amount
deducted to the relevant Official Body in accordance with applicable Law.

  (b)      Payment of Other Taxes by the Borrower.  Without limiting the
provisions of Section 5.04(a) [Payments Free of Taxes] above, the Borrower shall
timely pay any Other Taxes to the relevant Official Body in accordance with
applicable Law.

  (c)      Indemnification by the Borrower.  Borrower shall indemnify the
Lender, within ten (10) days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes on account of any obligations Borrower
hereunder or under any Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Lender, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Official Body. A

 

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certificate as to the amount of such payment or liability delivered to the
Borrower by the Lender, shall be conclusive absent manifest error.

  (d)      Evidence of Payments.    As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by Borrower to an Official Body, Borrower shall
deliver to the Lender the original or a certified copy of a receipt issued by
such Official Body evidencing such payment, a copy of the return reporting such
payment or other evidence of such payment reasonably satisfactory to the Lender.

5.05    Indemnity.  Borrower shall indemnify the Lender against all liabilities,
losses or expenses (including any loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain such Loan, from fees payable
to terminate the deposits from which such funds were obtained) which the Lender
sustains or incurs as a consequence of (a) any payment, prepayment, conversion
or renewal of any Loan to which a LIBOR Rate Option applies on a day other than
the last day of the corresponding Interest Period (whether or not such payment
or prepayment is mandatory, voluntary or automatic and whether or not such
payment or prepayment is then due), (b) any attempt by Borrower to revoke
(expressly, by later inconsistent notices or otherwise) in whole or part any
Loan Requests under Section 2.03 [Revolving Loan Requests] or Section 4.02
[Interest Periods] or notice relating to prepayments under Section 5.03
[Voluntary Prepayments], or (c) any default by Borrower in the performance or
observance of any covenant or condition contained in this Agreement or any other
Loan Document, including any failure of the Borrower to pay when due (by
acceleration or otherwise) any principal, interest, or any other amount due
hereunder.

If the Lender sustains or incurs any such loss or expense, it shall from time to
time notify the Borrower of the amount determined in good faith by the Lender
(which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as the Lender shall deem
reasonable) to be necessary to indemnify the Lender for such loss or expense.
Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to the
Lender ten (10) Business Days after such notice is given. In the event that the
actual loss or expense incurred or experienced by the Lender is less than the
amount paid by the Borrower pursuant to this Section 5.05, as determined on the
fifteenth (15th) day following such payment, then Lender shall refund the
Borrower on or before the eighteenth (18th) day following such payment the
difference between the amount paid by the Borrower and the actual loss or
expense incurred or experienced by the Lender.

Section 6.      REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that as of the date of this Agreement
and on the date of each requested borrowing hereunder:

6.01    Name, Capacity and Standing.  Borrower’s exact legal name is correctly
stated in the initial paragraph of the Agreement. Borrower is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Delaware. Borrower is duly qualified and in good standing in every
other state in which the nature of its business requires such qualification,
except where the failure to do so does not result in a Material Adverse

 

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Change and has been duly authorized by its partners to enter into and perform
its obligations under the Loan Documents.

6.02    Authority; Compliance.  Borrower (i) has full power and authority to
enter into, execute, deliver and carry out this Agreement and the other Loan
Documents to which it is a party, to incur the Indebtedness contemplated by the
Loan Documents and to perform its Obligations under the Loan Documents to which
it is a party, and all such actions have been duly authorized by all necessary
proceedings on its part, and (ii) is in compliance in all material respects with
all applicable Laws in all jurisdictions in which Borrower is presently or will
be doing business except where the failure to do so would not constitute a
Material Adverse Change. No Event of Default or Potential Default exists or is
continuing.

6.03    No Conflict; Material Agreements; Consents.    Neither the execution and
delivery of this Agreement or the other Loan Documents by Borrower nor the
consummation of the transactions herein or therein contemplated or compliance
with the terms and provisions hereof or thereof by Borrower will conflict with,
constitute a default under or result in any breach of (i) the terms and
conditions of the certificate of limited partnership or partnership agreement or
other organizational documents of Borrower or (ii) any Law or any material
agreement or instrument or order, writ, judgment, injunction or decree to which
Borrower is a party or by which it is bound or to which it is subject in any
event which results in a Material Adverse Change, or result in the creation or
enforcement of any Lien, charge or encumbrance whatsoever upon any property (now
or hereafter acquired) of Borrower (other than Liens granted under the Loan
Documents). There is no default under such material agreement (referred to
above) which would be reasonably likely to cause a Material Adverse Change, and
Borrower is not bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law which could
result in a Material Adverse Change. No consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official Body or any
other Person is required by any Law or any agreement in connection with the
execution, delivery and carrying out of this Agreement and the other Loan
Documents.

6.04    Asset Ownership.  Borrower and Guarantor, as the case may be, each has
good and marketable title to the Collateral described herein and in the
Collateral Documents and all of the assets reflected on the materials furnished
to Lender by Borrower and Guarantor, and all such Collateral is free and clear
of pledges, liens, and all other encumbrances, except for the lien evidenced
hereby and by the Collateral Documents and statutory Liens for taxes not yet due
and payable.

6.05    Litigation.  There is no claim, action, suit or proceeding pending,
threatened or reasonably anticipated before any court, commission,
administrative agency, whether state or federal, or arbitration which, in
Borrower’s reasonable belief, has a reasonable likelihood of success and which
individually or in the aggregate, if adversely determined, could result in any
Material Adverse Change or impair the ability of Borrower to perform its
obligations under the Loan Documents.

6.06    Other Agreements.  The representations and warranties made by Borrower
in the other Loan Documents are true and correct in all material respects on the
date hereof, except to

 

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the extent any representation or warranty expressly relates to an earlier date,
in which case such representation or warranty was true and correct in all
material respects as of such date.

6.07    Validity and Binding Effect.    This Agreement and each of the other
Loan Documents (i) has been duly and validly executed and delivered by Borrower
and Guarantor, and (ii) constitutes, or will constitute, legal, valid and
binding obligations of Borrower and Guarantor, as the case may be, which is or
will be a party thereto, enforceable against Borrower and Guarantor in
accordance with its terms.

6.08    Commercial Purpose.  The Loan is not a “consumer transaction”, as
defined in the Georgia Uniform Commercial Code, and none of the Collateral was
or will be purchased or held primarily for personal, family or household
purposes.

6.09    Liens in the Collateral.  The Liens in the Collateral granted to the
Lender pursuant to this Agreement, the Pledge Agreements and the Guaranty
(collectively, the “Collateral Documents”) constitute and will continue to
constitute Prior Security Interests. All filing fees and other expenses in
connection with the perfection of such Liens have been or will be paid by
Borrower.

6.10    Taxes.  All federal, state, local and other tax returns required to have
been filed with respect to Borrower and Guarantor have been filed, and payment
or adequate provision has been made for the payment of all taxes, fees,
assessments and other governmental charges which have or may become due pursuant
to said returns or to assessments received, except to the extent that such
taxes, fees, assessments and other charges are being contested in good faith by
appropriate proceedings diligently conducted and for which such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made.

6.11    Full Disclosure.  Neither this Agreement nor any other Loan Document,
nor any certificate, statement, agreement or other documents furnished to the
Lender in connection herewith or therewith, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which they were made, not materially misleading. There is no fact known to
Borrower which materially adversely affects the business, property, assets,
financial condition, or results of operations of Borrower or Guarantor which has
not been set forth in this Agreement or in the certificates, statements,
agreements or other documents furnished in writing to the Lender prior to or at
the date hereof in connection with the transactions contemplated hereby.

Section 7.      AFFIRMATIVE COVENANTS

Borrower covenants and agrees that from the date hereof and until payment in
full of all indebtedness and performance of all Obligations owed under the Loan
Documents, Borrower shall comply at all times with the following covenants:

7.01    Maintain Existence and Current Legal Form of Business.  (a) Maintain and
cause Guarantor to maintain its existence and good standing in the state of its
formation; (b) maintain and cause Guarantor to maintain its respective current
legal form of business; and (c), as applicable, qualify and remain qualified as
a foreign limited partnership in each

 

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jurisdiction in which such qualification is required, except to the extent that
failure to do so does not result in a Material Adverse Effect.

7.02    Maintain Records.  Maintain and cause Guarantor to maintain proper books
of record and account which enable the Borrower and Guarantor to issue financial
statements in accordance with GAAP and as otherwise required by applicable Laws
of any Official Body having jurisdiction over the Borrower and Guarantor, and in
which full, true and correct entries shall be made in all material respects of
all its dealings and business and financial affairs

7.03    Maintain Properties.  Maintain, keep, and preserve all of its properties
(tangible and intangible) including the Collateral necessary or useful in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.

7.04    Conduct of Business.  Continue to engage in business of the same general
type as now conducted.

7.05    Maintain Insurance.  Maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business, and business interruption insurance if required by Lender, which
insurance may provide for reasonable deductible(s).

7.06    Comply With Laws.  Comply in all material respects with all applicable
Laws including without limitation paying before the delinquency thereof, all
taxes, assessments, and governmental charges imposed upon it or upon its
property, and all Environmental Laws, except to the extent that failure to do so
does not result in a Material Adverse Effect. Borrower will use the proceeds of
the Loans only in accordance with Section 2.05 [Use of Proceeds] and as
permitted by applicable Law.

7.07    Right of Inspection.  Permit the officers and authorized agents of
Lender, at any reasonable time or times in Lender’s sole discretion upon
reasonable prior notice, to examine and make copies of the records and books of
account of Borrower and/or Guarantor, to visit the properties of Borrower or its
Subsidiaries, and to discuss such matters with any officers of Guarantor, the
partners, limited or general of Borrower, and in the presence of authorized
officers of Borrower, Borrower’s independent accountants as the Lender deems
necessary and proper.

7.08    Reporting Requirements.  Furnish to Lender:

  (a)      Financial Reports:  Bank statements relating to the Collateral from
the Deposit Bank within three (3) Business Days after Lender’s request therefor.

  (b)      Notice of Litigation:  Promptly after the receipt of or Knowledge, by
Borrower, notice or complaint of any filed, pending or threatened action, suit,
and proceeding before any court or administrative agency of any type which, if
determined adversely, could have a Material Adverse Change.

  (c)       Tax Returns:  As soon as available, complete copies (including all
schedules) of all state and federal tax returns filed by Borrower and Guarantor.

 

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  (d)      Notice of Default:   Promptly upon discovery or Knowledge thereof,
notice of the existence of any Event of Default under this Agreement or any of
the other Loan Documents or notice of any event or circumstance which, if
adversely determined, could constitute an Event of Default if not cured by
Borrower or Guarantor, as applicable.

  (e)      Other Information:    Such other information, including, without
limitation, periodic statements of the financial condition of Borrower and
Guarantor, as Lender may from time to time reasonably request.

7.09    Payment of Liabilities, Including Taxes, Etc.  Pay and discharge, and
cause Guarantor to pay and discharge, all liabilities to which Borrower or
Guarantor, as the case may be, is subject or which are asserted against it,
promptly as and when the same shall become due and payable, including all taxes,
assessments and governmental charges upon it or any of its properties, assets,
income or profits, prior to the date on which penalties attach thereto, except
to the extent that such liabilities, including taxes, assessments or charges,
are being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which such reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made; provided, however,
Borrower or Guarantor, as the case may be, shall not pay any liabilities,
including without limitation, advisory, development and/or management fees, to
their respective Affiliates prior to any regularly scheduled payment of the
Obligations required hereunder.

7.10    Affirmative Covenants from other Loan Documents.    All affirmative
covenants of Borrower contained in the other Loan Documents executed by Borrower
are hereby incorporated by reference herein and made a part hereof as if fully
set forth herein.

7.11    Additional Documentation.  Borrower shall, from time to time, at its
expense, faithfully preserve and protect the Lender’s Lien on and Prior Security
Interest in the Collateral whether now owned or hereafter acquired as a
continuing first priority perfected Lien, subject only to statutory Liens, and
shall do such other acts or execute any additional documents as the Lender in
its sole discretion may deem necessary or advisable from time to time in order
to preserve, perfect and protect the Liens granted under the Loan Documents and
to exercise and enforce its rights and remedies thereunder with respect to the
Collateral.

7.12    Anti-Terrorism Laws.  Borrower is not or shall not be (i) a Person with
whom the Lender is restricted from doing business under Executive Order
No. 13224 or any other Anti-Terrorism Law, (ii) engaged in any business involved
in making or receiving any contribution of funds, goods or services to or for
the benefit of such a Person or in any transaction that evades or avoids, or has
the purpose of evading or avoiding, the prohibitions set forth in any
Anti-Terrorism Law, or (iii) otherwise in violation of any Anti-Terrorism Law.

7.13    Security Interest.

  (a)      Grant of Interest in Certain Accounts.  Borrower hereby agrees that
Lender shall have and Borrower hereby grants, conveys, transfers and sets over
to Lender a lien on and a security interest in any and all now or later arising
advanced Loan proceeds and deposit accounts held by the Deposit Bank in
Borrower’s name; provided, however, such security

 

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interest shall be limited to advanced Loan proceeds and the amounts in such
deposit accounts originating from investor subscription proceeds in Guarantor’s
deposit account(s) at Deposit Bank as transferred to Borrower. Such lien and
security interest shall constitute additional security for the Loan, and upon
the occurrence of any Event or Default hereunder, Lender shall have and possess
any and all remedies of a secured party provided by law with respect to
enforcement of and recovery on its security interest on such items and amounts.
Borrower shall maintain its deposit accounts at the Deposit Bank at all times
during the term of this Agreement.

  (b)      UCC Financing Statements.  Borrower hereby authorizes Lender to file
UCC Financing statements in respect of the foregoing security interest and the
security interests granted under the Collateral Documents describing the
Collateral hereunder and under the Collateral Documents without execution
thereof by Borrower or any other action on the part of Borrower.

Section 8.      NEGATIVE COVENANTS

Borrower covenants and agrees that from the date hereof and until payment in
full of all indebtedness and performance of all obligations under the Loan
Documents, Borrower shall not, without the prior written consent of the Lender:

8.01    Liens; Lien Covenants.  Borrower shall not, and shall not permit any of
its Subsidiaries to, at any time create, incur, assume or suffer to exist any
Lien on any of its property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except Permitted Liens.

8.02    Guaranties.    Borrower shall not, and shall not permit any of its
Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person, except in connection
with Indebtedness incurred to acquire real property as contemplated herein.

8.03    Dividends and Related Distributions.  Borrower shall not, and shall not
permit any of its Subsidiaries to, make or pay, or agree to become or remain
liable to make or pay, any dividend or other distribution of any nature (whether
in cash, property, securities or otherwise) (collectively, “Distributions”) on
account of or in respect of its shares of capital stock, partnership interests
or limited liability company interests or on account of the purchase,
redemption, retirement or acquisition of its shares of capital stock (or
warrants, options or rights therefor), partnership interests or limited
liability company interests, except: (x) dividends declared and paid by any
Subsidiary to Borrower or any Distributions by Borrower to Guarantor, and
(y) any Distribution shall be permitted at any time unless at the time of each
such declaration or payment of such Distribution, or after giving effect
thereto: (1) a Potential Default or Event of Default has occurred and is
continuing; (2) the Borrower is not Solvent; and (3) such Distribution is
prohibited under applicable Law.

8.04    Continuation of or Change in Business.  Borrower shall not, and shall
not permit any of its Subsidiaries to, engage in any business that is
substantially different than the

 

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business conducted and operated by Borrower or Subsidiary during the present
fiscal year, and Borrower or Subsidiary shall not permit any material change in
such business.

8.05    Changes in Organizational Documents.    Borrower shall not, and shall
not permit any of its Subsidiaries to, amend in any respect its certificate of
incorporation (including any provisions or resolutions relating to capital
stock), by-laws, certificate of limited partnership, partnership agreement,
certificate of formation, limited liability company agreement or other
organizational documents if such change would be adverse to the Lender as
determined by the Lender in its sole discretion without the prior written
consent of the Lender.

8.06    Change of Legal Form of Business.  Change Borrower’s name or legal form
of business as described above, whether by merger, consolidation, conversion or
otherwise.

8.07    Disposition of Assets.  Sell, convey, lease, abandon or otherwise
transfer or dispose of, voluntarily or involuntarily, any of the Collateral
except in the ordinary and usual course of its business; provided, however, the
foregoing shall not permit Borrower or Guarantor to transfer the Collateral to a
replacement deposit bank without Lender’s consent and execution of a replacement
control agreement with such new deposit bank.

8.08    Affiliate Transactions.  Borrower shall not enter into or carry out any
transaction with any Affiliate of Borrower (including purchasing property or
services from or selling property or services to any Affiliate of Borrower or
other Person) unless such transaction is in accordance with applicable Law and
(i) is not otherwise prohibited by this Agreement and is entered into in the
ordinary course of business upon fair and reasonable arm’s-length terms and
conditions, or (ii) is otherwise approved by the disinterested members of the
board of directors of its general partner, or (iii) is with Lender or an
Affiliate of Lender.

All negative covenants contained in the Collateral Documents, or any other Loan
Document executed by Borrower are hereby incorporated by reference herein and
made a part hereof as if fully set forth herein.

Section 9.      EVENTS OF DEFAULT

An Event of Default shall mean the occurrence or existence of any one or more of
the following events or conditions (whatever the reason therefor and whether
voluntary, involuntary or effected by operation of Law):

9.01    Payments Under Loan Documents.  Borrower shall fail to pay (i) any
principal of any Loan (including scheduled installments or the payment due at
maturity), or Obligation or (ii) any interest on any Loan or any other amount
owing hereunder or under the other Loan Documents within three (3) Business Days
after the same becomes due;

9.02    Breach of Warranty.  Any representation or warranty made at any time by
Borrower herein or by Borrower in any other Loan Document, or in any
certificate, other instrument or statement furnished pursuant to the provisions
hereof or thereof, shall prove to have been false or misleading in any material
respect as of the time it was made or furnished, except to the extent such
breach could have or should have been prevented solely by an officer or employee
of Lender or an Affiliate of Lender;

 

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9.03    Breach of Negative Covenants or Certain Affirmative Covenants.  Borrower
shall default in the observance or performance of any covenant contained in
Section 7.07 [Right of Inspection], or Section 8 [Negative Covenants];

9.04    Breach of Other Covenants.  Borrower or Guarantor, as the case may be,
shall default in the observance or performance of any other covenant, condition
or provision hereof or of any other Loan Document and such default shall
continue unremedied for a period of thirty (30) days; provided that if such
default cannot be cured within such thirty (30) day grace period and Borrower is
actively and diligently taking action to cure such default, such grace period
may be extended in the sole discretion of the Lender. Notwithstanding the
foregoing, any such breach shall not constitute an Event of Default to the
extent such breach could have or should have been prevented solely by an officer
or employee of Lender or an Affiliate of Lender;

9.05    Defaults in Other Agreements or Indebtedness.  A default or event of
default shall occur at any time under the terms of any other agreement involving
borrowed money or the extension of credit or any other Indebtedness under which
Borrower may be obligated as a borrower or guarantor in excess of $1,000,000 in
the aggregate, and such breach, default or event of default consists of the
failure to pay (beyond any period of grace permitted with respect thereto,
whether waived or not) any Indebtedness when due (whether at stated maturity, by
acceleration or otherwise) or if such breach or default causes the acceleration
of any Indebtedness or the termination of any commitment to lend.
Notwithstanding the foregoing, any such liabilities relating to obligations
under any non-recourse guaranties shall not be considered defaults hereunder so
long as such obligation is discharged, vacated, bonded or stayed pending appeal
within a period of thirty (30) days from the date of entry. In addition,
notwithstanding the foregoing, any such breach shall not constitute an Event of
Default to the extent such breach could have or should have been prevented by an
officer or employee of Lender or an Affiliate of Lender;

9.06    Final Judgments or Orders.  Any final judgments or orders for the
payment of money in excess of $1,000,000 in the aggregate shall be entered
against Borrower by a court having jurisdiction in the premises, which judgment
is not discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry (except judgments validly covered by
insurance with a deductible of not more than Two Hundred Fifty Thousand Dollars
($250,000)) or there shall occur any levy upon, or attachment, garnishment or
other seizure of, any portion of the assets of Borrower, or any Guarantor in
excess of One Million Dollars ($1,000,000) by reason of the issuance of any tax
levy, judicial attachment or garnishment or levy of execution;

9.07    Loan Document Unenforceable.  Any of the Loan Documents shall cease to
be legal, valid and binding agreements enforceable against the party executing
the same or such party’s successors and assigns (as permitted under the Loan
Documents) in accordance with the respective terms thereof or shall in any way
be terminated (except in accordance with its terms) or become or be declared
ineffective or inoperative or shall in any way be challenged or contested or
cease to give or provide the respective Liens, security interests, rights,
titles, interests, remedies, powers or privileges intended to be created
thereby;

 

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9.08    Uninsured Losses; Proceedings Against Assets.  The Collateral or any
other of the Borrower’s assets in excess of $1,000,000 are attached, seized,
levied upon or subjected to a writ or distress warrant; or such come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not cured within thirty (30) days thereafter;

9.09    Relief Proceedings.  (a) A Relief Proceeding shall have been instituted
against Borrower or Guarantor and such Relief Proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60) consecutive
days or such court shall enter a decree or order granting any of the relief
sought in such Relief Proceeding, (b) Borrower or Guarantor institutes, or takes
any action in furtherance of, a Relief Proceeding, or (c) Borrower or Guarantor
ceases to be Solvent or admits in writing its inability to pay its debts as they
mature.

Section 10.      REMEDIES UPON DEFAULT

Upon the occurrence of any of the above listed Events of Default, the Lender may
at any time thereafter, at its option, take any or all of the following actions,
at the same or at different times:

10.01  Declare the balance of the Note and all other amounts due and payable
hereunder and under the other Loan Documents to be immediately due and payable,
both as to principal and interest, without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived by Borrower, and
such balance(s) shall accrue interest at the default rate as provided in
Section 4.03 until paid in full.

10.02  Require Borrower to pledge additional collateral to Lender from
Borrower’s assets and properties, the acceptability and sufficiency of such
collateral to be determined in Lender’s sole discretion.

10.03  Exercise any and all other rights and remedies available to the Lender
under the terms of the Loan Documents and applicable law, including the Georgia
Uniform Commercial Code.

10.04  From and after the date on which the Lender has taken any action pursuant
to this Section 10 and until all Obligations of the Borrower have been paid in
full, any and all proceeds received by the Lender from any sale or other
disposition of any Collateral, or any part thereof, or the exercise of any other
remedy by the Lender, shall be applied as follows:

  (a)      first, to reimburse the Lender for out-of-pocket costs, expenses and
disbursements, including reasonable attorneys’ and paralegals’ fees and legal
expenses, incurred by the Lender in connection with realizing on any Collateral
or collection of any Obligations of Borrower under any of the Loan Documents,
including advances made by the Lender for the reasonable maintenance,
preservation, protection or enforcement of, or realization upon, any Collateral,
including advances for taxes, insurance, repairs and the like and reasonable
expenses incurred to sell or otherwise realize on, or prepare for sale or other
realization on, any Collateral;

  (b)      second, to the repayment of all Obligations then due and unpaid of
the Borrower to the Lender or its Affiliates incurred under this Agreement or
any of the other Loan

 

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Documents, whether of principal, interest, fees, expenses or otherwise, in such
manner as the Lender may determine in its discretion; and

  (c)      the balance, if any, as required by Law.

Section 11.      ADDITIONAL RIGHTS AND REMEDIES

In addition to the rights and remedies specified elsewhere in this Agreement,
Lender shall have the following rights and remedies:

11.01  Cessation of Funding.  Any obligation of the Lender to advance funds to
the Borrower or any other Person under the terms of this Agreement or under the
Note and all other obligations, if any, of the Lender under the Loan Documents
shall immediately cease and terminate upon an Event of Default unless and until
Lender shall reinstate such obligation in writing.

11.02  No Liability of the Lender.  Whether or not Lender elects to employ any
or all remedies available to it upon an Event of Default, Lender shall not be
liable for the protection of the Collateral, for payment of any expense incurred
in connection with the exercise of any remedy available to Lender, or for the
performance or nonperformance of any other Obligation of Borrower.

Section 12.      MISCELLANEOUS PROVISIONS

12.01  Non-impairment.  To the fullest extent allowed by applicable law, if any
one or more provisions contained in the Loan Documents shall be held invalid,
illegal, or unenforceable in any respect, the validity, legality, and
enforceability of the remaining provisions contained therein shall not in any
way be affected or impaired thereby and shall otherwise remain in full force and
effect.

12.02  Applicable Law.  The Loan Documents shall be construed in accordance with
and governed by the laws of the State of Georgia, without regard to conflicts of
laws principles, except as required by mandatory provisions of law and except to
the extent that the UCC provides that the validity or perfection of any security
interests hereunder or remedies hereunder with respect to any particular
collateral, are governed by the laws of a jurisdiction other than the State of
Georgia.

12.03  Waiver; Cumulative Remedies.  Neither the failure nor any delay on the
part of Lender in exercising any right, power or privilege granted in the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise of any other right,
power, or privilege which may be provided by law. The rights and remedies of the
Lender under this Agreement and any other Loan Documents are cumulative and not
exclusive of any rights or remedies which it would otherwise have.

12.04  Modification.  No modification, amendment, or waiver of any provision of
any of the Loan Documents shall be effective unless in writing and signed by
Borrower and Lender and any original party thereto.

 

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12.05  Stamps and Fees.  Borrower shall pay all intangibles taxes, or other fees
or charges, if any are payable or are determined to be payable by reason of the
execution, delivery, or issuance of the Loan Documents or any security granted
to Lender; and Borrower agrees to indemnify and hold harmless Lender against any
and all liability in respect thereof.

12.06  Lender Making Required Payments.  In the event Borrower shall fail to
maintain insurance, pay taxes or assessments, or pay costs and expenses which
Borrower is, under any of the terms hereof or of any Loan Documents, required to
pay, or fail to keep the Mortgaged Property or any other assets constituting
collateral for the Loan free from new security interests, liens, or
encumbrances, except as permitted herein, Lender may at its election make
expenditures for any or all such purposes and the amounts expended together with
interest thereon at the Default Rate, shall become immediately due and payable
to Lender, and shall have benefit of and be secured by the collateral; provided,
however, Lender shall be under no duty or obligation to make any such payments
or expenditures.

12.07  Notices.  All notices, requests, demands, waivers, and other
communications given as provided in this Agreement will be in writing, and
unless otherwise specifically provided in this Agreement, will be deemed to have
been given: (i) if delivered in person, upon delivery, or (ii) if mailed by
certified or registered mail, postage prepaid, return receipt requested, and
addressed to either Borrower or Lender at the addresses provided below on the
second business day after deposit in the United States Mail if addressed to an
address located in the same State in which the notice is being mailed or on the
third business day after deposit in the United States Mail if addressed to an
address located within a State other than the State in which the notice is being
mailed, or (iii) if sent by overnight express delivery service, enclosed in a
prepaid envelope and addressed to Lender or Borrower at the address provided
below, on the first business day after deposit with the service, or (iv) if sent
by facsimile, or other form of rapid transmission confirmed by mailing (as
provided in this section), at substantially the same time as the rapid
transmission. Either Borrower or Lender may change its respective address as
provided in this section by giving written notice of the change as provided in
this section. The addresses for notice are:

 

Notice to Borrower:

  

Wells Core Office Income Operating

Partnership, L.P.

6200 The Corners Parkway

Norcross, GA 30092 3365

Attention: Douglas P. Williams

Fax:    (770) 243 8286

with a copy to:

  

DLA Piper

203 North LaSalle Street, Suite 1900

Chicago, Illinois 60601

Attention: Robert H. Bergdolt, Esq.

Brian K. Doyle, Esq.

Fax:    (312) 630 6355

 

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Notice to Lender:

  

Wells Real Estate Funds, Inc.

6200 The Corners Parkway

Norcross, GA 30092 3365

Attention: John E. Monroe

Fax:    (770) 243 8450

with a copy to:

  

Joseph B. Foltz, Esq.

Foltz Martin, LLC

5 Piedmont Center, Suite 750

3525 Piedmont Road

Atlanta, Georgia 30305

Fax:    (404) 237 1659

12.08  Consent to Jurisdiction; Waiver of Jury Trial.  Borrower hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement may be instituted in the Superior Court of Gwinnett
County in the State of Georgia, or in the Northern District Court of Georgia, or
in such other appropriate court and venue as Lender may choose in its sole
discretion. Borrower consents to the jurisdiction of such courts and waives any
objection relating to the basis for personal or in rem jurisdiction or to venue
which Borrower may now or hereafter have in any such legal action or
proceedings. Borrower hereby knowingly, voluntarily and intentionally waives any
right to trial by jury that it may have in any action or proceeding at law or in
equity in connection with this Agreement or the transactions related hereto.

12.09  Counterparts.  This Agreement may be executed by one or more parties on
any number of separate counterparts and all of such counterparts taken together
shall be deemed to constitute one and the same instrument. Electronic or
facsimile signatures shall constitute original signatures for all purposes under
this Agreement.

12.10  Expenses; Indemnity; Damage Waiver.

  (a)      Costs and Expenses.  Borrower shall pay (i) all out-of-pocket
expenses incurred by the Lender and its Affiliates (including the reasonable
fees, charges and disbursements of outside counsel for the Lender), in
connection with the participation of the credit facilities provided for herein,
the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket
expenses incurred by the Lender (including the reasonable fees, charges and
disbursements of any outside counsel for the Lender) in connection with the
enforcement or protection of its rights (A) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (B) in
connection with the Loans made, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans, and (iv) all reasonable out-of-pocket expenses of the Lender’s regular
employees and agents engaged periodically to perform audits of the Borrower’s
books, records and business properties.

  (b)      Indemnification by Borrower.  Borrower shall indemnify the Lender
(and any sub-agent thereof), and each Related Party of any of the foregoing
Persons (each such Person

 

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being called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses (including
the reasonable fees, charges and disbursements of any outside counsel for any
Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any
third party or by Borrower arising out of, in connection with, or as a result of
(i) the execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance or
nonperformance by the parties hereto of their respective obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom,
(iii) breach of representations, warranties or covenants of Borrower under the
Loan Documents, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, including any such
items or losses relating to or arising under Environmental Laws or pertaining to
environmental matters, whether based on contract, tort or any other theory,
whether brought by a third party or by Borrower, and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (y) result from a claim
brought by Borrower against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if Borrower
has obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

  (c)      Waiver of Consequential Damages, Etc.  To the fullest extent
permitted by applicable Law, Borrower shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof. No Indemnitee referred to in Section 12.10(b) [Indemnification by
Borrower] shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby, except due to the Lender’s gross negligence or
willful misconduct.

  (d)      Payments.  All amounts due under this Section shall be payable not
later than ten (10) days after demand therefor.

  (e)      Limitation.  Notwithstanding anything to the contrary contained
herein or in any Loan Document, Borrower shall not be obligated to indemnify any
Indemnitee for any matter done with the knowledge or approval of, or any matter
that could have been prevented solely by, any Indemnitee.

12.11  Time.  Time is of the essence with respect to each and every provision of
this Agreement.

12.12  Assignment by Borrower.  Neither Borrower nor Lender may assign this
Agreement or any of its representative rights or obligations hereunder without
the prior written

 

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consent of the other party, which consent may be withheld by such party in its
sole and absolute discretion.

12.13  Successors and Assigns; Included Parties.  Whenever in this Agreement a
party hereto is named or referred to, the heirs, legal representatives,
successors and assigns of such parties shall be included, and all covenants and
agreements contained in this Agreement by or on behalf of Borrower or by or on
behalf of Lender shall bind and adhere to the benefit of their respective heirs,
legal representatives, successors and assigns whether so expressed or not. This
Agreement is made and entered into for the sole protection and benefit of Lender
and Borrower, their successors and assigns, and no third person or persons shall
have any right to action hereon or rights to the Loan funds at any time, nor
shall Lender owe any duty whatsoever to any claimant for labor performed or
material furnished in connection with the construction of the Improvements, or
to apply any undisbursed portion of the Loan, or to apply any undisbursed
portion of the Loan to the payment of any such claim, or to exercise any right
or power of Lender hereunder or arising from any default by Borrower.

12.14  No Partnership or Joint Venture.  Borrower and Lender acknowledge and
agree that nothing contained in this Agreement or in the other Loan Documents,
and that nothing contained in any other instrument or document between Borrower
and Lender relating to the Loans shall be construed to establish Borrower and
Lender as joint ventures or partners.

12.15  Approval.  Wherever Lender’s consent, discretion, requirement or approval
is required in this Agreement or the other Loan Documents, such consent,
discretion, requirement or approval shall be reasonably given unless
specifically stated otherwise.

12.16  Addenda and Exhibits.  Any addenda, schedules, riders or exhibits to this
Agreement shall be deemed incorporated herein by reference thereto as if fully
set forth herein.

12.17  Severability.  The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.

12.18  Duration; Survival.  All representations and warranties of Borrower
contained herein or made in connection herewith shall survive the execution and
delivery of this Agreement, the completion of the transactions hereunder and the
full payment and performance of all Obligations. All covenants and agreements of
Borrower contained herein relating to the payment of principal, interest,
premiums, additional compensation or expenses and indemnification, including
those set forth in the Note, Section 5 [Payments] and Section 12.11 [Expenses;
Indemnity; Damage Waiver], shall survive full payment and performance of the
Obligations hereunder.

12.19  Holidays.    Whenever payment of a Loan to be made or taken hereunder
shall be due on a day which is not a Business Day such payment shall be due on
the next Business Day (except as provided in Section 4.02 [Interest Periods])
and such extension of time shall be included in computing interest and fees,
except that the Loans shall be due on the Business Day

 

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preceding the Expiration Date, if the Expiration Date is not a Business Day.
Whenever any payment or action to be made or taken hereunder (other than payment
of the Loans) shall be stated to be due on a day which is not a Business Day,
such payment or action shall be made or taken on the next following Business
Day, and such extension of time shall not be included in computing interest or
fees, if any, in connection with such payment or action.

12.20  USA Patriot Act Notice.  If the Lender is subject to the USA Patriot Act,
and the Lender hereby notifies the Borrower that pursuant to the requirements of
the USA Patriot Act, it is required to obtain, verify and record information
that identifies the Borrower and/or Guarantor, which information includes the
name and address of Borrower or Guarantor and other information that will allow
the Lender to identify the Borrower and/or Guarantor in accordance with the USA
Patriot Act.

12.21  Tax Treatment of the Parties Under the Loan Documents.  The parties
intend that (i) the amounts advanced under the Loan Documents shall be treated
as debt for federal income tax purposes; and (ii) the relationship between
Lender and Borrower be that of creditor and debtor for federal income tax
purposes. The parties shall report consistently with such intent for all federal
income tax purposes.

12.22  Entire Agreement.  The Loan Documents embody the entire agreement between
Borrower and Lender with respect to the Loan, and there are no oral or parol
agreements existing between Lender and Borrower with respect to the Loan which
are not expressly set forth in the Loan Documents.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be duly
executed under seal all as of the Effective Date.

 

BORROWER:

WELLS CORE OFFICE INCOME

OPERATING PARTNERSHIP, L.P., a

Delaware limited partnership

By:   

 Wells Core Office Income REIT

 Inc., a Maryland corporation, as its

 General Partner

By: /s/ Douglas P. Williams Name: Douglas P. Williams Title: Executive Vice
President LENDER:

WELLS REAL ESTATE FUNDS,

INC., a Georgia corporation

By: /s/ John E. Monroe Name: John E. Monroe Title: Assistant Treasurer   

      [CORPORATE SEAL]

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JOINDER BY GUARANTOR

The undersigned, being the Guarantor of the Loan, does hereby join in this
Agreement for the following purposes:

1.        To agree to comply with and abide by all the terms and conditions
contained in the Agreement applicable to the Guarantor.

2.        To acknowledge that a default under this Agreement or a default under
any of the Loan Documents shall be and constitute a default under the Loan and
the Guaranty.

 

Signed under seal as of October 5, 2010

 

“GUARANTOR”

 

WELLS CORE OFFICE INCOME REIT,

INC., a Maryland corporation

 

By:  /s/ Douglas P. Williams

 

Name: Douglas P. Williams

 

Title: Executive Vice President

   

      [CORPORATE SEAL]

 

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EXHIBIT 2.03

FORM OF

LOAN REQUEST

 

TO:

    

WELLS REAL ESTATE FUNDS, INC.

FROM:

    

WELLS CORE OFFICE INCOME OPERATING PARTNERSHIP, L.P., as Borrower

Capitalized terms not otherwise defined herein shall have the respective
meanings ascribed to them by the Loan and Security Agreement.

 

A.

Pursuant to Section 2.03 of the Agreement, Borrower hereby irrevocably requests
[check one line under 1(a) below and fill in blank space next to the line as
appropriate]:

 

 1.(a)

  

 

    

A new Revolving Credit Loan OR

  

 

    

Renewal of the LIBOR Rate Option applicable to an outstanding Revolving Credit
Loan, originally made on                     , 20     OR

  

 

    

Conversion of the Base Rate Option applicable to an outstanding Revolving Credit
Loan, originally made on                     , 20     to a Loan to which the
LIBOR Rate Option applies OR

  

 

    

Conversion of the LIBOR Rate Option applicable to an outstanding Revolving
Credit Loan, originally made on                     , 20     to a Loan to which
the Base Rate Option applies.

SUCH NEW, RENEWED OR CONVERTED LOAN SHALL BEAR INTEREST:

    [Check one line under 1(b) below and fill in blank spaces in line next to
line]:

 

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      1.(b)(i)  

 

  

Under the Base Rate Option. Such Loan shall have a Borrowing Date of
                , 20     (which date shall be (i) one (1) Business Day
subsequent to the Business Day of receipt by the Lender by 10:00 a.m., Atlanta
time, of this Loan Request for making a new Revolving Credit Loan to which the
Base Rate Option applies, or (ii) the last day of the preceding LIBOR Rate
Interest Period if a Loan to which the LIBOR Rate Option applies is being
converted to a Loan to which the Base Rate Option applies);

OR

      (ii)  

 

  

Under the LIBOR Rate Option. Such Loan shall have a Borrowing Date of
                , 20     (which date shall be three (3) Business Days subsequent
to the Business Day of receipt by the Lender by 10:00 a.m., Atlanta time, of
this Loan Request for making a new Revolving Credit Loan to which the LIBOR Rate
Option applies, renewing a Loan to which the LIBOR Rate Option applies, or
converting a Loan to which the Base Rate Option applies to a Loan to which the
LIBOR Rate Option applies).

  

2.

    

Such Loan is in the principal amount of U.S. $                         or the
principal amount to be renewed or converted is U.S.

$                         

[not to be less $50,000 and in increments of $50,000 for each Loan Request].

  

3.

    

[Complete blank below if the Borrower is selecting the LIBOR Rate Option]:

 

Such Loan shall have an Interest Period of                     , which shall be
either 7 days, one Month, two Months, three Months or six Months.

B.

  

As of the date hereof and the date of making of the above requested Loan (and
after giving effect thereto): Borrower has performed and complied with all
covenants and conditions of the Agreement; all of the Borrower’s representations
and warranties therein are true and correct; no Event of Default or Potential
Default has occurred and is continuing or exists; the making of such Loan shall
not contravene any Law applicable to Borrower, any Subsidiary of any Borrower,
or the Lender; and the making of any Revolving Credit Loan requested herein
shall not cause the aggregate principal amount outstanding to exceed the
Revolving Credit Commitment.

C.

  

The undersigned hereby irrevocably requests [check one line under 1.(a) below
and fill in blank spaces next to the line as appropriate]:

 

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1.(a)

    

 

  

Funds to be deposited into a Lender bank account per our current standing
instructions. Complete amount of deposit if not full loan advance amount:
$                        .

    

 

  

Funds to be wired per the following wire instructions:

 

$                          Amount of Wire Transfer

Bank Name:                                 

ABA:                                            

Account Number:                        

Account Name:                           

Reference:                                   

    

 

  

Funds to be wired per the attached Funds Flow (multiple wire transfers).

 

36

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[SIGNATURE PAGE FOLLOWS]

SIGNATURE PAGE 1 OF 1 TO LOAN REQUEST]

The undersigned certifies to the Lender as to the accuracy of the foregoing.

 

WELLS CORE OFFICE INCOME

OPERATING PARTNERSHIP, L.P., a

Delaware limited partnership

By:

    

Wells Core Office Income REIT,

Inc., a Maryland corporation, as its

General Partner

By:

 

 

Name:

 

 

Title:

 

 

Date:

 

 

  [CORPORATE SEAL]

 

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