EX-10.4






PLEDGE AND SECURITY AGREEMENT




THIS PLEDGE AND SECURITY AGREEMENT (together with all amendments, restatements and other
modifications, this “Agreement”), is dated effective as of February 15, 2007, is by and
between NNN 2003 VALUE FUND, LLC, a Delaware limited liability company
(“Pledgor”), and RAIT PARTNERSHIP, L.P., a Delaware limited partnership (together with
its successors and assigns, “Lender”). 



Background




A. Reference is made to the Background set forth in that certain Loan and Security Agreement
of even date herewith between Lender and NNN VF TIFFANY SQUARE, LLC, a Delaware limited liability
company (together with all amendments, restatements and other modifications, the “Loan
Agreement”), which is hereby incorporated herein.



B. Pledgor holds one hundred percent (100%) of the legal and beneficial membership interests
in NNN VF TIFFANY SQUARE, LLC, a Delaware limited liability company (“Issuer”), as more
particularly described on Schedule I attached hereto.



C. It is a condition precedent to the obligation of Lender to make the Loan to Pledgor that
Pledgor shall have executed and delivered this Agreement to Lender.



NOW, THEREFORE, based upon the foregoing background, which the parties agree to be true and
correct, and for good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:



1. Certain Definitions. Unless otherwise defined herein or the context otherwise
requires, each term defined in either the Loan Agreement or in the UCC is used in this Agreement
with the same meaning; provided that, if the definition given to such term in the Loan Agreement
conflicts with the definition given to such term in the UCC, the Loan Agreement definition shall
control to the extent legally allowable; and if any definition given to such term in Article 9 of
the UCC conflicts with the definition given to such term in any other chapter of the UCC, the
Article 9 definition shall prevail. As used herein, the following terms have the meanings
indicated:



“Certificate of Formation” means the certificate of formation of Issuer as currently
in effect, in the form delivered to Lender at Closing.



“Collateral” has the meaning specified in Section 2 hereof.



“Governmental Authority” means any federal, state, county, municipal, parish,
provincial or other government, or any department, commission, board, court, agency, committee,
whether of the United States of America or any other country, or any instrumentality of any of
them, or any other political subdivision thereof.



“LLC Interests” has the meaning specified in Section 2 hereof.



“Material Adverse Effect” means if the business prospects, operations or financial
condition of a person, entity or property has changed in a manner which could impair the value of
Lender’s security for the Loan, prevent timely repayment of the Loan or otherwise prevent the
applicable person or entity from timely performing any of its material obligations under the Loan
Documents.



“Operating Agreement” means the limited liability company agreement of Issuer as
currently in effect, in the form delivered to Lender at Closing.



“Organizational Documents” means the Certificate of Formation, the Operating
Agreement, and any other agreements affecting the rights, limitations, preferences or obligations
of Issuer with respect to any of the foregoing or with respect to the LLC Interests or otherwise,
in each case, as the same may be amended or modified from time to time in accordance with the Loan
Documents.



“Transfer” means any sale, transfer, lease, conveyance, alienation, pledge,
assignment, mortgage, encumbrance hypothecation or other disposition.



“UCC” means at any time the Uniform Commercial Code as in effect in the Commonwealth
of Pennsylvania; provided, that if, by reason of mandatory provisions of law, the validity or
perfection of Lender’s security interest in the Collateral or any part thereof is governed by the
Uniform Commercial Code or other similar law as in effect in a jurisdiction other than
Pennsylvania, “UCC” means the Uniform Commercial Code or such similar law as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such validity or
perfection.



2. Collateral: General Terms.



(a) Security Interest. As security for the Debt, Pledgor hereby grants Lender a
continuing security interest in, lien on and right of set-off against, and hereby assigns to Lender
as security, all of Pledgor’s right, title and interest, in, to and under the following property
and interests in property (save insofar as otherwise expressly excluded by the terms of this
Agreement), whether now owned or hereafter acquired or existing and wherever located (collectively,
the “Collateral”):



(i) all of Pledgor’s right, title and interest in and to all of the issued and outstanding
limited liability company membership interests in Issuer, including, for the avoidance of doubt,
all voting and management rights connected therewith or related thereto (collectively, the “LLC
Interests”), together with all instruments of transfer in respect of such interests, executed
in blank, all cash, securities, dividends, proceeds and other property whether constituting
investment property, accounts, documents, general intangibles and/or instruments or otherwise at
any time and from time to time received, receivable or otherwise distributed in respect of or in
exchange for any and all of the LLC Interests;



(ii) to the extent not included in clause (i) above, any and all rights and remedies of
Pledgor under any of the Organizational Documents, as applicable, including the right to enforce
any and all representations, warranties, covenants, obligations, agreements and indemnities of any
party thereto made to or for the benefit of, or that otherwise inure to the benefit of, Pledgor;



(iii) all securities hereafter delivered to Lender in substitution for or in addition to any
and all of the Collateral, all certificates and instruments representing or evidencing such
securities and all cash, securities, dividends, proceeds and other property at any time and from
time to time received, receivable or otherwise distributed in respect of or in exchange for any or
all of the Collateral;



(iv) all additional limited liability company interests in Issuer from time to time acquired
by Pledgor in any manner, the certificates (if any) representing such additional interests in
Issuer (all of which shall constitute part of the LLC Interests), and all options, warrants,
dividends, cash instruments and other rights and options from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such limited liability company
interests in Issuer or other equity interest, as applicable;



(v) all books and records (including credit files, computer programs, printouts and other
computer materials and records) of Pledgor pertaining to any of the Collateral;



(vi) all of Pledgor’s right, title and interest in and to the profits and losses of Issuer,
and Pledgor’s right as a member of Issuer to receive distributions of the assets of Issuer upon
complete or partial liquidation or otherwise; and



(vii) all cash and non-cash proceeds and products of the Collateral, and all dividends, cash,
instruments and other property from time to time received, receivable or otherwise distributed when
Collateral or proceeds are sold, leased, collected, exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary, and includes, without limitation, all rights to
payment, including return premiums, with respect to any insurance relating thereto.



(b) Pledgor Remains Liable. Anything herein to the contrary notwithstanding, (i)
Pledgor shall remain liable under the Organizational Documents to the extent set forth therein and
shall perform all of its duties and obligations thereunder to the same extent as if this Agreement
had not been executed; (ii) the exercise by Lender of any of the rights hereunder shall not release
Pledgor from any of its duties or obligations under any of the Organizational Documents; and (iii)
Lender shall not have any obligation or liability under any of the Organizational Documents by
reason of this Agreement, nor shall Lender be obligated to perform any of the obligations or duties
of Pledgor thereunder or to take any action to collect or enforce any claim for payment assigned
hereunder; provided that, upon foreclosure thereof, Lender and any other transferee of the
Collateral shall take the same subject to the Organizational Documents.



3. Representations and Warranties. Pledgor represents and warrants the following to
Lender:



(a) Formation; Good Standing. Issuer and Pledgor are duly organized, validly existing
and in good standing in their respective jurisdictions of organization.



(b) Authorization; Binding Effect. Pledgor has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and all such action has been duly
and validly authorized by all necessary action on its part. This Agreement has been duly and
validly executed and delivered by Pledgor and constitutes the legal, valid and binding obligation
of Pledgor, enforceable against Pledgor in accordance with its terms, except as the enforceability
hereof may be limited by bankruptcy, insolvency or other similar laws of general application
affecting the enforcement of creditors’ rights.



(c) No Consents. Except as required for perfection of the security interest in the
Collateral as described herein, no permits, licenses, franchises, approvals, authorizations,
qualifications or consents of, or registrations or filings with, governmental authorities, Lender
or any other person or entity are required in connection with the execution or delivery by Pledgor
of, or the performance by Pledgor of its obligations under, this Agreement, except such as have
been obtained or made and are in full force and effect.



(d) No Conflict. The execution and delivery of, and the performance by Pledgor of its
obligations under this Agreement do not and will not result in a breach or constitute a violation
of, conflict with, or constitute a default under, the Loan Documents, any of the organizational
documents of Pledgor or the Organizational Documents, or any law, regulation, order or judgment
applicable to Pledgor or any agreement or instrument to which Pledgor or Issuer is a party or by
which Pledgor or Issuer or any of their respective property is bound.



(e) No Material Litigation. There are no actions, suits, proceedings or claims
pending or, to the knowledge of Pledgor, threatened against or affecting Pledgor or Issuer or any
of their respective property which, individually or in the aggregate, could reasonably be expected
to lead to or cause a Material Adverse Effect.



(f) Title to Collateral. Pledgor is the sole owner of all of the Collateral,
beneficially and of record, free and clear of any liens other than the liens created hereunder and
under the other Loan Documents. The LLC Interests constitute one hundred percent (100%) of the
equity interests of Issuer. The Collateral is not subject to any option to purchase, right of
first refusal or similar rights of any kind. There are no restrictions upon the voting rights
connected with or relating to, or upon the transfer of, the LLC Interests other than as arising
pursuant to this Agreement and other Loan Documents.



(g) Perfection. Upon (i) the execution and delivery of this Agreement and (ii) the
delivery to Lender of the certificates representing the Collateral and all other instruments of
transfer relating thereto, including without limitation, the execution and delivery of an
assignment separate from certificate, endorsed in blank, naming Pledgor as the debtor, and Lender,
Lender will have a valid, perfected, continuing, first-priority security interest in or lien on the
Collateral. All instruments of transfer are duly executed and give the Lender the authority they
purport to confer. The grant and perfection of the security interests in the LLC Interests and
other Collateral for the benefit of Lender, in accordance with the terms hereof are not made in
violation of the registration requirements of the Securities Act of 1933 (the “Securities
Act”), any applicable provisions of other federal securities laws, state securities or “blue
sky” laws, foreign securities law, or applicable general corporation law or any other applicable
law.



(h) Article 8 of the UCC. The LLC Interests have been certificated and constitute a
“security” within Article 8 of the UCC.



4. Covenants. Pledgor covenants and agrees with Lender as set forth below:



(a) Protection of Collateral. Pledgor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is necessary to remove, any lien
on the Collateral other than as permitted by the Loan Documents, and if Pledgor fails to do so,
Lender may, but shall be under no obligation to, without waiving or releasing any obligation or
liability of Pledgor hereunder or any Event of Default, at any time thereafter make such payment or
any part thereof, obtain such discharge or otherwise defend Pledgor’s title to the Collateral.



(b) Change in Location of Principal Place of Business. Pledgor shall not relocate its
chief executive office and/or principal place of business to a new location without first notifying
Lender by giving at least ten (10) days’ prior written notice.



(c) Payment of Taxes. Pledgor shall pay, and save Lender harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise,
transfer, sale or other taxes which may be payable or determined to be payable with respect to any
of the Collateral or in connection with any of the transactions contemplated by this Agreement.



(d) Intentionally Omitted.



(e) Further Assurances; Preservation and Perfection of Security Interest. At its own
expense, Pledgor shall do, and shall cause Issuer to do, all such acts, and shall execute and
deliver to Lender all such financing statements, certificates, instruments and other documents and
shall do and perform or cause to be done all matters and such other things necessary or expedient
to be done as Lender may reasonably request from time to time in order to give full effect to this
Agreement, and for the purpose of effectively perfecting, maintaining and preserving Lender’s
security interest and the benefits intended to be granted to Lender hereunder. To the extent
permitted by applicable law, Pledgor hereby authorizes Lender to file, in the name of Pledgor or
otherwise, UCC financing statements, including continuation statements, which Lender in its
reasonable discretion may deem necessary or appropriate for the purpose specified above.



(f) Preservation of Related Collateral. Pledgor will not allow any default for which
it is responsible to occur under and in respect of the Collateral, and shall fully perform or cause
to be performed when due all of its obligations under and in respect of the Collateral.



(g) Papers; Records and Files.



(i) Maintenance. Pledgor shall acquire and shall assemble, maintain and have
available a complete file relating to the LLC Interests, including all statements and other
information delivered to Pledgor pursuant to the Organizational Documents. Pledgor shall maintain
all such papers, records and files not in the possession of Lender in good and complete condition
and shall preserve them against loss.



(ii) Lender’s Rights of Inspection. Upon reasonable advance notice from Lender and
during regular business hours, Pledgor shall make any or all such papers, records or files
available to Lender in order that Lender may examine any such papers, records and files, either by
its employees or by agents or contractors, or both, and make copies of all or any portion thereof.



(h) Additional Liens; Amendments to Organizational Documents. Pledgor shall not:



(i) sell, assign, pledge, grant any lien on, other than liens expressly permitted under the
Loan Documents, Transfer, dispose of or otherwise encumber the Collateral or any part thereof,
including entering into any lock-up or any other arrangement with respect to the Collateral;



(ii) permit Issuer to issue any replacement membership interest certificate without the prior
written consent of Lender;



(iii) vote to enable, or take any other action to permit, Issuer to issue, or fail to take any
available action to prevent Issuer from issuing any limited liability company membership interests
in Issuer or issuing any other securities convertible into or granting the right to purchase or
exchange for any limited liability company membership interests in Issuer;



(iv) cause or permit Issuer to terminate Issuer’s “opt in” election under Article 8 of the
UCC; or



(v) cause or permit amendment, modification or other change to the Organizational Documents,
without the prior written consent of Lender.



(i) Maintain Business of Issuer. Pledgor shall, in accordance with the Organizational
Documents, cause Issuer to take the actions and achieve the business purpose as described in the
Organization Documents and Pledgor agrees that Pledgor will not take any action, or refuse to grant
any consents, which would interfere with or impede the ability of Issuer to take such actions or
achieve such purpose.



(j) Issuer as Single Purpose Entity. Pledgor shall, insofar as it is able, cause
Issuer to, do all things necessary to preserve the existence of Issuer as a single purpose entity.



(k) Inspection of Property; Books and Records; Discussion; Consents.



(i) Pledgor shall, and insofar as it is able, cause Issuer to, keep and maintain on a fiscal
year basis proper books and records in accordance with the requirements set forth in the Loan
Agreement. Lender and its authorized representatives shall have the right at reasonable times and
upon reasonable notice to examine the foregoing books and records and to make such copies or
extracts thereof as Lender may require.



(ii) Pledgor shall, and insofar as it is able, cause Issuer to, permit Lender and any person
authorized by it, at all reasonable times and upon reasonable notice to enter and examine the
Property and inspect all work done, labor performed and materials furnished in and about the
Property. Lender shall have no duty to make any such inspection and shall have no liability or
obligation for making (except for its willful misconduct) or not making any such inspection.



(iii) Pledgor shall, and insofar as it is able, cause Issuer to, promptly after written
request by Lender, furnish or cause to be furnished to Lender, in such manner and in such detail as
may be requested by Lender, such additional information as may be reasonably requested by Lender
with respect to each of Pledgor, Issuer and the Property.



(l) Notices. Pledgor shall, and insofar as it is able, cause Issuer to, as
appropriate, promptly give Lender written notice of:



(i) the occurrence of any Event of Default;



(ii) any default or event of default under any contractual obligation of Issuer that could be
reasonably expected to result in a Material Adverse Effect, or any litigation, investigation or
proceeding which may exist at any time between Issuer and any Governmental Authority or any other
person, which, if not cured or if adversely determined, as the case may be, could reasonably be
expected to result in a Material Adverse Effect; and



(iii) of a change in the business, operations, property or financial or other condition or
prospects of Pledgor or Issuer which could result in a Material Adverse Effect.



Each notice pursuant to this subsection shall be accompanied by a statement setting forth details
of the occurrence referred to therein and stating what action the applicable person proposes to
take, if any, with respect thereto.



(m) Application of Disbursements. No amounts received by or disbursed to Pledgor
shall in any manner violate the requirements of the Loan Documents or the Loan Agreement.



(n) Additional Covenants of Pledgor Relating to Negative Covenants of Issuer. Pledgor
shall cause Issuer to take (or not take, as the case may be) the actions necessary to ensure that:
(i) Issuer shall comply with the covenants of Issuer set forth in the Loan Agreement; and (ii)
Issuer shall not transfer the Property or any portion thereof, except as expressly permitted under
the Loan Documents.



(o) Additional Consents. Pledgor shall, and insofar as it is able, cause Issuer to,
(i) consent to (A) the pledge by Pledgor to Lender of the LLC Interests, (B) the transfer of the
LLC Interests and the right of Lender to exercise all voting and management rights appurtenant or
relating to that LLC Interest in each case, by or in lieu of, foreclosure of the pledge (it being
agreed that Lender may, in its sole discretion, foreclose solely on the voting or management
rights) and (C) upon the aforesaid transfer of the LLC Interests, the change in control of Issuer
and (ii) acknowledge and agree that the foreclosure of the LLC Interests by Lender or other
transfer of the LLC Interests in lieu of foreclosure, shall not constitute an unpermitted transfer
under any of the Organizational Documents.



(p) Proxy Agreement. Pledgor agrees to execute and deliver to Lender, and agrees to
cause Issuer to execute and deliver to Lender, a proxy agreement (“Proxy Agreement”) in the
form of Exhibit “A” hereto.



5. Rights of Pledgor. Unless an Event of Default shall have occurred and be
continuing, notwithstanding any other provision of this Agreement to the contrary, Pledgor shall be
entitled to (a) exercise any and all voting and other consensual rights pertaining to the related
LLC Interests or any part thereof for any purpose not inconsistent with the terms of this Agreement
or the other Loan Documents and (b) receive and use, free and clear of any lien created hereby or
any security interest granted by Pledgor to Lender hereunder, for any purpose, any distributions
actually made and any allocations actually made with respect to the LLC Interests (whether as a
distribution of net cash flow or otherwise).



6. Remedies.



(a) Should any Event of Default occur and be continuing, Lender is hereby authorized and
empowered, at its election, to do any of the following without liability except to account for
money and other property actually received by it, but Lender shall have no duty to exercise any
such right, privilege or option and shall not be responsible for any failure to do so or delay in
so doing:



(i) to transfer and register in its or its nominee’s name the whole or any part of the
Collateral, including by means of the completion of the instruments of transfer delivered herewith,
if any;



(ii) to exercise all voting and management rights with respect to the Collateral;



(iii) to demand, sue for, collect, receive and give acquittance for any and all cash
distributions or monies due or to become due upon or by virtue thereof, and to settle, prosecute or
defend any action or proceeding with respect thereto;



(iv) to sell in one or more sales (public or private) the whole or any part of the Collateral
or otherwise to transfer or assign the same, in each case, however, to the extent permitted and in
the manner provided in the UCC;



(v) to receive and retain all distributions with respect to the Collateral;



(vi) to otherwise enforce and act with respect to the Collateral or the Proceeds as though
Lender were the outright owner thereof;



(vii) to exercise all other rights and remedies available under law or in equity; and



(viii) upon the exercise by Lender of any right, privilege or option pertaining to the LLC
Interests, and in connection therewith, to deposit and deliver any and all of the LLC Interests
with any committee, depository, transfer agent, registrar or other designated agency upon such
terms and conditions as it may determine. Lender is hereby granted a power of attorney to effect
the aforesaid registration in the name of the Lender or its nominee of the LLC Interests.



(b) In the event of any disposition of the Collateral as provided in subsection (a)(iv),
Lender shall give to Pledgor at least ten (10) Business Days’ prior written notice of the time and
place of any public sale of the Collateral or of the time after which any private sale or any other
intended disposition is to be made. Pledgor hereby acknowledges that ten (10) Business Days’ prior
written notice of such sale or sales shall be reasonable notice. Except as otherwise expressly
provided in the Loan Documents or the UCC, Lender may enforce its rights hereunder without any
other notice and without compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived by Pledgor, to the
fullest extent permitted by law). Lender may buy any part or all of the Collateral at any public
sale conducted in accordance with the UCC and as set forth herein.



(c) Pledgor recognizes that Lender may be unable to effect a public sale of the Collateral or
any part thereof by reason of certain prohibitions contained in the Securities Act and other
applicable laws, but may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers and may otherwise be required to impose additional limitations on
sales as a result thereof. Pledgor agrees that any such private sales may be at prices and on other
terms less favorable to the seller than if sold at public sales and that such private sales shall
not by reason thereof be deemed not to have been made in a commercially reasonable manner. Pledgor
agrees to use its best efforts to cause Issuer to execute and deliver all such instruments and
documents and to do or cause to be done all such other acts and things as may be necessary or, in
the opinion of Lender, advisable (i) to cause the Collateral, or any part thereof, to be exempt
from registration under the provisions of the Securities Act; (ii) to amend such instruments and
documents which, in the opinion of Lender, are necessary or advisable to meet the requirements of
the Securities Act and the rules and regulations of the Securities and Exchange Commission
applicable thereto; and (iii) to make any sales of any portion or all of the Collateral pursuant to
this Section valid and binding and in compliance with any and all applicable laws, provided that
nothing herein shall require the LLC Interests to be registered under the Securities Act or other
similar laws. Pledgor further agrees to use its best efforts to cause Issuer to comply with the
provisions of the state securities or “blue sky” laws of any jurisdiction which the Lender shall
designate, to the extent that any such laws apply.



7. Limitation on Duties Regarding Collateral. Lender’s sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its possession, if any, under
Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as Lender deals
with similar limited liability company membership interests and other similar property for its own
account. Neither Lender nor any of its directors, officers, partners, members, employees or agents
shall be liable for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of Pledgor or otherwise.



8. Prejudgment Remedy Provision. In the event of any legal action between Pledgor and
Lender hereunder, Pledgor expressly waives, to the extent permitted by law, any and all rights
Pledgor may have under the law as now constituted or hereafter amended that may constitute a
limitation on prejudgment remedies, and Lender may invoke any prejudgment remedy available to it,
including garnishment, attachment, foreign attachments and request, with respect to the Collateral,
to enforce the provisions of this Agreement.



9. Application of Proceeds. Except as otherwise provided herein or in the other Loan
Documents, Lender shall apply any proceeds from time to time held by it and the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after deducting all
reasonable out-of-pocket costs and expenses of every kind incurred therein or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights
of Lender hereunder, including reasonable attorney’s fees and disbursements, to the payment in
whole or in part of the Debt, in such order as Lender may elect, and only after such application
and after the payment by Lender of any other amount required by any provision of law, including
Section 9-615 of the UCC, need Lender account for the surplus, if any, to Pledgor.



10. Non-Recourse. Except as otherwise provided in this Agreement or in any other of
the Loan Documents, no recourse shall be had against Pledgor or any incorporator, affiliate,
shareholder, stockholder, member, partner, officer, employee or director of Pledgor by the
enforcement of any assessment or by any legal or equitable proceeding in respect of the Debt, it
being expressly agreed and understood that the Debt will be satisfied solely out of the collateral
described in the Loan Agreement.



11. Appointment of Lender as Pledgor’s Lawful Attorney. Pledgor irrevocably
designates, makes, constitutes and appoints Lender (and all persons designated by Lender) as its
true and lawful proxy and attorney-in- fact (coupled with an interest) upon the occurrence and
continuance of an Event of Default to take the following actions:



(a) at such time or times hereafter as Lender or its agent in its sole discretion may
determine, in Pledgor’s or Lender’s name, to endorse Pledgor’s name on any checks, notes, drafts,
instruments, documents or any other payment relating to the Collateral and/or proceeds which come
into the possession of Lender or come under Lender’s control;



(b) to the extent permitted by law, to sign Pledgor’s name on any documents necessary or
desirable for the purpose of maintaining or achieving the perfection of a security interest in the
Collateral; and



(c) to the extent permitted by law, to sign Pledgor’s name to any document necessary or
appropriate in order to permit Lender to fully exercise its rights herein.



12. Reimbursement. All reasonable sums expended by Lender in connection with the
exercise of any right or remedy provided for herein or in connection with preserving the Collateral
and Lender’s interest therein, whether through judicial proceedings or otherwise, or in defending
or prosecuting any actions, suits or proceedings arising out of or relating to the Collateral,
shall be and shall remain the obligation of Pledgor. At the option of Lender, all such sums may be
paid from the Collateral or may be advanced by Lender, in which event they shall be deemed to have
been advanced to Pledgor and shall be reimbursed by Pledgor to Lender upon demand therefor. Such
sums shall constitute part of the Debt.



13. Lender’s Powers for Lender’s Sole Benefit. The powers conferred on Lender
hereunder are solely for Lender’s benefit and do not impose any duty on Lender to exercise any such
powers. Pledgor waives, to the fullest extent permitted by law, all rights whatsoever against
Lender for any loss, expense, liability or damage suffered by Pledgor as a result of actions taken
pursuant to this Agreement, including those arising under any “mortgagee in possession” doctrine or
the like, except to the extent such losses, expenses, liabilities or damages result from the gross
negligence or willful misconduct of Lender, or to the extent otherwise expressly provided herein.



14. Waiver of Redemption and Deficiency Rights. Pledgor hereby waives, to the fullest
extent permitted by law, every statute of limitation, any right of redemption, any moratorium or
redemption period, and any right which Pledgor may have to direct the order in which any of the
Collateral shall be disposed of in the event of any disposition thereof pursuant hereto, except as
otherwise expressly provided herein or in the other Loan Documents.



15. Security Agreement. This Agreement is intended to be a security
agreement pursuant to the UCC for any and all of the Collateral purported to be covered by this
Agreement, and, prior to the occurrence of and continuation of an Event of Default hereunder, any
assignment of the Collateral by the Pledgor pursuant to this Agreement is an assignment for
security purposes only.



16. Security Interest Absolute. All rights of Lender hereunder, the grant of a
security interest in the Collateral and all obligations of Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the Organizational
Documents; (b) any change in time, manner or place of payment of, or in any other term of, all or
any of the Debt, or any release, amendment or waiver of or any consent to any departure from the
Loan Agreement or any other of the Loan Documents; (c) any exchange, release or nonperfection of
any other collateral, or any release, amendment or waiver of or consent to or departure from any
guarantee, for all or any of the Debt; or (d) any other similar circumstance which might otherwise
constitute a defense available to, or a discharge of, Issuer or Pledgor in respect of the Debt or
in respect of this Agreement.



17. Authorization to File Financing Statements. Pledgor’s execution of this Agreement
evidences Pledgor’s authorization to file such UCC financing statements as are necessary to perfect
Lender’s security interest in the Collateral at any time prior to the full satisfaction of the
Debt, including, but not limited to the filing of a financing statement with an “all assets”
collateral description.



18. Review of Financial Condition. Pledgor hereby consents and agrees that Lender
shall be permitted at any time and from time to time to review and/or confirm the financial
condition of Pledgor, including ordering and reviewing credit reports from a nationally recognized
credit agency. 



19. Miscellaneous.



(a) Waiver of Notice. Pledgor hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Agreement does not specifically and expressly
provide for the giving of notice by Lender to Pledgor. No release of any security for the Loan or
one or more extensions of time for payment of the Note or any installment thereof, and no
alteration, amendment or waiver of any provision of this Agreement, the Note or the other Loan
Documents made by agreement between Lender or any other person, shall release, modify, amend,
waive, extend, change, discharge, terminate or affect the liability of Pledgor or any other person
who may become liable for the payment of all or any part of the Loan under the Note, this Agreement
or the other Loan Documents.



(b) Jurisdiction; Court Proceedings. Pledgor, to the fullest extent permitted by law,
hereby knowingly, intentionally and voluntarily, with and upon the consultation of competent
counsel, (i) submits to personal, nonexclusive jurisdiction in the Commonwealth of Pennsylvania
with respect to any suit, action or proceeding by any person arising from, relating to or in
connection with the Loan Documents or the Loan, (ii) agrees that any such suit, action or
proceeding may be brought in any state or federal court of competent jurisdiction sitting in
Philadelphia, Pennsylvania, (iii) submits to the jurisdiction of such courts, (iv) agrees that it
will not bring any action, suit or proceeding in any forum other than Philadelphia, Pennsylvania
(but nothing herein shall affect the right of Lender to bring any action, suit or proceeding in any
other forum), (v) irrevocably agrees not to assert any objection which it may ever have to the
laying of venue of any such suit, action or proceeding in any federal or state court located in
Pennsylvania and any claim that any such action, suit or proceeding brought in any such court has
been brought in an inconvenient forum, and (vi) consents and agrees to service of any summons,
complaint or other legal process in any such suit, action or proceeding by registered or certified
U.S. mail, postage prepaid, to Pledgor, at the address for notices described herein and consents
and agrees that such service shall constitute in every respect valid and effective service (but
nothing herein shall affect the validity or effectiveness of process served in any other manner
permitted by law).



(c) Agent For Service of Process. Pledgor hereby irrevocably designates CT
Corporation System, located at 1515 Market Street, Suite 1210, Philadelphia, Pennsylvania 19102, or
other agent acceptable to Lender, as the designee, appointee and agent of Pledgor to receive, for
and on behalf of Pledgor, service of process in such respective jurisdictions in any legal action
or proceeding with respect to the Loan Documents. It is understood that a copy of such process
served on such agent will be promptly forwarded by overnight courier to the Pledgor at its
addresses set forth herein, but the failure of Pledgor to receive such copy shall not affect in any
way the service of such process.



(d) Waiver of Jury Trial. PLEDGOR, TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE CONSULTATION OF COMPETENT COUNSEL,
WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING ANY TORT ACTION, BROUGHT BY ANY PARTY TO THE LOAN DOCUMENTS AGAINST ANY OTHER BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO OR IN CONNECTION WITH THE LOAN DOCUMENTS, THE LOAN OR ANY
COURSE OF CONDUCT, ACT, OMISSION, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PERSON (INCLUDING, WITHOUT LIMITATION, SUCH PERSON’S DIRECTORS, OFFICERS, PARTNERS,
MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH SUCH PERSON), IN
CONNECTION WITH THE LOAN OR THE LOAN DOCUMENTS, INCLUDING ANY COUNTERCLAIM WHICH PLEDGOR MAY BE
PERMITTED TO ASSERT THEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS AGAINST PLEDGOR,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THIS WAIVER BY PLEDGOR OF ITS RIGHT TO A JURY
TRIAL IS A MATERIAL INDUCEMENT FOR THE LENDER TO MAKE THE LOAN.



(e) Offsets, Counterclaims and Defenses. Pledgor hereby knowingly waives the right to
assert any counterclaim, other than a compulsory counterclaim, in any action or proceeding brought
against Pledgor by Lender. Any assignee of the Loan Documents or any successor of Lender shall
take the same free and clear of all offsets, counterclaims or defenses which are unrelated to the
Loan Documents which Pledgor may otherwise have against any assignor of the Loan Documents, and no
such unrelated counterclaim or defense shall be interposed or asserted by Pledgor in any action or
proceeding brought by any such assignee under such Loan Document. Any such right to interpose or
assert any such unrelated offset, counterclaim or defense in any such action or proceeding is
hereby expressly waived by Pledgor.



(f) Voluntary Agreement. PLEDGOR HEREBY REPRESENTS AND WARRANTS THAT PLEDGOR IS FULLY
AWARE OF THE TERMS CONTAINED IN THE LOAN DOCUMENTS AND THAT PLEDGOR HAS VOLUNTARILY AND WITHOUT
COERCION OR DURESS OF ANY KIND ENTERED INTO THE LOAN DOCUMENTS TO WHICH IT IS A PARTY.



(g) Further Assurances. Pledgor agrees that it will execute and deliver such further
instruments and perform such further acts as may be reasonably requested by Lender from time to
time to confirm the provisions of any Loan Document to which it is a party, to carry out more
effectively the purposes of this Agreement or the Loan Documents, or to confirm the priority of the
conveyance created by the Loan Documents on any property, rights or interest encumbered or intended
to be conveyed by any of the Loan Documents.



(h) Waiver. Pledgor hereby waives and releases all errors, defects and imperfections
in any proceedings instituted by Lender under the Loan Documents, as well as any and all benefit
that might accrue to Pledgor by virtue of any present or future laws exempting any property, real
or personal, or any part of the proceeds arising from any sale of such property, from attachment,
levy, or sale under execution, or providing for any stay of execution, exemption from civil
process, or extensions of time for payment.



(i) Governing Law. This Agreement shall be governed by and construed in accordance
with Pennsylvania law without giving effect to the principles of conflicts of laws.



20. Rules of Construction. This Agreement is governed by and hereby incorporates by
reference the Rules of Construction contained in the Loan Agreement, which shall apply with the
same effect as though fully set forth herein.



[SIGNATURES APPEAR ON THE FOLLOWING PAGE]





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IN WITNESS WHEREOF, the parties hereto have caused this Pledge and Security Agreement to be
duly executed as of the date first above written.




PLEDGOR: 




NNN 2003 VALUE FUND, LLC, a Delaware limited
liability company




	 	 	 	By:
TRIPLE NET PROPERTIES, LLC, a Virginia limited
liability company, its manager





By: /s/ Jeff Hanson [SEAL]

Name: Jeff Hanson

Title: Managing Director of Real Estate





LENDER:




RAIT PARTNERSHIP, L.P., a Delaware limited




partnership




By: RAIT General, Inc., a Maryland corporation,




its general partner




By: /s/ Scott Schaefer

Name: Scott Schaefer

Title: Co-President




SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT









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