exv10w70






Exhibit 10.70



ATTENTION: COUNTY CLERK —THIS DEED OF TRUST ALSO CONSTITUTES AND IS FILED AS A FIXTURE FILING
UNDER THE TEXAS UNIFORM COMMERCIAL CODE. AS SUCH, THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED,
NOT ONLY AS A DEED OF TRUST, BUT ALSO AS A FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE TO
BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN. THE MAILING ADDRESSES OF GRANTOR (DEBTOR)
AND BENEFICIARY (SECURED PARTY) ARE SET FORTH IN THIS INSTRUMENT.



NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL
OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC
RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.



This instrument was prepared by:




Dana Davis Paul

Kutak Rock LLP

234 East Millsap Road, Suite 400

Fayetteville, Arkansas 72703-4099




Recording requested by

and when recorded return to:




WELLS FARGO BANK, N.A.

Commercial Mortgage Origination

5938 Priestly Drive, Suite 200

Carlsbad, California 92008




	 	 	 
	Attention:
	 	CMO Loan Admin.
	Loan No.:
	 	02-62113698
	Unit No.:
	 	623






 





THIS INSTRUMENT CONTAINS INDEMNIFICATION PROVISIONS AND PROVISIONS
LIMITING THE SECURED PARTY’S LIABILITY FOR NEGLIGENCE




DEED OF TRUST (TEXAS)

Wells Fargo/Cole Properties/Cracker Barrel

Loan No. 02-62113698/Store No. 623




 









 





DEED OF TRUST AND
ABSOLUTE ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
(AND FIXTURE FILING)



This DEED OF TRUST AND ABSOLUTE ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT (AND FIXTURE
FILING) (“Deed of Trust”), dated as of August 31, 2009 (the “Effective Date”), is
executed by COLE CB SHERMAN TX, LLC, a Delaware limited liability company (“Grantor”), with
an office at c/o Cole REIT III Operating Partnership, LP, 2555 E. Camelback Road, Suite 400,
Phoenix, Arizona 85016, in favor of J. Edward Blakey, an individual, as Trustee
(“Trustee”), with a mailing address at 1320 Willow Pass Road, Concord, California 94520,
for the benefit of WELLS FARGO BANK, NATIONAL ASSOCIATION, with a mailing address at 5938 Priestly
Drive, Suite 200, Carlsbad, California 92008 (“Beneficiary”).




RECITALS





	A.	 	Grantor as “Borrower” proposes to borrow from Beneficiary, and Beneficiary proposes to lend
to Grantor, the total principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND 00/100THS DOLLARS
($1,500,000.00) (the “Loan”). The Loan is evidenced by that certain Secured
Promissory Note of even date herewith, in the principal amount of the Loan, executed by
Grantor to Beneficiary (the “Note”).






	B.	 	The loan documents include this Deed of Trust, the Note and the other documents described in
the Note as Loan Documents (“Loan Documents”).





ARTICLE 1 DEED OF TRUST





	1.1.	 	GRANT. For the purpose of securing the payment and performance of the Secured
Obligations, as hereinafter defined, and upon the terms and conditions of this Deed of Trust,
Grantor irrevocably grants, bargains, sells, conveys and assigns to Trustee and said Trustee’s
successors and substitutes in this trust, in trust for the benefit of Beneficiary, with power
of sale and right of entry and possession, all estate, right, title and interest which Grantor
now has or may hereafter acquire in, to, under or derived from any or all of the following:






	 	a.	 	That real property (“Land”) located in Sherman, County of Grayson,
State of Texas, and more particularly described on Exhibit A attached hereto;
	 
	 	b.	 	All appurtenances, easements, rights of way, water and water rights, pumps,
pipes, flumes and ditches and ditch rights, water stock, ditch and/or reservoir stock
or interests,





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	 	 	 	royalties, development rights and credits, air rights, minerals, oil
rights, and gas rights, now or later used or useful in connection with, appurtenant to
or related to the Land;
	 
	 	c.	 	All buildings, structures, facilities, other improvements and fixtures now or
hereafter located on the Land;
	 
	 	d.	 	All apparatus, equipment, machinery and appliances and all accessions thereto
and renewals and replacements thereof and substitutions therefor used in the operation
or occupancy of the Land, it being intended by the parties that all such items shall be
conclusively considered to be a part of the Land, whether or not attached or affixed to
the Land;
	 
	 	e.	 	All estate, right, title and interest of Grantor in and to any land lying in
the right-of-way of any street, road, avenue, alley or right-of-way opened, proposed or
vacated, and all sidewalks, strips and gores of land adjacent to or used in connection
with the Land;
	 
	 	f.	 	All additions and accretions to the property described above;
	 
	 	g.	 	All licenses, authorizations, certificates, variances, consents, approvals and
other permits now or hereafter pertaining to the Land and all estate, right, title and
interest of Grantor in, to, under or derived from all trade names or business names
relating to the Land or the present or future development, construction, operation or
use of the Land; and
	 
	 	h.	 	All proceeds of any of the foregoing.






	 	 	All of the property described above is hereinafter collectively defined as the
“Property”. The listing of specific rights or property shall not be interpreted as
a limitation of general terms.
	 
	 	 	TO HAVE AND TO HOLD the Property, unto Trustee, forever, for and on behalf of Beneficiary
and Trustee and their successors and assigns; IN TRUST, WITH POWER OF SALE AND RIGHT OF
ENTRY, to secure the payment and performance of the Secured Obligations and Grantor does
hereby bind Grantor and Grantor’s respective heirs, personal representatives, successors and
assigns, to warrant and forever defend Grantor’s right, title and interest in, to and under
the Property unto Trustee, forever, against the claim or claims of all persons whomsoever
claiming or to claim the same, or any part thereof, except as may be otherwise expressly
stated herein.





DEED OF TRUST (TEXAS)

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Loan No. 02-62113698/Store No. 623




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ARTICLE 2 OBLIGATIONS SECURED





	2.1.	 	OBLIGATIONS SECURED. Grantor makes the foregoing grant and assignment and those set
forth in Articles 3 and 4 hereof and elsewhere herein for the purpose of securing the
following obligations (“Secured Obligations”):






	 	a.	 	Full and punctual payment to Beneficiary of all sums at any time owing under
the Note;
	 
	 	b.	 	Payment and performance of all covenants and obligations of Grantor under this
Deed of Trust including, without limitation, indemnification obligations and advances
made to protect the Property;
	 
	 	c.	 	Payment and performance of all additional covenants and obligations of Grantor
under the Loan Documents;
	 
	 	d.	 	Payment and performance of all future advances and other obligations that the
then record owner of all or part of the Property may agree to pay and/or perform
(whether as principal, surety or guarantor) for the benefit of Beneficiary, when the
obligation is evidenced by a writing which recites that it is secured by this Deed of
Trust;
	 
	 	e.	 	Payment and performance under any swap, derivative, foreign exchange or hedge
transaction or arrangement or similar transaction or arrangement howsoever described or
defined at any time entered into between Grantor and Beneficiary in connection with the
Note (“Swap Agreement”);
	 
	 	f.	 	All interest and charges on all obligations secured hereby including, without
limitation, prepayment charges, late charges and loan fees;
	 
	 	g.	 	All modifications, extensions and renewals of any of the obligations secured
hereby, however evidenced, including, without limitation: (i) modifications of the
required principal payment dates or interest payment dates or both, as the case may be,
deferring or accelerating payment dates wholly or partly; and (ii) modifications,
extensions or renewals at a different rate of interest whether or not any such
modification, extension or renewal is evidenced by a new or additional promissory note
or notes; and
	 
	 	h.	 	Payment and performance of any other obligations which are defined as
“Secured Obligations” in the Note.






	2.2.	 	OBLIGATIONS. The term “obligations” is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all interest and
charges, prepayment





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	 	 	charges, late charges and loan fees at any time accruing or assessed on
any of the Secured Obligations pursuant to the terms of the Loan Documents.
	 
	2.3.	 	INCORPORATION. All terms and conditions of the documents which evidence any of the
Secured Obligations are incorporated herein by this reference. All persons who may have or
acquire an interest in the Property shall be deemed to have notice of the terms of the Secured
Obligations and to have notice that the rate of interest on one or more Secured Obligation may
vary from time to time.
	 
	2.4.	 	PROTECTIVE ADVANCES. During the continuance of a Default, Beneficiary shall have the
right, but not the obligation, to make protective advances with respect to the Property for
the payment of taxes, assessments, insurance premiums or costs incurred for the protection of
the Property, and such protective advances, together with interest thereon at the Default Rate
from the date of each such advance until it is repaid in full, shall be secured by this Deed
of Trust to the fullest extent and with the highest priority contemplated by applicable law.






	2.5.	 	MATURITY DATE. The Maturity Date of the Note is August 29, 2012.





ARTICLE 3 ABSOLUTE ASSIGNMENT OF RENTS AND LEASES





	3.1.	 	ASSIGNMENT. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Grantor absolutely, unconditionally and irrevocably grants,
sells, conveys, sets over, delivers and assigns to Beneficiary all of Grantor’s right, title
and interest in, to and under: (a) all present and future leases of the Property or any
portion thereof, all licenses and agreements relating to the management, leasing or operation
of the Property or any portion thereof, and all other agreements of any kind relating to the
use or occupancy of the Property or any portion thereof, whether such leases, licenses and
agreements are now existing or entered into after the date hereof, including, without
limitation, that certain Lease Agreement dated as of June 30, 2009, between Grantor, as
landlord and CBOCS TEXAS, LLC, a Tennessee limited liability company, as tenant (the “Existing
Tenant”) covering the Property (as amended, the “Existing Lease”); all such leases, licenses
and agreements to which Grantor is a party, including, without limitation, the Existing Lease,
as same have been or may be amended from time to time, are hereinafter collectively referred
to as the “Leases” and, individually, as a “Lease”) and (b) all rents, issues, deposits and
profits of the Property, including, without limitation, all amounts payable and all rights and
benefits accruing to Grantor under the Leases (“Payments”). TO HAVE AND TO HOLD the Leases
and Payments unto Beneficiary forever, and Grantor does hereby bind itself, its successors and
assigns to warrant and forever defend title to the Leases and Payments unto Beneficiary
against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as may be otherwise expressly stated herein. The term
“Leases” shall also include all guarantees of and security for the Tenants’ performance
thereunder, and all





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	 	 	amendments, extensions, renewals or modifications thereto which are
permitted hereunder. The terms “Tenant” and “Tenants” shall refer to any and all current
and future tenants, including, without limitation, the Existing Tenant, under any and all
Leases affecting the Property. This conveyance is a present and absolute assignment, being
presently and immediately effective, not an assignment for security purposes only, and
Beneficiary’s right to the Leases and Payments is not contingent upon, and may be exercised
without possession of, the Property.
	 
	3.2.	 	GRANT OF LICENSE. Beneficiary confers upon Grantor a revocable license
(“License”) to collect and retain the Payments as they become due and payable, until
the occurrence of a Default (as hereinafter defined). Upon a Default, the License shall be
automatically revoked and Beneficiary may collect and apply the Payments pursuant to the terms
hereof without notice and without taking possession of the Property. All Payments thereafter
collected by Grantor shall be held by Grantor as agent for the benefit of Beneficiary.
Grantor hereby irrevocably authorizes and directs the Tenants under the Leases to rely upon
and comply with any notice or demand by Beneficiary for the payment to Beneficiary of any
rental or other sums which may at any time become due under the Leases, or for the performance
of any of the Tenants’ undertakings under the Leases, and the Tenants shall have no right or
duty to inquire as to whether any Default has actually occurred or is then existing. Grantor
hereby relieves the Tenants from any liability to Grantor by reason of relying upon and
complying with any such notice or demand by Beneficiary. Beneficiary may apply, in its sole
discretion, any Payments so collected by Beneficiary against any Secured Obligation or any
other obligation of Grantor or any other person or entity, under any document or instrument
related to or executed in connection with the Loan Documents, whether existing on the date
hereof or hereafter arising. Collection of any Payments by Beneficiary shall not cure or
waive any Default or notice of Default or invalidate any acts done pursuant to such notice.
If and when no Default exists, the License shall be deemed to be re-conferred upon Grantor by
Beneficiary, without any further act or deed, until the occurrence of another Default.






	3.3.	 	COVENANTS — LEASES.






	 	a.	 	Affirmative Covenants. Grantor shall, at Grantor’s sole cost and
expense:






	 	(i)	 	perform all obligations of the landlord under the Leases and
use reasonable efforts to enforce performance by the Tenants of all obligations
of the Tenants under the Leases;
	 
	 	(ii)	 	use reasonable efforts to keep the Property leased at all times
to Tenants which Grantor reasonably and in good faith believes are creditworthy
at rents not less than the fair market rental value (including, but not limited to, free or
discounted rents to the extent the market so requires);





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	 	(iii)	 	promptly upon Beneficiary’s request, deliver to Beneficiary a
copy of each requested Lease and all amendments thereto and waivers thereof;
and
	 
	 	(iv)	 	promptly upon Beneficiary’s request, execute and record any
additional assignments of landlord’s interest under any Lease to Beneficiary
and specific subordinations of any Lease to this Deed of Trust, in form and
substance satisfactory to Beneficiary.






	 	b.	 	Negative Covenants. Unless consented to in writing by Beneficiary (in
its sole and absolute discretion) or otherwise permitted under any other provision of
the Loan Documents or under any Lease, Grantor shall not:






	 	(i)	 	enter into any Lease which (aa) is not on commercially
reasonable terms and conditions similar to those found in similarly situated
commercial or retail properties, as applicable; (bb) does not contain
subordination, attornment and other grantee protective provisions, including a
provision requiring the Tenant to execute and deliver to the landlord an
estoppel certificate in form and substance reasonably satisfactory to the
landlord promptly upon the landlord’s request; (cc) does not contain
environmental compliance and reporting provisions reasonably satisfactory to
Beneficiary and its counsel; or (dd) allows the Tenant to assign or sublet the
premises, except in accordance with and subject to the terms set forth in such
Lease;
	 
	 	(ii)	 	grant any Tenant under any of the Leases any option, right of
first refusal or other right to purchase all or any portion of the Property
under any circumstances;
	 
	 	(iii)	 	grant any Tenant under any of the Leases any right to prepay
rent more than one (1) month in advance;
	 
	 	(iv)	 	except upon Beneficiary’s request, execute any assignment of
landlord’s interest in any of the Leases; or
	 
	 	(v)	 	collect rent or other sums due under any of the Leases in
advance, other than to collect rent one (1) month in advance of the time when
it becomes due.
	 
	 	(vi)	 	reduce any rent or other sums due from the Tenant under any
Lease;
	 
	 	(vii)	 	terminate or modify or amend any Lease or any guaranty
executed by any guarantor in connection therewith;





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	 	(viii)	 	allow the Tenant to assign or sublet its Lease, except in accordance with and
subject to the terms of its Lease;
	 
	 	(ix)	 	release or discharge the Tenant or any guarantor under any
Lease from any material obligation thereunder; or
	 
	 	(x)	 	subordinate or agree to subordinate any Lease to any other deed
of trust, deed to secure debt or mortgage (other than this Deed of Trust) and
any other Deed of Trust (as such term is defined in the Loan Documents).






	 	 	 	Any such attempted action in violation of the provisions of this Section shall be
null and void.






	 	c.	 	Lease Default. Grantor shall, at Grantor’s sole cost and expense, give
Beneficiary prompt written notice of any Lease Default (defined below). The term
“Lease Default” shall mean there shall exist (i) any “Event of Default” as
defined in any Lease, or (ii) any default under a Lease by Grantor after the expiration
of any applicable notice or cure period, in respect of a covenant, misrepresentation,
violation or other occurrence that Beneficiary, in its reasonable discretion,
determines to be a material covenant, misrepresentation, violation or occurrence under
such Lease.
	 
	 	d.	 	Approval of Existing Lease. It is understood that Grantor’s execution
and delivery of this Deed of Trust, together with Beneficiary’s disbursement of the
proceeds of the Loan, shall constitute Beneficiary’s written consent to the terms of
the Existing Lease, approval of the Tenant and an acknowledgment that the Existing
Lease complies with the provisions of this Section and the other provisions of this
Deed of Trust. As of the date of this Deed of Trust, the Property is subject to the
Existing Lease which has been approved by Beneficiary and is the only Lease affecting
the Property.






	3.4.	 	ESTOPPEL CERTIFICATES. Within thirty (30) days after request by Beneficiary, but not
more than two (2) times in any twelve (12) month period, Grantor shall deliver to Beneficiary
and to any party designated by Beneficiary, estoppel certificates relating to the Leases
executed by Grantor and by Tenant, in form and substance as executed by Existing Tenant on or
about the date of this Deed of Trust; provided, however, if any Tenant shall fail or refuse to
so execute and deliver any such estoppel certificate upon request, Grantor shall use
reasonable efforts to cause such Tenant to execute and deliver such estoppel certificate, but
such Tenant’s continued failure or refusal to do so, despite Grantor’s reasonable efforts, shall not constitute a default by
Grantor under this Section.





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	3.5.	 	RIGHT OF SUBORDINATION. Beneficiary may at any time and from time to time by
specific written instrument intended for the purpose unilaterally subordinate the lien of this
Deed of Trust to any Lease, without joinder or consent of, or notice to, Grantor, any Tenant
or any other person. Notice is hereby given to each Tenant under a Lease of such right to
subordinate. No subordination referred to in this Section shall constitute a subordination to
any lien or other encumbrance, whenever arising, or improve the right of any junior
lienholder. Nothing herein shall be construed as subordinating this Deed of Trust to any
Lease.





ARTICLE 4 SECURITY AGREEMENT AND FIXTURE FILING





	4.1.	 	SECURITY INTEREST. Grantor grants, bargains, conveys and assigns to Beneficiary a
security interest to secure payment and performance of all of the Secured Obligations, in
Grantor’s right, title and interest in and to all of the following described personal property
in which Grantor now or at any time hereafter has any interest (“Collateral”):
	 
	 	 	All goods, building and other materials, supplies, work in process, equipment, machinery,
fixtures, furniture, furnishings, signs and other personal property, wherever situated,
which are or are to be incorporated into, used in connection with or appropriated for use on
the Property; all rents, issues, deposits and profits of the Property (to the extent, if
any, they are not subject to the Absolute Assignment of Rents and Leases); all inventory,
accounts, cash receipts, deposit accounts, impounds, accounts receivable, contract rights,
general intangibles, software, chattel paper, instruments, documents, promissory notes,
drafts, letters of credit, letter of credit rights, supporting obligations, insurance
policies, insurance and condemnation awards and proceeds, any other rights to the payment of
money, trade names, trademarks and service marks arising from or related to the Property or
any business now or hereafter conducted thereon by Grantor; all permits, consents,
approvals, licenses, authorizations, wastewater and other utility capacity rights and other
rights granted by, given by or obtained from, any governmental entity with respect to the
ownership and use of the Property; all deposits or other security now or hereafter made with
or given to utility companies by Grantor with respect to the Property; all advance payments
of insurance premiums made by Grantor with respect to the Property; all plans, drawings and
specifications relating to the Property; all loan funds held by Beneficiary, whether or not
disbursed; all funds deposited with Beneficiary pursuant to any Loan Document, all reserves,
deferred payments, deposits, accounts, refunds, cost savings and payments of any kind
related to the Property or any portion thereof, including, without limitation, all
“Impounds” as defined herein; together with all replacements and proceeds of, and additions
and accessions to, any of the foregoing, and all books, records and files relating to any of
the foregoing. It is the intent of Grantor, Beneficiary and Trustee that this Deed of
Trust encumber all Leases and that all items contained in the definition of “Leases” which are included within the Texas Uniform
Commercial Code be covered by the security interest granted in this Paragraph 4.1 and all
items contained in





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	 	 	the definition of “Leases” which are excluded from the Texas Uniform
Commercial Code be covered by the provisions of Paragraph 1.1 hereof.
	 
	 	 	As to all of the above-described personal property which is or which hereafter becomes a
“fixture” under applicable law, this Deed of Trust, upon its recording in the real property
records of the county in which the Property is located, shall be effective as a financing
statement filed as a fixture filing under the Texas Business and Commerce Code, as amended
or recodified from time to time (the “UCC”). For purposes of the foregoing (i)
Grantor is the “debtor” and its address is as set forth on page 1 of this Deed of
Trust, (ii) the Beneficiary is the “secured party” and its address is as set forth on
page 1 of this Deed of Trust and (iii) the name of the record owner of the Property
is Grantor.
	 
	4.2.	 	COVENANTS. Grantor agrees: (a) to execute and deliver such documents as Beneficiary
deems necessary to create, perfect and continue the security interests contemplated hereby;
(b) not to change its name, and as applicable, its chief executive offices, its principal
residence or the jurisdiction in which it is organized without giving Beneficiary at least
thirty (30) days’ prior written notice thereof; and (c) to cooperate with Beneficiary in
perfecting all security interests granted herein and in obtaining such agreements from third
parties as Beneficiary deems reasonably necessary, proper or convenient in connection with the
preservation, perfection or enforcement of any of Beneficiary’s rights hereunder.
	 
	4.3.	 	RIGHTS OF BENEFICIARY. In addition to Beneficiary’s rights as a “Secured Party”
under the UCC, Beneficiary may, but shall not be obligated to, at any time without notice and
at the expense of Grantor: (a) give notice to any person of Beneficiary’s rights hereunder and
enforce such rights at law or in equity; (b) insure, protect, defend and preserve the
Collateral or any rights or interests of Beneficiary therein; and (c) inspect the Collateral
(and during the term of any Lease, subject to any specific restrictions or prohibitions under
such Lease). Notwithstanding the above, in no event shall Beneficiary be deemed to have
accepted any property other than cash in satisfaction of any obligation of Grantor to
Beneficiary unless Beneficiary shall make an express written election of said remedy under the
UCC or other applicable law.
	 
	4.4.	 	RIGHTS OF BENEFICIARY UPON DEFAULT. Upon the occurrence and continuation of a
Default, then in addition to all of Beneficiary’s rights as a “Secured Party” under the UCC or
otherwise at law:






	 	a.	 	Disposition of Collateral. Beneficiary may: (i) upon written notice,
require Grantor to assemble the Collateral and make it available to Beneficiary at a
place designated by Beneficiary; (ii) without prior notice, enter upon the Property
(and during the term of any Lease affecting the Property, subject to any specific restrictions or prohibitions
under any such lease) or other place where any of the Collateral may be located and
take possession





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	 	 	 	of, collect, sell, lease, license and otherwise dispose of the
Collateral, and store the same at locations acceptable to Beneficiary at Grantor’s
expense; or (iii) sell, assign and deliver the Collateral at any place or in any
lawful manner and bid and become purchaser at any such sales; and
	 
	 	b.	 	Other Rights. Beneficiary may, for the account of Grantor and at
Grantor’s expense: (i) operate, use, consume, sell, lease, license or otherwise dispose
of the Collateral as Beneficiary deems appropriate for the purpose of performing any or
all of the Secured Obligations; (ii) enter into any agreement, compromise or settlement
including insurance claims, which Beneficiary may deem desirable or proper with respect
to the Collateral; and (iii) endorse and deliver evidences of title for, and receive,
enforce and collect by legal action or otherwise, all indebtedness and obligations now
or hereafter owing to Grantor in connection with or on account of the Collateral.






	 	 	Grantor acknowledges and agrees that a disposition of the Collateral in accordance with
Beneficiary’s rights and remedies as heretofore provided is a disposition thereof in a
commercially reasonable manner and that five (5) Business Days’ prior notice of such
disposition is commercially reasonable notice. Beneficiary shall have no obligation to
process or prepare the Collateral for sale or other disposition. In disposing of the
Collateral, Beneficiary may disclaim all warranties of title, possession, quiet enjoyment
and the like. Any proceeds of any sale or other disposition of the Collateral may be applied
by Beneficiary first to the reasonable expenses incurred by Beneficiary in connection
therewith, including, without limitations, reasonable attorneys’ fees and disbursements, and
then to the payment of the Secured Obligations, in such order of application as Beneficiary
may from time to time elect.






	4.5.	 	POWER OF ATTORNEY. Grantor hereby irrevocably appoints Beneficiary as Grantor’s
attorney-in-fact (such agency being coupled with an interest), and as such attorney-in-fact,
Beneficiary may, without the obligation to do so, in Beneficiary’s name or in the name of
Grantor, prepare, execute, file and record financing statements, continuation statements,
applications for registration and like papers necessary to create, perfect or preserve any of
Beneficiary’s security interests and rights in or to the Collateral, and take any other action
required of Grantor; provided, however, that Beneficiary as such attorney-in-fact shall be
accountable only for such funds as are actually received by Beneficiary.





ARTICLE 5 REPRESENTATIONS AND WARRANTIES





	5.1.	 	REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants to Beneficiary that,
to Grantor’s current actual knowledge, the following statements are true and correct as of the
Effective Date:





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	 	a.	 	Legal Status. Grantor is duly formed and validly existing and in good
standing under the laws of the state(s) in which Grantor is organized. Grantor is
qualified or licensed to do business in all jurisdictions in which such qualification
or licensing is required.
	 
	 	b.	 	Permits. Grantor possesses all permits, franchises and licenses and
all rights to all trademarks, trade names, patents and fictitious names, if any,
necessary to enable Grantor to conduct the business(es) in which Grantor is now engaged
in compliance with applicable law.
	 
	 	c.	 	Authorization and Validity. The execution and delivery of the Loan
Documents have been duly authorized and the Loan Documents constitute valid and binding
obligations of Grantor, enforceable in accordance with their respective terms, except
as such enforcement may be limited by bankruptcy, insolvency, moratorium or other laws
affecting the enforcement of creditors’ rights, or by the application of rules of
equity.
	 
	 	d.	 	Violations. The execution, delivery and performance by Grantor of each
of the Loan Documents does not violate any provision of any law or regulation, or
result in any breach or default under any contract, obligation, indenture or other
instrument to which Grantor is a party or by which Grantor is bound.
	 
	 	e.	 	Litigation. Except as otherwise disclosed in that certain Disclosure
Agreement Regarding Representations, Covenants and Warranties of even date herewith,
executed by Grantor for the benefit of Beneficiary (the “Disclosure
Agreement”), there are no pending or threatened actions, claims, investigations,
suits or proceedings before any governmental authority, court or administrative agency
which may adversely affect the financial condition or operations of Grantor.
	 
	 	f.	 	Financial Statements. The Financial Statements (as such term is
defined in that certain Borrower’s Certification of even date herewith, executed by
Grantor in favor of Beneficiary) of the sole member of Grantor and guarantor, Cole REIT
III Operating Partnership, LP, a Delaware limited partnership (“Guarantor”),
previously delivered by Grantor to Beneficiary: (i) are materially complete and
correct; (ii) present fairly the financial condition of such party; and (iii) have been
prepared in accordance with generally accepted accounting principles (“GAAP”).
Since the date of such Financial Statements, there has been no material adverse change in such financial condition,
nor have any assets or properties reflected on such financial statements been sold,
transferred, assigned, mortgaged, pledged or encumbered, except as disclosed in the
Disclosure Agreement.





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	 	g.	 	Reports. All reports, documents, instruments and information delivered
by Grantor to Beneficiary or otherwise prepared by, for or at the direction of Grantor
and delivered to Beneficiary in connection with the Loan: (i) are correct and
sufficiently complete to give Beneficiary accurate knowledge of their subject matter;
and (ii) do not contain any misrepresentation of a material fact or omission of a
material fact which omission makes the provided information misleading.
	 
	 	h.	 	Income Taxes. There are no pending assessments or adjustments of
Grantor’s income tax payable with respect to any year.
	 
	 	i.	 	Subordination. There is no agreement or instrument to which Grantor is
a party or by which Grantor is bound that would require the subordination in right of
payment of any of Grantor’s obligations under the Note to an obligation owed to another
party.
	 
	 	j.	 	Title. Grantor lawfully holds and possesses fee simple title to the
Property, without limitation on the right to encumber same. This Deed of Trust is a
first lien on the Property prior and superior to all other liens and encumbrances on
the Property, except: (i) liens for real estate taxes and assessments that are either
not yet due and payable or due, but not yet delinquent; (ii) senior exceptions
previously approved by Beneficiary and shown in the title insurance policy insuring the
lien of this Deed of Trust; and (iii) other matters, if any, as disclosed in the
Disclosure Agreement.
	 
	 	k.	 	Mechanics’ Liens. Except as disclosed in the Disclosure Agreement,
there are no mechanics’ or similar liens or claims which have been filed for work,
labor or material affecting the Property which are or may be prior to or equal to the
lien of this Deed of Trust. Except as disclosed in the Disclosure Agreement, there are
no rights outstanding that under law could give rise to any liens affecting the
Property which are or may be prior to or equal to the lien of this Deed of Trust.
	 
	 	l.	 	Encroachments. Except as shown in the survey for the Property issued
in connection with the closing of the Loan and previously delivered to Beneficiary,
none of the buildings or other improvements which were included for the purpose of
determining the appraised value of the Property lies outside of the boundaries or
building restriction lines of the Property and no buildings or other improvements
located on adjoining properties encroach upon the Property.
	 
	 	m.	 	Leases. The Existing Lease is in full force and effect and is
enforceable in accordance with its terms. No material breach or default by any party,
or event which would constitute a material breach or default by any party after notice
or the passage of time, or both, exists under the Existing Lease. None of the
landlord’s interests under any of the





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	 	 	 	Leases, including, but not limited to, rents,
additional rents, charges, issues or profits, has been transferred or assigned other
than to Beneficiary. No rent or other payment under the Existing Lease has been paid
by the Existing Tenant for more than one (1) month in advance.


	 
	 	n.	 	Collateral. Grantor has good title to the existing Collateral, if any,
free and clear of all liens and encumbrances, except those, if any, disclosed in the
Disclosure Agreement. Grantor’s chief executive office (or principal residence, if
applicable) is located at the address shown on page one of this Deed of Trust. Grantor
is an organization organized solely under the laws of the State of Delaware. All
organizational documents of Grantor delivered to Beneficiary are complete and accurate
in every material respect. Grantor’s legal name is exactly as shown on page one of
this Deed of Trust.


	 
	 	o.	 	Condition of Property. Except as set forth in the Environmental
Reports (as such term is defined in the Disclosure Agreement), or the Property
Condition Reports (as such term is defined in the (Disclosure Agreement), or as
otherwise set forth in the Disclosure Agreement, the Property is in good condition and
repair and is free from any damage that would materially and adversely affect the value
of the Property as security for the Loan or the intended use of the Property.


	 
	 	p.	 	Hazardous Materials. Except as shown in the Environmental Reports, or
as otherwise set forth in the Disclosure Agreement, or as otherwise permitted in
Section 6.2.a. below, the Property is not and has not been a site for the use,
generation, manufacture, storage, treatment, release, threatened release, discharge,
disposal, transportation or presence of Hazardous Materials (as hereinafter defined).


	 
	 	q.	 	Hazardous Materials Laws. Except as shown in the Environmental
Reports, the Property complies with all Hazardous Materials Laws (as hereinafter
defined), except for any noncompliance that would not materially and adversely affect
the value of the Property as security for the Loan or the intended use of the Property.
	 
	 	r.	 	Hazardous Materials Claims. Except as shown in the Environmental
Reports, there are no pending or threatened Hazardous Materials Claims (as hereinafter
defined) that would materially and adversely affect the value of the Property as
security for the Loan or the intended use of the Property.
	 
	 	s.	 	Wetlands. Except as shown in the Environmental Reports or on any
survey of the Property issued in connection with the closing of the Loan that has been
delivered to Beneficiary, no part of the Property consists of or is classified as
wetlands, tidelands or swamp and overflow lands.





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	 	t.	 	Compliance With Laws. Except as reflected in the Environmental
Reports, or as otherwise set forth in the Disclosure Agreement, all federal, state and
local laws, rules and regulations applicable to the Property, including, without
limitation, all zoning and building requirements and all requirements of the Americans
With Disabilities Act of 1990, as amended from time to time (42 U.S.C. Section 12101 et
seq.) have been satisfied or complied with in all material respects and any non
compliance will not materially and adversely affect the value of the Property as
security for the Loan or the intended use of the Property.
	 
	 	u.	 	Property Taxes and Other Liabilities. All taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, and ground rents,
if any, which previously became due and owing in respect of the Property have been paid
or arrangements, acceptable to Beneficiary, have been made for their payment
contemporaneously with the execution of this Deed of Trust.
	 
	 	v.	 	Condemnation. There is no proceeding pending or overtly threatened for
the total or partial condemnation of the Property.
	 
	 	w.	 	Homestead. There is no homestead or other exemption available to
Grantor which would materially interfere with the right to sell the Property or the
right to foreclose this Deed of Trust.
	 
	 	x.	 	Solvency. None of the transactions contemplated by the Loan will be or
have been made with an actual intent to hinder, delay or defraud any present or future
creditors of Grantor, and Grantor, on the Effective Date, will have received fair and
reasonably equivalent value in good faith for the grant of the liens or security
interests effected by the Loan Documents. On the Effective Date, Grantor will be
solvent and will not be rendered insolvent by the transactions contemplated by the Loan
Documents. Grantor is able to pay its debts as they become due.
	 
	 	y.	 	Separate Tax Parcel(s). Except as may be set forth in the title
insurance policy issued to Beneficiary with respect to the Property, and/or any
endorsements issued in connection therewith, the Property is assessed for real estate
tax purposes as one or more wholly independent tax parcels, separate from any other
real property, and no other real property is assessed and taxed together with the
Property or any portion thereof.
	 
	 	z.	 	Utilities; Water; Sewer. The Property is served by public or private
utilities (including water and sewer systems) required and adequate for the current or
contemplated use thereof.





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	 	aa.	 	ERISA Matters. Grantor is not an employee benefit plan as defined in
Section 3.(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), which is subject to Title I of ERISA, nor a plan as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (each of the
foregoing hereinafter referred to individually and collectively as a “Plan”).
Grantor’s assets do not constitute “plan assets” of any plan within the meaning of
Department of Labor Regulation Section 2510.3-101. Grantor will not transfer or convey
the Property to a Plan or to a person or entity whose assets constitute such “plan
assets”, and Grantor will not be reconstituted as a Plan or as an entity whose assets
constitute “plan assets”. No Lease is with a Plan or an entity whose assets constitute
such “plan assets,” and Grantor will not enter into any Lease with a Plan or an entity
whose assets constitute such “plan assets.” With respect to the Loan, Grantor is
acting on Grantor’s own behalf and not on account of or for the benefit of any Plan.
	 
	 	bb.	 	Purpose of Borrowings; Margin Regulations; Investment Company Act.






	 	(i)	 	Grantor does not intend to use all or any portion of the
proceeds of the Loan to purchase or carry any securities, including, without
limitation, margin stock. None of the proceeds of the Loan will be used,
directly or indirectly, for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
stock or other security or for any other purpose which might cause any
borrowing to be considered a “purpose credit” within the meaning of Regulations
U, T or X of the Board of Governors of the Federal Reserve System, as amended.
Grantor intends to and agrees to use the proceeds of the Loan solely for the
lawful, proper business or commercial purposes set forth in its application for
the Loan and any disbursement direction letter furnished by Grantor to
Beneficiary in connection with the Loan.
	 
	 	(ii)	 	Grantor is not engaged, principally or as one of its important
activities, in the business of purchasing or carrying margin stock, or
extending credit for the purpose of purchasing or carrying margin stock.
	 
	 	(iii)	 	Neither Grantor nor any entity controlling Grantor is or is
required to be registered as an “investment company” under the Investment
Company Act of 1940.






	 	bb.	 	Disclosure. Grantor has disclosed to Beneficiary all agreements,
instruments and corporate or other restrictions to which it is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a material adverse effect on Grantor’s ability to perform its
obligations under the Loan Documents.





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	 	 	 	No report, financial statement, certificate or
other information furnished (whether in writing or orally) by or on behalf of Grantor
to Beneficiary in connection with the transactions contemplated hereby and the
negotiation of this Security Deed or delivered hereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, Grantor represents only that such
information was prepared in good faith based upon assumptions believed to be reasonable
at the time.
	 
	 	cc.	 	No Further Disposition. Other than with respect to the lien granted
herein to Beneficiary and, to the extent of the encumbrances on the Property that have
been permitted by Beneficiary, Grantor has not entered into any agreement or
understanding or taken, permitted or suffered to exist any action (including the filing
of a financing statement, agreement, pledge, deed to secure debt, deed of trust or
mortgage, notice or registration) or event (whether by operation of law or otherwise)
for the purpose of, or that may have the effect of, directly or indirectly, granting or
permitting any lien on or disposing of any Collateral, any interest therein or rights
pertaining thereto.
	 
	 	dd.	 	Brokers and Financial Advisors. Except as previously disclosed to
Beneficiary in writing, no brokers or finders were used in connection with the
financing contemplated hereby and Grantor hereby agrees to indemnify and hold
Beneficiary harmless from and against any and all liabilities, costs and expenses
(including reasonable attorney’s fees and court costs) suffered or incurred by
Beneficiary as a result of or arising out of any of the transactions contemplated
hereby. The provisions of this section shall survive the expiration and termination of
this Security Deed and the payment of the Secured Obligations.
	 
	 	ee.	 	Compliance with OFAC Rules and Regulations. Neither Grantor nor, to
Grantor’s knowledge, any Affiliate of any Grantor (i) is a Sanctioned Person, (ii) has
any assets in Sanctioned Countries, or (iii) derives any operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Countries. No
part of the proceeds of any borrowing hereunder will be used directly or indirectly to
fund any operations in, finance any investments or activities in or make any payments
to, a Sanctioned Person or a Sanctioned Country.






	 	 	For purposes of this Section 5.1(ee) only, “Affiliate” of any entity means any other
entity directly or indirectly controlling, controlled by or under common control
with such entity. An entity shall be deemed to control another entity if the
controlling entity is the





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	 	 	 	“beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of 10% or more of any class of voting securities
(or other ownership interests) of the controlled entity or possesses, directly or
indirectly, the power to direct or cause the direction of the management or policies
of the controlled entity, whether through ownership of voting securities, by
contract or otherwise. For all other provisions of this Security Deed, “Affiliate”
shall have the meaning given to such term in the Note.
	 
	 	 	 	For purposes of this Security Deed, “Sanctioned Country” shall mean a country
subject to a sanctions program identified on the list maintained by U.S. Department
of the Treasury’s Office of Foreign Assets Control (“OFAC”) and available at
http://www.treas.gov/offices/enforcement/ofac/programs/index.shtml, or as
otherwise published from time to time.
	 
	 	 	 	For purposes of this Security Deed, “Sanctioned Person” shall mean (i) a person
named on the list of “Specially Designated Nationals and Blocked Persons” maintained
by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn/index.shtml, or as
otherwise published from time to time, or (ii) (A) an agency of the government of a
Sanctioned Country, (B) an organization controlled by a Sanctioned Country, or (C) a
person resident in a Sanctioned Country, to the extent subject to a sanctions
program administered by OFAC.
	 
	 	ff.	 	Foreign Assets Control Regulations, Etc. Grantor is not an “enemy” or
an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy
Act of the United States of America (50 U.S.C. App. §§ 1 et seq.), as amended. Grantor
is not is in violation of (a) the Trading with the Enemy Act, as amended, (b) any of
the foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto or (c) the USA Patriot Act of 2001, Pub. L. No. 107-56 (the
“Patriot Act”). Grantor (i) is not a blocked person described in Section 1 of
the Anti-Terrorism Order or (ii) to the best of its knowledge, does not engage in any
dealings or transactions, and is not otherwise associated, with any such blocked
person.






      As used in this Section 5.1, to “Grantor’s current actual knowledge” shall mean
to the current actual knowledge of Todd J. Weiss and Raymond Silliere.




	5.2.	 	REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING ENTITY STATUS.
	 
	 	 	In connection with the Loan, Grantor hereby represents, warrants and covenants to
Beneficiary as follows with respect to Grantor:





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	 	a.	 	such entity was organized solely for the purpose of (i) owning and holding the
Property or any property subsequently substituted therefor in compliance with the Loan
Documents; acting as landlord, lessor, or similar designation; and executing and
performing any documents executed or to be executed by such entity as required by
Beneficiary in connection with the Loan and (ii) engaging in any lawful act or activity
and exercising any powers permitted to limited liability companies organized under the
laws of the State of Delaware that are related or incidental to and necessary,
convenient or advisable for the accomplishment of (i) above;
	 
	 	b.	 	such entity has not engaged in, and will not engage in, any business other than
the actions required or permitted to be performed under this Section or the other Loan
Documents;
	 
	 	c.	 	such entity has not had, and will not have, any assets other than the Property
(and personal property incidental to the ownership and operation of the Property);
	 
	 	d.	 	such entity, to the fullest extent permitted by law, has not engaged in, and
will not engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, asset sale, or other transfer of ownership interest other than
such activities as are expressly permitted pursuant to any provisions of the Loan
Documents;
	 
	 	e.	 	such entity, to the fullest extent permitted by law, has not engaged in, and
will not engage in, seek or consent to any dissolution or liquidation or consolidation
or merging of itself with or into any other entity, or conveying or transferring of its
properties and assets substantially as an entirety or transferring of any of its
beneficial interests to any entity other than as expressly permitted by the Loan
Documents, or voluntarily commencing of a case with respect to itself, as debtor, under
the Federal Bankruptcy Code or any similar federal or state statute without the
unanimous consent of its Member;
	 
	 	f.	 	except as permitted under the Loan Documents or unless required by Applicable
Law, such entity shall not make any material amendment to Sections 4, 8, 10, 14, 17 or
27 of its Limited Liability Company Agreement or its Certificate of Formation without
first obtaining approval of the mortgagee holding the Loan Documents encumbering any
portion of the Property;
	 
	 	g.	 	such entity shall not incur, create or assume any indebtedness other than as
expressly permitted under the Loan Documents;
	 
	 	h.	 	such entity has not failed to correct, and will not fail to correct, any known
misunderstanding regarding the separate identity of such entity;





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	 	i.	 	such entity has maintained, and will maintain, its bank accounts, books and
records separate from any other person or entity;
	 
	 	j.	 	such entity has not commingled, and will not commingle, its assets with those
of any other entity, except as permitted by the Loan Documents;
	 
	 	k.	 	such entity has conducted and will continue to conduct its business in its own
name and strictly comply with all organizational formalities to maintain its separate
existence;
	 
	 	l.	 	such entity has maintained, and will maintain, separate financial statements;
	 
	 	m.	 	such entity has maintained, and will maintain, its assets in such a manner that
it is not costly or difficult to segregate, identify or ascertain such assets;
	 
	 	n.	 	such entity has prepared, and will prepare, separate tax returns from those of
any person to the extent required by applicable law and pay any taxes required to be
paid by applicable law;
	 
	 	o.	 	such entity has paid, and will pay, its own liabilities and expenses out of and
to the extent of its own funds;
	 
	 	p.	 	such entity as of the date of this Deed of Trust has not guaranteed, and will
not guarantee any obligation of any person, including any Affiliate of such entity or
hold out its credit or assets as being available to satisfy the obligations of any
other entity, other than as permitted by the Loan Documents;
	 
	 	q.	 	such entity has not acquired, and will not acquire, any securities of its
members;
	 
	 	r.	 	such entity has allocated, and will allocate fairly and reasonably, any common
employee or overhead shared with Affiliates and each such entity has used, and will
use, separate invoices and checks;
	 
	 	s.	 	such entity has identified and will identify itself in all communications, and
has caused and will cause its agents to indicate such capacity when acting on behalf of
such entity;
	 
	 	t.	 	such entity has not pledged, and will not pledge, its assets for the benefit of
any other person or entity, except as permitted by the Loan Documents;
	 
	 	u.	 	such entity has held itself, and will hold itself, out to creditors, the public
and all other persons, as a legal entity separate from its members and any other
person;





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	 	v.	 	such entity has not made, and will not make or permit to remain outstanding any
loan or advance to, or own or acquire any stock or securities of, any person, except
that such entity may invest in those investments permitted under the Loan Documents and
may make any advance required or expressly permitted to be made pursuant to any
provisions of such entity’s organizational documents and permit the same to remain
outstanding in accordance with such provisions;
	 
	 	w.	 	such entity has maintained, and will maintain, an arm’s-length relationship
with its Affiliates;
	 
	 	x.	 	such entity has paid, and will pay, the salaries of its own employees, if any,
out of its own funds and has maintained and will maintain a sufficient number of
employees in light of its contemplated business purpose;
	 
	 	y.	 	such entity has maintained, and will maintain, adequate capital in light of its
contemplated business purpose, transactions and liabilities;
	 
	 	z.	 	such entity has not and will not form, acquire or hold any subsidiary (whether
corporate, partnership, limited liability company or other);
	 
	 	aa.	 	such entity has not and will not permit any Affiliate to guarantee or pay its
obligations (other than limited guarantees and indemnities set forth in the Loan
Documents);
	 
	 	bb.	 	if such entity is a limited liability company, its operating agreement contains
the provisions set forth in this Section 5.2 and such entity shall conduct its
business and operations in strict compliance with the terms contained therein.





ARTICLE 6 RIGHTS AND DUTIES OF THE PARTIES





	6.1.	 	MAINTENANCE AND PRESERVATION OF THE PROPERTY. Grantor shall (or shall cause a
Tenant, in accordance with the Lease to): (a) keep the Property in good condition and repair;
(b) complete or restore promptly and in workmanlike manner the Property or any part thereof
which may be damaged or destroyed; (c) comply or cause the Property to comply with, (i) all
laws, ordinances, regulations and standards, (ii) all covenants, conditions, restrictions and
equitable servitudes, whether public or private, of every kind and character and (iii) all
requirements of insurance companies and any bureau or agency which establishes standards of
insurability, in each case to avoid a Material Adverse Effect (as defined in Section
6.3 below), which laws, covenants or requirements affect the Property and pertain to
acts committed or conditions existing thereon, including, without limitation, any work of
alteration, improvement or demolition as such laws, covenants or requirements mandate; (d)
operate and manage the





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	 	 	Property at all times in a professional manner and do all other acts
which from the character or use of the Property may be reasonably necessary to maintain and
preserve its value; (e) promptly after execution, deliver to Beneficiary a copy of any
management agreement concerning the Property and all amendments thereto and waivers thereof;
and (f) execute and acknowledge all further documents, instruments and other papers as
Beneficiary deems reasonably necessary or appropriate to preserve, continue, perfect and
enjoy the benefits of this Deed of Trust and perform Grantor’s obligations, including,
without limitation, statements of the amount secured hereby then owing and statements of no
offset. In addition, Grantor shall not (except as may be permitted under any Lease): (A)
remove or demolish all or any material part of the Property, except in connection with any
remedial or other action required to comply with applicable Hazardous Materials Laws,
provided that any Property removed shall be removed in accordance with any applicable laws
and such Property be replaced with property of equal or greater value; (B) alter either (i)
the exterior of the Property in a manner which materially and adversely affects the value of
the Property or (ii) the roof or other structural elements of the Property in a manner which
requires a building permit, except for tenant improvements required or permitted under the
Leases; (C) initiate or acquiesce in any change in any zoning or other land classification
which affects the Property; (D) materially alter the type of occupancy or use of all or any
part of the Property; or (E) commit or permit waste of the Property.






	6.2.	 	HAZARDOUS MATERIALS. Without limiting any other provision of this Deed of Trust,
Grantor agrees as follows:






	 	a.	 	Prohibited Activities. Grantor shall not cause or permit the Property
to be used as a site for the use, generation, manufacture, storage, treatment, release,
discharge, disposal, transportation or presence of any of the following (collectively,
“Hazardous Materials”) which are either in violation of Hazardous Materials
Laws (defined below) or which exist in quantities in excess of what is permitted under
Hazardous Materials Laws: oil or other petroleum products; flammable explosives;
asbestos; urea formaldehyde insulation; radioactive materials; hazardous wastes;
fungus, mold, mildew, spores or other biological or microbial agents the presence of
which may affect human health, impair occupancy or materially affect the value or
utility of the Property; toxic or contaminated substances or similar materials,
including, without limitation, any substances which are “hazardous substances,”
“hazardous wastes,” “hazardous materials” or “toxic substances” under the
Hazardous Materials Laws (defined below) and/or other applicable environmental laws,
ordinances or regulations.
	 
	 	 	 	Notwithstanding the foregoing, (i) Grantor may store, maintain and use on the
Property janitorial and maintenance supplies, paint and other Hazardous Materials of
a type and in a quantity readily available for purchase by the general public and
normally stored,





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	 	 	 	maintained and used by owners and managers of properties of a type
similar to the Property; (ii) Tenants of the Property may store, maintain and use on
the Property (and, if any Tenant is a retail business, hold in inventory and sell in
the ordinary course of such Tenant’s business) Hazardous Materials of a type and
quantity readily available for purchase by the general public and normally stored,
maintained and used (and, if Tenant is a retail business, sold) by tenants in
similar lines of business on properties similar to the Property; and (iii) any
person undertaking an investigation or remediation of Hazardous Materials in, on at
or under the Property may temporarily maintain, store and/or handle such Hazardous
Materials at the Property, provided, such person is fully authorized by applicable
law to handle such materials, such Hazardous Materials are reasonably necessary to
the investigation or remediation, and such Hazardous Materials are brought upon the
Property and are upon completion of such investigation or remediation promptly
removed, in accordance with applicable Hazardous Materials Laws.
	 
	 	b.	 	Hazardous Materials Laws. Grantor shall comply and cause the Property
to comply with all federal, state and local laws, ordinances and regulations relating
to Hazardous Materials (“Hazardous Materials Laws”), including, without
limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (including the Superfund Amendments and Reauthorization Act of 1986,
“CERCLA”), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as
amended, 29 U.S.C. Section 651; the Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as
amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section
300f et seq.; and all comparable state and local laws, laws of other jurisdictions or
orders and regulations.
	 
	 	c.	 	Notices. Except as set forth in the Environmental Reports, Grantor
shall promptly notify Beneficiary in writing of: (i) its acquiring actual knowledge of
any Hazardous Materials on, under or about the Property (other than Hazardous Materials permitted under
Section 6.2.a); (ii) any knowledge by Grantor that the Property does not
comply with any Hazardous Materials Laws; (iii) any claims or actions
(“Hazardous Materials Claims”) pending or threatened against Grantor or, to
Grantor’s knowledge, the Property by any governmental entity or agency or any other
person or entity relating to Hazardous Materials or pursuant to the Hazardous
Materials Laws; and (iv) its acquiring actual





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	 	 	 	knowledge of any occurrence or condition on any real property adjoining or in the
vicinity of the Property that could cause the Property or any part thereof to become
contaminated by or with Hazardous Materials; provided that said discovery,
non-compliance or claim would materially and adversely affect the value of the
Property as security for the Loan or the intended use of the Property.
	 
	 	d.	 	Remedial Action. In response to the presence of any Hazardous
Materials on, under or about the Property, Grantor shall, in accordance with Hazardous
Materials Laws, take or cause to be taken, at Grantor’s sole expense, all remedial
action required by any Hazardous Materials Laws or any judgment, consent decree,
settlement or compromise in respect to any Hazardous Materials Claims.
	 
	 	e.	 	Inspection By Beneficiary. Upon reasonable prior notice to Grantor
(and with respect to any Lease, subject to any restrictions or prohibitions set forth
in such Lease), Beneficiary, its employees and agents, may from time to time (whether
before or after the commencement of a non-judicial or judicial foreclosure proceeding),
enter and inspect the Property for the purpose of determining the existence, location,
nature and magnitude of any past or present release or threatened release of any
Hazardous Materials into, onto, beneath or from the Property.
	 
	 	f.	 	Monitoring. Upon notice to Grantor or Grantor’s acquiring actual
knowledge that the Property has violated Hazardous Materials Laws, Grantor shall comply
or cause any Tenant to comply with the terms and conditions regarding remediation and
monitoring as set forth in the Environmental Liabilities Agreement of even date
herewith, executed by Grantor in favor of Beneficiary.
	 
	 	g.	 	Underground Storage Tanks. Grantor shall not install or permit to be
installed any asbestos-containing materials at the Property. Grantor shall remedy or
cause the remedy of all violations of Hazardous Materials Laws with respect to any
asbestos or any existing underground or above ground storage tanks (“Storage
Tanks”) including, but not limited to, removal of Storage Tanks in the manner and
as required by applicable Hazardous Materials Laws. If required by applicable
Hazardous Materials Laws, to Grantor’s actual knowledge, Grantor or its predecessor in
interest has registered all Storage Tanks which are now located on the Property and has
paid all fees assessed by the applicable authority in connection with such tanks (and
Grantor will so register and pay said fees, or cause any Tenant to so register and pay
said fees, with respect to any Storage Tanks hereafter located on the Property), as
required by Hazardous Materials Laws. To the extent any such Storage Tanks have not
been registered, Grantor will hereafter promptly register such Storage Tanks and pay
any fees assessed by the applicable authority in connection therewith, as required by
Hazardous Materials Laws, or cause any Tenant to so register





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	 	 	 	and pay said fees. Grantor will comply, or cause compliance, with the above
mentioned laws, the Federal Solid Waste Disposal Act, and 40 C.F.R. Part 280, as
supplemented and amended, including without limitation, requirements for financial
assurance, tank replacement and monitoring.






	6.3.	 	COMPLIANCE WITH LAWS. Grantor shall comply, or cause compliance (in each case to
avoid a Material Adverse Effect), with all federal, state and local laws, rules and
regulations applicable to the Property, including, without limitation, all zoning and building
requirements and all requirements of the Americans With Disabilities Act of 1990 (42 U.S.C.
Section 12101 et seq.), as amended from time to time. Grantor shall possess and maintain or
cause Grantor’s Tenant to possess and maintain in full force and effect at all times, in each
case to avoid a Material Adverse Effect: (a) all certificates of occupancy and other
licenses, permits and authorizations required by applicable law for the existing use of the
Property and (b) all permits, franchises and licenses and all rights to all trademarks, trade
names, patents and fictitious names, if any, required by applicable law for Grantor to conduct
the business(es) in which Grantor is now engaged. The term “Material Adverse Effect”
means (a) a material and adverse effect on (i) the value of the Property as security for the
Loan or (ii) the intended use of the Property, (b) resulting in fines in excess of $5,000.00,
(c) resulting in penalties or sanctions that could impair the business, operations,
properties, assets or condition (financial or otherwise) of Grantor’s Tenant when considered
with respect to the Property, (d) material impairment of the ability of Grantor’s Tenant to
perform its obligations under its Lease, (e) material impairment of the landlord’s rights
under any Lease, or (f) imposition of liens upon the Property. In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding that such event
does not of itself have such effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event and all other then occurring events and
existing conditions would result in a Material Adverse Effect.
	 
	6.4.	 	LITIGATION. Grantor shall promptly notify Beneficiary in writing of any litigation
pending or threatened against Grantor claiming damages in excess of $250,000.00 and of all
pending or threatened litigation against Grantor if the aggregate damage claims against
Grantor exceed $500,000.00.
	 
	6.5.	 	MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Grantor shall not: (a) merge or
consolidate with any other entity; (b) make any substantial change in the nature of Grantor’s
business or structure; (c) acquire all or substantially all of the assets of any other entity;
or (d) sell, lease, assign, transfer or otherwise dispose of a material part of Grantor’s
assets, except in the ordinary course of Grantor’s business or in accordance with the terms of
the Note.
	 
	6.6.	 	ACCOUNTING RECORDS. Grantor shall maintain adequate books and records in accordance
with the same accounting standard used by Grantor to prepare the financial statements
delivered





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	 	 	to and approved by Beneficiary in connection with the making of the Loan or other accounting
standards approved by Beneficiary. Grantor shall permit any representative of Beneficiary,
at any reasonable time and from time to time, to inspect, audit and examine such books and
records and make copies of same. Unless a Default exists, any such inspection beyond one
(1) time a year shall be at Beneficiary’s expense.
	 
	6.7.	 	COSTS, EXPENSES AND ATTORNEYS’ FEES. Grantor shall pay to Beneficiary the full
amount of all costs and expenses, including, without limitation, reasonable attorneys’ fees
and expenses, incurred by Beneficiary in connection with: (a) appraisals and inspections of
the Property or Collateral required by Beneficiary as a result of (i) a Transfer or proposed
Transfer (as defined below), or (ii) a Default; (b) appraisals and inspections of the Property
or Collateral required by applicable law, including, without limitation, federal or state
regulatory reporting requirements; and (c) any acts performed by Beneficiary at Grantor’s
request or wholly or partially for the benefit of Grantor (including, without limitation, the
preparation or review of amendments, assumptions, waivers, releases, reconveyances, estoppel
certificates or statements of amounts owing under any Secured Obligation). In connection with
appraisals and inspections, Grantor specifically (but not by way of limitation) acknowledges
that: (aa) a formal written appraisal of the Property by a state certified or licensed
appraiser may be required by federal regulatory reporting requirements on an annual or more
frequent basis; and (bb) Beneficiary may require inspection of the Property by an independent
supervising architect, a cost engineering specialist, or both. Grantor shall pay all
indebtedness arising under this Section immediately upon demand by Beneficiary together with
late charges thereon as set forth in the Note if not paid by Grantor on or before the
fourth (4th) day after the demand for payment is made by Beneficiary.
	 
	6.8.	 	LIENS, ENCUMBRANCES AND CHARGES. Grantor shall promptly discharge (or cause to be
discharged) by bonding or otherwise any lien, charge or other encumbrance which attaches to
the Property in violation of Section 6.15. Subject to Grantor’s right to contest such
matters under this Deed of Trust or Tenant’s right to contest such matters under any Lease or
as expressly permitted in the Loan Documents, Grantor shall pay when due or cause to be paid
when due all obligations secured by or reducible to liens and encumbrances which shall now or
hereafter encumber or appear to encumber all or any part of the Property or any interest
therein, whether senior or subordinate hereto, including, without limitation, all claims for
work or labor performed, or materials or supplies furnished, in connection with any work of
demolition, alteration, repair, improvement or construction of or upon the Property, except
such as Grantor may in good faith contest or as to which a bona fide dispute may arise
(provided provision is made to the satisfaction of Beneficiary for eventual payment thereof in
the event that Grantor is obligated to make such payment and that any recorded claim of lien,
charge or other encumbrance against the Property is promptly discharged by bonding or
otherwise). So long as it complies





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	 	 	with the provisions of this Section 6.8 and any other relevant provisions of a
Lease, a Tenant under a Lease shall have the right to perform Grantor’s obligations under
this Section 6.8.
	 
	6.9.	 	TAXES AND OTHER LIABILITIES. Subject to Grantor’s rights to contest such taxes and
assessments under Section 8.3 of this Deed of Trust or Tenant’s right to contest such
matters under any Lease or as expressly permitted in the other Loan Documents, Grantor shall
pay and discharge or cause to be paid and discharged when due any and all indebtedness,
obligations, assessments and taxes, both real and personal and including federal and state
income taxes and state and local property taxes and assessments. Upon request of Beneficiary,
Grantor shall promptly provide to Beneficiary copies of all tax and assessment notices
pertaining to the Property. Grantor hereby authorizes Beneficiary to obtain, at Grantor’s
expense, a tax service contract which shall provide tax information on the Property to
Beneficiary for the term of the Loan and any extensions or renewals of the Loan.
	 
	6.10.	 	INSURANCE COVERAGE. Grantor shall comply with the terms and provisions of that
certain Agreement Regarding Required Insurance dated as of the date hereof by and between
Grantor and Beneficiary.
	 
	6.11.	 	CONDEMNATION AND INSURANCE PROCEEDS.






	 	a.	 	Assignment of Claims. Grantor absolutely and irrevocably assigns to
Beneficiary all of the following rights, claims and amounts (collectively,
“Claims”), all of which shall be paid to Beneficiary except as otherwise
provided in any Lease: (i) all awards of damages and all other compensation to which
Grantor is entitled directly or indirectly by reason of a condemnation or proposed
condemnation for public or private use affecting all or any part of, or any interest
in, the Property; (ii) all other claims and awards to which Grantor is entitled for
damages to or decrease in value of all or any part of, or any interest in, the
Property; (iii) all proceeds of any insurance policies payable to Grantor by reason of
loss sustained to all or any part of the Property; and (iv) all interest which may
accrue on any of the foregoing; any such awards, proceeds, interest and other sums of
the Claims herein collectively called, “Proceeds.” Grantor shall give
Beneficiary prompt written notice upon learning of the occurrence of any casualty
affecting, or the institution of any proceedings for eminent domain or for the
condemnation of, the Property or any portion thereof. So long as no Default has
occurred and is continuing at the time; (i) Grantor shall have the right to adjust,
compromise and settle any Claim or group of related Claims of $100,000.00 or less
without the participation or consent of Beneficiary and (ii) Beneficiary shall have the
right to participate in and consent to any adjustment, compromise or settlement of any
Claim or group of related Claims exceeding $100,000.00. If a Default has occurred and
is continuing at the time, Grantor hereby irrevocably empowers Beneficiary, in the name
of Grantor, as Grantor’s true and lawful





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	 	 	 	attorney in fact, to commence, appear in, defend, prosecute, adjust, compromise and
settle all Claims; provided, however, Beneficiary shall not be responsible for any
failure to undertake any or all of such actions regardless of the cause of the
failure. All Proceeds shall, in all cases, be payable to Beneficiary, except as
otherwise provided in any Lease.
	 
	 	b.	 	Application of Proceeds; No Default. So long as no Default has
occurred and is continuing at the time of Beneficiary’s receipt of the Proceeds and no
Default occurs thereafter, the following provisions shall apply (subject to the rights
of Tenant under any Lease):






	 	(i)	 	Condemnation. If the Proceeds are the result of Claims
described in clauses 6.11.a. (i) or (ii) above, or interest accrued thereon,
Beneficiary shall apply the Proceeds in the following order of priority:
First, to Beneficiary’s expenses in settling, prosecuting or defending the
Claims; Second, to the repair or restoration of the portion of the Property, if
any, not condemned or proposed for condemnation and not otherwise the subject
of a claim or award; and Third, to the Secured Obligations in any order without
suspending, extending or reducing any obligation of Grantor to make installment
payments.
	 
	 	(ii)	 	Casualty and Other Insurance. If the Proceeds are the
result of Claims described in clause 6.11.a.(iii) above or interest accrued
thereon, Beneficiary shall apply the Proceeds in the following order of
priority: First, to Beneficiary’s expenses in settling, prosecuting or
defending the Claims; Second, to the repair or restoration of the Property; and
Third, (aa) if the repair or restoration of the Property has been completed and
all costs incurred in connection with the repair or restoration have been paid
in full, to Grantor or (bb) in all other circumstances, to the Secured
Obligations in any order without suspending, extending or reducing any
obligation of Grantor to make installment payments.
	 
	 	(iii)	 	Restoration. Notwithstanding the foregoing
Sections 6.11.b.(i) and (ii) but subject to the rights of Tenant under
any Lease, Beneficiary shall have no obligation to make any Proceeds available
for the repair or restoration of all or any portion of the Property unless and
until all the following conditions have been satisfied: (aa) delivery to
Beneficiary of the Proceeds plus any additional amount which is needed to pay
all costs of the repair or restoration (including, without limitation, taxes,
financing charges, insurance and rent during the repair period); (bb)
establishment of an arrangement for lien releases and disbursement of funds
acceptable to Beneficiary; (cc) delivery to Beneficiary in form and content
acceptable to Beneficiary of all of the following: (1) plans and specifications
for the work; (2) a contract for the work, signed by a contractor





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	 	 	 	acceptable to Beneficiary; (3) a cost breakdown for the work; (4) if
reasonably required by Beneficiary, a payment and performance bond for the
work; (5) evidence of the continuation of all Leases unless consented to in
writing by Beneficiary; (6) evidence that, upon completion of the work, the
size, capacity, value, and income coverage ratios for the Property will be
at least as great as those which existed immediately before the damage or
condemnation occurred; (7) evidence that the work can reasonably be
completed on or before that date which is six (6) months prior to the
Maturity Date; and (8) evidence of the satisfaction of any additional
conditions that Beneficiary may reasonably establish to protect
Beneficiary’s security. Grantor acknowledges that the specific conditions
described above are reasonable.






	 	c.	 	Application of Proceeds; Default. If a Default has occurred and is
continuing at the time of Beneficiary’s receipt of the Proceeds or if a Default occurs
at any time thereafter, Beneficiary may, at Beneficiary’s absolute discretion and
regardless of any impairment of security or lack of impairment of security, but subject
to applicable law governing use of the Proceeds, if any, and the rights of Tenant under
any Lease, apply all or any of the Proceeds to Beneficiary’s expenses in settling,
prosecuting or defending the Claims and then apply the balance to the Secured
Obligations in any order without suspending, extending or reducing any obligation of
Grantor to make installment payments, and may release all or any part of the Proceeds
to Grantor upon any conditions Beneficiary chooses.






	6.12.	 	IMPOUNDS. Any impounds payable by Grantor under the Loan Documents
(“Impounds”) shall be deposited into one or more segregated or commingled accounts
maintained by Beneficiary or its servicing agent. Except as otherwise provided in the Loan
Documents, such account(s) shall not bear interest. Beneficiary shall not be a trustee,
special depository or other fiduciary for Grantor with respect to such account. If no Default
exists, Beneficiary shall apply all Impounds in accordance with the Loan Documents. If a
Default exists, Beneficiary may apply any or all Impounds to any Secured Obligation or to cure
such Default, whereupon Grantor shall promptly restore all Impounds so applied and cure all
Defaults not cured by such application. The obligations of Grantor hereunder shall not be
diminished by Grantor’s deposits of Impounds, except to the extent that such obligations are
actually satisfied by Beneficiary’s application of such Impounds. Upon any assignment of this
Deed of Trust, Beneficiary may assign all Impounds in its possession to Beneficiary’s
assignee, whereupon Beneficiary shall be released from all liability with respect to such
Impounds. Within sixty (60) days following full repayment of the Secured Obligations (other
than as a consequence of foreclosure or conveyance in lieu of foreclosure) or at such earlier
time as Beneficiary may elect, Beneficiary shall pay to Grantor all Impounds in its
possession, and no other party shall have any right or claim thereto. Grantor shall





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	 	 	deliver to Beneficiary, promptly upon receipt, all bills for taxes and insurance for which
Beneficiary has required Impounds.
	 
	6.13.	 	DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. Grantor shall protect, preserve
and defend the Property and title to and right of possession of the Property, the security of
this Deed of Trust and the rights and powers of Beneficiary and Trustee hereunder at Grantor’s
sole expense against all adverse claims, whether the claim: (a) is against a possessory or
non-possessory interest; (b) arose prior or subsequent to the Effective Date; or (c) is senior
or junior to Grantor’s or Beneficiary’s rights. Grantor shall give Beneficiary and Trustee
prompt notice in writing upon learning of the assertion of any claim, of the filing of any
action or proceeding, of the occurrence of any damage to the Property and of any condemnation
offer or action.
	 
	6.14.	 	RIGHT OF INSPECTION. Subject to any restrictions or prohibitions set forth in any
Lease, Beneficiary and its independent contractors, agents and employees may enter the
Property from time to time at any reasonable time and upon five (5) Business Days’ prior
notice for the purpose of inspecting the Property and ascertaining Grantor’s compliance with
the terms of this Deed of Trust. Beneficiary shall use reasonable efforts to assure that
Beneficiary’s entry upon and inspection of the Property shall not materially and unreasonably
interfere with the business or operations of Grantor or Grantor’s Tenants on the Property.
	 
	6.15.	 	DUE ON SALE/ENCUMBRANCE.






	 	a.	 	Definitions. The following terms shall have the meanings indicated:
	 
	 	 	 	“Restricted Party” shall mean each of (i) Grantor, (ii) any entity obligated
under any guaranty or indemnity made in favor of Beneficiary in connection with the
Loan and (iii) any shareholder, partner, member or any direct owner of Grantor or
any entity obligated under item (ii) hereinabove.
	 
	 	 	 	“Transfer” shall mean any sale, installment sale, exchange, mortgage,
pledge, hypothecation, assignment, encumbrance or other transfer, conveyance or
disposition, whether voluntarily, involuntarily or by operation of law or otherwise.
	 
	 	b.	 	Property Transfers.






	 	(i)	 	Prohibited Property Transfers. Without the prior
written consent of Beneficiary, Grantor shall not cause or permit any Transfer
of all or any part of the Property or the Collateral (collectively, a
“Prohibited Property Transfer”), including, without limitation, the
Transfer of all or any part of Grantor’s right, title and interest in and to
the Property, any Leases or any Payments.





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	 	(ii)	 	Permitted Property Transfers. Notwithstanding the
foregoing, none of the following Transfers shall be deemed to be a Prohibited
Property Transfer: (A) a Transfer which is expressly permitted under the Note;
(B) a Lease which is permitted under Article 3; and (C) the sale of
inventory in the ordinary course of the business at the Property.






	 	c.	 	Equity Transfers.






	 	(i)	 	Prohibited Equity Transfers. Without the prior written
consent of Beneficiary, Grantor shall not cause or permit any Transfer of any
interest in a Restricted Party (collectively, a “Prohibited Equity
Transfer”), including without limitation, (A) if a Restricted Party is a
corporation (other than Cole Credit Property Trust III, Inc.), any merger,
consolidation or other Transfer of more than 10% of such corporation’s stock or
the creation or issuance of new stock in one or a series of transactions
resulting in total capital stock then issued and outstanding which is more than
110% of the total immediately prior to such issuance; (B) if a Restricted Party
is a limited partnership, limited liability partnership, general partnership or
joint venture, any merger or consolidation or the change, removal, resignation
or addition of a general partner or the Transfer of the partnership interest of
any general partner or any profits or proceeds relating to such partnership
interests; (C) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member (or if no managing member, any member) or any profits or proceeds
relating to such limited liability company interest, or the Transfer of a
non-managing limited liability company interest or the creation or issuance of
new non-managing limited liability company interests; or (D) if a Restricted
Party is a trust, any merger, consolidation or other Transfer of any legal or
beneficial interest in such Restricted Party or the creation or issuance of new
legal or beneficial interests. Notwithstanding the foregoing, in no event
shall a Transfer or proposed Transfer of any direct or indirect legal or
beneficial interest in Grantor (whether by a Restricted Party or a non
Restricted Party) be done in a manner that would violate the Patriot Act.
Notwithstanding the foregoing, with respect to the direct and indirect
interests in Cole Credit Property Trust III, Inc., Grantor shall be permitted
to rely exclusively on the implementation by its U.S. broker-dealer network of
the normal and customary investor screening practices mandated by applicable
law and NASD regulations in satisfaction of the covenant set forth in the
preceding sentence.





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	 	(ii)	 	Permitted Equity Transfers. Notwithstanding the
foregoing, however, (i) limited partnership interests in Grantor or in any
general partner or member of Grantor shall be freely transferable without the
consent of Beneficiary, (ii) any involuntary transfer caused by the death of
Grantor or any general partner, shareholder, joint venturer, manager, member or
beneficial owner of a trust shall not be a Default under this Deed of Trust so
long as Grantor is reconstituted, if required, following such death and so long
as those persons responsible for the management of the Property and Grantor
remain unchanged as a result of such death or any replacement management is
approved by Beneficiary, (iii) gifts for estate planning purposes of any
individual’s interests in Grantor or in any of Grantor’s general partners,
managing members or joint venturers to the spouse or any lineal descendant of
such individual, or to a trust for the benefit of any one or more of such
individual, spouse, or lineal descendant, shall not be a Default under this
Deed of Trust so long as Grantor is reconstituted, if required, following such
gift and so long as those persons responsible for the management of the
Property and Grantor remain unchanged following such gift or any replacement
management is approved by Beneficiary and (iv) membership interests in Grantor
and interests in any member of Grantor or in any partner of any member of
Grantor may be transferred without the consent of Beneficiary so long as, after
any such transfer, Christopher H. Cole or Cole Credit Property Trust III, Inc.,
or any of their wholly owned affiliates or subsidiaries, “controls” the affairs
of Grantor, where the term “control” means the power to direct the management
and policies of Grantor, provided, that in all of the foregoing cases shall
such transfer be done in a manner that would not violate the Patriot Act,
subject to the provisions of the last sentence of Section 6.15.c.(i).
In the event of a transfer by Cole REIT III Operating Partnership, LP of its
interests in Grantor pursuant to the terms hereof, Grantor agrees to
contemporaneously furnish to Beneficiary a new limited guaranty of the Loan (in
form and substance as executed at closing of the Loan) by a new guarantor
satisfactory to Benficiary in Beneficiary’s sole and absolute discretion.
Grantor shall provide Beneficiary with copies of the applicable transfer
documents or governing instruments in each of the foregoing instances in the
preceding sentence within fifteen (15) days of the effective date of any such
transfer or change.
	 
	 	(iii)	 	Entity Status. Nothing contained in this Section
6.15.c. shall be construed to permit any Transfer which would result in a
breach of any representation, warranty or covenant of Grantor under Section
5.2 above.





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	 	d.	 	Certificates of Ownership. Grantor shall deliver to Beneficiary, at
any time and from time to time, not more than five (5) days after Beneficiary’s written
request therefor, a certificate, in form acceptable to Beneficiary, signed and dated by
Grantor, listing the names of all persons and entities holding direct or indirect legal
or beneficial interests in the Property or any Restricted Party and the type and amount
of each such interest, except for the ownership of Cole Credit Property Trust III,
Inc., a Maryland corporation, for which a certificate shall not be required.






	6.16.	 	ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee accepts this trust when
this Deed of Trust is recorded. From time to time upon written request of Beneficiary and
presentation of this Deed of Trust, or a certified copy thereof, for endorsement, and without
affecting the personal liability, if any, of any person for payment of any indebtedness or
performance of any Secured Obligation, Trustee may, without liability therefor and without
notice: (a) reconvey all or any part of the Property; (b) consent to the making of any map or
plat of the Property; (c) join in granting any easement on the Property; (d) join in any
declaration of covenants and restrictions; or (e) join in any extension agreement or any
agreement subordinating the lien or charge of this Deed of Trust. Nothing contained in the
immediately preceding sentence shall be construed to limit, impair or otherwise affect the
rights of Grantor in any respect. Except as may otherwise be required by applicable law,
Trustee or Beneficiary may from time to time apply to any court of competent jurisdiction for
aid and direction in the execution of the trusts hereunder and the enforcement of the rights
and remedies available hereunder, and Trustee or Beneficiary may obtain orders or decrees
directing or confirming or approving acts in the execution of said trusts and the enforcement
of said remedies. Trustee has no obligation to notify any party of any pending sale or any
action or proceeding (including, without limitation, actions in which Grantor, Beneficiary or
Trustee shall be a party) unless held or commenced and maintained by Trustee under this Deed
of Trust. Trustee shall not be obligated to perform any act required of it hereunder unless
the performance of the act is requested in writing and Trustee is reasonably indemnified and
held harmless against loss, cost, liability and expense.
	 
	6.17.	 	COMPENSATION OF TRUSTEE. Grantor shall pay to Trustee reasonable compensation and
reimbursement for services and expenses in the administration of this trust, including,
without limitation, reasonable attorneys’ fees. Grantor shall pay all indebtedness arising
under this Section immediately upon demand by Trustee or Beneficiary together with interest
thereon from the date the indebtedness arises at the rate of interest then applicable to the
principal balance of the Note as specified therein.
	 
	6.18.	 	EXCULPATION. Beneficiary shall not directly or indirectly be liable to Grantor or
any other person as a consequence of: (a) the exercise of the rights, remedies or powers
granted to Beneficiary in this Deed of Trust; (b) the failure or refusal of Beneficiary to
perform or discharge





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	 	 	any obligation or liability of Grantor under any agreement related to the Property or under
this Deed of Trust; or (c) any loss sustained by Grantor or any third party resulting from
Beneficiary’s failure to lease the Property after a Default (hereafter defined) or from any
other act or omission of Beneficiary in managing the Property after a Default unless the
loss is caused by the willful misconduct, bad faith or gross negligence of Beneficiary and
no such liability shall be asserted or enforced against Beneficiary, all such liability
being expressly waived and released by Grantor.
	 
	6.19.	 	INDEMNITY. Without in any way limiting any other indemnity contained in this Deed
of Trust, Grantor agrees to defend, indemnify and hold harmless Trustee and the Beneficiary
Group (hereinafter defined) from and against any claim, loss, damage, cost, expense or
liability directly or indirectly arising out of: (a) the making of the Loan, except for
violations of banking laws or regulations by the Beneficiary Group; (b) this Deed of Trust,
including, without limitation, all recording costs, taxes, documentary stamp taxes, intangible
taxes, and costs of title insurance endorsements; (c) the execution of this Deed of Trust or
the performance of any act required or permitted hereunder or by law; (d) any failure of
Grantor to perform Grantor’s obligations under this Deed of Trust or the other Loan Documents;
(e) any alleged obligation or under-taking on the Beneficiary Group’s part to perform or
discharge any of the representations, warranties, conditions, covenants or other obligations
contained in any other document related to the Property; (f) any act or omission by Grantor or
any contractor, agent, employee or representative of Grantor with respect to the Property; or
(g) any claim, loss, damage, cost, expense or liability directly or indirectly arising out of:
(i) the use, generation, manufacture, storage, treatment, release, threatened release,
discharge, disposal, transportation or presence of any Hazardous Materials which are found in,
on, under or about the Property (including, without limitation, underground contamination); or
(ii) the breach of any covenant, representation or warranty of Grantor under Sections
5.1.p., 5.1.q., 5.1.r., or 6.2 above. This indemnity shall include, without limitation:
(aa) all actual damages (including, without limitation, any third party tort claims or
governmental claims, fines or penalties against the Beneficiary Group); (bb) all court costs
and reasonable attorneys’ fees (including, without limitation, expert witness fees) paid or
incurred by the Beneficiary Group; and (cc) the costs, whether foreseeable or unforeseeable,
of any investigation, repair, cleanup or detoxification of the Property which is required by
any governmental entity or is otherwise necessary to render the Property in compliance with
all laws and regulations pertaining to Hazardous Materials. The foregoing to the contrary
notwithstanding, this indemnity shall not include any claim, loss, damage, cost, expense or
liability directly or indirectly arising out of the gross negligence or willful misconduct of
any member of the Beneficiary Group or Trustee, or any claim, loss, damage, cost, expense or
liability incurred by the Beneficiary Group or Trustee arising from any act or incident on the
Property occurring after the full reconveyance and release of the lien of this Deed of Trust
on the Property, or with respect to the matters set forth in clause (g), any claim, loss,
damage, cost, expense or liability incurred by the Beneficiary Group resulting from the
introduction and initial





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	 	 	release of Hazardous Materials on the Property occurring after the transfer of title to the
Property at a foreclosure sale under this Deed of Trust, either pursuant to judicial decree
or the power of sale, or by deed in lieu of such foreclosure, or after any Member of the
Beneficiary Group takes actual possession of the Property prior to such transfer of title to
the Property (and not, for example, through the appointment of a receiver).
“Beneficiary Group,” as used herein, shall mean (1) Beneficiary (including, without
limitation, any participant in the Loan and any of their respective successors or assigns,
whether by sale, a secondary market transaction, or otherwise), (2) any entity controlling,
controlled by or under common control with Beneficiary, (3) the directors, officers,
employees and agents of Beneficiary and such other entities, and (4) the successors, heirs
and assigns of the entities and persons described in foregoing clauses (1) through (3).
Grantor shall pay immediately upon Trustee’s or Beneficiary’s demand any amounts owing under
this indemnity together with interest from the date the indebtedness arises until paid at
the rate of interest applicable to the principal balance of the Note as specified therein.
Grantor agrees to use legal counsel reasonably acceptable to the Trustee and the Beneficiary
Group in any action or proceeding arising under this indemnity. THE PROVISIONS OF THIS
SECTION SHALL SURVIVE THE SATISFACTION AND RELEASE OF THIS DEED OF TRUST, BUT GRANTOR’S
LIABILITY UNDER THIS INDEMNITY SHALL BE SUBJECT TO THE PROVISIONS OF THE SECTION IN THE NOTE
ENTITLED “BORROWER’S LIABILITY.”
	 
	6.20.	 	SUBSTITUTION OF TRUSTEE. If Trustee shall die or become disqualified from acting in
the execution of this trust, or shall fail or refuse to execute the same when requested by
Beneficiary to do so, or if, for any reason, with or without cause, Beneficiary shall prefer
to appoint a substitute trustee to act instead of the herein named Trustee, Beneficiary shall
have full power to appoint, at any time and without any formality other than by written
instrument executed by Beneficiary, a substitute trustee, and, if desired by Beneficiary,
several substitute trustees in succession, each of whom shall succeed to all the estate,
rights, powers and duties of Trustee named herein, and no notice of such appointment need be
given to Grantor or to any other person or filed for record in any public office. Such
appointment may be executed by Beneficiary or any agent of Beneficiary and, if Beneficiary is
a corporation or other entity, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by the board of
directors or any executive officer of the corporation or otherwise. All references herein to
Trustee shall be deemed to refer to the party identified herein as “Trustee” and to any
successor or substitute appointed or designated as herein provided and from time to time
acting hereunder.
	 
	6.21.	 	RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to or
the consent, approval or agreement of any persons or entities having any interest at any time
in the Property or in any manner obligated under the Secured Obligations (“Interested
Parties”), Beneficiary may, from time to time: (a) fully or partially release any





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	 	 	person or entity from liability for the payment or performance of any Secured Obligation;
(b) agree with Grantor to extend the maturity of any Secured Obligation; (c) make any
agreement with Grantor increasing the amount or otherwise altering the terms of any Secured
Obligation; (d) accept additional security for any Secured Obligation; or (e) release all or
any portion of the Property, Collateral and other security for any Secured Obligation.
Except as expressly set forth in any documents relating to the foregoing actions, none of
the foregoing actions shall release or reduce the personal liability of any of said
Interested Parties, or release or impair the priority of the lien of this Deed of Trust upon
the Property.
	 
	6.22.	 	SALE OR PARTICIPATION OF LOAN. Beneficiary may at any time sell, assign,
participate or securitize all or any portion of Beneficiary’s rights and obligations under the
Loan Documents, and that any such sale, assignment, participation or securitization may be to
one or more financial institutions or other entities, to private investors, or into the public
securities market, in Beneficiary’s sole discretion. Grantor further agrees that Beneficiary
may disseminate to any such actual or potential purchaser(s), assignee(s) or participant(s)
(and to any investment banking firms, rating agencies, accounting firms, law firms and other
third party advisory firms and investors involved with the Loan and the Loan Documents or the
applicable sale, assignment, participation or securitization) all documents and financial and
other information heretofore or hereafter provided to or known to Beneficiary with respect to:
(a) the Property and its operation; (b) any party connected with the Loan (including, without
limitation, Grantor, any partner or member of Grantor, any constituent partner or member of
Grantor, any guarantor and any non-borrower). In the event of any such sale, assignment,
participation or securitization, Beneficiary and the other parties to the same shall share in
the rights and obligations of Beneficiary set forth in the Loan Documents as and to the extent
they shall agree among themselves. In connection with any such sale, assignment,
participation or securitization, Grantor further agrees that the Loan Documents shall be
sufficient evidence of the obligations of Grantor to each purchaser, assignee or participant,
and Grantor shall, within fifteen (15) days after request by Beneficiary; (c) deliver to
Beneficiary such information and documents relating to Grantor, the Property and its operation
and any party connected with the Loan as Beneficiary or any rating agency may request; (d)
deliver to Beneficiary an estoppel certificate for the benefit of Beneficiary and any other
party designated by Beneficiary verifying the status and terms of the Loan, in form and
content satisfactory to Beneficiary; (e) enter into such amendments to the Loan Documents as
may be reasonably requested (including, without limitation, to restructure all or any part of
the Loan into two or more promissory notes in whatever proportion Beneficiary determines) in
order to facilitate any such sale, assignment, participation or securitization without
impairing Grantor’s rights or increasing Grantor’s obligations (and without requiring a
secondary borrower or grantor); (f) if, as a condition to the closing of the Loan, Grantor was
required to be a special-purpose bankruptcy-remote entity, enter into such amendments to the
organizational documents of Grantor as any rating agency may request to preserve or enhance
Grantor’s special-purpose





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	 	 	bankruptcy-remote status; and (g) if, as a condition to the closing of the Loan, Grantor was
required to provide Beneficiary with any nonconsolidation opinions, provide Beneficiary with
such amendments and restatements of such opinions as any rating agency may request. The
preparation and delivery of the foregoing items shall be at Grantor’s sole cost and expense,
except for items that are not prepared and/or provided regularly pursuant to the terms of
the Loan Documents, and provided further that Grantor obtains Beneficiary’s consent to the
cost of any extraordinary item to be paid by Beneficiary prior to incurring such expense.
The indemnity obligations of Grantor under the Loan Documents shall also apply with respect
to any purchaser, assignee or participant.
	 
	6.23.	 	RELEASE. Upon payment in full of the Secured Obligations (including, without
limitation, repayment in full of all principal, interest and other amounts owing under the
Note), and all obligations, if any, of Beneficiary for future advances have been terminated,
then, and in that event only, Beneficiary shall release, without warranty, the Property or
that portion thereof then held hereunder. The recitals of any facts in any release shall be
conclusively deemed true. To the extent permitted by law, the release may describe the grantee
as “the person or persons legally entitled thereto.” Beneficiary shall have no duty to
determine the rights of persons claiming to be rightful grantees of any release. When the
Property has been fully released, the last such release shall operate as a reassignment of all
future rents, issues and profits of the Property to the person or persons legally entitled
thereto. Notwithstanding anything to the contrary contained in this Section 6.23, the
release of the Property shall not affect (i) any other Secured Obligations under the Loan
Documents, (ii) the Environmental Liabilities Agreement executed by Grantor of even date
herewith, or (iii) any guaranty now or hereafter executed with respect to the Loan
(collectively or severally as the context thereof may suggest or require).
	 
	6.24.	 	SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances,
whether released of record or not, paid in whole or in part by Beneficiary pursuant to this
Deed of Trust or by the proceeds of any loan secured by this Deed of Trust.





ARTICLE 7 DEFAULT





	7.1.	 	DEFAULT. For all purposes hereof, “Default” shall mean either an
“Optional Default” (as defined below) or an “Automatic Default” (as defined
below).






	 	a.	 	Optional Default. An “Optional Default” shall occur, at
Beneficiary’s option, upon the occurrence of any of the following events:






	 	(i)	 	Monetary. Grantor shall fail to (aa) pay when due any
sums which by their express terms require payment upon the expiration of a
specified notice and cure period or sums which are payable on the Maturity
Date, or (bb) pay any other





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	 	 	 	sums payable under the Note, this Deed of Trust or any of the other Loan
Documents which failure remains uncured for five (5) days after written
notice thereof shall have been given to Grantor by Beneficiary, excluding
with respect to (aa) or (bb) any monthly payment of principal or interest
due under the Note which is an Automatic Default as set forth in Section
7.1.b.(i) of this Deed of Trust.
	 
	 	(ii)	 	Failure to Perform. Grantor shall fail to observe,
perform or discharge any of Grantor’s obligations, covenants, conditions or
agreements, other than Grantor’s payment obligations, under the Note, this Deed
of Trust or any of the other Loan Documents (including, without limitation, any
of the other mortgages and deeds of trust executed as part of the Loan
Documents and securing the Note), and (aa) such failure shall remain uncured
for thirty (30) days after written notice thereof shall have been given to
Grantor by Beneficiary or (bb) if such failure is of such a nature that it
cannot be cured within such thirty (30) day period, Grantor shall fail to
commence to cure such failure within such thirty (30) day period or shall fail
to diligently prosecute such curative action thereafter.
	 
	 	(iii)	 	Representations and Warranties. Any representation,
warranty, certificate or other statement (financial or otherwise) made or
furnished by or on behalf of Grantor, or a guarantor, if any, to Beneficiary or
in connection with any of the Loan Documents, or as an inducement to
Beneficiary to make the Loan, shall be false, incorrect, incomplete or
misleading in any material respect when made or furnished.
	 
	 	(iv)	 	Seizure; Attachment. The seizure of any material
portion (as reasonably determined by Beneficiary) of the Property; or the
sequestration or attachment of, or levy or execution upon any of the Property,
the Collateral or any other collateral provided by Grantor under any of the
Loan Documents, or any material portion of the other assets of Grantor, other
than a condemnation, which sequestration, attachment, levy or execution is not
released or dismissed within sixty (60) days after its occurrence; or the sale
of any assets effected pursuant to any of the foregoing (other than pursuant to
a condemnation).
	 
	 	(v)	 	Uninsured Casualty. The occurrence of an uninsured
casualty with respect to any material portion (as reasonably determined by
Beneficiary) of the Property unless: (aa) no other Default has occurred and is
continuing at the time of such casualty or occurs thereafter; (bb) Grantor
promptly notifies Beneficiary of the occurrence of such casualty; (cc) Tenant
is restoring the Property pursuant to the terms of the Lease or is consummating
a substitution pursuant to the terms of the





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	 	 	 	Lease; and (dd) if Tenant is not restoring the Property pursuant to the
terms of the Lease and an Event of Default exists under the Lease by virtue
of such failure to restore, Grantor shall within forty-five (45) days
thereafter, deliver to Beneficiary immediately available funds in an amount
sufficient, in Beneficiary’s reasonable opinion, to pay all costs of the
repair or restoration (including, without limitation, taxes, financing
charges, insurance and rent during the repair period). So long as no
Default has occurred and is continuing at the time of Beneficiary’s receipt
of such funds and no Default occurs thereafter, but subject to the rights of
Tenant under any Lease, Beneficiary shall make such funds available for the
repair or restoration of the Property. Notwithstanding the foregoing, but
subject to the rights of Tenant under any Lease, Beneficiary shall have no
obligation to make funds available for repair or restoration of the Property
unless and until all the conditions set forth in clauses (bb) and (cc) of
Section 6.11.b.(iii) of this Deed of Trust have been satisfied.
Grantor acknowledges that the specific conditions described above are
reasonable.
	 
	 	(vi)	 	Lease. With respect to a Lease, Grantor defaults under
Section 3.3.b. of this Deed of Trust or a Lease Default occurs under
any Lease, and such default or Lease Default remains uncured for thirty (30)
days after written notice thereof shall have been given by Beneficiary to
Grantor.






	 	b.	 	Automatic Default. An “Automatic Default” shall occur
automatically upon the occurrence of any of the following events:






	 	(i)	 	Monetary. Grantor shall fail to pay when due any
monthly payment of principal and interest due under the Note and no funds are
in the Restricted Account (as defined in the Cash Management Agreement) to make
such payment when due; provided, that, no Automatic Default shall be deemed to
have occurred if Grantor’s failure to pay results solely from Beneficiary’s
failure to timely initiate an ACH debit.
	 
	 	(ii)	 	Voluntary Bankruptcy, Insolvency, Dissolution. (aa)
Grantor’s filing a petition for relief under the Bankruptcy Reform Act of 1978,
as amended or recodified (“Bankruptcy Code”), or under any other
present or future state or federal law regarding bankruptcy, reorganization or
other relief to debtors (collectively, “Debtor Relief Law”); or (bb)
Grantor’s filing any pleading in any involuntary proceeding under the
Bankruptcy Code or other Debtor Relief Law which admits to the petition’s
material allegations regarding Grantor’s insolvency; or (cc) Grantor’s making a
general assignment for the benefit of creditors; or (dd) Grantor’s applying
for, or the appointment of, a receiver,





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	 	 	 	trustee, custodian or liquidator of Grantor or any of its property; or (ee)
the filing by or on behalf of Grantor of a voluntary petition seeking the
liquidation or dissolution of Grantor or the commencement of any other
procedure by or on behalf of Grantor to liquidate or dissolve Grantor.
	 
	 	(iii)	 	Involuntary Bankruptcy. Grantor’s failure to effect a
full dismissal of any involuntary petition under the Bankruptcy Code or other
Debtor Relief Law, or any other procedure to liquidate or dissolve Grantor,
that is filed against Grantor or in any way restrains or limits Grantor or
Beneficiary regarding the Loan or the Property, prior to the earlier of the
entry of any order granting relief sought in the involuntary petition or ninety
(90) days after the date of filing of the petition.
	 
	 	(iv)	 	Partners, Guarantors. The occurrence of an event
specified in Sections (ii) or (iii) as to Grantor, any general partner or any
member of Grantor, as applicable, or any guarantor obligated to Beneficiary
under the Loan Documents.






	7.2.	 	ACCELERATION. Upon the occurrence of an Optional Default, Beneficiary may, at its
option, declare all sums owing to Beneficiary under the Note and the other Loan Documents
immediately due and payable without presentment, demand, protest, notice of protest, notice of
acceleration, notice of intention to accelerate or any other notice of any kind, all of which
are expressly waived by Grantor. Upon the occurrence of an Automatic Default, all sums owing
to Beneficiary under the Note and the other Loan Documents shall automatically become
immediately due and payable, also without presentment, demand, protest, notice of protest,
notice of acceleration, notice of intention to accelerate or any other notice of any kind, all
of which are expressly waived by Grantor.
	 
	7.3.	 	RIGHTS AND REMEDIES. In addition to the rights and remedies in Section 7.2
above, at any time after a Default, Beneficiary shall have all of the following rights and
remedies:






	 	a.	 	Entry on Property. Subject to the rights of Tenant under any Lease,
Beneficiary shall have the right to enter upon the Property from time to time, with or
without notice, and without releasing Grantor from any Secured Obligation, and without
becoming a mortgagee in possession, and do such other acts and things as Beneficiary or
Trustee deems necessary or desirable in order to inspect, investigate, assess and
protect the security hereof or to cure any Default;
	 
	 	b.	 	Appointment of Receiver. Beneficiary shall have the right to apply to a
court of competent jurisdiction for and obtain appointment of a receiver, trustee,
liquidator or conservator of the Property, with or without notice of hearing, for any
purpose, including, without limitation, to enforce Beneficiary’s rights to collect
Payments and to enter on and





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	 	 	 	inspect the Property for Hazardous Materials, as a matter of strict right and
without regard to: (i) the adequacy of the security for the repayment of the Secured
Obligations; (ii) the existence of a declaration that the Secured Obligations are
immediately due and payable; (iii) the filing of a notice of default; or (iv) the
solvency of Grantor, or any guarantor or other person or entity in any manner
obligated to Beneficiary under the Loan Documents;
	 
	 	c.	 	Injunction. Beneficiary shall have the right to commence and maintain
an action or actions in any court of competent jurisdiction to obtain specific
enforcement of the covenants of Grantor hereunder, and Grantor agrees that such
covenants shall be specifically enforceable by injunction or any other appropriate
equitable remedy and that for the purposes of any suit brought under this subparagraph,
Grantor waives the defense of laches and any applicable statute of limitations;
	 
	 	d.	 	Judicial Foreclosure. Beneficiary shall have the right to commence and
maintain an action or actions in any court of competent jurisdiction to foreclose this
instrument as a mortgage or to obtain specific enforcement of the covenants of Grantor
hereunder. For the purposes of any suit brought under this subparagraph, Grantor
waives the defense of laches and any applicable statute of limitations;
	 
	 	e.	 	Non-judicial Foreclosure. Beneficiary shall have the right to direct
the Trustee to sell or offer for sale the Property in such portions, order and parcels
as Beneficiary may determine, with or without having first taken possession of same, to
the highest bidder for cash at public auction at the county courthouse of any county in
which any of the Land to be sold is situated, in the area in such courthouse designated
for real property foreclosure sales in accordance with applicable law (or in the
absence of any such designation, in the area set forth in the notice of sale
hereinafter described), on the first Tuesday of any month between the hours of 10:00
A.M. and 4:00 P.M. (commencing no earlier than such time as may be designated in the
hereinafter described notice of sale), after giving legally adequate notice of the
time, place and terms of sale and that portion of the Property to be sold, in such
manner as permitted or required by Section 51.002 of the Property Code of the State of
Texas relating to the sale of real estate or by Chapter 9 of the Texas Business and
Commerce Code relating to the sale of collateral after default by a debtor (as said
section and chapter now exist or as may be hereafter amended), or by any other present
or subsequent articles or enactments relating to same; provided, however, that nothing
contained in this Section 7.3(e) shall be construed so as to limit in any way
Trustee’s rights to sell the Property and the Collateral, or any portion thereof, by
private sale if, and to the extent that, such private sale is permitted under the laws
of the State of Texas or by public or private sale after entry of a judgment by any
court of competent jurisdiction





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ordering same. At any such sale (i) whether made under the power herein contained,
the aforesaid Property Code Section 51.002, the Texas Business and Commerce Code or
any other legal enactment, or by virtue of any judicial proceedings or any other
legal right, remedy or recourse, it shall not be necessary for Trustee to have taken
possession of the Property (Grantor hereby covenanting and agreeing to deliver to
Trustee any portion of the Property not actually or constructively possessed by
Trustee immediately upon demand by Trustee) and the title to and right of possession
of any such property shall pass to the purchaser thereof as completely as if the
same had been actually present and delivered to purchaser at such sale, (ii) each
instrument of conveyance executed by Trustee shall contain a general warranty of
title, binding upon Grantor and its successors and assigns, (iii) each and every
recital contained in any instrument of conveyance made by Trustee shall conclusively
establish the truth and accuracy of the matters recited therein, including, without
limitation, nonpayment of the Secured Obligations, advertisement and conduct of such
sale in the manner provided herein and otherwise by law and appointment of any
successor Trustee hereunder, (iv) any and all prerequisites to the validity thereof
shall be conclusively presumed to have been performed, (v) the receipt of Trustee or
of such other party or officer making the sale shall be a sufficient discharge to
the purchaser or purchasers for its purchase money and no such purchaser or
purchasers, or its assigns or personal representatives, shall thereafter be
obligated to see to the application of such purchase money, or be in any way
answerable for any loss, misapplication or nonapplication thereof, (vi) to the
fullest extent permitted by law, Grantor shall be completely and irrevocably
divested of all of its right, title, interest, claim and demand whatsoever, either
at law or in equity, in and to the property sold and such sale shall be a perpetual
bar both at law and in equity against Grantor, and against any and all other persons
claiming or to claim the property sold or any part thereof, by, through or under
Grantor, and (vii) to the extent and under such circumstances as are permitted by
law, Beneficiary may be a purchaser at any such sale, and shall have the right,
after paying or accounting for all costs of said sale or sales, to credit the amount
of the bid upon the amount of the Secured Obligations (in the order of priority set
forth in Section 7.4 hereof) in lieu of cash payment;




	 	f.	 	Multiple Foreclosures. Beneficiary shall have the right to resort to
and realize upon the Property and Collateral and any other security now or later held
by Beneficiary concurrently or successively and in one or several consolidated or
independent judicial actions or lawfully taken non-judicial proceedings, or both, and
to apply the proceeds received upon the Secured Obligations all in such order and
manner as Trustee and Beneficiary or either of them determine in their sole discretion;





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	 	g.	 	Rights to Collateral. To exercise all rights Trustee or Beneficiary
may have with respect to the Collateral under this Deed of Trust, the UCC or otherwise
at law; and
	 
	 	h.	 	Other Rights. To exercise such other rights as Trustee or Beneficiary
may have at law or in equity or pursuant to the terms and conditions of this Deed of
Trust or any of the other Loan Documents.






	 	 	In connection with any sale or sales hereunder, Beneficiary may elect to treat any of the
Property which consists of a right in action or which is property that can be severed from
the Property (including, without limitation, any improvements forming a part thereof)
without causing structural damage thereto as if the same were personal property or a
fixture, as the case may be, and dispose of the same in accordance with applicable law,
separate and apart from the sale of the Property. Any sale of Collateral hereunder shall be
conducted in any manner permitted by the UCC.
	 
	7.4.	 	APPLICATION OF FORECLOSURE SALE PROCEEDS. If any foreclosure sale is effected,
Trustee shall apply the proceeds of such sale in the following order of priority:
First, to the costs, fees and expenses of exercising the power of sale, including,
without limitation, the payment of the Trustee’s fees and reasonable attorneys’ fees;
Second, to the payment of the Secured Obligations which are secured by this Deed of
Trust, in such order as Beneficiary shall determine in its sole discretion; and Third,
to Grantor or Grantor’s successor in interest, or in the event the Property has been sold or
transferred to another, to the vested owner of record at the time of the Trustee’s sale or to
such other persons as may be entitled thereto by law.
	 
	7.5.	 	WAIVER OF MARSHALING RIGHTS. Grantor, for itself and for all parties claiming
through or under Grantor, and for all parties who may acquire a lien on or interest in the
Property or the Collateral, waives all rights to a sale in inverse order of alienation or to
have the Property, the Collateral or any other security for any Secured Obligation, marshaled
upon any foreclosure of this Deed of Trust or on a foreclosure of any other security for any
of the Secured Obligations.
	 
	7.6.	 	NO CURE OR WAIVER. Neither Beneficiary’s nor Trustee’s nor any receiver’s entry upon
and taking possession of all or any part of the Property, nor any collection of rents, issues,
profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of
other security, or other sums, nor the application of any collected sum to any Secured
Obligation, nor the exercise of any other right or remedy by Beneficiary or Trustee or any
receiver shall cure or waive any Default or notice of default under this Deed of Trust, or
nullify the effect of any notice of default or sale (unless all Secured Obligations then due
have been paid or performed and Grantor has cured all other Defaults hereunder), or impair the
status of the security, or prejudice Beneficiary or Trustee in the exercise of any right or
remedy, or be construed as an affirmation by Beneficiary of any tenancy, lease or option or a
subordination of the lien of this Deed of Trust.





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	7.7.	 	PAYMENT OF COSTS, EXPENSES AND ATTORNEYS’ FEES. Grantor agrees to pay to Beneficiary
immediately and upon demand all costs and expenses incurred by Trustee and Beneficiary in the
enforcement of the terms and conditions of this Deed of Trust (including, without limitation,
trustee’s fees, court costs and reasonable attorneys’ fees, whether incurred in litigation or
not) with interest from the date of expenditure until said sums have been paid at the rate of
interest applicable to the principal balance of the Note as specified therein.
	 
	7.8.	 	POWER TO FILE NOTICES AND CURE DEFAULTS. Grantor hereby irrevocably appoints
Beneficiary and its successors and assigns, as its attorney-in-fact, which agency is coupled
with an interest, to perform any obligation of Grantor hereunder upon the occurrence of an
event, act or omission which, with notice or passage of time or both, would constitute a
Default, provided, however, that: (a) Beneficiary as such attorney-in-fact
shall only be accountable for such funds as are actually received by Beneficiary; and (b)
Beneficiary shall not be liable to Grantor or any other person or entity for any failure to
act under this Section.
	 
	7.9.	 	REMEDIES CUMULATIVE. All rights and remedies of Beneficiary and Trustee under this
Deed of Trust and the other Loan Documents are cumulative and are in addition to all rights
and remedies provided by applicable law (including specifically that of foreclosure of
this Deed of Trust as though it were a mortgage). Beneficiary may enforce any one or more
remedies or rights under the Loan Documents either successively or concurrently.
	 
	7.10.	 	FORECLOSURE FOR INSTALLMENTS. Beneficiary shall also have the option to proceed
with foreclosure in satisfaction of any installments of the Secured Obligations which have not
been paid when due either through the courts or by directing the Trustee or his successors in
trust to proceed with foreclosure in satisfaction of the matured but unpaid portion of the
Secured Obligations as if under a full foreclosure, conducting the sale as herein provided and
without declaring all sums under the Note due; such sale may be made subject to the unmatured
portion of the Secured Obligations, and any such sale shall not in any manner affect the
unmatured portion of the Secured Obligations, but as to such unmatured portion of the Secured
Obligations this Deed of Trust shall remain in full force and effect just as though no sale
had been made hereunder. It is further agreed that several sales may be made hereunder
without exhausting the right of sale for any unmatured part of the Secured Obligations, it
being the purpose hereof to provide for a foreclosure and sale of the security for any matured
portion of the Secured Obligations without exhausting the power to foreclose and sell the
Property for any subsequently maturing portion of the Secured Obligations.
	 
	7.11.	 	SEPARATE SALES. The Property may be sold in one or more parcels and in such manner
and order as Trustee, in his sole discretion, may elect, it being expressly understood and
agreed that the right of sale arising out of any Default shall not be exhausted by any one or
more sales.





DEED OF TRUST (TEXAS)

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Loan No. 02-62113698/Store No. 623




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	7.12.	 	DISCONTINUANCE OF PROCEEDINGS. In case Beneficiary shall have proceeded to invoke
any right, remedy or recourse permitted under the Loan Documents and shall thereafter elect to
discontinue or abandon same for any reason, Beneficiary shall have the unqualified right so to
do and, in such an event, Grantor and Beneficiary shall be restored to their former positions
with respect to the Secured Obligations, the Loan Documents, the Property and otherwise, and
the rights, remedies, recourses and powers of Beneficiary shall continue as if same had never
been invoked.
	 
	7.13.	 	OCCUPANCY AFTER FORECLOSURE. The purchaser at any foreclosure sale pursuant to
Section 7.3e shall become the legal owner of the Property. Except for tenants holding
under leases not subject to being extinguished by virtue of a foreclosure of this Deed of
Trust, all occupants of the Property or any part thereof shall become tenants at sufferance of
the purchaser at the foreclosure sale and shall deliver possession thereof immediately to the
purchaser upon demand. It shall not be necessary for the purchaser at said sale to bring any
action for possession of the Property other than the statutory action of forcible detainer in
any Justice Court having jurisdiction over the Property.
	 
	7.14.	 	DEFICIENCY. In the event an interest in any of the Property is foreclosed upon
pursuant to a judicial or non-judicial foreclosure sale, Grantor agrees as follows:
Notwithstanding the provisions of Sections 51.003, 51.004, and 51.005 of the Texas Property
Code (as the same may be amended from time to time), but only to the extent permitted by
applicable law, Grantor agrees that Beneficiary shall be entitled to seek a deficiency
judgment from Grantor and any other party obligated on the Note equal to the difference
between the amount owing on the Note and the amount for which the Property was sold pursuant
to judicial or non-judicial foreclosure sale. Grantor expressly recognizes that this section
constitutes a waiver of the above-cited provisions of the Texas Property Code which would
otherwise permit Grantor and other persons against whom recovery of deficiencies is sought or
any guarantor independently (even absent the initiation of deficiency proceedings against
them) to present competent evidence of the fair market value of the Property as of the date of
the foreclosure sale and offset against any deficiency the amount by which the foreclosure
sale price is determined to be less than such fair market value. Grantor further recognizes
and agrees that this waiver creates an irrebuttable presumption that the foreclosure sale
price is equal to the fair market value of the Property for purposes of calculating
deficiencies owed by Grantor, any guarantor, and others against whom recovery of a deficiency
is sought.
	 
	 	 	Alternatively, in the event the waiver provided for above is determined by a court of
competent jurisdiction to be unenforceable, the following shall be the basis for the finder
of fact’s determination of the fair market value of the Property as of the date of the
foreclosure sale in proceedings governed by Sections 51.003, 51.004 and 51.005 of the Texas
Property Code (as





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44









 






	 	 	amended from time to time): (i) the Property shall be valued in an “as is” condition as of
the date of the foreclosure sale, without any assumption or expectation that the Property
will be repaired or improved in any manner before a resale of the Property after
foreclosure; (ii) the valuation shall be based upon an assumption that the foreclosure
purchaser desires a resale of the Property for cash promptly (but no later than twelve (12)
months) following the foreclosure sale; (iii) all reasonable closing costs customarily borne
by the seller in commercial real estate transactions should be deducted from the gross fair
market value of the Property, including, without limitation, brokerage commissions, title
insurance, a survey of the Property, tax prorations, attorneys’ fees, and marketing costs;
(iv) the gross fair market value of the Property shall be further discounted to account for
any estimated holding costs associated with maintaining the Property pending sale,
including, without limitation, utilities expenses, property management fees, taxes and
assessments (to the extent not accounted for in (iii) above), and other maintenance,
operational and ownership expenses; and (v) any expert opinion testimony given or considered
in connection with a determination of the fair market value of the Property must be given by
persons having at least five (5) years experience in appraising property similar to the
Property and who have conducted and prepared a complete written appraisal of the Property
taking into consideration the factors set forth above.





ARTICLE 8 MISCELLANEOUS PROVISIONS





	8.1.	 	CONSENTS AND APPROVAL. Wherever Beneficiary’s consent, approval, acceptance or
satisfaction is required under any provision of this Deed of Trust or any of the other Loan
Documents, such consent, approval, acceptance or satisfaction shall not be unreasonably
withheld, conditioned or delayed by Beneficiary unless such provision expressly provides
otherwise.
	 
	8.2.	 	ATTORNEYS’ FEES. If any legal action, suit or proceeding is commenced between
Grantor and Beneficiary regarding their respective rights and obligations under any Loan
Document, the prevailing party shall be entitled to recover, in addition to damages or other
relief, costs and expenses, reasonable attorneys’ fees and court costs (including, without
limitation, expert witness fees).
	 
	8.3.	 	PERMITTED CONTESTS. After prior written notice to Beneficiary, Grantor may contest,
by appropriate legal or other proceedings conducted in good faith and with due diligence, the
amount, validity or application, in whole or in part, of any lien, levy, tax or assessment, or
any lien of any laborer, mechanic, materialman, supplier or vendor, or the application to
Grantor or the Property of any law or the validity thereof (each a “Contested
Matter”), the assertion or imposition of which, or the failure to pay when due, would
constitute a Default; provided that (a) Grantor pursues the contest diligently, in a manner
which Beneficiary determines is not prejudicial to Beneficiary, and does not impair the lien
of this Deed of Trust; (b) the Property, or





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	 	 	any part hereof or estate or interest therein, shall not be in any danger of being sold,
forfeited or lost by reason of such proceedings; (c) in the case of the contest of any law
or other legal requirement, Beneficiary shall not be in any danger of any civil or criminal
liability; and (d) if required by Beneficiary, Grantor deposits with Beneficiary any funds
or other forms of assurance (including a bond or letter of credit) satisfactory to
Beneficiary to protect Beneficiary from the consequences of the contest being unsuccessful.
Grantor’s right to contest pursuant to the terms of this provision shall in no way relieve
Grantor of its obligations under the Loan or to make payments to Beneficiary as and when
due. The Tenant under any Lease shall also have the right to contest any Contested Matter
in accordance with the terms of such Lease.
	 
	8.4.	 	GRANTOR AND BENEFICIARY DEFINED. The term “Grantor” includes both the original
Grantor and any subsequent owner or owners of any of the Property, and the term “Beneficiary”
includes the original Beneficiary and any future owner or holder, including assignees, pledges
and participants, of the Note or any interest therein.
	 
	8.5.	 	DISCLAIMERS.






	 	a.	 	Relationship. The relationship of Grantor and Beneficiary under this
Deed of Trust and the other Loan Documents is, and shall at all times remain, solely
that of borrower and lender, and Beneficiary neither undertakes nor assumes any
responsibility or duty to Grantor or to any third party with respect to the Property.
Notwithstanding any other provisions of this Deed of Trust and the other Loan
Documents: (i) Beneficiary is not, and shall not be construed to be, a partner, joint
venturer, member, alter ego, manager, controlling person or other business associate or
participant of any kind of Grantor, and Beneficiary does not intend to ever assume such
status; and (ii) Beneficiary shall not be deemed responsible for or a participant in
any acts, omissions or decisions of Grantor.
	 
	 	b.	 	No Liability. Beneficiary shall not be directly or indirectly liable
or responsible for any loss, claim, cause of action, liability, indebtedness, damage or
injury of any kind or character to any person or property arising from any construction
on, or occupancy or use of, the Property, whether caused by or arising from: (i) any
defect in any building, structure, grading, fill, landscaping or other improvements
thereon or in any on-site or off-site improvement or other facility therein or thereon;
(ii) any act or omission of Grantor or any of Grantor’s agents, employees, independent
contractors, licensees or invitees; (iii) any accident in or on the Property or any
fire, flood or other casualty or hazard thereon; (iv) the failure of Grantor or any of
Grantor’s licensees, employees, invitees, agents, independent contractors or other
representatives to maintain the Property in a safe condition; or (v) any nuisance made
or suffered on any part of the Property.





DEED OF TRUST (TEXAS)

Wells Fargo/Cole Properties/Cracker Barrel

Loan No. 02-62113698/Store No. 623





46












 






	8.6.	 	SEVERABILITY. If any term of any Loan Document, or the application thereof to any
person or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of
the Loan Document, or the application of such term to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby, and each term
of the Loan Document shall be valid and enforceable to the fullest extent permitted by law.
	 
	8.7.	 	JOINT AND SEVERAL LIABILITY. If more than one person has executed this Deed of Trust
as “Grantor,” the obligations of all such persons hereunder shall be joint and several.
	 
	8.8.	 	SEPARATE AND COMMUNITY PROPERTY. Any married person who executes this Deed of Trust
as a “Grantor” agrees that any money judgment which Beneficiary or Trustee obtains pursuant to
the terms of this Deed of Trust or any other obligation of that married person secured by this
Deed of Trust may be collected by execution upon any separate property or community property
of that person.
	 
	8.9.	 	INTEGRATION; INTERPRETATION. The Loan Documents contain or expressly incorporate by
reference the entire agreement of the parties with respect to the matters contemplated therein
and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall
not be modified, except by written instrument executed by all parties. Any reference in any
of the Loan Documents to the Property or Collateral shall include all or any part of the
Property or Collateral. Any reference to the Loan Documents includes any amendments, renewals
or extensions now or hereafter approved by Beneficiary in writing. When the identity of the
parties or other circumstances make it appropriate, the masculine gender includes the feminine
and/or neuter, and the singular number includes the plural.
	 
	8.10.	 	CAPITALIZED TERMS. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Note.
	 
	8.11.	 	SUCCESSORS IN INTEREST. The terms, covenants, and conditions contained herein and
in the other Loan Documents shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties. The foregoing sentence shall not be construed to
permit Grantor to assign the Loan, except as otherwise permitted under the Note or the other
Loan Documents.
	 
	8.12.	 	GOVERNING LAW. This Deed of Trust was accepted by Beneficiary in the state of New
York, which state the parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, to the extent allowed by §35.51 of the
Texas Business and Commerce Code in all respects, including, without limiting the generality
of the foregoing, matters of construction, validity, enforceability and performance, this Deed
of Trust, the Note and the other Loan Documents and the obligations arising hereunder and
thereunder shall be governed by, and construed in accordance with, the laws of the state of
New





DEED OF TRUST (TEXAS)

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Loan No. 02-62113698/Store No. 623




47









 






York applicable to contracts made and performed in such state and any applicable law of the
United States of America, except that at all times the provisions for enforcement of
Trustee’s STATUTORY POWER OF SALE and all other remedies granted hereunder and the creation,
perfection and enforcement of the liens and security interests created pursuant hereto and
pursuant to the other Loan Documents in any Collateral which is located in the state where
the Property is located shall be governed by and construed according to the law of the state
where the Property is located except to the extent that under the UCC perfection may be
governed by the laws of a different jurisdiction. Except as provided in the immediately
preceding sentence, Grantor hereby unconditionally and irrevocably waives, to the fullest
extent permitted by law, any claim to assert that the law of any jurisdiction other than New
York governs this Deed of Trust, the Note and other Loan Documents.




	8.13.	 	CONSENT TO JURISDICTION. Grantor irrevocably submits to the jurisdiction of: (a)
any state or federal court sitting in the state of New York over any suit, action or
proceeding, brought by Grantor against Beneficiary, arising out of or relating to this Deed of
Trust, the Note or the Loan; (b) any state or federal court sitting in the state where the
Property is located or the state in which Grantor’s principal place of business is located
over any suit, action, or proceeding, brought by Beneficiary against Grantor, arising out of
or relating to this Deed of Trust, the Note or the Loan; and (c) any state court sitting in
the county of the state where the Property is located over any suit, action, or proceeding,
brought by Trustee to exercise its STATUTORY POWER OF SALE under this Deed of Trust or any
action brought by Beneficiary to enforce its rights with respect to the Collateral. Grantor
irrevocably waives, to the fullest extent permitted by law, any objection that Grantor may now
or hereafter have to the laying of venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit, action, or proceeding brought in any such court
has been brought in an inconvenient forum.
	 
	8.14.	 	EXHIBITS. Exhibit A is incorporated into this Deed of Trust by this
reference as if fully set forth herein.
	 
	8.15.	 	ADDRESSES; REQUEST FOR NOTICE. All notices and other communications that are
required or permitted to be given to a party under this Deed of Trust or the other Loan
Documents shall be in writing, refer to the Loan number, and shall be sent to such party,
either by personal delivery, by overnight delivery service, by certified first class mail,
return receipt requested, or by facsimile transmission to the addressee or facsimile number
below. All such notices and communications shall be effective upon receipt of such delivery
or facsimile transmission. The addresses of the parties are set forth on page 1 of this Deed
of Trust and the facsimile numbers for the parties are as follows:






Beneficiary:



DEED OF TRUST (TEXAS)

Wells Fargo/Cole Properties/Cracker Barrel

Loan No. 02-62113698/Store No. 623




48









 






WELLS FARGO BANK, NATIONAL ASSOCIATION

FAX No.: (760) 918-2727




Grantor:




COLE CB SHERMAN TX, LLC

FAX No.: (602) 778-8780




Grantor’s principal place of business is at the address set forth on page 1 of this
Deed of Trust.




Any Grantor whose address is set forth on page 1 of this Deed of Trust hereby
requests that a copy of notice of default and notice of sale be delivered to it at that
address. Failure to insert an address shall constitute a designation of Grantor’s last
known address as the address for such notice. Any party shall have the right to change its
address for notice hereunder to any other location within the continental United States by
giving thirty (30) days notice to the other parties in the manner set forth above.




	8.16.	 	COUNTERPARTS. This Deed of Trust may be executed in any number of counterparts,
each of which, when executed and delivered, will be deemed an original and all of which taken
together, will be deemed to be one and the same instrument.






	8.17.	 	WAIVER OF JURY TRIAL. BENEFICIARY AND GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEED OF TRUST OR ANY OTHER
LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF BENEFICIARY OR GRANTOR. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
BENEFICIARY TO ENTER INTO THIS DEED OF TRUST.






	8.18.	 	NON-WAIVER. By accepting payment of any amount secured hereby after its due date or
late performance of any other Secured Obligation, Beneficiary shall not waive its right
against any person obligated directly or indirectly hereunder or on any Secured Obligation,
either to require prompt payment or performance when due of all other sums and obligations so
secured or to declare default for failure to make such prompt payment or performance. No
exercise of any right or remedy by Beneficiary or Trustee hereunder shall constitute a waiver
of any other right or remedy herein contained or provided by law. No failure by Beneficiary
or Trustee to exercise any right or remedy hereunder arising upon any Default shall be
construed to prejudice Beneficiary’s or Trustee’s rights or remedies upon the occurrence of
any other or subsequent Default. No delay by





DEED OF TRUST (TEXAS)

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Loan No. 02-62113698/Store No. 623




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Beneficiary or Trustee in exercising any such right or remedy shall be construed to preclude
Beneficiary or Trustee from the exercise thereof at any time while that Default is
continuing. No notice to nor demand on Grantor shall of itself entitle Grantor to any other
or further notice or demand in similar or other circumstances.




	8.19.	 	FURTHER ASSURANCES. Grantor shall, upon demand by Beneficiary or Trustee, execute,
acknowledge (if appropriate) and deliver any and all documents and instruments and do or cause
to be done all further acts reasonably necessary or appropriate to effectuate the purposes of
the Loan Documents and to perfect any assignments contained therein.






	8.20.	 	RELATIONSHIP OF ARTICLES. The rights, remedies and interests of Beneficiary under
this Deed of Trust established by Article 1 and the security agreement established by
Article 4 are independent and cumulative, and there shall be no merger of any lien
created by this Deed of Trust with any security interest created by the security agreement.
Beneficiary may elect to exercise or enforce any of its rights, remedies or interests under
either or both this Deed of Trust or the security agreement as Beneficiary may from time to
time deem appropriate. The absolute assignment of rents and leases established by Article
3 is similarly independent of and separate from this Deed of Trust and the security
agreement.






	8.21.	 	MERGER. No merger shall occur as a result of Beneficiary’s acquiring any other
estate in, or any other lien on, the Property unless Beneficiary consents to a merger in
writing.






	8.22.	 	CROSS-DEFAULT; CROSS-COLLATERALIZATION. The Note is secured by, among other things,
this Deed of Trust and those certain other Mortgages, Deeds of Trust, and/or Deeds to Secure
Debt of even date herewith, executed by the mortgagor, trustor or grantor, as the case may be,
in favor of Beneficiary and covering certain real property and improvements and personal
property thereon as described therein and located as described on Schedule I hereof
(the “Other Mortgages”). The existence of a Default under this Deed of Trust (after
the expiration of any applicable notice and cure periods) shall be deemed and shall constitute
an Automatic Default under the Other Mortgages (without any further notice and cure by
Beneficiary to Grantor which is hereby specifically waived by Grantor for all purposes), and a
Default under any of the Other Mortgages (after the expiration of any applicable notice and
cure periods), shall be deemed and shall constitute an Automatic Default under this Deed of
Trust and the remaining Other Mortgages (without any further notice and cure by Beneficiary to
Grantor which is hereby specifically waived by Grantor for all purposes).






	8.23.	 	HOMESTEAD. The Property forms no part of any property owned, used or claimed by
Grantor as a residence or business homestead and is not exempt from forced sale under the laws
of the State of Texas. GRANTOR HEREBY DISCLAIMS AND RENOUNCES EACH AND EVERY CLAIM TO THE
PROPERTY AS A HOMESTEAD.





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	8.24.	 	FINANCE CODE NOTICE. TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION
INSURANCE NOTICE: (A) GRANTOR IS REQUIRED TO: (I) KEEP THE PROPERTY INSURED AGAINST DAMAGE IN
THE AMOUNT SPECIFIED IN THE LOAN DOCUMENTS; (II) PURCHASE THE INSURANCE FROM AN INSURER THAT
IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND
(III) NAME BENEFICIARY AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS AS AND
TO THE EXTENT REQUIRED IN THE LOAN DOCUMENTS; (B) GRANTOR MUST, IF REQUIRED BY BENEFICIARY
PURSUANT TO THE LOAN DOCUMENTS, DELIVER TO BENEFICIARY A COPY OF THE POLICY AND PROOF OF THE
PAYMENT OF PREMIUMS; AND (C) IF GRANTOR FAILS TO MEET ANY REQUIREMENT LISTED IN PARAGRAPH (A)
OR (B), BENEFICIARY MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF GRANTOR AT
GRANTOR’S EXPENSE AS AND TO EXTENT EXPLICITLY PERMITTED BY THE LOAN DOCUMENTS.
	 
	8.25.	 	WAIVER OF TEXAS PROPERTY CODE PROVISIONS. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, GRANTOR HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS AND DEFENSES BASED UPON OR
RELATED TO SECTIONS 51.003, 51.004 AND 51.005 OF THE TEXAS PROPERTY CODE, TO THE EXTENT THE
SAME PERTAIN OR MAY PERTAIN TO ANY ENFORCEMENT OF THIS DEED OF
TRUST.
	 
	8.26.	 	ENTIRE AGREEMENT. GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS DEED
OF TRUST AND AGREES TO ITS TERMS. GRANTOR FURTHER ACKNOWLEDGES THAT GRANTOR HAS EITHER
OBTAINED THE ADVICE OF COUNSEL IN CONNECTION HEREWITH OR HAS HAD THE OPPORTUNITY TO OBTAIN
SUCH ADVICE. THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
	 
	8.27.	 	USA PATRIOT ACT NOTIFICATION. Beneficiary hereby notifies Grantor that, pursuant to
the requirements of the Patriot Act, it is required to obtain, verify and record information
that identifies Grantor, which information includes the name and address of Grantor and other
information that will allow Beneficiary to identify Grantor in accordance with the Patriot
Act.





DEED OF TRUST (TEXAS)

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Loan No. 02-62113698/Store No. 623




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[SIGNATURE PAGE FOLLOWS]




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     IN WITNESS WHEREOF, Grantor has executed this Deed of Trust as of the day and year set forth
above.



	 	 	 	 	 
	 	

GRANTOR:




COLE CB SHERMAN TX, LLC,

a Delaware limited liability company



By:  Cole REIT Advisors III, LLC,

        a Delaware limited liability company,

        its manager

 
	 	By:  	/s/ Todd J. Weiss
 	 
	 	 	Name:  	Todd J. Weiss 	 
	 	 	Title:  	Vice President 	 
	 



DEED OF TRUST (TEXAS)

Wells Fargo/Cole Properties/Cracker Barrel

Loan No. 02-62113698/Store No. 623




 









 





	 	 	 
	STATE OF

	 	ARIZONA
	 
	COUNTY OF

	 	MARICOPA





The foregoing instrument was acknowledged before me on August 28, 2009, by TODD J. WEISS,
the Vice President of Cole REIT Advisors III, LLC, a Delaware limited liability company,
the manager of Cole CB SHERMAN TX, LLC, a Delaware limited liability company, on behalf of
said limited liability company.




	 	 	 	 	 	 	 
	 

	 	/s/ Mary D. Bates
	 	 	 	 
	 	 	 	 	 
	[Notary Seal]	 	Notary Public, State of ARIZONA	 	 
	 

	 	Printed Name:
 Mary D. Bates	 	 
	 

	 	My Commission Expires:
	 	September 3, 2012	 	 






DEED OF TRUST (TEXAS)

Wells Fargo/Cole Properties/Cracker Barrel

Loan No. 02-62113698/Store No. 623




 









 





Loan No. 02-62113698




EXHIBIT A




DESCRIPTION OF LAND




Unit No.: 623




Property Address: 3501 N. US Highway 75, Sherman, Texas



Description of Land. The Land referred to in this Agreement is situated in the County of Grayson,
State of Texas and is described as follows:




[Legal Description Attached Hereto]




DEED OF TRUST (TEXAS)

Wells Fargo/Cole Properties/Cracker Barrel

Loan No. 02-62113698/Store No. 623




 









 





TRACT 1



Being Lot 5 in Block C of the Amended Re-Plat of Block C of Sherman Commons Addition, an Addition to the City of Sherman,
Texas, as shown by Plat of record in Volume 18, pages 132 and 132a, Plat Records, Grayson County, Texas, being more particularly
described as follows:



Description of a 2.4490 acre tract of land situated in the Hillard Jennings Survey, Abstract No. 639, City of Sherman,
Grayson County, Texas and being all of Lot 5 in Block C of the Amended Replat of Block C of Sherman Commons Addition to
the City of Sherman, Grayson County, Texas; as shown on plat recorded in Volume 18, pages 132 and 132a of the Plat Records
of Grayson County, Texas; said 2.4490 acre tract being more particularly described as follows:



Commencing at a concrete nail with shiner found for the most Southerly Southwest corner of said plat of Sherman
Commons Addition, said point being the intersection of the South line of said Hillard Jennings Survey with the
East right of way line of US Highway 75, variable width public right of way; thence North 06°52’28” East with
the West line of said Sherman Commons Addition, a distance of 16.17 feet to an angle point; thence North 24°51’58”
West a distance of 27.43 feet to a 5/8 inch iron rod with yellow plastic cap stamped GSES INC RPLS 4804 set for the
Southwest corner of said Lot 5; said point being the intersection of the North right of way line of Pecan Grove Road,
a public right of way dedicated by said plat of Sherman Commons Addition with said East right of way line of
US Highway 75, said point being also the point of beginning; thence North 24°51’58” West with said East right of
way line a distance of 67.58 feet to a leaning Texas Department of Transportation monument found for corner; thence
North 06°52’28” East with said East right of way line a distance of 268.96 feet to a 5/8 inch iron rod with yellow
plastic cap stamped GSES INC RPLS 4804 set for the Northwest corner of said Lot 5, said point being also the Southwest
corner of Lot 4, Block C of said Sherman Commons Addition; thence South 82°44’25” East with the common line between
said Lots 4 and 5 a distance of 260.78 feet to a 5/8 inch iron rod with yellow plastic cap stamped GSES INC RPLS 4804
set for the Northeast corner of said Lot 5 and the Southeast corner of said Lot 4, said point being also on the West
line of Lot 6, Block C of said Sherman Commons Addition; thence South 06°37’35” West with the common line between said
Lots 5 and 6 a distance of 57.26 feet to a 5/8 inch iron rod with yellow plastic cap stamped GSES INC RPLS 4804 set for
an interior corner of said Lot 5, said point being also the Southwest corner of said Lot 6; thence South 84°16’13” West
with the common line between said Lots 5 and 6 a distance of 253.79 feet to a 5/8 inch iron rod with yellow plastic cap
stamped GSES INC RPLS 4804 set for the Northeast corner of said Lot 5 and the Southeast corner of said Lot 6, said point
being also on the West right of way line of Loy Lake Road, a public right of way dedicated by said plat of Sherman Commons
Addition; thence South 07°24’14” East with said West right of way line of Loy Lake Road a distance of 58.54 feet to a 5/8
inch iron rod with yellow plastic cap stamped GSES INC RPLS 4804 set for the Northeast end of the corner clip at the intersection
of said West right of way line with said North right of way line of Pecan Grove Road; thence South 33°03’58” West




Deed of Trust (Texas)

Wells Fargo/FRIS CHKN — Church’s

Loan Nos. 93-0902639-A; 93-0902640-B / Unit No. 623




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with said
corner clip a distance of 22.79 feet to a 5/8 inch iron rod with yellow plastic cap stamped GSES INC RPLS 4804 set
to the Southwest end of said corner clip; thence South 74°52’53” West with said North right of way line of Pecan Grove Road a
distance of 521.53 feet to the point of beginning.



Containing 106,680 square feet or 2.4490 acres of land, more or less.




CAD #1197174005




TRACT 2



Non-exclusive easement for ingress and egress as set forth in Reciprocal Access and Restrictive Covenant Agreement executed
by and between Kohl’s Texas, L.P. and Woodmont Sherman, L.P. dated November 11, 2005 and recorded in Volume 3973, page 831 and
Volume 3980, page 541; as amended by First Amendment to Reciprocal Easement Agreement dated May 18, 2007 and recorded July 18, 2007
in Volume 4287, page 682, Official Records of Grayson County, Texas.




Deed of Trust (Texas)

Wells Fargo/FRIS CHKN — Church’s

Loan Nos. 93-0902639-A; 93-0902640-B / Unit No. 623




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SCHEDULE I




LIST OF OTHER MORTGAGES AND CROSS-COLLATERALIZED PROPERTIES





	1.	 	That certain Deed to Secure Debt and Absolute Assignment of Rents and Leases and Security
Agreement made by COLE CB Braselton GA, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 301 Exchange Way, Braselton, Georgia.
	 
	2.	 	That certain Deed to Secure Debt and Absolute Assignment of Rents and Leases and Security
Agreement made by COLE CB Bremen GA, LLC, a Delaware limited liability company, as borrower,
in favor of Wells Fargo Bank, National Association, as lender, encumbering property located at
106 Price Creek Road, Bremen, Georgia.
	 
	3.	 	That certain Deed to Secure Debt and Absolute Assignment of Rents and Leases and Security
Agreement made by COLE CB Columbus GA, LLC, a Delaware limited liability company, as borrower,
in favor of Wells Fargo Bank, National Association, as lender, encumbering property located at
1500 Bradley Park Drive, Columbus, Georgia.
	 
	4.	 	That certain Deed of Trust and Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Greensboro NC, LLC, a Delaware limited liability company,
as borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering
property located at 3701 Elmsley Court, Greensboro, North Carolina.
	 
	5.	 	That certain Deed of Trust and Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Mebane NC, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 135 Spring Forrest Drive, Mebane, North Carolina.
	 
	6.	 	That certain Deed of Trust and Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Rocky Mount, LLC, a Delaware limited liability company,
as borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering
property located at 238 Enterprise Drive, Rocky Mount, North Carolina.
	 
	7.	 	That certain Mortgage and Absolute Assignment of Rents and Leases and Security Agreement (and
Fixture Filing) made by COLE CB Fort Mill SC, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 295 Carowinds Boulevard, Fort Mill, South Carolina.





DEED OF TRUST (TEXAS)

Wells Fargo/Cole Properties/Cracker Barrel

Loan No. 02-62113698/Store No. 623




 









 






	8.	 	That certain Mortgage and Absolute Assignment of Rents and Leases and Security Agreement (and
Fixture Filing) made by COLE CB Piedmont SC, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 591 Highway 183, Piedmont, South Carolina.
	 
	9.	 	That certain Deed of Trust and Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Abilene TX, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 1602 Highway 351, Abilene, Texas.
	 
	10.	 	That certain Deed of Trust and Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB San Antonio TX, LLC, a Delaware limited liability
company, as borrower, in favor of Wells Fargo Bank, National Association, as lender,
encumbering property located at 123 SW Loop 410, San Antonio, Texas.
	 
	11.	 	That certain Deed of Trust and Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Sherman TX, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 3501 N US Highway 75, Sherman, Texas.
	 
	12.	 	That certain Deed of Trust, Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Bristol VA, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 125 Village Circle, Bristol, Virginia.
	 
	13.	 	That certain Deed of Trust, Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Emporia VA, LLC, a Delaware limited liability company, as
borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering property
located at 103 Sader Lane, Emporia, Virginia.
	 
	14.	 	That certain Deed of Trust, Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Waynesboro VA, LLC, a Delaware limited liability company,
as borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering
property located at 101 Appletree Lane, Waynesboro, Virginia.
	 
	15.	 	That certain Deed of Trust, Absolute Assignment of Rents and Leases and Security Agreement
(and Fixture Filing) made by COLE CB Woodstock VA, LLC, a Delaware limited liability company,
as borrower, in favor of Wells Fargo Bank, National Association, as lender, encumbering
property located at 451 West Reservoir Road, Woodstock, Virginia.





Deed of Trust (Texas)

Wells Fargo/FRIS CHKN — Church’s

Loan Nos. 93-0902639-A; 93-0902640-B / Unit No. 623





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