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Exhibit 10.1

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Loan and Security Agreement

Borrowers:
RW HOLDINGS NNN REIT, INC., a Maryland corporation (“NNN Holdings”)

RICH UNCLES NNN LP, LLC, a Delaware limited liability company (“NNN LLC”)

        

RICH UNCLES NNN OPERATING PARTNERSHIP, LP, a Delaware limited partnership (“NNN
OP”)

         

BRIXINVEST, LLC, a Delaware limited liability company (“BrixInvest”)

 

KATANA MERGER SUB, LP, a Delaware limited partnership (“Katana”)

 

          

MODIV, LLC, a Delaware limited liability company (“Modiv”)

 

Address:
3090 Bristol Street, Suite 550

Costa Mesa, CA 92626
         

Date:
December 19, 2019

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
PACIFIC MERCANTILE BANK (“Lender”), whose address is 949 South Coast Drive, 3rd
Floor, Costa Mesa, CA 92626, and the borrower(s) named above (jointly and
severally, the “Borrower”), whose chief executive office is located at the above
address (“Borrower’s Address”). The Schedule to this Agreement (the “Schedule”)
shall for all purposes be deemed to be a part of this Agreement, and the same is
an integral part of this Agreement.  (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)

1A.
  2019 BRIXINVEST LSA AND 2019 NNN LOAN AGREEMENT.

1A.1  2019 BrixInvest LSA.  Reference is made to that certain Loan and Security
Agreement dated April 30, 2019 between BrixInvest and Lender (as amended, the
“2019 BrixInvest LSA”), which 2019 BrixInvest LSA amended, restated, replaced
and superseded that certain Business Loan Agreement dated October 1, 2018
between Lender and BrixInvest, that certain Promissory Note dated October 1,
2018 by BrixInvest in favor of Lender, and that certain Commercial Security
Agreement dated October 1, 2018 between Lender and BrixInvest (collectively, the
“2018 BrixInvest LSA”).  Borrower represents, warrants and covenants to Lender
that (a) on or prior to December 31, 2019, BrixInvest shall contribute all of
its assets and certain of its liabilities and other obligations (such
contributed assets, liabilities and obligations, collectively, the “BrixInvest
A&O”), including without limitation those under and with respect to the 2019
BrixInvest LSA but excluding certain other assets with an aggregate book value
not in excess of $100,000, to Modiv and Modiv shall accept and assume the
BrixInvest A&O (such contribution, acceptance and assumption, the “BrixInvest
Contribution”), (b) as of the date of such BrixInvest Contribution, Modiv shall
have all of the same rights, title and interest in the BrixInvest A&O as
BrixInvest had immediately prior to the BrixInvest Contribution, and shall have
no liabilities or other obligations other than those BrixInvest had immediately
prior to the BrixInvest Contribution, and (c) Borrower shall provide Lender with
written notice and reasonable evidence of the consummation of the BrixInvest
Contribution.  Borrower hereby assumes and agrees to pay and perform when due
all present and future indebtedness, liabilities and obligations of BrixInvest
and Modiv under, based upon, or arising out of the 2019 BrixInvest LSA and all
other Loan Documents (as defined in the 2019 BrixInvest LSA), including without
limitation all of the “Obligations” as defined in the 2019 BrixInvest LSA, as
the same are amended hereby.  This Agreement amends, restates, replaces and
supersedes, in its entirety, the 2019 BrixInvest LSA.  This Agreement does not
constitute a novation of the 2019 BrixInvest LSA but, rather, an amendment and
continuation thereof.  Without limitation on the generality of the foregoing,
Borrower and Lender acknowledge and agree that Loans that are outstanding under
the 2019 BrixInvest LSA shall be deemed Nonformula Loans (as defined in Section
1 of the Schedule to this Agreement) hereunder, and subject to the terms hereof.
 
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Loan and Security Agreement
 

1A.2  2019 NNN Loan Agreement.  Reference is made to that certain Loan Agreement
dated April 30, 2019 between NNN Borrower and Lender (as amended, the “2019 NNN
Loan Agreement”), which 2019 NNN Loan Agreement amended, restated, replaced and
superseded that certain Business Loan Agreement dated February 20, 2018 between
Lender and NNN Borrower and that certain Promissory Note dated February 20, 2018
by NNN Borrower in favor of Lender.  Borrower hereby assumes and agrees to pay
and perform when due all present and future indebtedness, liabilities and
obligations of NNN Borrower under, based upon, or arising out of the 2019 NNN
Loan Agreement and all other Loan Documents (as defined in the 2019 NNN Loan
Agreement), including without limitation all of the “Obligations” as defined in
the 2019 NNN Loan Agreement, as the same are amended hereby.  This Agreement
amends, restates, replaces and supersedes, in its entirety, the 2019 NNN Loan
Agreement.  This Agreement does not constitute a novation of the 2019 NNN Loan
Agreement but, rather, an amendment and continuation thereof.  Without
limitation on the generality of the foregoing, Borrower and Lender acknowledge
and agree that (i) Purchase Contract Loans that are outstanding under the 2019
NNN Loan Agreement shall be deemed Purchase Contract Loans (as defined in
Section 1 of the Schedule to this Agreement) hereunder, (ii) Loans other than
Purchase Contract Loans that are outstanding under the 2019 NNN Loan Agreement
shall be deemed Other Loans (as defined in Section 1 of the Schedule to this
Agreement) hereunder, and such Purchase Contract Loans and Other Loans shall be
subject to the terms hereof.

1.
LOANS.

1.1  Loans. Lender will make loans to Borrower (the “Loans”) as described, and
in amounts not to exceed the limits shown (the “Credit Limits”), on the
Schedule, subject to the provisions of this Agreement and subject to deduction
of such Reserves as Lender deems proper from time to time in its Good Faith
Business Judgment.

1.2  Interest.  All Loans and all other monetary Obligations shall bear interest
at the interest rate shown on the Schedule.  Accrued interest shall be payable
monthly for each month on the fifteenth (15th) day of the following month, and
shall be debited to Borrower’s Deposit Account maintained with the Lender
designated by Borrower (or as selected by Lender in the absence of such a
designation).  Borrower shall at all times maintain sufficient funds in said
Deposit Account to enable payment of all interest and other sums to be so paid
to Lender by such debit.

1.3  Overadvances. If at any time or for any reason any Loan, Loans and/or other
monetary Obligations exceeds any applicable Credit Limit (an “Overadvance”),
Borrower shall immediately pay the amount of the excess to Lender, without
notice or demand.  Without limiting Borrower’s obligation to repay to Lender the
amount of any Overadvance, Borrower agrees to pay Lender interest on the
outstanding amount of any Overadvance, on demand, at the Default Rate.

1.4  Fees.  Borrower shall pay Lender the fees shown on the Schedule, which are
in addition to all interest and other sums payable to Lender and are not
refundable.

1.5  Loan Requests. To obtain a Loan, Borrower shall make a request to Lender,
as further described in the Schedule. Lender may rely on any request for a Loan
given by a person whom Lender believes is an Authorized Person (as set forth on
the Schedule), and Borrower will indemnify Lender for any loss Lender suffers as
a result of that reliance.

1.6  Conditions.  The making of the first disbursement of any Loan is subject to
the satisfaction of the following conditions precedent, which Borrower agrees to
satisfy within five Business Days after the date hereof: (i) all filings have
been completed that are necessary or advisable to perfect the security interest
of Lender in the Collateral, including without limitation filings in the United
States Copyright Office and United States Patent and Trademark Office, (ii) all
documents relating to this Agreement have been executed and delivered, (iii)
Lender has confirmed to its satisfaction that there has been no Material Adverse
Change since the date of the last financial statements provided to Lender prior
to the date hereof, (iv) UCC and other searches deemed necessary by Lender have
been completed and the results thereof are satisfactory to Lender, (v) no
Default or Event of Default has occurred and is continuing, and (vi) all other
matters relating to the Loans have been completed to Lender’s satisfaction.
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

2.  SECURITY INTEREST.  To secure the payment and performance of all of the
Obligations when due, each of Modiv and BrixInvest hereby grants to Lender a
security interest in all of the following (collectively, the “Collateral”):  all
of its right, title and interest of in and to all of the following, whether now
owned or hereafter arising or acquired and wherever located: all Accounts; all
Inventory; all Equipment; all Deposit Accounts; all General Intangibles
(including without limitation all Intellectual Property); all Investment
Property; all Other Property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above, and all
substitutions and replacements for, additions, accessions, attachments,
accessories, and improvements to, and proceeds (including proceeds of any
insurance policies, proceeds of proceeds and claims against third parties) of,
any and all of the above, and all its books relating to any and all of the
above.  BrixInvest and Modiv confirm and agree (i) to the security interest of
Lender in BrixInvest’s assets pursuant to the 2019 BrixInvest LSA and Loan
Documents (as defined therein), and (ii) that the assets to be transferred from
BrixInvest to Modiv pursuant to the BrixInvest Contribution shall be transferred
subject to Lender’s security interests therein and such security interests shall
survive the BrixInvest Contribution and continue pursuant to this Agreement, as
amended by this Agreement, securing the Obligations.

3.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.

In order to induce Lender to enter into this Agreement and to make Loans,
Borrower represents and warrants to Lender as follows, and Borrower covenants
that the following representations will continue to be true in all material
respects (except to the extent that such representation or warranty relates to a
particular date), and that Borrower will at all times comply with all of the
following covenants, throughout the term of this Agreement and until all
Obligations have been paid and performed in full:

3.1  Corporate Existence and Authority.  Borrower is, and will continue to be,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.  Borrower is and will
continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would reasonably be expected to result in liability
on the part of Borrower in excess of $10,000.  The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated
hereby (i) have been duly and validly authorized, (ii) are not subject to any
consents, which have not been obtained, (iii) are enforceable against Borrower
in accordance with their terms (except as enforcement may be limited by
equitable principles and by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors’ rights generally), and (iv) do not
violate Borrower’s articles or certificate of incorporation, or Borrower’s
by-laws, or any law or any material agreement or instrument, which is binding
upon Borrower or its property, and (v) do not constitute grounds for
acceleration of any indebtedness or obligations in excess of $50,000 in the
aggregate, under any agreement or instrument which is binding upon Borrower or
its property.

3.2  Name; Trade Names and Styles. As of the date hereof, the name of Borrower
set forth in the heading to this Agreement is its correct name.  Listed in the
Schedule are all prior names of Borrower and all of Borrower’s present and prior
trade names, as of the date hereof.  Borrower shall give Lender 30 days’ prior
written notice before changing its name or doing business under any other name. 
Borrower has complied, and will in the future comply, in all material respects,
with all laws relating to the conduct of business under a fictitious business
name.

3.3  Place of Business; Location of Collateral. As of the date hereof, the
address set forth in the heading to this Agreement is Borrower’s chief executive
office.  In addition, as of the date hereof, Borrower has places of business and
Collateral is located only at the locations set forth in the Schedule.  Borrower
will give Lender at least 20 days prior written notice before opening any
additional place of business, changing its chief executive office, or moving any
of the Collateral to a location other than Borrower’s Address or one of the
locations set forth in the Schedule (if any), except that Borrower may maintain
sales offices in the ordinary course of business at which not more than a total
of $50,000 fair market value of Equipment and Inventory is located.

3.4  Title to Collateral; Perfection; Permitted Liens.

(a)  ModivBrix is now, and will at all times in the future be, the sole owner of
all the Collateral, except for items of Equipment which are leased to ModivBrix,
and except for non-exclusive licenses granted by ModivBrix to its customers in
the ordinary course of business.  Borrower’s assets now are and will remain free
and clear of any and all Liens and adverse claims, except for Permitted Liens.  
Lender now has, and will continue to have, a first-priority perfected and
enforceable security interest in all of the Collateral, subject only to the
Permitted Liens, and ModivBrix will at all times defend Lender and the
Collateral against all claims of others.

(b) Borrower has set forth in the Schedule all of Borrower’s Deposit Accounts as
of the date hereof, and Borrower will give Lender five Business Days advance
written notice before establishing any new Deposit Accounts and, if Modiv or
BrixInvest is establishing any new Deposit Accounts other than at Lender, Modiv
or BrixInvest (as applicable) will cause the institution where any such new
Deposit Account is maintained to execute and deliver to Lender a control
agreement in form sufficient to perfect Lender’s security interest in the
Deposit Account and otherwise satisfactory to Lender in its Good Faith Business
Judgment. Nothing herein limits any requirements which may be set forth in the
Schedule as to where Deposit Accounts will be maintained.

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Pacific Mercantile Bank
Loan and Security Agreement
 

(c)  In the event that Modiv or BrixInvest shall at any time after the date
hereof have any commercial tort claims against others, which it is asserting or
intends to assert, and in which the potential recovery exceeds $100,000, Modiv
or BrixInvest (as applicable) shall promptly notify Lender thereof in writing
and provide Lender with such information regarding the same as Lender shall
request.  Such notification to Lender shall constitute a grant of a security
interest in the commercial tort claim and all proceeds thereof to Lender, and
Modiv or BrixInvest shall execute and deliver all such documents and take all
such actions as Lender shall request in connection therewith.

(d)  None of the Collateral now is or will be affixed to any real property in
such a manner, or with such intent, as to become a fixture.  Borrower is not and
will not become a lessee under any real property lease pursuant to which the
lessor may obtain any rights in any of the Collateral and no such lease now
prohibits, restrains, impairs or will prohibit, restrain or impair ModivBrix’s
right to remove any Collateral from the leased premises.  Borrower will keep in
full force and effect, and will comply with all material terms of, any lease of
real property where any of the Collateral now or in the future may be located.

(e)  Except as disclosed in the Schedule, neither Modiv nor BrixInvest is a
party to, nor is it bound by, any license or other agreement that is important
for the conduct of Borrower’s business and that prohibits or otherwise restricts
Modiv or BrixInvest from granting a security interest in Modiv’s or BrixInvest’s
interest in such license or agreement or any other property of Modiv or
BrixInvest important for the conduct of Borrower’s business.

(f)  Each of Modiv and BrixInvest is the sole owner of its Intellectual
Property, except for non-exclusive licenses granted by it to its customers in
the ordinary course of business.  To the best of Borrower’s knowledge, each of
Modiv’s and BrixInvest’s Copyrights, Trademarks and Patents is valid and
enforceable, and no part of Modiv’s or BrixInvest’s Intellectual Property has
been judged invalid or unenforceable, in whole or in part, and no claim has been
made to Borrower that any part of Modiv’s or BrixInvest’s Intellectual Property
violates the rights of any third party except to the extent such claim would not
reasonably be expected to cause a Material Adverse Change.

3.5  Maintenance of Collateral. Each of Modiv and BrixInvest will maintain its
Inventory in good and merchantable condition and maintain all other tangible
Collateral in good working condition (ordinary wear and tear excepted), and
Borrower will not use the Collateral for any unlawful purpose.  Each of Modiv
and BrixInvest will immediately advise Lender in writing of any loss or damage
to its Collateral exceeding $100,000.

3.6  Books and Records. Borrower has maintained and will maintain at Borrower’s
Address books and records, which are complete and accurate in all material
respects, and comprise an accounting system in accordance with GAAP.

3.7  Financial Condition, Statements and Reports.  All financial statements now
or in the future delivered to Lender have been, and will be, prepared in
conformity with GAAP, and now and in the future will fairly present the results
of operations and financial condition of Borrower, in accordance with GAAP, at
the times and for the periods therein stated (except, as applicable, for
non-compliance with FAS 123R in monthly financial statements, and, in the case
of interim financial statements, for the lack of footnotes and subject to
year-end adjustments).  Between the last date covered by any such statement
provided to Lender and the date hereof, there has been no Material Adverse
Change.

3.8  Tax Returns and Payments; Pension Contributions.  Borrower has timely
filed, and will timely file, all required tax returns and reports, and Borrower
has timely paid, and will timely pay, all foreign, federal, state and local
taxes, assessments, deposits and contributions now or in the future owed by
Borrower.  Borrower may, however, defer payment of any contested taxes, provided
that Borrower (i) in good faith contests Borrower’s obligation to pay the taxes
by appropriate proceedings promptly and diligently instituted and conducted,
(ii) notifies Lender in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a Lien upon any of Borrower’s
assets.  Borrower is unaware of any claims or adjustments proposed for any of
Borrower’s prior tax years which could result in additional taxes becoming due
and payable by Borrower.  Borrower has paid, and shall continue to pay all
amounts necessary to fund all present and future pension, profit sharing and
deferred compensation plans in accordance with their terms, and Borrower has not
and will not withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to, any
such plan which could reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency.  Borrower shall concurrently
execute and deliver to Lender an IRS Form 8821, Tax Information Authorization,
and Borrower shall maintain the same in full force and effect throughout the
term of this Agreement.
     

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Pacific Mercantile Bank
Loan and Security Agreement
 

3.9  Compliance with Law.

(a)  Borrower has, to the best of its knowledge, complied, and will in the
future comply, in all material respects, with all provisions of all foreign,
federal, state and local laws and regulations applicable to Borrower, including,
but not limited to, those relating to Borrower’s ownership of real or personal
property, the conduct and licensing of Borrower’s business, and all
environmental matters, except where the failure to do so would not reasonably be
expected to result in liability on the part of Borrower in excess of $100,000.
Borrower has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all governmental
authorities that are necessary for the continued operation of Borrower’s
business as currently conducted, except where the failure to do so would not
reasonably be expected to result in liability on the part of Borrower in excess
of $100,000.

(b)  Borrower is not in violation and shall not violate any of the country or
list based economic and trade sanctions administered and enforced by OFAC or as
otherwise published from time to time.  Neither Borrower, nor to the knowledge
of Borrower, any director, officer, employee, agent, affiliate or representative
thereof, (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has its assets
located in a Sanctioned Entity, (iii) derives revenues from investments in, or
transactions with a Sanctioned Person or a Sanctioned Entity or (iv) is owned or
controlled by a Sanctioned Entity or a Sanctioned Person.

(c)  Borrower is in compliance with, and will continue to comply with, all
applicable Anti-Terrorism Laws.  Borrower does not deal in, or otherwise engage
in any transaction relating to, any property or interests in property blocked
pursuant to any OFAC Sanctions Programs.  Borrower is not any of the following
(each a “Blocked Person”): (i) a Person that is prohibited pursuant to any of
the OFAC Sanctions Programs, including a Person named on OFAC’s list of
Specially Designated Nationals and Blocked Persons; (ii) a Person that is owned
or controlled by, or that owns or controls any Person described in (i) above; or
(iii) a Person with which Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law.  No part of the proceeds
of the Loans will be used, directly or indirectly, for any payments to any
government official or employee, political party, official of a political party,
candidate for political office, or anyone else acting in an official capacity,
in order to obtain, retain or direct business or obtain any improper advantage,
in violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.

(d)  Borrower shall not (i) conduct any business or engage in any transaction or
dealing with any Blocked Person, including the making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, (ii) deal in, or otherwise engage in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order No.
13224, (iii) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT
Act, or any other Anti-Terrorism Law, and the Borrower shall deliver to Lender
any certification or other evidence requested from time to time by Lender in its
sole discretion, confirming Borrower’s compliance with this Section, (iv) become
(including by virtue of being owned or controlled by a Blocked Person), own or
control a Blocked Person or any Person that is the target of sanctions imposed
by the United Nations or the European Union including the making or receiving
any contribution of funds, goods or services to or for the benefit of any
Blocked Person, or (v) engage in any business or activity in violation of the
Trading with the Enemy Act.

3.10  Litigation.  Except as otherwise described in Note 10 of Notes to
Consolidated Financial Statements of NNN Holdings’ September 30, 2018 Form 10-Q,
as of the date hereof, there is no claim, suit, litigation, proceeding or
investigation pending or, to Borrower’s knowledge, threatened against or
affecting Borrower in any court or before any governmental agency (or any basis
therefor known to Borrower) involving any claim against Borrower of more than
$50,000.  Borrower will promptly inform Lender in writing of any claim,
proceeding, litigation or investigation in the future threatened or instituted
against Borrower involving any claim against Borrower of more than $50,000.

3.11  Use of Proceeds.  All proceeds of all Loans shall be used solely for
Borrower’s business operations, including acquisitions of real estate properties
in the ordinary course of business and working capital.  Borrower is not
purchasing or carrying any “margin stock” (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) and no part of the proceeds of
any Loan will be used to purchase or carry any “margin stock” or to extend
credit to others for the purpose of purchasing or carrying any “margin stock.”

3.12  Solvency, Payment of Debts. Borrower is able to pay its debts (including
trade debts) as they mature; the fair saleable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; and Borrower is not left with unreasonably small capital after the
transactions contemplated by this Agreement.
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

4.
 ACCOUNTS.

4.1  Accounts.  All statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing ModivBrix’s Accounts are
and shall be true and correct in all material respects, and all such invoices,
instruments and other documents and all of Borrower’s books and records are and
shall be genuine and in all material respects what they purport to be.  All
sales and other transactions underlying or giving rise to each of ModivBrix’s
Accounts shall comply in all material respects with all applicable laws and
governmental rules and regulations.  All signatures and endorsements on all
documents, instruments, and agreements relating to all ModivBrix’s Accounts are
and shall be genuine, and all such documents, instruments and agreements are and
shall be legally enforceable in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors’
rights generally).  After the occurrence and during the continuance of an Event
of Default, Lender may, from time to time, verify directly with the respective
Account Debtors on Modiv’s and BrixInvest’s Accounts the validity, amount and
other matters relating to such Accounts, by means of mail, telephone or
otherwise, either in the name of Borrower or Lender or such other name as Lender
may choose, and Lender or its designee may, at any time, after the occurrence
and during the continuance of an Event of Default, notify Account Debtors on
Modiv’s and BrixInvest’s Accounts that it has a security interest in such
Accounts.

5.
 ADDITIONAL DUTIES OF BORROWER.

5.1  Financial and Other Covenants.  Borrower shall at all times comply with the
financial and other covenants set forth in the Schedule.

5.2  Insurance.  Borrower shall at all times insure its tangible assets and
carry such other business insurance, with insurers reasonably acceptable to
Lender, as is reasonable and is customary and in accordance with standard
practices for Borrower’s industry and locations, and, without limiting the
foregoing, as may be legally required.  In addition and not in limitation of the
foregoing, ModivBrix shall at all times insure all of its tangible personal
property Collateral and carry such other business insurance, with insurers
reasonably acceptable to Lender, in such form and amounts as Lender may
reasonably require and that are customary and in accordance with standard
practices for ModivBrix’s industry and locations.  All such insurance policies
insuring the Collateral shall name Lender as an additional loss payee, and shall
contain a lenders loss payee endorsement in form reasonably acceptable to Lender
and shall name Lender as additional insured with regard to liability coverage.
Upon receipt of the proceeds of any such insurance, Lender shall apply such
proceeds in reduction of the Obligations as Lender shall determine in its sole
discretion, except that, provided no Default or Event of Default has occurred
and is continuing, Lender shall release to Borrower insurance proceeds with
respect to Equipment totaling less than $50,000, which shall be utilized by
Borrower for the replacement of the Equipment with respect to which the
insurance proceeds were paid.  Lender may require reasonable assurance that the
insurance proceeds so released will be so used.  If Borrower fails to provide or
pay for any insurance, Lender may, but is not obligated to, obtain the same at
Borrower’s expense.  Borrower shall promptly deliver to Lender copies of all
material reports made to insurance companies.  At Lender’s request, Borrower
shall provide evidence of such insurance to Lender.

5.3  Reports.  Borrower, at its expense, shall provide Lender with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower as Lender shall from time to time specify in its Good Faith Business
Judgment.

5.4  Access to Assets, Books and Records.  At reasonable times, and on one
Business Day’s notice, Lender, or its agents, shall have the right to inspect
Borrower’s assets, and the right to audit and copy Borrower’s books and records.
The foregoing inspections and audits shall be at Borrower’s expense and the
charge therefor shall be Lender’s then current standard charge for the same,
plus reasonable out-of-pocket expenses (including without limitation any
additional costs and expenses of outside auditors retained by Lender).

5.5  Negative Covenants.  Except as may be specifically permitted in this
Agreement (including the Schedule), Borrower shall not, without Lender’s prior
written consent (which shall be a matter of its Good Faith Business Judgment),
do any of the following:

(i)  merge or consolidate with another corporation or entity, except that during
calendar year 2020 Katana may merge into NNN OP, with NNN OP being the surviving
entity, with thirty days prior written notice to Lender;

(ii)  acquire any assets, except in the ordinary course of business, and except
that during calendar year 2020 NNN OP may acquire all the ownership interests in
or assets of Katana with thirty days prior written notice to Lender;

(iii)  enter into any other transaction outside the ordinary course of business;
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

 
(iv)  sell or transfer any assets, except for (A) the sale or transfer of either
of the two Chevron real estate properties owned by Katana as of the date hereof
in the ordinary course of Borrower’s business, (B) the sale or transfer to NNN
OP of all the ownership interests in or the assets of Katana with thirty days
prior written notice to Lender, (C) the sale of finished Inventory in the
ordinary course of Borrower’s business, (D) the sale of obsolete Equipment in
the ordinary course of business, in an amount not more than $50,000 in any
fiscal year, and (E) non-exclusive licenses of Intellectual Property in the
ordinary course of business;

(v)  store any assets with any warehouseman or other third party, unless there
is in place an agreement by such warehouseman or other third party in favor of
Lender in such form as Lender shall specify in its Good Faith Business Judgment;

(vi)  sell any Inventory on a sale-or-return, guaranteed sale, consignment, or
other contingent basis;

(vii)  make any loans of any money or other assets or any other Investments,
other than Permitted Investments;

(viii)  create, incur, assume or permit to be outstanding any Indebtedness other
than Permitted Indebtedness;

(ix)  guarantee or otherwise become liable with respect to the obligations of
another party or entity, except for (i) guaranties or indemnities by NNN
Borrower of the obligations of a Single-Purpose Subsidiary of NNN OP to such
Single-Purpose Subsidiary’s mortgage lender, or by Katana of the obligations of
a Single-Purpose Subsidiary of Katana to such Single-Purpose Subsidiary’s
mortgage lender; in each case limited to (a) damages or loss suffered by such
mortgage lender arising from certain customary “carve out” obligations,
including without limitation, the gross negligence or fraud of such
Single-Purpose Subsidiary, commission of waste, mechanics’ liens, breach of
environmental representations, warranties  and covenants pertaining to hazardous
substances, failure to apply rental income to the operation of the mortgaged
property, failure to pay property taxes or failure to maintain required
insurance, and (b) repayment of the mortgage loan if there is an unpermitted
change of ownership of any part of the real property owned by the Single-Purpose
Subsidiary securing the mortgage loan or in the ownership of the Single-Purpose
Subsidiary, if there is a bankruptcy of the Single-Purpose Subsidiary, or if
such mortgage lender’s right to recourse to the mortgaged property is prejudiced
by NNN Borrower or Katana (as applicable), the Single-Purpose Subsidiary, or any
other party liable for the mortgaged loan, and (ii) customary environmental
indemnity agreements by NNN Borrower in favor of a mortgage lender to a
Single-Purpose Subsidiary of NNN OP pertaining to the mortgaged property or by
Katana in favor of a mortgage lender to a Single-Purpose Subsidiary of Katana
pertaining to the mortgaged property;

(x)  [intentionally omitted];

(xi)  redeem, retire, purchase or otherwise acquire, directly or indirectly, any
of Borrower’s stock or other equity securities, except that NNN Holdings may
continue to make ordinary course of business repurchases of its stock as
approved by NNN Holding’s Board of Directors and consistent with its past
practices provided that Lender has not given NNN Holdings notice to cease or
limit such repurchases after the occurrence and during the continuance of an
Event of Default;

(xii)  engage, directly or indirectly, in any business other than the businesses
currently engaged in by Borrower or reasonably related thereto, or become an
“investment company” within the meaning of the Investment Company Act of 1940;

(xiii)  directly or indirectly enter into, or permit to exist, any material
transaction with any Affiliate of Borrower, except for transactions that are in
the ordinary course of Borrower’s business, and are on fair and reasonable terms
that are no less favorable to Borrower than would be obtained in an arm’s length
transaction with a non-affiliated Person; or

(xiv)  reincorporate or reorganize in another state;

(xv)  change its fiscal year;

(xvi)  create a Subsidiary except for Single-Purpose Subsidiaries (as defined in
the Schedule) created in the ordinary course of business;

(xvii)  dissolve or elect to dissolve, except that NNN LLC may dissolve, with
ten Business Day prior written notice to the Lender, if all of its assets are
distributed to NNN Holdings; or

(xviii) agree to do any of the foregoing, unless such agreement provides that it
is subject to the prior written consent of Lender.

Transactions permitted by the foregoing provisions of this Section are only
permitted if no Default or Event of Default has occurred and is continuing, or
would occur as a result of such transaction.

5.6  Litigation Cooperation.  Should any third-party suit or proceeding be
instituted by or against Lender with respect to any Collateral or relating to
Borrower, Borrower shall, without expense to Lender, make available Borrower and
its officers, employees and agents and Borrower’s books and records, to the
extent that Lender may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.
                       
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Pacific Mercantile Bank
Loan and Security Agreement
 

5.7  Notification of Changes.  Borrower will give Lender written notice of any
change in its executive officers within ten days after the date of such change.

5.8  Registration of Modiv’s and BrixInvest’s Intellectual Property Rights.

(a)          Each of Modiv and BrixInvest shall promptly give Lender written
notice of any applications or registrations it files or obtains with respect to
Intellectual Property filed with the United States Patent and Trademark Office
or the United States Copyright Office, including the date of any such filing and
the registration or application numbers, if any, and shall execute and deliver
such documents and take such actions as are reasonably necessary or advisable in
Lender’s Good Faith Business Judgment to perfect or reflect of record Lender’s
security interest in the same, and to file the same in the United States Patent
and Trademark Office or the United States Copyright Office, as the case may be.

(b)          Borrower shall use commercially reasonable efforts to (i) protect,
defend and maintain the validity and enforceability of Modiv’s and BrixInvest’s
Intellectual Property that is material to Borrower, (ii) detect infringements of
any material Intellectual Property of Modiv or BrixInvest, and (iii) not allow
any material Intellectual Property of Modiv or BrixInvest to be abandoned,
forfeited or dedicated to the public without the written consent of Lender,
which shall not be unreasonably withheld.

  (c)          Lender shall have the right, but not the obligation, to take, at
Borrower’s sole expense, any actions that Borrower is required under this
Section 5.8 to take but which Borrower fails to take, after fifteen days’ notice
to Borrower.  Borrower shall reimburse and indemnify Lender for all reasonable
costs and reasonable expenses incurred in the reasonable exercise of its rights
under this Section.

5.9  [Intentionally Omitted].

5.10  Further Assurances.  Borrower agrees, at its expense, on request by
Lender, to execute all documents and take all actions, as Lender, may, in its
Good Faith Business Judgment, deem necessary or useful in order to perfect and
maintain Lender’s perfected first-priority security interest in the Collateral
(subject only to Permitted Liens), and in order to fully consummate the
transactions contemplated by this Agreement.

6.
TERM.

6.1  Maturity Date.  This Agreement shall continue in effect until the maturity
date set forth on the Schedule (the “Maturity Date”), subject to Sections 6.2
and 6.3 below.

6.2  Early Termination.  This Agreement may be terminated prior to the Maturity
Date as follows:  (i) by Borrower, effective 20 days after written notice of
termination is given to Lender; or (ii) by Lender at any time after the
occurrence and during the continuance of an Event of Default, without notice,
effective immediately.
 
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Pacific Mercantile Bank
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6.3  Payment of Obligations.  On the Maturity Date or on any earlier effective
date of termination, Borrower shall pay and perform in full all Obligations,
whether evidenced by installment notes or otherwise, and whether or not all or
any part of such Obligations are otherwise then due and payable. Notwithstanding
any termination of this Agreement, all of Lender’s security interests in all of
the Collateral and all of the terms and provisions of this Agreement shall
continue in full force and effect until all Obligations have been paid and
performed in full; provided that Lender may, in its sole discretion, refuse to
make any further Loans after termination.  No termination shall in any way
affect or impair any right or remedy of Lender, nor shall any such termination
relieve Borrower of any Obligation to Lender, until all of the Obligations have
been paid and performed in full. Lender shall, at Borrower’s expense, release or
terminate all financing statements and other filings in favor of Lender as may
be required to fully terminate Lender’s security interests, provided that there
are no suits, actions, proceedings or claims pending or threatened against any
Person indemnified by Borrower under this Agreement with respect to which
indemnity has been or may be sought, upon Lender’s receipt of the following, in
form and content reasonably satisfactory to Lender: (i) cash payment in full of
all of the Obligations and performance by Borrower of all non-monetary
Obligations under this Agreement, (ii) written confirmation by Borrower that the
commitment of Lender to make Loans under this Agreement has terminated, (iii) a
general release of all claims against Lender, its officers, directors, agents,
attorneys and Affiliates by Borrower relating to Lender’s performance and
obligations under the Loan Documents, on Lender’s standard form, and (iv) an
agreement by Borrower to indemnify Lender for any payments received by Lender
that are applied to the Obligations that may subsequently be returned or
otherwise not paid for any reason.

7.
EVENTS OF DEFAULT AND REMEDIES.

7.1  Events of Default.  The occurrence of any of the following events shall
constitute an “Event of Default” under this Agreement, and Borrower shall give
Lender immediate written notice thereof:

(a) Any warranty, representation, statement, report or certificate made or
delivered to Lender by Borrower or any of Borrower’s officers, employees or
agents, now or in the future, shall be untrue or misleading in a material
respect when made or deemed to be made; or

(b) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or

(c) the Loans and other Obligations outstanding at any time shall exceed any
applicable Credit Limit; or

(d) Borrower shall fail to comply with any non-monetary Obligation (i) which by
its nature cannot be cured or (ii) which by its nature can be cured but is
similar to an Obligation with respect to which Lender has given Borrower notice
of failure of compliance within the preceding 12 months; or

(e) Borrower shall fail to perform any other non-monetary Obligation, and as to
any such failure that can be cured, shall fail to cure such failure within 10
Business Days after Borrower receives notice thereof or any officer of Borrower
becomes aware thereof; provided, however, that if such failure cannot by its
nature be cured within the 10 Business Days period or cannot after diligent
attempts by Borrower be cured within such 10 Business Days period, and such
failure is likely to be cured within a reasonable time, then Borrower shall have
an additional reasonable period (which shall not in any case exceed 60 days) to
attempt to cure such failure, and within such reasonable time period the failure
to have cured such failure shall not be deemed an Event of Default but no Loans
will be made; or

(f) any Collateral or any material assets become subject to any Lien (other than
a Permitted Lien) which is not cured within ten Business Days after the
occurrence of the same; or

(g) any Collateral or any material assets are attached, seized, subjected to a
writ or distress warrant, or is levied upon, and such attachment, seizure, writ
or distress warrant or levy has not been removed, discharged or rescinded within
ten Business Days, or if Borrower is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs, or if a judgment or other claim becomes a Lien on any of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower’s assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency;
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

(h) any default or event of default occurs under any obligation secured by a
Permitted Lien, which is not cured within any applicable cure period or waived
in writing by the holder of the Permitted Lien; or

(i) a default or event of default shall occur under any documents or agreements
evidencing or relating to any Permitted Indebtedness which is not cured within
any applicable cure period.

(j) Borrower breaches any material contract or obligation, which has resulted or
may reasonably be expected to result in a Material Adverse Change; or

(k) a final, judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of at least $250,000 shall be rendered against
Borrower, and the same remain unsatisfied and unstayed for a period of 10
Business Days or more; or

(l) Dissolution, termination of existence, temporary or permanent suspension of
business, insolvency or business failure of Borrower; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
Insolvency Proceeding by Borrower; or

(m) the commencement of any Insolvency Proceeding against Borrower or any
Guarantor, which is not cured by the dismissal thereof within 45 days after the
date commenced; or

(n) revocation or termination of, or limitation or denial of liability upon, or
default under, any guaranty of the Obligations or any attempt to do any of the
foregoing, or commencement of any Insolvency Proceeding by any Guarantor, or
death of any Guarantor; or

(o) revocation or termination of, or limitation or denial of liability upon, or
default under, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing, or commencement of
any Insolvency Proceeding by or against any such third party; or

(p) Borrower makes any payment on account of any Subordinated Debt, other than
as permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations terminates or in any way limits
its subordination agreement; or

(q) a Change in Control shall occur; or

(r) [Intentionally Omitted]; or

(s) Borrower shall generally not pay its debts as they become due, or Borrower
shall conceal, remove or transfer any part of its property, with intent to
hinder, delay or defraud its creditors, or make or suffer any transfer of any of
its property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or

(t) Any director, officer, or owner of 20% or more of the issued and outstanding
common stock of Borrower is indicted for a felony offense under state or federal
law and, as to a director or an officer, such director or officer is not
terminated by Borrower within thirty (30) days after Borrower has actual
knowledge of such indictment, or Borrower hires an officer or has a director who
has been convicted of any such felony offense, or a Person becomes an owner of
at least 20% of the issued and outstanding common stock of Borrower who has been
convicted of any such felony offense; or

(u) a Material Adverse Change shall occur.
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

Lender may cease making any Loans hereunder during any of the above cure
periods, and thereafter if an Event of Default has occurred and is continuing.

7.2  Remedies.  Upon the occurrence and during the continuance of any Event of
Default, and at any time thereafter, Lender, at its option, and without notice
or demand of any kind (all of which are hereby expressly waived by Borrower),
may do any one or more of the following: (a) Cease making Loans or otherwise
extending credit to Borrower under this Agreement or any other Loan Document;
(b) Accelerate and declare all or any part of the Obligations to be immediately
due, payable, and performable, notwithstanding any deferred or installment
payments allowed by any instrument evidencing or relating to any Obligation
(except that all Obligations shall be automatically accelerated and due and
payable upon the commencement of any Insolvency Proceeding by Borrower or any
Event of Default under Section 7.1(m)); (c) Take possession of any or all of the
Collateral wherever it may be found, and for that purpose Borrower hereby
authorizes Lender without judicial process to enter onto any of Borrower’s
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so long
as Lender deems it necessary, in its Good Faith Business Judgment, in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Lender seek to take possession of any
of the Collateral by court process, Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that Lender retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require
Borrower to assemble any or all of the Collateral and make it available to
Lender at places designated by Lender which are reasonably convenient to Lender
and Borrower, and to remove the Collateral to such locations as Lender may deem
advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Lender shall have the right to use Borrower’s premises,
vehicles, hoists, lifts, cranes, and other Equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time Lender obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale.  Lender shall have the right to
conduct such disposition on Borrower’s premises without charge, for such time or
times as Lender deems reasonable, or on Lender’s premises, or elsewhere and the
Collateral need not be located at the place of disposition.  Lender may directly
or through any Affiliate purchase or lease any Collateral at any such public
disposition, and if permissible under applicable law, at any private
disposition.  Any sale or other disposition of Collateral shall not relieve
Borrower of any liability Borrower may have if any Collateral is defective as to
title or physical condition or otherwise at the time of sale; (g) demand payment
of, and collect any Accounts and General Intangibles comprising Collateral and,
in connection therewith, Borrower irrevocably authorizes Lender to endorse or
sign Borrower’s name on all collections, receipts, instruments and other
documents, to take possession of and open mail addressed to Borrower and remove
therefrom payments made with respect to any item of the Collateral or proceeds
thereof, and, in Lender’s Good Faith Business Judgment, to grant extensions of
time to pay, compromise claims and settle Accounts and the like for less than
face value; (h) demand and receive possession of any of Borrower’s federal and
state income tax returns and the books and records utilized in the preparation
thereof or referring thereto; and (i) set off any of the Obligations against any
general, special or other Deposit Accounts of Borrower maintained with Lender. 
All reasonable attorneys’ fees, expenses, costs, liabilities and obligations
incurred by Lender with respect to the foregoing shall be added to and become
part of the Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations. 
Without limiting any of Lender’s rights and remedies, from and after the
occurrence and during the continuance of any Event of Default, the interest rate
applicable to the Obligations shall be increased by an additional six percent
per annum (the “Default Rate”).

7.3  Standards for Determining Commercial Reasonableness.  Borrower and Lender
agree that a sale or other disposition (collectively, “Sale”) of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable:  (i) notice of the Sale is given to Modiv or BrixInvest
(as applicable) at least ten days prior to the Sale, and, in the case of a
public Sale, notice of the Sale is published at least five days before the date
of the Sale in a newspaper of general circulation in the county where the Sale
is to be conducted; (ii) notice of the Sale describes the Collateral in general,
non-specific terms; (iii) the Sale is conducted at a place designated by Lender,
with or without the Collateral being present; (iv) the Sale commences at any
time between 8:00 a.m. and 6:00 p.m;  (v) payment of the purchase price in cash
or by cashier’s check or wire transfer is required; (vi) with respect to any
Sale of any of the Collateral, Lender may (but is not obligated to) direct any
prospective purchaser to ascertain directly from Modiv or BrixInvest (as
applicable) any and all information concerning the same.  Lender shall be free
to employ other methods of noticing and selling the Collateral, in its
discretion, if they are commercially reasonable.

7.4 Investment Property. If an Event of Default has occurred and is continuing,
Modiv and BrixInvest shall hold all payments on, and proceeds of, and
distributions with respect to, Investment Property in trust for Lender, and
shall deliver all such payments, proceeds and distributions to Lender,
immediately upon receipt, in their original form, duly endorsed, to be applied
to the Obligations in such order as Lender shall determine. Borrower recognizes
that Lender may be unable to make a public sale of any or all of the Investment
Property, by reason of prohibitions contained in applicable securities laws or
otherwise, and expressly agrees that a private sale to a restricted group of
purchasers for investment and not with a view to any distribution thereof shall
be considered a commercially reasonable sale thereof.
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

7.5  Power of Attorney.  Upon the occurrence and during the continuance of any
Event of Default, without limiting Lender’s other rights and remedies, Borrower
grants to Lender an irrevocable power of attorney coupled with an interest,
authorizing and permitting Lender (acting through any of its employees,
attorneys or agents) at any time, at its option, but without obligation, with or
without notice to Borrower, and at Borrower’s expense, to do any or all of the
following, in Borrower’s name or otherwise, but Lender agrees that if it
exercises any right hereunder, it will do so in good faith and in a commercially
reasonable manner:  (a) execute on behalf of Modiv or BrixInvest any documents
that Lender may, in its Good Faith Business Judgment, deem advisable in order to
perfect and maintain Lender’s security interest in the Collateral, or in order
to exercise a right of Modiv, BrixInvest or Lender, or in order to fully
consummate all the transactions contemplated under this Agreement, and all other
Loan Documents; (b) execute on behalf of Modiv or BrixInvest, any invoices
relating to any Account thereof, any draft against any Account Debtor thereof
and any notice to any Account Debtor thereof, any proof of claim in bankruptcy,
any Notice of Lien, claim of mechanic’s, materialman’s or other Lien, or
assignment or satisfaction of mechanic’s, materialman’s or other Lien; (c) take
control in any manner of any cash or non-cash items of payment or proceeds of
Collateral; endorse the name of Modiv or BrixInvest upon any instruments, or
documents, evidence of payment or Collateral thereof that may come into Lender’s
possession; (d) endorse on behalf of Modiv or BrixInvest all checks and other
forms of remittances thereof received by Lender; (e) pay, contest or settle any
Lien and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; (f)
grant on behalf of Modiv or BrixInvest extensions of time to pay, compromise
claims and settle Accounts and General Intangibles thereof for less than face
value and execute all releases and other documents in connection therewith; (g)
pay any sums required on account of Borrower’s taxes or to secure the release of
any Liens therefor, or both; (h) settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (i) instruct any third party having custody or control of any books or
records belonging to, or relating to, Borrower to give Lender the same rights of
access and other rights with respect thereto as Lender has under this Agreement;
and (j) take any action or pay any sum required of Borrower pursuant to this
Agreement and any other Loan Documents; (k) enter into a short-form intellectual
property security agreement with respect to Modiv’s or BrixInvest’s Intellectual
Property consistent with the terms of this Agreement for recording purposes only
or modify, in its sole discretion, any intellectual property security agreement
entered into between Modiv and Lender or BrixInvest and Lender without first
obtaining Borrower’s approval of or signature to such modification by amending
exhibits thereto, as appropriate, to include reference to any right, title or
interest in any Copyrights, Patents or Trademarks acquired by Modiv or
BrixInvest (as applicable) after the execution hereof or to delete any reference
to any right, title or interest in any Copyrights, Patents or Trademarks in
which Modiv or BrixInvest (as applicable) no longer has or claims to have any
right, title or interest; and (l) file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral; provided Lender may exercise such power of attorney to sign the
name of Modiv or BrixInvest on any of the documents described in clauses (k) and
(l) above, regardless of whether an Event of Default has occurred.  Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities,
obligations and attorneys’ fees incurred by Lender with respect to the foregoing
shall be added to and become part of the Obligations, shall be payable on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.  In no event shall Lender’s rights under
the foregoing power of attorney or any of Lender’s other rights under this
Agreement be deemed to indicate that Lender is in control of the business,
management or properties of Borrower.

7.6  Application of Proceeds.  All proceeds realized as the result of any Sale
of the Collateral shall be applied by Lender first to the reasonable costs,
expenses, liabilities, obligations and attorneys’ fees incurred by Lender in the
exercise of its rights under this Agreement, second to the interest due upon any
of the Obligations, and third to the principal of the Obligations, in such order
as Lender shall determine in its sole discretion.  Any surplus shall be paid to
applicable Borrower or other persons legally entitled thereto; Borrower shall
remain liable to Lender for any deficiency.  If, Lender, in its Good Faith
Business Judgment, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any Sale of Collateral, Lender
shall have the option, exercisable at any time, in its Good Faith Business
Judgment, of either reducing the Obligations by the principal amount of purchase
price or deferring the reduction of the Obligations until the actual receipt by
Lender of the cash therefor.

7.7  Remedies Cumulative.  In addition to the rights and remedies set forth in
this Agreement, Lender shall have all the other rights and remedies accorded a
creditor, secured party or other contracting party (as applicable) under the
Uniform Commercial Code and under all other applicable laws, and under any other
instrument or agreement now or in the future entered into between Lender and
Borrower, and all of such rights and remedies are cumulative and none is
exclusive.  Exercise or partial exercise by Lender of one or more of its rights
or remedies shall not be deemed an election, nor bar Lender from subsequent
exercise or partial exercise of any other rights or remedies.  The failure or
delay of Lender to exercise any rights or remedies shall not operate as a waiver
thereof, but all rights and remedies shall continue in full force and effect
until all of the Obligations have been fully paid and performed.
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

8.
DEFINITIONS.
As used in this Agreement, the following terms have the following meanings:

“Account Debtor” means the obligor on an Account.

“Accounts” means all present and future “accounts” as defined in the Uniform
Commercial Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation all accounts receivable
and other sums owing to Borrower.

“Affiliate” means, with respect to any Person, a relative, partner, shareholder,
director, officer, or employee of such Person, or any parent or subsidiary of
such Person, or any Person controlling, controlled by or under common control
with such Person.

“this Agreement”, “the Loan Agreement” and “this Loan Agreement” mean
collectively to this Loan and Security Agreement and the Schedule and all
exhibits and schedules thereto, as the same may be modified, amended or restated
from time to time by a written agreement signed by Borrower and Lender.

 “Anti-Terrorism Laws” means (i) the Money Laundering Control Act of 1986 (i.e.,
18 U.S.C. §§ 1956 and 1957), (ii) the Bank Secrecy Act, as amended by the USA
PATRIOT Act, (iii) the laws, regulations and Executive Orders administered by
the United States Department of the Treasury’s Office of Foreign Assets Control
(“OFAC”), (iv) the Comprehensive Iran Sanctions, Accountability, and Divestment
Act of 2010 and implementing regulations by the United States Department of the
Treasury, (v) the Proceeds of Crime (Money Laundering) and Terrorist Financing
Act (Canada), (vi) any law enacted in the United States, Canada or any other
jurisdiction in which any Borrower or any of its Subsidiaries operate
prohibiting or directed against terrorist activities or the financing of
terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), (vii) the foreign
asset control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) and any enabling legislation or executive
order relating thereto, or (viii) any similar laws relating to terrorism or
money laundering enacted in the United States, Canada or any other jurisdictions
in which Borrower or any of its Subsidiaries operate, as any of the foregoing
laws may from time to time be amended, renewed, extended, or replaced and all
other legal requirements of any Governmental Authority governing, addressing,
relating to, or attempting to eliminate, terrorist acts and acts of war and any
regulations promulgated pursuant thereto.

“Business Day” means a day on which Lender is open for business other than
Saturday, Sunday or Federal holiday.

“Change in Control” means:  (i) NNN Holdings shall cease to own, beneficially
and of record, 100% of the ownership interests of NNN LLC, without the prior
written consent of Lender; or (ii) NNN Holdings and NNN LLC shall cease to own,
beneficially and of record, a combined 100% of the ownership interests of NNN
OP, less not more than 21% owned by Daisho and its members, without the prior
written consent of Lender; or (iii) NNN Holdings and NNN LLC shall cease to own,
beneficially and of record, a combined 100% of the ownership interests of
Katana, without the prior written consent of Lender, except that Katana may
merge into NNN OP in accordance with Section 5.5(i); or (iv) NNN OP shall cease
to own, beneficially and of record, 100% of the ownership interests of Modiv,
without the prior written consent of Lender; or (v) a transaction other than a
bona fide equity financing or series of financings on terms and from investors
reasonably acceptable to Lender in which any “person” or “group” (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of a sufficient number of shares
of all classes of stock (or equivalent ownership interests, e.g., membership
units) then outstanding of Borrower ordinarily entitled to vote in the election
of the management of Borrower (e.g., the Board of Directors, as applicable),
empowering such “person” or “group” to elect a majority of the management of
Borrower (e.g., the Board of Directors, as applicable), who did not have such
power before such transaction.

“Code” means the Uniform Commercial Code as adopted and in effect in the State
of California from time to time.

“Collateral” has the meaning set forth in Section 2 above.

“Compliance Certificates” has the meaning set forth in Section 6 of the
Schedule.
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued for the account of that
Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term “Contingent Obligation” shall not
include endorsements for collection or deposit in the ordinary course of
business.  The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.

“continuing” and “during the continuance of” when used with reference to a
Default or Event of Default means that the Default or Event of Default has
occurred and has not been either waived in writing by Lender or cured within any
applicable cure period.

“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.

“Daisho” means Daisho OP Holdings, LLC, a Delaware limited liability company.

“Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.

“Default Rate” has the meaning set forth in Section 7.2 above.

“Deposit Accounts” means all present and future “deposit accounts” as defined in
the Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation  all general and special bank
accounts, demand accounts, checking accounts, savings accounts and certificates
of deposit.

“Equipment” means all present and future “equipment” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the
foregoing.

“Event of Default” means any of the events set forth in Section 7.1 of this
Agreement.

“GAAP” means generally accepted accounting principles consistently applied, as
in effect from time to time in the United States.

“General Intangibles” means all present and future “general intangibles” as
defined in the Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all Intellectual
Property, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers,
domain names, claims, income tax refunds, security and other deposits, options
to purchase or sell real or personal property, rights in all litigation
presently or hereafter pending (whether in contract, tort or otherwise),
insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of
any kind.

“Good Faith Business Judgment” means Lender’s business judgment, exercised
honestly and in good faith and not arbitrarily.

“Guarantor” means any Person who has guaranteed, or in the future guarantees,
any of the Obligations.

“including” means including (but not limited to).
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Pacific Mercantile Bank
Loan and Security Agreement
 

“Indebtedness” means (a) all indebtedness created, assumed or incurred in any
manner by Borrower representing money borrowed (including by the issuance of
debt securities, notes, bonds debentures or similar instruments), (b) all
indebtedness for the deferred purchase price of property or services, (c) the
Obligations, (d) obligations and liabilities of any Person secured by a Lien or
claim on property owned by Borrower, even though Borrower has not assumed or
become liable therefor, (e) obligations and liabilities created or arising under
any capital lease or conditional sales contract or other title retention
agreement with respect to property used or acquired by Borrower, even though the
rights and remedies of the lessor, seller or lender are limited to repossession
or otherwise limited; (f) all obligations of Borrower on or with respect to
letters of credit, bankers’ acceptances and other similar extensions of credit
whether or not representing obligations for borrowed money; and (g) the amount
of any Contingent Obligations.

“Intellectual Property” means all right, title, and interest in and to the
following: Copyrights, Trademarks and Patents; any and all trade secrets, and
any and all intellectual property rights in computer software and computer
software products now or hereafter existing, created, acquired or held; any and
all design rights which may be available now or hereafter existing, created,
acquired or held; any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to sue for and collect such damages for said use or infringement
of the intellectual property rights identified above; all licenses or other
rights to use any of the Copyrights, Patents or Trademarks, and all license fees
and royalties arising from such use; and all amendments, renewals and extensions
of any of the Copyrights, Trademarks or Patents.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other state, federal or other bankruptcy or insolvency law, now or
hereafter in effect,  including assignments for the benefit of creditors, formal
or informal moratoria, compositions, extension generally with its creditors, or
proceedings seeking reorganization, arrangement, readjustment of debt,
dissolution or liquidation, or other relief.

“Inventory” means all present and future “inventory” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation all merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products,
including without limitation such inventory as is temporarily out of Borrower’s
custody or possession or in transit, and including any returned goods and any
documents of title representing any of the above.

“Investment” means any beneficial ownership interest in any Person (including
stock, securities, partnership interest, limited liability company interest, or
other interests), and any loan, advance or capital contribution to any Person,
including the creation or capital contribution to a wholly-owned or
partially-owned subsidiary)

“Investment Property” means all present and future investment property,
securities, stocks, bonds, debentures, debt securities, partnership interests,
limited liability company interests, options, security entitlements, securities
accounts, commodity contracts, commodity accounts, and all financial assets held
in any securities account or otherwise, and all options and warrants to purchase
any of the foregoing, wherever located, and all other securities of every kind,
whether certificated or uncertificated.

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

“Loan Documents” means, collectively, this Agreement and all other present and
future documents, instruments and agreements between Lender and Borrower,
including, but not limited to those relating to this Agreement, and all
amendments and modifications thereto and replacements therefor.

“Material Adverse Change” means a material adverse effect on (i) the operations,
business, prospects or financial condition of Borrower, (ii) the ability of
Borrower to repay the Obligations or otherwise perform its obligations under the
Loan Documents, or (iii) Borrower’s interest in, the value of, or the perfection
or priority of Lender’s security interest in, the Borrower’s assets.

“ModivBrix” means, (i) prior to the BrixInvest Contribution, BrixInvest, and
(ii) after the BrixInvest Contribution, Modiv.

“NNN Borrower” means, jointly and severally, NNN Holdings, NNN LLC and NNN OP.
 
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Pacific Mercantile Bank
Loan and Security Agreement
 

“Obligations” means all present and future Loans, advances, debts, liabilities,
obligations, guaranties, covenants, duties and indebtedness at any time owing by
Borrower to Lender, whether arising under this Agreement, or any note or other
instrument or document, or otherwise, whether arising from an extension of
credit, opening of a letter of credit, banker’s acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Lender in
Borrower’s debts owing to others, and any interest and other obligations that
accrue after the commencement of an Insolvency Proceeding), absolute or
contingent, due or to become due, including, without limitation, all interest,
charges, expenses, fees, attorney’s fees, expert witness fees, audit fees,
letter of credit fees, collateral monitoring fees, closing fees, facility fees,
termination fees, minimum interest charges and any other sums chargeable to
Borrower under this Agreement or under any other Loan Documents.

“Other Property” means the following as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and all
rights relating thereto: all present and future “commercial tort claims”
(including without limitation any commercial tort claims identified in the
Schedule), “documents”, “instruments”, “promissory notes”, “chattel paper”,
“letters of credit”, “letter-of-credit rights”, “fixtures”, “farm products” and
“money”; and all other goods and personal property of every kind, tangible and
intangible, whether or not governed by the Code.

“Overadvance” is defined in Section 1.3.

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Payment” means all checks, wire transfers and other items of payment received
by Lender (including proceeds of Accounts and payment of the Obligations in
full) for credit to Borrower’s outstanding Loans.

“Permitted Indebtedness” means:

(i) the Obligations;

(ii) Subordinated Debt;

(iii) Indebtedness existing on the date hereof in a total principal amount not
in excess of $4,800,000;

(iv) trade payables incurred in the ordinary course of business;

(v) Indebtedness incurred as a result of endorsing negotiable instruments
received in the ordinary course of business;

(vi) capitalized leases and purchase money Indebtedness secured by Permitted
Liens in an aggregate amount not exceeding $250,000 at any time outstanding,
provided the amount of such capitalized leases and purchase money Indebtedness
do not exceed, at the time they were incurred, the lesser of the cost or fair
market value of the property so leased or financed with such Indebtedness;

(vii) extensions, refinancings, modifications, amendments and restatements of
any items of Permitted Indebtedness in clauses (iii) through (vi) above,
provided that the principal amount thereof is not increased and the terms
thereof are not modified to impose more burdensome terms upon Borrower.

 “Permitted Investments” means:

(i)          Marketable direct obligations issued or unconditionally guaranteed
by the United States of America or any agency or any State thereof maturing
within one year from the date of acquisition thereof, commercial paper maturing
no more than one year from the date of creation thereof and currently having
rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or
Moody’s Investors Service, Lender’s certificates of deposit maturing no more
than one year from the date of investment therein, and Lender’s money market
accounts; Investments in regular deposit or checking accounts held with Lender
or subject to a control agreement in favor of Lender;

(ii)          Investments of a Borrower in another Borrower;

(iii)          Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of Borrower’s business; and

(iv) ownership interests of NNN OP in Single-Purpose Subsidiaries (as defined in
the Schedule) obtained in the ordinary course of business; ownership interests
of Katana in Single-Purpose Subsidiaries (as defined in the Schedule) obtained
in the ordinary course of business, and in two real estate properties acquired
as a consequence of the merger of Rich Uncles REIT I into Katana; and ownership
interests of Modiv in Rich Uncles NNN REIT Operator LLC, Brix Student Housing
Operator LLC, and Single-Purpose Subsidiaries (as defined in the Schedule)
obtained in the ordinary course of business during 2020 for purposes of the
expansion of Modiv’s advisory services or for tax purposes.

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Pacific Mercantile Bank
Loan and Security Agreement
 

 “Permitted Liens” means the following:

(i) purchase money security interests in specific items of Equipment;

(ii) leases of specific items of Equipment;

(iii) Liens for taxes not yet payable;

(iv)  Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default;

(v) security interests being terminated substantially concurrently with this
Agreement;

(vi) Liens incurred on deposits made in the ordinary course of business in
connection with workers compensation, unemployment insurance, social security
and other like laws or to secure the performance of statutory obligations, in an
aggregate amount not exceeding $50,000 at any time;

(vii)  Liens of mechanics, materialmen, workers, repairmen, fillers and common
carriers arising by operation of law for amounts that are not yet due and
payable or which are being contested in good faith by Borrower by appropriate
proceedings, in an aggregate amount not exceeding $25,000 at any time; and

(viii) deposits or pledges of cash to secure leases arising in the ordinary
course of business, in an aggregate amount not exceeding $140,000 at any time.

“Person” means any individual, sole proprietorship, partnership, joint venture,
limited liability company, trust, unincorporated organization, association,
corporation, government, or any agency or political division thereof, or any
other entity.

“Prime Rate” means the variable rate of interest per annum, shown as the “prime
rate” or “bank prime rate”, as published in the Wall Street Journal.  If for any
reason the Wall Street Journal does not publish a “prime rate” or “bank prime
rate”, then the “Prime Rate” shall be such rate as Lender shall select in its
Good Faith Business Judgment from time to time, which is reasonably comparable
to the “prime rate” or “bank prime rate”, as published in the Wall Street
Journal.

“REIT Portfolio Debt Default” means any default or event of default under any
documents or agreements evidencing or relating to any Indebtedness for borrowed
money owed by any Subsidiary of NNN OP or any Subsidiary of Katana.

“Reserves” means, as of any date of determination, such amounts as Lender may
from time to time establish and revise in its Good Faith Business Judgment,
reducing the amount of Loans, and other financial accommodations which would
otherwise be available to Borrower under the lending formulas provided in the
Schedule:  (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in its Good Faith Business Judgment, do or may adversely
affect (i) the Collateral or any other property which is security for the
Obligations or its value (including without limitation any increase in
delinquencies of Modiv or BrixInvest Accounts), (ii) the assets, business or
prospects of Borrower or any Guarantor, or (iii) the security interests and
other rights of Lender in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect Lender’s good faith belief
that any Collateral, asset or financial information furnished by or on behalf of
Borrower or any Guarantor to Lender is or may have been incomplete, inaccurate
or misleading in any material respect; or (c) in respect of any state of facts
which Lender determines in good faith constitutes an Event of Default or may,
with notice or passage of time or both, constitute an Event of Default.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, or (d) a Person resident
in or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

“Sanctioned Person” means a Person named on the OFAC-maintained list of
“Specially Designated Nationals” (as defined by OFAC).

 “Subordinated Debt” means unsecured Indebtedness which is on terms acceptable
to Lender in its Good Faith Business Judgment, and which is subordinated to the
Obligations pursuant to a Subordination Agreement in such form as Lender shall
specify in its Good Faith Business Judgment.

“Subsidiary” means, with respect to any Person, a Person of which more than 50%
of the voting stock or other equity interests is owned or controlled, directly
or indirectly, by such Person or one or more Affiliates of such Person.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business connected with and
symbolized by such trademarks.

“Trigger Event” has the meaning set forth in Section 8 of the Schedule hereto.

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Pacific Mercantile Bank
Loan and Security Agreement
 

“USA PATRIOT Act” means 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.

“Wirta Guarantors” means, collectively, Guarantors Raymond E. Wirta and the
Wirta Family Trust dated July 5, 1985, as amended August 15, 2006 and April 22,
2016.

Other Terms.  All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with GAAP,
consistently applied.  All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.

9.
GENERAL PROVISIONS.

9.1  Application of Payments.  All payments with respect to the Obligations may
be applied, and in Lender’s Good Faith Business Judgment reversed and
re-applied, to the Obligations, in such order and manner as Lender shall
determine in its Good Faith Business Judgment. Lender shall not be required to
credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Lender in its Good Faith Business Judgment, and Lender may
charge Borrower’s loan account for the amount of any item of payment which is
returned to Lender unpaid. In computing interest on the Obligations, all
Payments will be deemed received when received in immediately available funds,
and if such immediately available funds are received after 1:00 PM Pacific Time
on any day, they shall be deemed received on the next Business Day.

9.2  Increased Costs and Reduced Return. If Lender shall have determined that
the adoption or implementation of, or any change in, any law, rule, treaty or
regulation, or any policy, guideline or directive of, or any change in, the
interpretation or administration thereof by, any court, central bank or other
administrative or governmental authority, or compliance by Lender with any
directive of, or guideline from, any central bank or other Governmental
Authority or the introduction of, or change in, any accounting principles
applicable to Lender (whether or not having the force of law) shall (i) subject
the Lender to any tax, duty or other charge with respect to this Agreement or
any Loan made hereunder, or change the basis of taxation of payments to Lender
of any amounts payable hereunder (except for taxes on the overall net income of
Lender), (ii) impose, modify or deem applicable any reserve, special deposit or
similar requirement against any Loan, or against assets of or held by, or
deposits with or for the account of, or credit extended by, Lender, or (iii)
impose on Lender any other condition regarding this Agreement or any Loan, and
the result of any event referred to in clauses (i), (ii) or (iii) above shall be
to increase the cost to Lender of making any Loan, or agreeing to make any Loan
or to reduce any amount received or receivable by Lender, then, upon demand by
Lender, the Borrower shall pay to Lender such additional amounts as will
compensate the Lender for such increased costs or reductions in amount. All
amounts payable under this Section shall bear interest from the date of demand
by the Lender until payment in full to the Lender at the highest interest rate
applicable to the Obligations. A certificate of the Lender claiming compensation
under this Section, specifying the event herein above described and the nature
of such event shall be submitted by the Lender to the Borrower, setting forth
the additional amount due and an explanation of the calculation thereof, and the
Lender’s reasons for invoking the provisions of this Section, and the same shall
be final and conclusive absent manifest error.

9.3  Charges to Accounts.  Lender may, in its discretion, require that Borrower
pay monetary Obligations in cash to Lender, or charge them to Borrower’s Loan
account (in which event they will bear interest at the same rate applicable to
the Loans), or any of Borrower’s Deposit Accounts maintained with Lender.

9.4  Monthly Accountings.  Lender may provide Borrower monthly with an account
of advances, charges, expenses and payments made pursuant to this Agreement. 
Such account shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by Lender), unless Borrower notifies Lender in
writing to the contrary within 60 days after such account is rendered,
describing the nature of any alleged errors or omissions.

9.5  Notices.  All notices to be given under this Agreement shall be in writing
and shall be given either personally or by reputable private delivery service
(including commercial overnight courier such as FedEx, GSO or UPS) or by Express
Mail or by United States certified mail return receipt requested, addressed (i)
to Borrower at the address shown in the heading to this Agreement, or (ii) to
Lender at the address shown in the heading to this Agreement, or (iii) for
either party at any other address designated in writing by one party to the
other party. All notices shall be deemed to have been given upon delivery in the
case of notices personally delivered, or at the expiration of one Business Day
following delivery to the overnight private delivery service, or two Business
Days following the deposit thereof in the Express Mail or United States
certified mail, with postage prepaid.
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Pacific Mercantile Bank
Loan and Security Agreement
 

9.6  Severability.  Should any provision of this Agreement be held by any court
of competent jurisdiction to be void or unenforceable, such defect shall not
affect the remainder of this Agreement, which shall continue in full force and
effect.

9.7  Integration.  This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete agreement between Borrower and Lender and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement.  There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith.

9.8  Waivers; Indemnity.  The failure of Lender at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other Loan Document shall not waive or diminish any right of Lender later to
demand and receive strict compliance therewith.  Any waiver of any default shall
not waive or affect any other default, whether prior or subsequent, and whether
or not similar.  None of the provisions of this Agreement or any other Loan
Document shall be deemed to have been waived by any act or knowledge of Lender
or its agents or employees, but only by a specific written waiver signed by an
authorized officer of Lender and delivered to Borrower.  Borrower waives the
benefit of all statutes of limitations relating to any of the Obligations or
this Agreement or any other Loan Document, and Borrower waives demand, protest,
notice of protest and notice of default or dishonor, notice of payment and
nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, General Intangible, document or guaranty
at any time held by Lender on which Borrower is or may in any way be liable, and
notice of any action taken by Lender, unless expressly required by this
Agreement. Borrower hereby agrees to indemnify Lender and its affiliates,
subsidiaries, parent, directors, officers, employees, agents, and attorneys, and
to hold them harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and expenses
(including reasonable attorneys’ fees), of every kind, which they may sustain or
incur based upon or arising out of any of the Obligations, or any relationship
or agreement between Lender and Borrower, or any other matter, relating to
Borrower or the Obligations; provided that this indemnity shall not extend to
damages proximately caused by the indemnitee’s own gross negligence or willful
misconduct.  Notwithstanding any provision in this Agreement to the contrary,
the indemnity agreement set forth in this Section shall survive any termination
of this Agreement and shall for all purposes continue in full force and effect.

9.9 Liability. NEITHER LENDER NOR ANY OF ITS AFFILIATES, SUBSIDIARIES,
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR ATTORNEYS SHALL BE LIABLE FOR ANY
CLAIMS, DEMANDS, LOSSES OR DAMAGES, OF ANY KIND WHATSOEVER, MADE, CLAIMED,
INCURRED OR SUFFERED BY BORROWER OR ANY OTHER PARTY THROUGH THE ORDINARY
NEGLIGENCE OF LENDER, OR ITS PARENT OR ANY OF ITS  AFFILIATES, SUBSIDIARIES,
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR ATTORNEYS, BUT NOTHING HEREIN SHALL
RELIEVE LENDER FROM LIABILITY FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. NEITHER LENDER NOR ANY OF ITS AFFILIATES, SUBSIDIARIES, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR ATTORNEYS SHALL BE RESPONSIBLE OR LIABLE TO
BORROWER OR TO ANY OTHER PARTY FOR ANY INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS WHICH MAY BE ALLEGED AS A RESULT OF ANY
FINANCIAL ACCOMMODATION HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS
AGREEMENT OR AS A RESULT OF ANY OTHER ACT, OMISSION OR TRANSACTION.

9.10  Amendment.  The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Borrower and a duly authorized
officer of Lender.

9.11  Time of Essence.  Time is of the essence in the performance by Borrower of
each and every obligation under this Agreement.

9.12  Attorneys Fees and Costs.  Borrower shall reimburse Lender for all
reasonable attorneys’ and consultant’s fees (including without limitation those
of Lender’s outside counsel and in-house counsel, and whether incurred before,
during or after an Insolvency Proceeding), and all filing, recording, search,
title insurance, appraisal, audit, and other reasonable costs incurred by
Lender, pursuant to, or in connection with, or relating to this Agreement
(whether or not a lawsuit is filed), including, but not limited to, any
reasonable attorneys’ fees and costs Lender incurs in order to do the following:
prepare and negotiate this Agreement and all present and future documents
relating to this Agreement; obtain legal advice in connection with this
Agreement or Borrower; enforce, or seek to enforce, any of its rights; prosecute
actions against, or defend actions by, Account Debtors; commence, intervene in,
or defend any action or proceeding; initiate any complaint to be relieved of any
automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of Borrower’s assets or any of Borrower’s books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Lender’s security
interest in, the Collateral; and otherwise represent Lender in any litigation
relating to Borrower. If either Lender or Borrower files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and attorneys’ fees,
including (but not limited to) reasonable attorneys’ fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment from the non-prevailing party. All attorneys’ fees and costs to which
Lender may be entitled pursuant to this Paragraph shall immediately become part
of Borrower’s Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.

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Pacific Mercantile Bank
Loan and Security Agreement
 

9.13  Benefit of Agreement.  The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of Borrower and Lender; provided, however,
that Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Lender, and any prohibited assignment shall
be void.  No consent by Lender to any assignment shall release Borrower from its
liability for the Obligations.

9.14  Joint and Several Liability.  If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.

9.15  Limitation of Actions.  Any claim or cause of action by Borrower against
Lender, its directors, officers, employees, agents, accountants or attorneys,
based upon, arising from, or relating to this Loan Agreement, or any other Loan
Document, or any other transaction contemplated hereby or thereby or relating
hereto or thereto, or any other matter, cause or thing whatsoever, occurred,
done, omitted or suffered to be done by Lender, its directors, officers,
employees, agents, accountants or attorneys, shall be barred unless asserted by
Borrower by the commencement of an action or proceeding in a court of competent
jurisdiction by the filing of a complaint within one year after the first act,
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based, and the service of a summons and complaint on an officer of
Lender, or on any other person authorized to accept service on behalf of Lender,
within thirty (30) days thereafter.  Borrower agrees that such one-year period
is a reasonable and sufficient time for Borrower to investigate and act upon any
such claim or cause of action.  The one-year period provided herein shall not be
waived, tolled, or extended except by the written consent of Lender in its sole
discretion.  This provision shall survive any termination of this Loan Agreement
or any other Loan Document.

9.16  Section Headings; Construction; Signing.  Section headings are only used
in this Agreement for convenience.  Borrower and Lender acknowledge that the
headings may not describe completely the subject matter of the applicable
section, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement.  This Agreement has
been fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly
against Lender or Borrower under any rule of construction or otherwise.  This
Agreement may be executed and delivered by exchanging original signed
counterparts, or signed counterparts by facsimile, pdf or other electronic
means, or a combination of the foregoing, and this Agreement shall be fully
effective if so executed and delivered.

9.17  Public Announcement.  Borrower hereby agrees that Lender may make a public
announcement of the transactions contemplated by this Agreement, and may
publicize the same in marketing materials, newspapers and other publications,
and otherwise, and in connection therewith may use the Borrower’s name,
tradenames and logos.

9.18  Confidentiality.  Lender agrees to use the same degree of care that it
exercises with respect to its own proprietary information, to maintain the
confidentiality of any and all proprietary, trade secret or confidential
information provided to or received by Lender from the Borrower, which indicates
that it is confidential or would reasonably be understood to be confidential,
including business plans and forecasts, non-public financial information,
confidential or secret processes, formulae, devices and contractual information,
customer lists, and employee relation matters, provided that Lender may disclose
such information to its officers, directors, employees, attorneys, accountants,
affiliates, participants, prospective participants, assignees and prospective
assignees, and such other Persons to whom Lender shall at any time be required
to make such disclosure in accordance with applicable law, and provided, that
the foregoing provisions shall not apply to disclosures made by Lender in its
Good Faith Business Judgment in connection with the enforcement of its rights or
remedies after an Event of Default.  The confidentiality agreement in this
Section supersedes any prior confidentiality agreement of Lender relating to
Borrower.

9.19  PATRIOT Act Notice. Lender hereby notifies Borrower that pursuant to the
requirements of the USA PATRIOT Act, it is required to obtain, verify and record
information that identifies Borrower and each of its Subsidiaries, which
information includes the names and addresses of each Borrower and each of its
Subsidiaries and other information that will allow it to identify Borrower and
each of its Subsidiaries in accordance with the USA PATRIOT Act.

9.20  Governing Law; Jurisdiction; Venue. This Agreement and all acts,
transactions, disputes and controversies arising hereunder or relating hereto,
and all rights and obligations of the parties shall be governed by, and
construed in accordance with, the internal laws (and not the conflict of laws
rules) of the State of California. All disputes, controversies, claims, actions
and other proceedings involving, directly or indirectly, any matter in any way
arising out of, related to, or connected with, this Agreement or the
relationship between Borrower and Lender, and any and all other claims of
Borrower against Lender of any kind, shall be brought only in a court located in
Orange County, California, and each party consents to the jurisdiction of an
such court and the referee referred to in Section 9.21 below, and waives any and
all rights the party may have to object to the jurisdiction of any such court,
or to transfer or change the venue of any such action or proceeding, including,
without limitation, any objection to venue or request for change in venue based
on the doctrine of forum non conveniens; provided that, notwithstanding the
foregoing, nothing herein shall limit the right of Lender to bring proceedings
against Borrower in the courts of any other jurisdiction. Borrower consents to
service of process in any action or proceeding brought against it by Lender, by
personal delivery, or by mail addressed as set forth in this Agreement or by any
other method permitted by law.

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Pacific Mercantile Bank
Loan and Security Agreement
 

9.21  Dispute Resolution.  Any controversy, dispute or claim between the parties
based upon, arising out of, or in any way relating to: (i) this Agreement or any
supplement or amendment thereto; or (ii) any other present or future instrument
or agreement between the parties hereto; or (iii) any breach, conduct, acts or
omissions of any of the parties hereto or any of their respective directors,
officers, employees, agents, attorneys or any other person affiliated with or
representing any of the parties hereto; in each of the foregoing cases, whether
sounding in contract or tort or otherwise (a “Dispute”) shall be resolved
exclusively by judicial reference in accordance with Sections 638 et seq. of the
California Code of Civil Procedure (“CCP”) and Rules 3.900 et seq. of the
California Rules of Court (“CRC”), subject to the following terms and
conditions. (All references in this section to provisions of the CCP and/or CRC
shall be deemed to include any and all successor provisions.)

(a)          The reference shall be a consensual general reference pursuant to
CCP Sections 638 and 644(a). Unless the parties otherwise agree in writing, the
reference shall be to a single referee. The referee shall be a retired Judge of
the Los Angeles County or Orange County Superior Court (“Superior Court”) or a
retired Justice of the California Court of Appeal or California Supreme Court.
Nothing in this section shall be construed to limit the right of Lender, pending
or after the appointment of the referee, to seek and obtain provisional relief
from the Superior Court or such referee, or any other court in a jurisdiction in
which any collateral is located or having jurisdiction over any collateral,
including without limitation, writ of attachment, writ of possession,
appointment of a receiver, temporary restraining order and/or preliminary
injunction, or other “provisional remedy” (as such term is defined in CCP
Section 1281.8).

(b)          Within fifteen (15) days after a party gives written notice in
accordance with this Agreement to all other parties to a Dispute that the
Dispute exists, all parties to the Dispute shall attempt to agree on the
individual to be appointed as referee. If the parties are unable to agree on the
individual to be appointed as referee, the referee shall be appointed, upon
noticed motion or ex parte application by any party, by the Superior Court in
accordance with CCP Section 640, subject to all rights of the parties to
challenge or object to the appointment, including without limitation the right
to peremptory challenge under CCP Section 170.6. If the referee (or any
successor referee) appointed by the Superior Court is unable, or at any time
becomes unable, to serve as referee in the Dispute, the Superior Court shall
appoint a new referee as agreed to by the parties or, if the parties cannot
agree, in accordance with CCP Section 640, which new referee shall then have the
same powers, and be subject to the same terms and conditions, as the predecessor
referee.

(c)          Venue for all proceedings before the referee, and for any Superior
Court proceeding for the appointment of the referee, shall be exclusively within
the County of Orange, State of California.  The referee shall have the exclusive
power to determine whether a Dispute is subject to judicial reference pursuant
to this section. Trial, and all proceedings and hearings on dispositive motions,
conducted before the referee shall be conducted in the presence of, and shall be
transcribed by, a court reporter, unless otherwise agreed in writing by all
parties to the proceeding. The referee shall issue a written statement of
decision, which shall be subject to objections of the parties pursuant to CRC
Rule 3.1590 as if the statement of decision were issued by the Superior Court.
The referee’s powers include, in addition to those set forth in CCP Sections
638, et seq., and CRC Rules 3.900 et seq., (i) the power to grant provisional
relief, including without limitation, writ of attachment, writ of possession,
appointment of a receiver, temporary restraining order and/or preliminary
injunction, or other “provisional remedy” (as such term is defined in CCP
Section 1281.8), and (ii) the power to hear and resolve all post-trial matters
in connection with the Dispute that would otherwise be determined by the
Superior Court, including without limitation motions for new trial,
reconsideration, to vacate judgment, to stay execution or enforcement, to tax
costs, and/or for attorneys’ fees. The parties shall, subject to the referee’s
power to award costs to the prevailing party, bear equally the costs of the
reference proceeding, including without limitation the fees and costs of the
referee and the court reporter.

(d)          The parties acknowledge and agree that (i) the referee alone shall
determine all issues of fact and/or law in the Dispute, without a jury (subject,
however, to the right of a party, pending or after the appointment of the
referee, to seek and obtain provisional relief from the Superior Court or such
referee, including without limitation, writ of attachment, writ of possession,
appointment of a receiver, temporary restraining order and/or preliminary
injunction, or other “provisional remedy” (as such term is defined in CCP
Section 1281.8)), (ii) the referee does not have the power to empanel a jury,
(iii) the Superior Court shall enter judgment on the decision of the referee
pursuant to CCP Section 644(a) as if the decision were issued by the Superior
Court, (iv) the decision of the referee shall not be subject to review by the
Superior Court, and (v) the decision of the referee, once entered as a judgment
by the Superior Court, shall be binding, final and conclusive, shall have the
full force and effect of a judgment of the Superior Court, and shall be subject
to appeal to the same extent as a judgment of the Superior Court.

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Pacific Mercantile Bank
Loan and Security Agreement
 

9.22  Multiple Borrowers; Suretyship Waivers.

(a) Borrowers’ Agent. Each Borrower hereby irrevocably appoints each other
Borrower, as the agent, attorney-in-fact and legal representative of all
Borrowers for all purposes, including requesting disbursement of Loans and
receiving account statements and other notices and communications to Borrowers
(or any of them) from Lender. Lender may rely, and shall be fully protected in
relying, on any request for a Loan, disbursement instruction, report,
information or any other notice or communication made or given by any Borrower,
whether in its own name, as Borrowers’ agent, or on behalf of one or more
Borrowers, and Lender shall not have any obligation to make any inquiry or
request any confirmation from or on behalf of any other Borrower as to the
binding effect on it of any such request, instruction, report, information,
other notice or communication, nor shall the joint and several character of
Borrowers’ obligations hereunder be affected thereby.

(b)          Waivers.  Each Borrower hereby waives:  (i) any right to require
Lender to institute suit against, or to exhaust its rights and remedies against,
any other Borrower or any other person, or to proceed against any property of
any kind which secures all or any part of the Obligations, or to exercise any
right of offset or other right with respect to any reserves, credits or deposit
accounts held by or maintained with Lender or any indebtedness of Lender to any
other Borrower, or to exercise any other right or power, or pursue any other
remedy Lender may have; (ii) any defense arising by reason of any disability or
other defense of any other Borrower or any Guarantor or any endorser, co-maker
or other person, or by reason of the cessation from any cause whatsoever of any
liability of any other Borrower or any Guarantor or any endorser, co-maker or
other person, with respect to all or any part of the Obligations, or by reason
of any act or omission of Lender or others which directly or indirectly results
in the discharge or release of any other Borrower or any Guarantor or any other
person or any Obligations or any security therefor, whether by operation of law
or otherwise; (iii) any defense arising by reason of any failure of Lender to
obtain, perfect, maintain or keep in force any Lien on, any property of any
Borrower or any other person; (iv) any defense based upon or arising out of any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against any other Borrower
or any Guarantor or any endorser, co-maker or other person, including without
limitation any discharge of, or bar against collecting, any of the Obligations
(including without limitation any interest thereon), in or as a result of any
such proceeding.  Until all of the Obligations have been paid, performed, and
discharged in full, nothing shall discharge or satisfy the liability of Borrower
hereunder except the full performance and payment of all of the Obligations.  If
any claim is ever made upon Lender for repayment or recovery of any amount or
amounts received by Lender in payment of or on account of any of the
Obligations, because of any claim that any such payment constituted a
preferential transfer or fraudulent conveyance, or for any other reason
whatsoever, and Lender repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having
jurisdiction over Lender or any of its property, or by reason of any settlement
or compromise of any such claim effected by Lender with any such claimant
(including without limitation any other Borrower), then and in any such event,
Borrower agrees that any such judgment, decree, order, settlement and compromise
shall be binding upon Borrower, notwithstanding any revocation or release of
this Agreement or the cancellation of any note or other instrument evidencing
any of the Obligations, or any release of any of the Obligations, and the
Borrower shall be and remain liable to Lender under this Agreement for the
amount so repaid or recovered, to the same extent as if such amount had never
originally been received by Lender, and the provisions of this sentence shall
survive, and continue in effect, notwithstanding any revocation or release of
this Agreement.  Each Borrower hereby expressly and unconditionally waives all
rights of subrogation, reimbursement and indemnity of every kind against any
other Borrower, and all rights of recourse to any assets or property of any
other Borrower, and all rights to any collateral or security held for the
payment and performance of any Obligations, including (but not limited to) any
of the foregoing rights which Borrower may have under any present or future
document or agreement with any other Borrower or other person, and including
(but not limited to) any of the foregoing rights which Borrower may have under
any equitable doctrine of subrogation, implied contract, or unjust enrichment,
or any other equitable or legal doctrine. Each Borrower further hereby waives
any other rights and defenses that are or may become available to the Borrower
by reason of California Civil Code Sections 2787 to 2855 (inclusive), 2899, and
3433, as now in effect or hereafter amended, and under all other similar
statutes and rules now or hereafter in effect.

(c)          Consents. Each Borrower hereby consents and agrees that, without
notice to or by Borrower and without affecting or impairing in any way the
obligations or liability of Borrower hereunder, Lender may, from time to time
before or after revocation of this Agreement, do any one or more of the
following in Lender’s sole and absolute discretion:  (i) accept partial payments
of, compromise or settle, renew, extend the time for the payment, discharge, or
performance of, refuse to enforce, and release all or any parties to, any or all
of the Obligations; (ii) grant any other indulgence to any Borrower or any other
person in respect of any or all of the Obligations or any other matter; (iii)
accept, release, waive, surrender, enforce, exchange, modify, impair, or extend
the time for the performance, discharge, or payment of, any and all property of
any kind securing any or all of the Obligations or any guaranty of any or all of
the Obligations, or on which Lender at any time may have a Lien, or refuse to
enforce its rights or make any compromise or settlement or agreement therefor in
respect of any or all of such property; (iv) substitute or add, or take any
action or omit to take any action which results in the release of, any one or
more other Borrowers or any endorsers or Guarantors of all or any part of the
Obligations, including, without limitation one or more parties to this
Agreement, regardless of any destruction or impairment of any right of
contribution or other right of Borrower; (v) apply any sums received from any
other Borrower, any Guarantor, endorser, or co-signer, or from the disposition
of any collateral or security, to any indebtedness whatsoever owing from such
person or secured by such collateral or security, in such manner and order as
Lender determines in its sole discretion, and regardless of whether such
indebtedness is part of the Obligations, is secured, or is due and payable. 
Borrower consents and agrees that Lender shall be under no obligation to marshal
any assets in favor of Borrower, or against or in payment of any or all of the
Obligations.  Borrower further consents and agrees that Lender shall have no
duties or responsibilities whatsoever with respect to any property securing any
or all of the Obligations.  Without limiting the generality of the foregoing,
Lender shall have no obligation to monitor, verify, audit, examine, or obtain or
maintain any insurance with respect to, any property securing any or all of the
Obligations.

(d)          Foreclosure of Trust Deeds. Each Borrower waives all rights and
defenses that the Borrower may have because any other Borrower’s Obligations are
secured by real property.  This means, among other things:  (1) Lender may
collect from the Borrower without first foreclosing on any real or personal
property collateral pledged by the other Borrower; and  (2) If Lender forecloses
on any real property collateral pledged by another Borrower:  (A) The amount of
the Obligations may be reduced only by the price for which that collateral is
sold at the foreclosure sale, even if the collateral is worth more than the sale
price; and  (B) Lender may collect from the Borrower even if Lender, by
foreclosing on the real property collateral, has destroyed any right the
Borrower may have to collect from the other Borrower.  This is an unconditional
and irrevocable waiver of any rights and defenses the Borrower may have because
any other Borrower’s Obligations are secured by real property.  These rights and
defenses include, but are not limited to, any rights or defenses based upon
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure. 
Each Borrower waives all rights and defenses arising out of an election of
remedies by Lender, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
the Borrower’s rights of subrogation and reimbursement against another Borrower
or any other person by the operation of Section 580d of the California Code of
Civil Procedure or otherwise.

(e)          Independent Liability.  Each Borrower hereby agrees that one or
more successive or concurrent actions may be brought hereon against Borrower, in
the same action in which any other Borrower may be sued or in separate actions,
as often as deemed advisable by Lender. Each Borrower is fully aware of the
financial condition of each other Borrower and is executing and delivering this
Agreement based solely upon its own independent investigation of all matters
pertinent hereto, and Borrower is not relying in any manner upon any
representation or statement of Lender with respect thereto.  Each Borrower
represents and warrants that it is in a position to obtain, and each Borrower
hereby assumes full responsibility for obtaining, any additional information
concerning any other Borrower’s financial condition and any other matter
pertinent hereto as Borrower may desire, and Borrower is not relying upon or
expecting Lender to furnish to it any information now or hereafter in Lender’s
possession concerning the same or any other matter.

(f) Subordination.  All indebtedness of a Borrower now or hereafter arising held
by another Borrower is subordinated to the Obligations and the Borrower holding
the indebtedness shall take all actions reasonably requested by Lender to
effect, to enforce and to give notice of such subordination.

 [Signatures on Next Page]

Form Version:  -5.6 (11-16)
Document Version -5
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Pacific Mercantile Bank
Loan and Security Agreement
 

9.23  Mutual Waiver of Jury Trial.  LENDER AND BORROWER EACH ACKNOWLEDGE THAT
THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT IT MAY BE
WAIVED.  EACH OF THE PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT,
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), ACTION OR INACTION OF ANY OF
THEM.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT
OR RELINQUISHED BY LENDER OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED
BY EACH OF THEM.  IF FOR ANY REASON THE PROVISIONS OF THIS SECTION ARE VOID,
INVALID OR UNENFORCEABLE, THE SAME SHALL NOT AFFECT ANY OTHER TERM OR PROVISION
OF THIS AGREEMENT, AND ALL OTHER TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE
UNAFFECTED BY THE SAME AND CONTINUE IN FULL FORCE AND EFFECT.

Borrower:

Borrower:
 
 
RW HOLDINGS NNN REIT, INC.
 
By:  /s/ RAYMOND J. PACINI
Name: Raymond J. Pacini
Title: CFO
 

 
 
RICH UNCLES NNN OPERATING PARTNERSHIP, LP
 
By: RW HOLDINGS NNN REIT, INC., general partner
 
   By: /s/ RAYMOND J. PACINI
   Name: Raymond J. Pacini
   Title: CFO
 

RICH UNCLES NNN LP, LLC
 
By: RW HOLDINGS NNN REIT, INC., managing member
 
   By:  /s/ RAYMOND J. PACINI
   Name: Raymond J. Pacini
   Title: CFO
 

KATANA MERGER SUB, LP
 
By: RW HOLDINGS NNN REIT, INC., general partner
 
   By: /s/ RAYMOND J. PACINI
   Name: Raymond J. Pacini
   Title: CFO
 

MODIV, LLC
 
By: DAISHO OP HOLDINGS, LLC, its Manager
 
By:  BRIXINVEST, LLC, its Manager
 
   By: /s/ RAYMOND J. PACINI
   Name: Raymond J. Pacini
   Title: CFO
 

BRIXINVEST, LLC

By: /s/ RAYMOND J. PACINI
Name: Raymond J. Pacini
Title: CFO
 

Lender:

PACIFIC MERCANTILE BANK
 
By: /s/ROSS MACDONALD
Name: Ross Macdonald
Title: Senior Vice President

 

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[nt10005285x3_ex10-1image1.jpg]

Schedule to
Loan and Security Agreement

Borrowers:
RW HOLDINGS NNN REIT, INC., a Maryland corporation (“NNN Holdings”)
         

         

        

RICH UNCLES NNN LP, LLC, a Delaware limited liability company (“NNN LLC”)
         

RICH UNCLES NNN OPERATING PARTNERSHIP, LP, a Delaware limited partnership (“NNN
OP”)
   

         

 

BRIXINVEST, LLC, a Delaware limited liability company (“BrixInvest”)

KATANA MERGER SUB, LP, a Delaware limited partnership] (“Katana”)

         

MODIV, LLC, a Delaware limited liability company (“Modiv”)

Address:
3090 Bristol Street, Suite 550

Costa Mesa, CA 92626

Date:
December 19, 2019

This Schedule forms an integral part of the Loan and Security Agreement between
PACIFIC MERCANTILE BANK and the borrower(s) named above (jointly and severally,
the “Borrower”) of even date (the “Loan Agreement”).

 

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Pacific Mercantile Bank
Schedule to Loan and Security Agreement
 

1.  CREDIT LIMITS

(Section 1.1):
The Loans shall consist of Purchase Contract Loans (as defined below),
Nonformula Loans (as defined below) and Other Loans (as defined below), as
follows.  (“Loans” as used in this Loan Agreement means, collectively, the
Purchase Contract Loans, Nonformula Loans and Other Loans.)

(a)          Purchase Contract Loans Facility.

(1)          Purchase Contract Loans Credit Limits.  The Purchase Contract Loans
shall be in an aggregate amount not to exceed the lesser of the limits described
in (A) and (B) below (each, a “Credit Limit”):

(A)
a total of $10,000,000 at any one time outstanding; or

(B)
the maximum amount of Purchase Contract Loans available and allowed to be
outstanding as described below.

(2)          Purchase Contract Loans Advance Rate.  Subject to the terms and
conditions of this Agreement, Lender shall from time to time before the Purchase
Contract Loans Maturity Date make Loans to Borrower, each such Loan in an amount
of up to 70% (an “Advance Rate”) of the purchase price that the applicable
Single Purpose Subsidiary (as defined below) of NNN OP is obligated to pay
pursuant to an Eligible Purchase Contract (as defined below) (each such Loan, a
“Purchase Contract Loan”).  There may be more than one Purchase Contract Loan
outstanding at any one time, subject to the Purchase Contract Loan Credit
Limits.

For purposes hereof, the following terms shall have the following meanings:

“Eligible Property” means a single-tenant, income producing commercial, office,
industrial or retail real estate property located within the United States.

“Eligible Purchase Contract” means a contract for the purchase by a
Single-Purpose Subsidiary of NNN OP of an Eligible Property, which contract has
been fully executed by the parties thereto, is in full force and effect, has not
yet closed, and arises in the ordinary course of NNN OP’s business, which
Lender, in its Good Faith Business Judgment, shall deem eligible for borrowing.

“Single-Purpose Subsidiary” means, (i) with respect to a company other than
Modiv, a wholly-owned subsidiary of such company that will only own and operate
one Eligible Property and engage in no other business, or (ii) with respect to
Modiv, a wholly-owned subsidiary of Modiv obtained in the ordinary course of
business during 2020 for purposes of the expansion of Modiv’s advisory services
or for tax purposes.

(3)          Requesting Purchase Contract Loans; Repayment.  An Authorized
Person (as defined below) may, from time to time before the Purchase Contract
Loans Maturity Date, request a Purchase Contract Loan from Lender (in writing if
required by Lender) provided that (i) Borrower has provided Lender with an
executed updated Compliance Certificate, (ii) the closing of the applicable
Single-Purpose Subsidiary’s purchase of the applicable Eligible Property
pursuant to the Eligible Purchase Contract to which the Purchase Contract Loan
relates shall close at the time or promptly after Lender makes such Purchase
Contract Loan and (iii) if Lender shall so require, Borrower has provided Lender
with the following, all in form and substance acceptable to Lender: (y) the
Eligible Purchase Contract upon which the Purchase Contract Loan is to be based
and (z) such other documents or information as Lender shall request in its Good
Faith Business Judgment.  Borrower agrees to fully repay to Lender each Purchase
Contract Loan on or before the earlier of the 90th day following the day such
Purchase Contract Loan was advanced to Borrower and the Purchase Contract Loans
Maturity Date, provided that any Purchase Contract Loan made prior to the date
hereof pursuant to the 2019 NNN Loan Agreement shall be repaid by Borrower to
Lender on or before March 31, 2020.

(4)          Other Loans.  Subject to the terms and conditions of this
Agreement, Lender may from time to time in its sole discretion make Loans other
than Purchase Contract Loans or Nonformula Loans to Borrower subject to such
requirements and conditions as Lender shall determine (“Other Loans”).  Unless
Lender shall agree in writing otherwise, (i) the amount of such Other Loans
outstanding shall reduce the Purchase Contract Loans available and allowed to be
outstanding by the same amount, and (ii) Borrower shall fully repay to Lender
each such Other Loan on or before the earlier of the 90th day following the day
such Loan was advanced to Borrower and the Purchase Contract Loans Maturity
Date, provided that any Other Loan made prior to the date hereof pursuant to the
2019 NNN Loan Agreement shall be repaid by Borrower to Lender on or before March
31, 2020.

(5)          Miscellaneous Regarding Purchase Contract Loans.  Lender may, from
time to time, adjust the Advance Rate, in its Good Faith Business Judgment, upon
notice to NNN OP, based on changes in risk factors or other issues or factors
relating to any Eligible Purchase Contract, Eligible Property, Single-Purpose
Subsidiary or Borrower; provided that the Advance Rate shall not be reduced
below 65% of the purchase price that the applicable Single Purpose Subsidiary is
obligated to pay pursuant to an Eligible Purchase Contract.

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Pacific Mercantile Bank
Schedule to Loan and Security Agreement
 

(b)          Nonformula Loans Facility.  (Loans made pursuant to this section
may be referred to as “Nonformula Loans”.)

(1)          Nonformula Loans Credit Limit; Repayment.  Subject to the terms and
conditions of this Agreement, Lender shall from time to time make Nonformula
Loans to Borrower in an amount not to exceed a total of $2,000,000 at any one
time outstanding (a “Credit Limit”).  Nonformula Loans may be borrowed, repaid
and reborrowed from time to time (within said Nonformula Loans Credit Limit)
prior to the Nonformula Loans Maturity Date.  There may be more than one
Nonformula Loan outstanding at any one time, subject to the Nonformula Loans
Credit Limit.  On the Nonformula Loans Maturity Date Borrower shall repay to
Lender all Nonformula Loans.

(2)          Requesting Loans.  An Authorized Persons may, from time to time,
request Nonformula Loans from Lender (in writing if required by Lender).

(3)          Yearly Zero Balance Requirement.  During each calendar year,
Borrower shall maintain a zero ($0.00) outstanding Nonformula Loan balance for
at least thirty (30) consecutive days during such year, and Borrower shall make
such payments to Lender as are necessary to meet such requirements.

(c)          Authorized Persons; Miscellaneous Regarding Loans.  For purposes of
this Section 1 to the Schedule to Loan Agreement, “Authorized Person” shall mean
any one of the following: Aaron S. Halfacre, Raymond J. Pacini, Sandra G.
Sciutto or Jason Miller. In Lender’s discretion Loans may be made separately to
each Borrower based on each Borrower’s assets, liabilities and/or relationship
to the Single-Purpose Subsidiaries.  When Borrower requests a Loan, Borrower’s
request shall be deemed to be a representation, warranty and covenant by
Borrower that all the limits, requirements and conditions to such Loan that are
set forth in this Section 1 of the Schedule and in the other portions of this
Schedule and in the Loan Agreement are met, complied with and satisfied,
including in the case of a Purchase Contract Loan that the purchase contract
upon which the Loan is to be based is an Eligible Purchase Contract and that the
amount of the requested Purchase Contract Loan does not exceed the Advance Rate
of the purchase price.  With respect to each Purchase Contract Loan, Borrower
agrees to cause the purchaser under the applicable Eligible Purchase Contract to
remain a Single-Purpose Subsidiary of NNN OP and the owner of the applicable
Eligible Property until such Purchase Contract Loan has been repaid in full.
 

2. INTEREST.

  Interest Rate (Section 1.2):
  
A rate equal to the Prime Rate in effect from time to time, plus the Applicable
Margin (as defined below), provided that the interest rate in effect on any day
shall not be less than 5.50% per annum.  Interest shall be calculated on the
basis of a 360-day year for the actual number of days elapsed. The interest rate
applicable to the Obligations shall change on each date there is a change in the
Prime Rate.

As used herein, “Applicable Margin” shall mean 1.00% per annum, provided that,
in the event that Borrower fails to maintain its Deposit Accounts with Lender
and/or maintain ACH automated payments hereunder, the “Applicable Margin” shall,
at the Lenders option, mean 1.25% per annum, for the remaining term of this
Agreement.
 

3.  FEES (Section 1.4):

Loan Fee:
$2,500, payable concurrently herewith and which Borrower authorizes Lender, in
its discretion, to deduct from any of Borrower’s operating accounts held with
Lender.

 

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Pacific Mercantile Bank
Schedule to Loan and Security Agreement
 

4.  MATURITY DATE

(Section 6.1):
The Purchase Contract Loans Maturity Date shall be October 1, 2020 (the
“Purchase Contract Loans Maturity Date”).

The Nonformula Loans Maturity Date shall be October 15, 2020 (the “Nonformula
Loans Maturity Date”).

The Maturity Date shall be the later of the Purchase Contract Loans Maturity
Date and the Nonformula Loans Maturity Date (the “Maturity Date”).
 

5.  FINANCIAL COVENANTS

(Section 5.1):
Borrower shall comply with each of the following covenants:

Debt Service Coverage Ratio:
NNN Holdings, on a consolidated basis, shall maintain a Debt Service Coverage
Ratio of not less than 1.25 to 1.00 for the 12-month periods ending as of
December 31, 2019 and as of the last day of each calendar quarter thereafter.

As used herein, “Debt Service Coverage Ratio” means for any applicable period,
for NNN Holdings on a consolidated basis, (i) the result of NNN Holding’s net
income before interest, taxes, depreciation and amortization for such period,
plus Net New Investor Equity for such period, plus Allowed Merger Transaction
Add-Backs for such period, less cash tax expense for such period, less dividends
and other distributions to stockholders, members or owners for such period, and
less repurchases by NNN Holdings of common stock for such period; divided by
(ii) the sum of NNN Holding’s current portion of long-term debt (inclusive of
the current portion of long-term debt of Subsidiaries of NNN OP and of
Subsidiaries of Katana, as noted in the Portfolio Status Reports (as defined in
Section 6 below)), excluding (without duplication) Subordinated Debt and the
$4,800,000 of Unsecured Convertible Notes Payable (the “$4,800,000 Convertible
Notes”) set forth in BrixInvest’s balance sheet as of September 30, 2019 and
further described in Note 8 of notes to consolidated financial statements of
BrixInvest as of September 30, 2019 (without duplication in excluding
Subordinated Debt), for such period, plus capitalized lease expense for such
period, plus interest expense (inclusive of interest on long-term debt of
Subsidiaries of NNN OP and of Subsidiaries of Katana, as noted in the Portfolio
Status Reports (as defined in Section 6 below)), excluding (without duplication)
interest expense for Subordinated Debt and the $4,800,000 Convertible Notes, for
such period; calculated from NNN Holding’s 10-Q Financial Statements/10-K.

As used herein, “Net New Investor Equity” means for any applicable period,
proceeds from NNN Holding’s issuance of common stock, plus stock compensation
expense, less the reclassification of redeemable common stock; and “Allowed
Merger Transaction Add-Backs” means expenses paid or accrued (without
duplication) during the quarters ending September 30, 2019 and December 31, 2019
for legal and accounting fees, financial advisor fees, valuation professionals
fees and proxy filing, printing and solicitation costs arising with respect to
the Restructuring Transactions (as defined in Section 8 below), provided that
the add-backs are acceptable to Lender and in an aggregate amount not exceeding
$1,250,000.

Guarantors’ Liquidity:
Borrower shall cause the Wirta Guarantors to maintain a combined aggregate value
of their unrestricted and unencumbered cash plus unrestricted and unencumbered
readily marketable securities, of at least $17,000,000, measured as of the end
of each calendar quarter and and as calculated by Lender in its Good Faith
Business Judgment based upon such Wirta Guarantors’ Liquidity Statements (as
defined in Section 6 below).  For purposes of clarity, the parties acknowledge
and agree that such unrestricted and unencumbered cash is to be net of any
outstanding margin loan balance.

 

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Pacific Mercantile Bank
Schedule to Loan and Security Agreement
 

6.  REPORTING.
  (Section 5.3):
Borrower shall provide Lender with the following, all of which shall be in such
form as Lender shall specify:

(a)
Annual financial statements of NNN Holdings, on a consolidated basis, as soon as
available, and in any event within 90 days following the end of NNN Holdings’s
fiscal year, certified by, and with an unqualified opinion of, Squar Milner or
other independent certified public accountants reasonably acceptable to Lender
(the “Annual Financial Statements”);

(b)
Quarterly financial statements of NNN Holdings, on a consolidated basis, that
NNN Holdings has filed with the U.S. Securities and Exchange Commission, as soon
as available, and in any event within 45 days after the end of each of NNN
Holdings’s fiscal quarters (“Quarterly Financial Statements”);

(c)
Each of the Quarterly Financial Statements shall be accompanied by compliance
certificates (“Compliance Certificates”), in such form as Lender shall
reasonably specify, signed by the Chief Financial Officer of NNN Holdings,
certifying that as of the end of such period and the date of such Certificate
Borrower was in full compliance with all of the terms and conditions of the Loan
Agreement, and no Default or Event of Default had occurred, and setting forth
calculations showing compliance with the financial covenants set forth in this
Agreement and such other information as Lender shall request in its Good Faith
Business Judgment;

(d)
A portfolio status report (including without limitation the status of the REIT
portfolios, operating statements, and debt schedules), in form and substance
acceptable to Lender (a “Portfolio Status Report”), from NNN Holdings as soon as
available, and in any event within 50 days after the end of each of NNN
Holdings’s fiscal quarters;

(e)
A report of any REIT Portfolio Debt Default, within three (3) Business Days
after Borrower first having knowledge of its occurrence;

(f)
Promptly upon receipt, each management letter prepared by Borrower’s independent
certified public accounting firm regarding Borrower’s management control
systems;

(g)
Such budgets, sales projections, operating plans or other financial information
as Lender may reasonably request from time to time; and

(h)
For all Guarantors: (a) their personal financial statements in form and
substance acceptable to Lender within 60 days after the end of each calendar
year, (b) such asset verifications as Lender shall from time to time request
(e.g., liquidity and/or brokerage statements), in form and substance acceptable
to Lender (“Liquidity Statements”), within 30 days after the end of each
calendar quarter, and (c) copies of their federal tax returns (including any
Schedule K-1s and all other schedules), within 15 days after the earlier of the
date they are filed or the date they are due (after giving effect to any proper
filing deadline extension actually received, a copy of which is provided to
Lender).

 

7.  BORROWER INFORMATION:

Borrower represents and warrants to Lender as follows:

(1)
Prior Names and Styles.  Further to Section 3.2 of the Loan Agreement, the
following are all of Borrower’s prior names, and existing and prior trade names,
within the last five years: NNN Holdings has prior names of Rich Uncles REIT,
Inc. and Rich Uncles Real Estate Investment Trust, Inc. and a fictitious
business name of Rich Uncles NNN REIT, Inc.

(2)
Place of Business.  Further to Section 3.3 of the Loan Agreement, in addition to
Borrower’s address set forth in the heading to the Loan Agreement, Borrower only
has the following places of business as of the date hereof: None.

(3)
Deposit Accounts.  Further to Section 3.4(b) of the Loan Agreement, the
following are all of Borrower’s Deposit Accounts as of the date hereof: (i)
various accounts at Lender; (ii) the following two accounts of NNN Holdings at
Wells Fargo Bank that are used for investor transactions: Nos. 4152788030 and
433-7887525; and a payroll account of Modiv at Wells Fargo Bank.

(4)
Certain Licenses and Agreements.  Further to Section 3.4(e) of the Loan
Agreement, neither Modiv nor BrixInvest is a party to, nor is it bound by, any
license or other agreement that is important for the conduct of Borrower’s
business and that prohibits or otherwise restricts Modiv or BrixInvest from
granting a security interest in its interest in such license or agreement or any
other property important for the conduct of Borrower’s business, except: None.

(5)
Commercial Tort Claims.  Neither Modiv nor BrixInvest has any interest in any
“commercial tort claims” (as defined in the Code) except: None.

 

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Pacific Mercantile Bank
Schedule to Loan and Security Agreement
 

8.  ADDITIONAL PROVISIONS

(a)          Subordination of Indebtedness. Concurrently herewith, Borrower
shall cause The Wirta Family Trust dated July 5, 1985, as amended August 15,
2006 and April 22, 2016 (aka Raymond E. Wirta and Sandra Wirta, Trustees of The
Wirta Family Trust dated July 5, 1985) to execute and deliver to Lender a Debt
Subordination Agreement in such form as Lender shall specify, subordinating the
existing Indebtedness of Borrower to said Trust, which does not exceed $791,845
(the amount as of September 30, 2019), to the Obligations.

(b)          Subordination of Inside Debt.  All present and future indebtedness
of Borrower to its officers, directors and shareholders (“Inside Debt”) shall,
at all times, be subordinated to the Obligations pursuant to a subordination
agreement on Lender’s standard form, except that the foregoing shall not require
that the Beaumont Notes (as defined below) and the Employee Notes (as defined
below) be so subordinated.  Borrower represents and warrants that there is no
Inside Debt presently outstanding, except for the following: (i) an amount not
exceeding $791,845 (the amount as of September 30, 2019) owed to the Wirta
Family Trust dated July 5, 1985, as amended August 15, 2006 and April 22, 2016,
pursuant to two promissory notes by BrixInvest (and assumed by Modiv), each
dated October 23, 2017 and each in the stated principal amount of $500,000, (ii)
$2,561,875 remaining of the original $4,000,000 of unsecured notes due to
Beaumont RU Holdings LLC (the “Beaumont Notes”) plus the 20% maturity date
extension consideration of $512,375 with respect thereto, and (iii) two notes
aggregating $42,500 of the original $4,000,000 of unsecured notes due to Mr.
David Perduk and Ms. Jean Ho (the “Employee Notes”) plus the 20% maturity date
extension consideration of $8,500 with respect thereto.  Prior to incurring any
Inside Debt in the future, Borrower shall cause the person to whom such Inside
Debt will be owed to execute and deliver to Lender a subordination agreement on
Lender’s standard form.

(c)         Deposit Accounts; Automatic Payments. Concurrently herewith,
Borrower shall transfer all of its Deposit Accounts (except for payroll-specific
accounts previously approved by Lender) and investment accounts to Lender, and
at all times thereafter Borrower shall maintain the foregoing with Lender. 
Borrower shall (and hereby does) authorize Lender to initiate Automated Clearing
House (“ACH”) loan payment transactions and Borrower shall sign documentation
prior to or in conjunction with disbursement of Loans hereunder which will
authorize Lender’s initiation of ACH debit entries from its operating account to
cover all amounts due under this Agreement.

(d)         Triggered Guaranties.  Concurrently herewith, Borrower shall cause
each of the Wirta Guarantors to execute and deliver to Lender a Continuing
Guaranty with respect to all of the Obligations, on Lender’s standard form, and
certifications of trust or other evidence of authority with respect to the
execution and delivery of such Guaranties.  Said Guaranties (the “Triggered
Guaranties”) shall provide that the guaranties therein become effective upon the
occurrence of any of the following events (each, a “Trigger Event”): (i) any
Event of Default, including without limitation Borrower’s failure to fully pay
any Loan when due pursuant to the terms hereof; or (ii) any Resolution Failure
Trigger Event; or (iii) any REIT Portfolio Debt Default which is not cured to
Lender’s satisfaction within 30 days of its occurrence.  If after the Guaranties
become effective, all Trigger Events are cured to Lender’s satisfaction in its
sole discretion, then Lender may, in its discretion, by written notice to the
Wirta Guarantors, make the Guaranties ineffective again (subject to again
becoming effective upon the occurrence of another Trigger Event). Throughout the
term of the Loan Agreement Borrower shall cause such Guaranties to continue in
full force and effect.

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Pacific Mercantile Bank
Schedule to Loan and Security Agreement
 

(e)          Foreign Assets. Borrower represents and warrants that it does not
have, and covenants that, during the term of the Loan Agreement, it will not
have, any assets located outside the United States.

(f)          SEC Investigation.  Reference is made to the investigation
conducted by the Securities and Exchange Commission (“SEC”) related to the
advertising and sale of securities by NNN Holdings in connection with its
registered offering, as further described in Note 10 of Notes to Consolidated
Financial Statements of NNN Holdings’ September 30, 2018 Form 10-Q (the “SEC
Investigation”).  Borrower represents, warrants and covenants that the SEC
Investigation has been settled and terminated with respect to Borrower pursuant
to the terms described in NNN Holdings’ Form 8-K filed with the Securities and
Exchange Commission on September 26, 2019 (the “SEC Settlement”) and that such
terms include the temporary suspension of the sale of shares of NNN Holdings and
Brix REIT (the “Suspended Share Sales”).  Borrower shall promptly notify Lender,
in writing, of all material new developments related to the SEC Settlement, and
shall provide Lender with written updates of the status of the SEC Settlement
(including such information and copies of filings, correspondence, pleadings and
other documents as Lender shall request in Lender’s Good Faith Business
Judgment) from time to time as Lender shall request in Lender’s Good Faith
Business Judgment.  Any breach of, default under or other failure to comply with
the terms of the SEC Settlement shall constitute an Event of Default under this
Loan Agreement.  If the Suspended Share Sales are not re-opened for sale,
through a FINRA-licensed broker dealer and in accordance with SEC requirements,
on or before December 31, 2019, such failure to be re-opened for sale shall not
constitute an Event of Default under this Loan Agreement but shall constitute a
“Resolution Failure Trigger Event” (as used above with respect to the Triggered
Guaranties).  If the Suspended Share Sales are not re-opened for sale, through a
FINRA-licensed broker dealer and in accordance with SEC requirements, on or
before January 31, 2020, such failure to be re-opened for sale shall constitute
an Event of Default under this Loan Agreement.

(g)          Consent to Loan Participation. Borrower agrees and consents to
Lender’s sale or transfer, whether now or later, of one or more participation
interests in any Loan to one or more purchasers, whether related or unrelated to
Lender. Lender may provide, without any limitation whatsoever, to any one or
more purchasers, or potential purchasers, any information or knowledge Lender
may have about Borrower or about any other matter relating to the Loans, and
Borrower hereby waives any rights to privacy Borrower may have with respect to
such matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loan and will have all the rights granted under the
participation agreement or agreements governing the sale of such participation
interests. Borrower further waives all rights of offset or counterclaim that it
may have now or later against Lender or against any purchaser of such a
participation interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower’s obligation under the Loans irrespective of the
failure or insolvency of any holder of any interest in any Loan. Borrower
further agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.

(h)          Consent to Restructuring Transactions.  Subject to the terms of
this Loan Agreement, Lender hereby consents to the following (collectively, the
“Restructuring Transactions”): (i) the BrixInvest Contribution occurring on or
prior to December 31, 2019, provided that immediately thereafter Modiv becomes a
wholly-owned subsidiary of NNN OP, (ii) on or about the date of the BrixInvest
Contribution, BrixInvest transferring its ownership interest in its wholly-owned
subsidiary Daisho to the BrixInvest members, (iii) on or about the date of the
BrixInvest Contribution, Daisho obtaining an ownership interest in NNN OP not
exceeding the ownership interest described in the definition of “Change in
Control” set forth in Section 8 of the Loan Agreement, (iv) on or before the
date of the BrixInvest Contribution, Katana becoming wholly owned by NNN
Holdings (as Katana’s sole general partner) and NNN LLC (as Katana’s sole
limited partner), and (v) on or about the date of the BrixInvest Contribution,
Rich Uncles Real Estate Investment Trust I merging into Katana (with Katana
being the surviving company), provided that the only consideration therefor is
shares of stock of NNN Holdings.

(i)          Modiv Intellectual Property Security Agreement.  Promptly following
the earlier of December 31, 2019 and Modiv acquiring any Intellectual Property
from modiv co, Modiv shall execute and deliver to Lender an intellectual
property security agreement in the form previously provided by Lender to
Borrower.

[Signatures on Next Page]

Form Version:  -5.6 (11-16)
Document Version -5

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Pacific Mercantile Bank
Schedule to Loan and Security Agreement
 

Borrower:

RW HOLDINGS NNN REIT, INC.
 
By:  /s/ RAYMOND J. PACINI
Name: Raymond J. Pacini
Title: CFO
 
 
 
 
RICH UNCLES NNN OPERATING PARTNERSHIP, LP
 
By: RW HOLDINGS NNN REIT, INC., general partner
 
   By: /s/ RAYMOND J. PACINI
   Name: Raymond J. Pacini
   Title: CFO
 

RICH UNCLES NNN LP, LLC
 
By: RW HOLDINGS NNN REIT, INC., managing member
 
   By:  /s/ RAYMOND J. PACINI
   Name: Raymond J. Pacini
   Title: CFO
 

KATANA MERGER SUB, LP
 
By: RW HOLDINGS NNN REIT, INC., general partner
 
   By:  /s/ RAYMOND J. PACINI

   Name: Raymond J. Pacini

   Title: CFO
 

MODIV, LLC
 
By: DAISHO OP HOLDINGS, LLC, its Manager
 
By: BRIXINVEST, LLC, its Manager
 
By: /s/ RAYMOND J. PACINI
Name: Raymond J. Pacini
Title: CFO
 

BRIXINVEST, LLC

By: /s/ RAYMOND J. PACINI
Name: Raymond J. Pacini
Title: CFO

Lender:
 

PACIFIC MERCANTILE BANK
 
By: /s/ROSS MACDONALD
Name: Ross Macdonald
Title: Senior Vice President
 

 

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