EX-10.3






LOAN AGREEMENT




between




G&E HEALTHCARE REIT COUNTY LINE ROAD, LLC,




a Delaware limited liability company




and




WACHOVIA BANK, NATIONAL ASSOCIATION




dated as of




December 19, 2007




1




LOAN AGREEMENT




This Loan Agreement is made as of December 19, 2007 by and between WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, whose address is Wachovia Bank, N.A., Real Estate
Financial Services, General Banking Group, Mail Code: CA 6233, 15750 Alton Parkway, Irvine,
California 92618 (“Lender”), and G&E HEALTHCARE REIT COUNTY LINE ROAD, LLC, a Delaware limited
liability company, whose address is c/o Triple Net Properties, LLC, 1551 N. Tustin Avenue, Suite
300, Santa Ana, California 92705 (“Borrower”).



RECITALS




A. Borrower has acquired or will acquire fee simple title to that certain real property
located in Highlands Ranch, Colorado, as more particularly described in Exhibit A attached
hereto (collectively, the “Property”), commonly known as 200 and 206 West County Line Road,
Highlands Ranch, Colorado.



B. Borrower has requested that Lender extend credit to it for the financing and operation of
the Project (as defined herein).



C. Lender is prepared to extend such credit in accordance with and subject to the terms and
conditions set forth herein.



NOW, THEREFORE, in consideration of the covenants and conditions herein contained, the parties
agree as follows:



ARTICLE I




DEFINITIONS





1.1 Definitions. As used herein, the following terms shall have the meanings set
forth below:



"Adverse Survey Matters” shall have the meaning assigned in Section 10.18 of this Agreement.



"Affiliate” of any Person means any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with such Person. For purposes of this
definition, “control” when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.



"Agreement” shall mean this Loan Agreement, as the same may be amended, modified,
supplemented, renewed and restated from time to time.



"Appraisal” shall mean an appraisal of the “as is” value of the Property and the Improvements
(i) ordered by Lender, (ii) prepared by an appraiser satisfactory to Lender, (iii) in compliance
with all federal and state standards for appraisals, (iv) reviewed by Lender and (v) in form and
substance satisfactory to Lender in its sole and absolute discretion; provided, however, that in
reviewing such appraisals and applying such discretion, Lender will act in good faith and will
consistently apply the standards generally used by Lender in the normal course of its real estate
lending business in order to review and evaluate appraisals.



"Borrower” shall mean G&E Healthcare REIT County Line Road, LLC, a Delaware limited liability
company, whose address is as set forth in the introductory paragraph to this Agreement.



"Budget” shall mean the cost breakdown/budget for the Loan attached hereto as
Exhibit B, which shall set forth the costs to be paid with the Loan.



"Business Day” shall mean a day of the year other than Saturdays, Sundays and legal holidays
on which banks are required to be closed in California, Colorado or North Carolina.



"Calendar Month” shall mean any of the twelve (12) calendar months of the year. With respect
to any payment or obligation that is due or required to be performed within a specified number of
Calendar Months, then such payment or obligation shall become due on the day in the last of such
specified number of Calendar Months that corresponds numerically to the date on which such payment
or obligation was incurred or commenced; provided, however, that with respect to any obligation
that was incurred or commenced on the 29th, 30th or 31st day of any Calendar Month and if the
Calendar Month in which such payment or obligation would otherwise become due does not have a
numerically corresponding date, such obligation shall become due on the first Business Day of the
next succeeding Calendar Month.



"CC&R’s” shall mean any and all covenants, conditions, restrictions, maintenance agreements or
reciprocal easement agreements affecting the Project or any of the Property.



"Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.



"Closing Date” shall mean the date the Mortgage is recorded in the official records of the
County.



"Collateral” shall mean all real and personal property (whether tangible or intangible) in
which a lien, encumbrance or security interest is granted in favor of Lender pursuant to the Loan
Documents.



"County” shall mean Douglas County, Colorado.



"Day” or “Days” shall mean calendar days unless expressly stated to be Business Days.



“Debt Service Coverage Ratio” shall mean a fraction, the numerator of which is the Net
Operating Income from the Project before payment of debt service for the three-month period in
question, and the denominator of which is an amount equivalent to the sum of (a) an amount, as
reasonably determined by Lender, equivalent to the interest that would accrue on the Loan during
such three-month period at a rate of interest equal to the greater of (i) seven percent (7.0%) per
annum, or (ii) the rate of one and one-half percent (1.50%) per annum above the Treasury Note Rate
(herein defined), and (b) an amount for such period, as reasonably determined by Lender, equivalent
to the amount of principal that would be payable during such three-month period according to a
schedule that would fully amortize the Loan over a 30-year period given the foregoing rate of
interest.



"Default Rate” shall have the meaning assigned in the Note.



"Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement executed
by Borrower and Guarantor of even date herewith.



"Event of Default” shall mean the occurrence of any of the events listed in Section 11.1 of
this Agreement.



"ERISA” shall mean Employee Retirement Income Security Act of 1974, as the same may, from time
to time, be amended.



"Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided, however, that (a) if the day for which such rate is to be determined
is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if
such rate is not so published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Lender on such Business Day on such transactions as determined
by Lender.



"Financing Statement” shall mean one or more UCC-1 financing statements authorized by
Borrower, as debtor, in favor of Lender, as secured party, and perfecting Lender’s security
interest in the collateral described therein, each in form and substance satisfactory to Lender, to
be filed in the Office of the Secretary of State of Delaware, and in such other offices for
recording or filing such statements in such jurisdictions as Lender shall desire to perfect
Lender’s security interest or reflect such interest in appropriate public records.



"First Extended Maturity Date” shall mean an extended maturity date determined in accordance
with Section 2.4 of this Agreement.



"First Extension” shall have the meaning assigned in Section 2.4 of this Agreement.



"Governmental Authority” shall mean (a) any governmental municipality or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission,
department instrumentality or public body, or (c) any court, administrative tribunal or public
utility.



"Guarantor” shall mean Grubb & Ellis Healthcare REIT, Inc., a Maryland corporation.



"Guaranty” shall mean that certain Repayment Guaranty of even date herewith executed by the
Guarantor, in form and content satisfactory to Lender.



"Improvements” shall mean all on-site and off-site improvements to the Property, if any, and
appurtenances now or later to be located on the Land and/or in such improvements.



"Indebtedness” means, as to any Person (a) indebtedness created, issued, incurred or assumed
by such Person for borrowed money or evidenced by bonds, debentures, notes or similar instruments;
(b) all obligations of such Person to pay the deferred purchase price of property or services and
all other accounts payable; (c) all indebtedness secured by a lien on any asset of such Person
whether or not such indebtedness is assumed by such Person; (d) all obligations, contingent or
otherwise, of such Person directly or indirectly guaranteeing any indebtedness or other obligation
of any other Person or in any manner providing for the payment of any indebtedness or other
obligation of any other Person or otherwise protecting the holder of such indebtedness against loss
(excluding endorsements for collection or deposit in the ordinary course of business); (e) the
amount of all reimbursement obligations and other obligations of such Person (whether due or to
become due, contingent or otherwise) in respect of letters of credit, drafts, notes, bankers’
acceptances, surety or other bonds and similar instruments; (f) all capitalized lease obligations;
(g) all other obligations that would be included as liabilities on a balance sheet prepared in
accordance with GAAP; (h) all payables of such Person relating to minority interests; (i) net
liabilities under Swap Contracts.



"Indemnified Taxes” means Taxes other than Excluded Taxes.



"Interest Rate” shall have the meaning assigned in the Note.



"Leases” means all leases, and other occupancy or use agreements (whether oral or written),
now or hereafter existing, which cover or relate to the Property or any part thereof, together with
all options therefor, amendments thereto and renewals and modifications thereof.



"Lender” shall mean Wachovia Bank, National Association, a national banking association, whose
address is as set forth in the introductory paragraph to this Agreement, and its successors and
assigns.



"Lending Office” means the office, branch, subsidiary or affiliate of Lender selected by
Lender, from time to time, for the funding or booking of the Loan.



"Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement for the
refinancing of the Property and the operation of the Project.



"Loan Amount” shall mean Eight Million Eight Hundred Fifty-Three Thousand and No/100 Dollars
($8,853,000.00).



"Loan Documents” shall mean this Agreement, the Note, the Mortgage, Financing Statements, the
Guaranty, the Environmental Indemnity, the Subordination of Property Management Agreement and all
other documents and instruments (other than any Swap Contracts) now or hereafter executed and
delivered in connection with this Agreement and the Loan described herein.



"London Banking Day” means a day on which dealings in dollar deposits are conducted by and
between banks in the London interbank eurodollar market.



"Maturity Date” shall mean the date upon which the Loan becomes due and payable, which date
shall be December 31, 2010, subject to possible extensions as set forth in Section 2.4.



"Mortgage” shall mean a Deed of Trust, Assignment, Security Agreement and Fixture Filing
executed by Borrower, as trustor, and naming Lender as beneficiary, creating a first lien on the
Property, the Improvements, and all other buildings, fixtures and improvements now or hereafter
owned or acquired by Borrower and situated on the Property, and all rights and easements
appurtenant thereto, securing indebtedness and obligations pursuant to the Loan Documents and any
Swap Contracts with Lender or its Affiliates, all in form and substance acceptable to Lender, as
such Mortgage may be amended, modified, supplemented, renewed and restated from time to time.



"Net Operating Income” shall mean the amount of (a) Rental Income for the applicable three (3)
month period of time in question, less (b) the amount of Operating Expenses for such period
of time.



"Non-Related Party” shall mean a person or entity that is not an Affiliate of Borrower.



"Note” shall mean the Promissory Note of even date herewith evidencing the Loan and secured by
the Mortgage, as such note may be amended, modified, supplemented, renewed or restated from time to
time.



"Operating Expenses” shall mean any and all costs and expenses incurred in connection with the
Project (or which should have been incurred to operate and maintain the Project in a first class
manner) during the applicable three-month time period in question as reasonably determined by
Lender, including without limitation (a) taxes and assessments imposed upon the Project which are
reasonably allocable to such time period, (b) bond assessments which are reasonably allocable to
such time period, (c) insurance premiums for casualty insurance and liability insurance carried in
connection with the Project which are reasonably allocable to such time period, (d) operating
expenses incurred by Borrower for the management, operation, cleaning, leasing, maintenance and
repair of the Project which are reasonably allocable to such time period, including a management
fee as approved by Lender, and (e) a sufficient replacement reserve (based on an annual rate of
$0.15 per foot), but excluding depreciation, debt service and capital expenditures). Operating
Expenses shall not include any depreciation, interest, principal, loan fees, extension fees or
other payments on the Loan.



"Permitted Exceptions” means the matters approved by Lender as permitted exceptions of title
with respect to the Property and set forth as exceptions to title in the Title Insurance Policy
approved by Lender.



"Person” shall mean a natural person, a partnership, a joint venture, an unincorporated
association, a limited liability company, a corporation, a trust, any other legal entity, or any
Governmental Authority.



"Project” shall mean the Property and the Improvements.



"Property” shall mean the real property described in Exhibit A attached hereto.



"Rental Income” shall mean the rental income received by Borrower, as reasonably determined by
Lender, for the three (3) month period of time in question from the tenant Leases of the
Improvements which are then in effect (and as to which the tenants thereunder are in possession and
paying rent, and are not in default) or any other income, if any, generated by Borrower’s ownership
and operation of the Project.



"Second Extended Maturity Date” shall mean an extended maturity date determined in accordance
with Section 2.4 of this Agreement.



"Second Extension” shall have the meaning assigned in Section 2.4 of this Agreement.



"Subordination of Property Management Agreement” shall mean that certain Subordination of
Property Management Agreement of even date herewith executed by Borrower and property manager, in
form and content satisfactory to Lender.



"Swap Contract” shall mean any agreement, whether or not in writing, relating to any
transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap or option, bond, note or bill option, interest rate option,
forward foreign exchange transaction, interest cap, collar or floor transaction, currency swap,
cross-currency rate swap, swap option, currency option or any other similar transaction (including
any option to enter into the foregoing) or any combination of the foregoing, and, unless the
context otherwise clearly requires, any form of master agreement published by the International
Swaps and Derivatives Association, Inc., or any other master agreement, together with any related
schedules and confirmations, as amended, supplemented, superseded or replaced from time to time,
relating to or governing any or all of the foregoing.



"Title Company” shall mean Lawyers Title Insurance Company, or such other title insurance
company as Lender may approve from time to time.



"Title Insurance Policy” shall mean a title insurance policy in the form of an American Land
Title Association Loan Policy (1992) extended coverage (without revision, modification or
amendment) issued by the Title Company, in form and substance satisfactory to Lender and containing
such endorsements as Lender may require.



"Unmatured Event of Default” shall mean an event or condition which with notice or lapse of
time, or both, would become an Event of Default.




1.2 Accounting Terms. For purposes of this Agreement, all accounting terms not
otherwise defined herein or in the Recitals shall have the meanings assigned to them in
conformity with generally acceptable accounting standards and principles, consistently applied
(“GAAP”).



ARTICLE II




THE LOAN





2.1 Agreement to Lend and Borrow. Subject to the terms and conditions of this
Agreement, Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender the Loan
Amount (or such lesser amount as Borrower requests that Lender advance). The Loan proceeds shall
be used for the purposes of financing the Property and operating the Project in accordance with
this Agreement, and other uses reasonably approved by Lender. All amounts advanced under the
Loan and repaid shall not be re-borrowed.




2.2 Evidence of Indebtedness. The Loan shall be evidenced by the Note. In the
event of any inconsistency between the Note and this Agreement, the provisions of this Agreement
shall prevail.




2.3 Interest Rate.




(a) Payment. The Loan shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to the Interest Rate. Interest shall be payable in
arrears and shall be due on the first day of each calendar month and on the Maturity Date
(as it may be extended) and on the date the outstanding principal amount of the Note is
repaid in full.




(b) Rate after Default. If all or a portion of the principal amount of the
Loan made hereunder or any installment of interest on the Loan shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise and after any applicable
opportunity to cure), any such overdue principal amount and, to the extent permitted by
applicable law, any overdue installment of interest on the Loan shall, without limiting any
other rights of Lender, bear interest, payable on demand, for each day until paid at the
Default Rate. After the occurrence and during the continuance of an Event of Default, the
principal amount of the Loan (and, to the extent permitted by applicable law, all accrued
interest thereon) may, at the election of Lender, bear interest at the Default Rate.




(c) Computation of Interest. Interest in respect of the Loan shall be
calculated on the basis of a 360-day year for the actual days elapsed. Each determination
of an interest rate by Lender pursuant to any provision of this Agreement shall be
conclusive and binding on Lender and Borrower in the absence of manifest error.




(d) No Deductions. All payments of principal or interest under the Note shall
be made without deduction of any present and future taxes, levies, imposts, deductions,
charges or withholdings, which amounts shall be owed and paid by Borrower. Borrower will
pay the amounts necessary such that the gross amount of the principal and interest received
by Lender is not less than that required by the Note.




(e) Order of Application. Any payments received by Lender will be applied in
the following order: (1) late charges; (2) impound payments for taxes and insurance (if
any); (3) interest; and (4) principal.




2.4 Maturity of the Loan. All principal owing on the Loan, and all accrued interest
and other sums owing under the Loan Documents not otherwise paid when due, shall be due and
payable in full on the Maturity Date. Borrower shall have the option to extend the term of the
Loan (the “First Extension”) from the Maturity Date (for purposes of this Section, the “Original
Maturity Date”) to a date that is twelve (12) months following the Original Maturity Date (for
purposes of this Section, the “First Extended Maturity Date”), and upon the expiration of the
First Extension, Borrower shall have the option to extend the term of the Loan (the “Second
Extension”) from the First Extended Maturity Date to a date that is twelve (12) months following
the First Extended Maturity Date (for purposes of this Section, the “Second Extended Maturity
Date”), each such Extension being subject to the satisfaction of each of the following conditions
precedent:




(a) Borrower shall provide Lender with written notice of Borrower’s request to exercise
its option to extend the maturity date not more than ninety (90) days but not less than
sixty (60) days prior to (i) the Original Maturity Date, in the case of the First Extension,
and (ii) the First Extended Maturity Date, in the case of the Second Extension;




(b) As of the date of Borrower’s delivery of notice of request to exercise its option
to extend, and as of the date of the commencement of the applicable extension, no Event of
Default or Unmatured Event of Default shall have occurred and be continuing, and Borrower
shall so certify in writing;




(c) Borrower shall certify in writing that all representations and warranties set forth
in the Loan Documents remain true and correct;




(d) The Debt Service Coverage Ratio for the Project for the three month period
immediately preceding the then applicable Maturity Date shall have been at least 1.25 to
1.0;




(e) Immediately prior to the commencement of each extension, Borrower shall pay to
Lender an extension fee in the amount of one eighth of one percent (0.125%) of the total
outstanding plus undisbursed Loan proceeds, as determined on the Original Maturity Date, in
the case of the First Extension, and as determined on the First Extended Maturity Date, in
the case of the Second Extension;




(f) Borrower shall deliver to Lender, at Borrower’s sole cost and expense, such title
insurance endorsements reasonably required by Lender; and




(g) Borrower shall have paid all costs and expenses of Lender in connection with such
extension.



Notwithstanding the foregoing, the Second Extension may not come into effect unless the First
Extension shall have been in effect. If each of the foregoing conditions precedent are satisfied,
and the Original Maturity Date is extended as provided above to the First Extended Maturity Date or
the Second Extended Maturity Date, as applicable, as used herein and in the other Loan Documents,
the term “Maturity Date” or “Extended Maturity Date” shall thereafter mean the First Extended
Maturity Date or the Second Extended Maturity Date, as applicable.




2.5 Prepayment. Upon not less than thirty (30) days’ prior written notice to
Lender, Borrower may prepay the Loan, in whole or in part (provided Lender shall have no
obligations to readvance any repaid principal), without prepayment premium (but subject to any
costs set forth in any Swap Contract should Lender in its sole discretion elect to terminate any
such Swap Contract provided by Lender or its Affiliate upon any such prepayment).




2.6 Security. Payment of the Notes shall be secured by the following:




(a) The Mortgage;




(b) To the extent to which they may be assigned, all other rights, licenses, permits,
franchises, authorizations, approvals and agreements relating to the use, occupancy or
operation of the Project; and




(c) The Financing Statement.




2.7 Fees.




(a) Loan Fee. On the Closing Date, Borrower shall pay to Lender a loan fee in
the amount of Thirty-Five Thousand Four Hundred Twelve and No/100 Dollars ($35,412.00).




(b) Extension Fees. Borrower shall pay all fees for any maturity date
extension as and when due pursuant to this Agreement.




2.8 Increased Costs.




(a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve,
special deposit, compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by, Lender;
(ii) subject Lender to any tax of any kind whatsoever with respect to this Agreement or the
Loan, or change the basis of taxation of payments to Lender in respect thereof; or
(iii) impose on Lender or the London interbank market any other condition, cost or expense
affecting this Agreement or the Loan or participation therein; and the result of any of the
foregoing shall be to increase the cost to Lender of making or maintaining the Loan (or of
maintaining its obligation to make the Loan), or to reduce the amount of any sum received or
receivable by Lender hereunder (whether of principal, interest or any other amount) then,
upon request of Lender, Borrower will pay to Lender such additional amount or amounts as
will compensate Lender for such additional costs actually incurred or reduction actually
suffered.




(b) If Lender determines that any Change in Law affecting Lender or any Lending Office
of Lender or Lender’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on Lender’s capital or on the capital of
Lender’s holding company, if any, as a consequence of this Agreement, the Loan to a level
below that which Lender or Lender’s holding company could have achieved but for such Change
in Law (taking into consideration Lender’s policies and the policies of Lender’s holding
company with respect to capital adequacy), then from time to time Borrower will pay to
Lender such additional amount or amounts as will compensate Lender or Lender’s holding
company for any such reduction suffered.



ARTICLE III




CONDITIONS PRECEDENT





3.1 Closing. Lender’s obligations to close the Loan and perform under this
Agreement are expressly conditioned upon (i) Borrower’s satisfaction of all of the conditions set
forth in Exhibit C hereto; (ii) Borrower’s satisfaction of the conditions for
disbursement set forth in Article IV (as applicable); (iii) the Title Company’s unconditional
commitment to issue the Title Insurance Policy; and (iv) Borrower’s delivery to Lender of the
following documents, in form and content satisfactory to Lender, duly executed (and acknowledged
where necessary) by the appropriate parties thereto:




(a) This Agreement;




(b) The Note;




(c) The Mortgage, which shall be duly recorded in the official records of the County;




(d) The Financing Statement, which shall be duly filed with the Delaware Secretary of
State;




(e) The Guaranty;




(f) The Environmental Indemnity;




(g) The Subordination of Property Management Agreement;




(h) Assignments of all other agreements, contracts, rights, permits, licenses,
entitlements, authorizations, and franchises relating to the Project, and consents to such
assignments where deemed appropriate by Lender; and




(i) Such other documents that Lender may reasonably require.



ARTICLE IV




LOAN DISBURSEMENTS





4.1 Recordation Disbursements. Upon recordation of the Mortgage and satisfaction of
all conditions set forth herein, provided that the Title Company has issued or is irrevocably
committed in writing to issue to Lender the Title Insurance Policy referred to in Section 5.1
hereof, Lender shall disburse to Borrower the entirety of the Loan proceeds.




4.2 Intentionally Omitted.




4.3 Limitations and Conditions on Disbursements. In addition to the conditions
precedent set forth in Sections 3.1 and 4.1 above, Borrower shall be entitled to disbursement of
the Loan only in accordance with the terms and conditions of this Agreement (unless waived or
modified by Lender) and, in addition, the following conditions (unless waived or modified by
Lender):




(a) The representations and warranties of Borrower contained in all of the Loan
Documents shall be correct in all material respects on and as of the date of the
disbursement as though made on and as of that date and no Event of Default or Unmatured
Event of Default shall have occurred and be continuing as of the date of the disbursement;




(b) No mechanics’ lien shall have been recorded against the Property; and




(c) Lender shall be satisfied that the advance will not be junior in priority to any
mechanics’ or materialmen’s liens or any intervening or other liens on the Property other
than Permitted Exceptions.




4.4 Debt Service Coverage Ratio. At all times during the term of the Loan, the Debt
Service Coverage Ratio shall equal or exceed 1.25:1.00 as determined by Lender in its sole and
absolute discretion. If for any reason the applicable Debt Service Coverage Ratio is not met,
then Borrower shall, within thirty (30) days after Lender’s demand, immediately reduce the unpaid
principal balance of the Loan in an amount which would cause the applicable Debt Service Coverage
Ratio to be met.



ARTICLE V




TITLE INSURANCE





5.1 Basic Insurance. Concurrently with the recording of the Mortgage, Borrower
shall, at Borrower’s sole cost and expense, deliver or cause to be delivered to Lender the Title
Insurance Policy issued by the Title Company (and such reinsurers and coinsurers as Lender may
require) with a liability limit of not less than the full amount of the Loan and with coverage
and in form satisfactory to Lender, insuring Lender’s interest under the Mortgage as a valid
first lien on the Project, together with such reinsurance or coinsurance agreements or
endorsements to the Title Insurance Policy as Lender may require, which policy shall contain only
the Permitted Exceptions from its coverage, and thereafter Borrower shall, at its own cost and
expense, do all things necessary to maintain the Mortgage as a valid first lien on the Property.




5.2 Intentionally Omitted.



ARTICLE VI




OPERATION AND MAINTENANCE OF THE PROJECT





6.1 Operation as First Class Medical/Commercial Office Buildings. At all times
during the term of this Agreement, Borrower shall itself (or through a manager satisfactory to
Lender) operate the Project as first class medical/commercial office buildings.




6.2 Maintenance. Borrower shall at all times maintain the Project in good condition
and repair (as is more fully set forth in the Mortgage).



ARTICLE VII




LIABILITY, RISK, AND FLOOD INSURANCE




At all times throughout the Loan term Borrower shall, at its sole cost and expense, maintain
insurance, and shall pay, as the same becomes due and payable, all premiums in respect thereto,
including, but not necessarily limited to:




7.1 Property. “Special Cause of Loss” insurance on the Improvements in an amount
not less than the full insurable value on a replacement cost basis of the insured Improvements
and personal property related thereto.




7.2 Liability. Insurance protecting Borrower and Lender against loss or losses from
liability imposed by law or assumed in any written contract and arising from personal injury,
including bodily injury or death, having a limit of liability of not less than One Million
Dollars ($1,000,000) (combined single limit for personal injury and property damage) and an
umbrella excess liability policy in an amount not less than Fifteen Million Dollars ($15,000,000)
protecting Borrower and Lender against any loss or liability or damage for personal injury,
including bodily injury or death, or property damage. Such policies must be written on an
occurrence basis so as to provide blanket contractual liability, broad form property damage
coverage, and coverage for products and completed operations.




7.3 Additional Insurance. Borrower shall provide such other policies of insurance
as Lender may reasonably request in writing.




7.4 Other Requirements. All required insurance shall be procured and maintained in
financially sound and generally recognized responsible insurance companies selected by Borrower
and subject to the approval of Lender. Such companies should be authorized to write such
insurance in the State of Colorado. The company issuing the policies shall have a financial and
performance rating of “A-IX” or better by A.M. Best Co., in Bests’ Key Guide, or such other
rating acceptable to Lender. All property policies evidencing the required insurance shall name
Lender as first mortgagee, and all liability policies evidencing the insurance required shall
name Lender as additional insured, shall provide for payment to Lender (or its assignee, as
directed by Lender) of the net proceeds of insurance resulting from any claim for loss or damage
thereunder, shall not be cancelable as to the interests of Lender due to the acts of Borrower,
and shall provide for at least thirty (30) days prior written notice of the cancellation or
modification thereof to Lender.




7.5 Evidence. All policies of insurance, or certificates of insurance evidencing
that such insurance is in full force and effect, shall be delivered to Lender on or before the
closing date (together with proof of the payment of the premiums thereof). At least thirty (30)
days prior to the expiration or cancellation of each such policy, Borrower shall furnish Lender
evidence that such policy has been renewed or replaced in the form of a certificate reflecting
that there is in full force and effect, with a term covering the next succeeding calendar year,
insurance of the types and in the amounts required.



ARTICLE VIII




RIGHTS OF INSPECTION; AGENCY




Lender, or its agent, shall have the right at any time and from time to time to enter upon the
Property for purposes of inspection and conducting Appraisals.



ARTICLE IX




REPRESENTATIONS AND WARRANTIES





9.1 Consideration. As an inducement to Lender to execute this Agreement and to
disburse the proceeds of the Loan, Borrower represents and warrants to Lender that the following
statements set forth in this Article IX are true, correct and complete as of the date hereof and
will be true, correct and complete as of the Closing Date and Borrower acknowledges that the
truth and accuracy of such representations and warranties is also a condition precedent to
Lender’s obligation to make each Loan advance.




9.2 Organization, Powers and Good Standing.




(a) Organization and Powers-Borrower. Borrower is a limited liability company,
duly organized and validly existing under the laws of the State of Delaware and is duly
qualified to transact business as a limited liability company under the laws of the State of
Colorado. Borrower has all requisite power and authority and rights to own and operate its
properties, to carry on its businesses as now conducted and as proposed to be conducted, and
to enter into and perform this Agreement and the other Loan Documents. The address of
Borrower’s principal place of business is 1551 N. Tustin Avenue, Suite 300, Santa Ana,
California 92705.




(b) Organization and Powers-Guarantor. Guarantor is a corporation, duly
organized and validly existing under the laws of the State of Maryland. Guarantor has all
requisite power and authority and rights to own and operate its properties, to carry on its
businesses as now conducted and as proposed to be conducted, and to enter into and perform
the Environmental Indemnity and the other Loan Documents. The address of Guarantor’s
principal place of business is 1551 N. Tustin Avenue, Suite 300, Santa Ana, California
92705.




(c) Good Standing. Borrower has made all filings and is in good standing in
the States of Delaware and Colorado and in each other jurisdiction in which the character of
the property it owns or the nature of the business it transacts makes such filings necessary
or where the failure to make such filings could have a materially adverse effect on the
business, operations, assets or condition (financial or otherwise) of Borrower. Guarantor
has made all filings and is in good standing in the State of Maryland and in each other
jurisdiction in which the character of the property it owns or the nature of the business it
transacts makes such filings necessary or where the failure to make such filings could have
a materially adverse effect on the business, operations, assets or condition (financial or
otherwise) of Guarantor.




(d) Non-foreign Status. Borrower is not a “foreign corporation,” “foreign
partnership,” “foreign trust,” or “foreign estate,” as those terms are defined in the
Internal Revenue Code and the regulations promulgated thereunder. Borrower’s U.S. employer
identification number is as set forth on the signature page hereof.




9.3 Authorization of Loan Documents.




(a) Authorization. The execution, delivery and performance of the Loan
Documents by Borrower are within Borrower’s powers and have been duly authorized by all
necessary action by Borrower.




(b) No Conflict. The execution, delivery and performance of the Loan Documents
by Borrower will not violate (i) Borrower’s operating agreement or articles of organization;
or (ii) to Borrower’s knowledge, any legal requirement affecting Borrower or any of its
properties; or (iii) any agreement to which Borrower is bound or to which it is a party and
will not result in or require the creation (except as provided in or contemplated by this
Agreement) of any lien upon any of such properties.




(c) Binding Obligations. This Agreement and the other Loan Documents have been
duly executed by Borrower, and are legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of equity.




9.4 Compliance with Laws. The Property consists of a legal and separate parcel or
parcels under applicable law and for tax assessment purposes. The Improvements were constructed
in compliance with, and the Project presently complies fully with, all restrictive covenants and
all applicable laws and regulations, including, without limitation, all building codes,
environmental laws and the Americans With Disabilities Act (Public Law 101-336).




9.5 No Material Defaults. There exists no material violation of or material default
by Borrower and no event has occurred which, upon the giving of notice or the passage of time, or
both, would constitute a material default with respect to (a) the terms of any instrument
evidencing or securing any material indebtedness secured by the Project, (b) any material lease
or other agreement affecting the Project to which Borrower is a party, (c) to Borrower’s
knowledge, any material license, permit, statute, ordinance, law, judgment, order, writ,
injunction, decree, rule or regulation of any Governmental Authority, or any determination or
award of any arbitrator to which Borrower or the Project may be bound, or (d) any mortgage,
instrument, agreement or document by which Borrower, or any of its properties is bound: (i) which
involves any Loan Document, (ii) that might materially and adversely affect the ability of
Borrower to perform its obligations under any of the Loan Documents, any Swap Contracts or any
other material instrument, agreement or document to which it is a party, or (iii) which might
adversely affect the first priority of the liens created by this Agreement or any of the Loan
Documents.




9.6 Litigation; Adverse Facts. Borrower has no knowledge of any action, suit,
investigation, proceeding or arbitration (whether or not purportedly on behalf of Borrower) at
law or in equity or before or by any foreign or domestic court or other governmental entity (a
“Legal Action”), pending or, to the knowledge of Borrower, overtly threatened against or
affecting Borrower or any of its assets which could reasonably be expected to result in any
material adverse change in the business, operations, assets (including the Project) or condition
(financial or otherwise) of Borrower or would materially and adversely affect Borrower’s ability
to perform its obligations under the Loan Documents. Borrower is not (a) in violation of any
applicable law which violation materially and adversely affects or may materially and adversely
affect the business, operations, assets (including the Project) or condition (financial or
otherwise) of Borrower, (b) subject to, or in default with respect to any other legal requirement
that would have a materially adverse effect on the business, operations, assets (including the
Project) or condition (financial or otherwise) of Borrower, or (c) in default with respect to any
agreement to which Borrower is a party or to which it is bound. There is no Legal Action pending
or, to the knowledge of Borrower, threatened against or affecting Borrower questioning the
validity or the enforceability of this Agreement or any of the other Loan Documents.




9.7 Title to Properties; Liens. Borrower has good and legal title to all properties
and assets reflected in its most recent balance sheet delivered to Lender, except for assets
disposed of in the ordinary course of business since the date of such balance sheet. Borrower is
the sole owner of, and has good and marketable title to the fee interest in the Property, and the
Improvements and all other real property described in the Mortgage, free from any adverse lien,
security interest or encumbrance of any kind whatsoever, excepting only (a) liens and
encumbrances shown on the Title Policy, (b) liens and security interests in favor of Lender, and
(c) other matters which have been approved in writing by Lender.




9.8 Disclosure. There is no fact known to Borrower that materially and adversely
affects the business, operations, assets or condition (financial or otherwise) of Borrower that
has not been disclosed in this Agreement or in other documents, certificates and written
statements furnished to Lender in connection herewith.




9.9 Payment of Taxes. All tax returns and reports of Borrower required to be filed
by it have been timely filed, and all taxes, assessments, fees and other governmental charges
upon Borrower and upon its properties, assets, income and franchises which are due and payable
have been paid when due and payable.




9.10 Securities Activities. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of purchasing or
carrying any margin stock (as defined within Regulations G, T and U of the Board of Governors of
the Federal Reserve System), and none of the value of Borrower’s assets consists of such margin
stock. No part of the Loan will be used to purchase or carry any margin stock or to extend
credit to others for that purpose or for any other purpose that violates the provisions of
Regulations U or X of said Board of Governors.




9.11 Government Regulations. Borrower is not subject to regulation under the
Investment Company Act of 1940, the Federal Power Act, the Public Utility Holding Company Act of
1935, the Interstate Commerce Act or to any federal or state statute or regulation limiting its
ability in incur indebtedness for money borrowed.




9.12 Rights to Project Agreements, Permits and Licenses. Upon the purchase of the
Property, Borrower will be the true owner of all rights in and to all existing agreements,
permits and licenses relating to the Project, and will be the true owner of all rights in and to
all future agreements, permits and licenses relating to the Project.




9.13 Access. All streets and easements necessary for the operation of the Project
are available to the boundaries of the Property.




9.14 Use of Project. To Borrower’s knowledge, the Improvements and the Property,
and their use as medical/commercial office buildings, comply fully with all applicable laws and
restrictive covenants, including, without limitation, all zoning laws.




9.15 Financial Condition. The financial statements and all financial data
previously delivered to Lender in connection with the Loan and/or relating to Borrower are true,
correct and complete in all material respects. Such financial statements fairly present the
financial position of the parties who are the subject thereof as of the date thereof. No
material adverse change has occurred in such financial position, no borrowings have been made by
Borrower since the date thereof which are secured by, or might give rise to, a lien or claim
against the Project, the proceeds of this Loan, or other assets of Borrower.




9.16 Personal Property. Borrower is now and shall continue to be the sole owner of
the personal property constituting part of the Collateral free from any adverse lien, security
interest or adverse claim of any kind whatsoever, except for liens or security interests in favor
of Lender.




9.17 No Condemnation. No condemnation proceedings or moratorium is pending or, to
Borrower’s knowledge, threatened against the Project or the Property (or any portion thereof)
which would materially impair the use, occupancy or full operation of the Project in any manner
whatsoever.




9.18 Other Loan Documents. Each of the representations and warranties of Borrower
contained in any of the other Loan Documents is true and correct in all material respects. All
of such representations and warranties are incorporated herein for the benefit of Lender.




9.19 Guarantor. Guarantor has full right, power and authority to execute, deliver
and carry out the terms of the Guaranty and Environmental Indemnity and, when executed and
delivered pursuant thereto, the Guaranty and the Environmental Indemnity will constitute the
valid, binding and legal obligations of Guarantor, enforceable against Guarantor in accordance
with its terms subject to bankruptcy, insolvency, moratorium and similar laws affecting creditors
generally and to general principles of equity.




9.20 No Lease Defaults. There are no defaults by Borrower, to Borrower’s knowledge,
or any tenant under any Lease.




9.21 Defects. To Borrower’s knowledge, there are no defects, facts or conditions
affecting the Project which would make it unsuitable for its present use and operation as a
medical/commercial office buildings.




9.22 ERISA. As of the Closing Date and throughout the term of the Loan,
(a) Borrower is not and will not be an “employee benefit plan” as defined in ERISA, and (b) the
assets of Borrower do not and will not constitute “plan assets” of one or more such plans for
purposes of Title I of ERISA.



ARTICLE X




COVENANTS OF BORROWER





10.1 Consideration. As an inducement to Lender to execute this Agreement and to
make each disbursement of the Loan, Borrower hereby covenants as set forth in this Article X,
which covenants shall remain in effect so long as the Note shall remain unpaid or any obligation
of Borrower under any other Loan Documents or under any Swap Contracts remain outstanding or
unperformed.




10.2 Existence. Borrower shall and shall cause Guarantor (if other than an
individual) to continue to be validly existing under the laws of the jurisdiction of its
organization.




10.3 Books and Records; Access by Lender. Borrower shall maintain a single,
standard, modern system of accounting (including, without limitation, a single, complete and
accurate set of books and records of its assets, business, financial condition, operations,
property, prospects and results of operation in accordance with good accounting practice and on a
cash basis). During business hours and upon reasonable advance written notice, Borrower will
give representatives of Lender access to all assets, books, documents, property, and records of
Borrower and will permit such representatives to inspect such assets and property and to audit,
copy, examine and make excerpts from such books, documents and records.




10.4 No Encumbrances. Borrower will not permit any lien, levy, attachment or
restraint to be made or filed against the Project, or any portion thereof, or permit any
receiver, trustee or assignee for the benefit of creditors to be appointed to take possession of
the Project or any portion thereof, except for lien claims filed or asserted against the Property
or the Project and concerning which Borrower is in full compliance with the applicable provisions
of the Mortgage.




10.5 Compliance with Laws. Borrower shall comply with all applicable laws,
statutes, regulations, codes and requirements, as amended from time to time (including, without
limitation, all environmental laws, building, zoning and use laws, requirements, regulations and
ordinances, and the Americans With Disabilities Act), all CC&Rs and all obligations created by
private contracts and leases which affect ownership, development, construction, equipping,
fixturing, use or operation of the Project. If requested by Lender, Borrower shall deliver to
Lender, promptly after receipt thereof, copies of all permits and approvals received from
Governmental Authorities relating to the development, construction, use, occupancy or operation
of the Project to the extent such items are in Borrower’s possession or are reasonably obtainable
by Borrower.




10.6 Personal Property. Borrower will not install materials, personal property,
equipment or fixtures subject to any security agreement or other agreement or contract wherein
the right is reserved to any person, firm or corporation to remove or repossess any such
materials, equipment for fixtures, or whereby title to any of the same is not completely vested
in Borrower at the time of installation, other than medical equipment purchased with purchase
money financing, without Lender’s prior written consent.




10.7 Assessments. Borrower shall pay or discharge all lawful claims, including
taxes, assessments and governmental charges or levies imposed upon Borrower or its income or
profits or upon any property (including the Project) belonging to Borrower (all the above
collectively hereinafter referred to as “Impositions”), prior to the date upon which
penalties attach thereto, and submit evidence satisfactory to Lender confirming the payment of
all Impositions against the Project. Borrower has the right before any delinquency occurs to
contest or object to the amount or validity of any such Imposition by appropriate proceedings,
but this will not be deemed or construed in any way as relieving, modifying or extending
Borrower’s covenant to pay any such Imposition at the time and in the manner provided in this
Section 10.7, unless Borrower has given prior written notice to Lender of Borrower’s intent to so
contest or object to an Imposition, and unless, at Lender’s sole option, (i) Borrower
demonstrates to Lender’s reasonable satisfaction that the proceedings to be initiated by Borrower
will conclusively operate to prevent the sale of the Collateral, or any part thereof, to satisfy
such Imposition prior to final determination of such proceedings; or (ii) Borrower furnishes a
good and sufficient bond or surety as requested by and reasonably satisfactory to Lender; or
(iii) Borrower demonstrates to Lender’s reasonable satisfaction that Borrower has provided as
good and sufficient undertaking as may be required or permitted by law to accomplish a stay of
any such sale.




10.8 Information and Statements. Borrower shall furnish to Lender:




(a) as soon as the same are available, and in any event within one hundred twenty (120)
days after the end of each fiscal year of Borrower, certified by an officer of Borrower, a
copy of the current company-prepared financial statements of Borrower, prepared upon a GAAP
accrual basis, which shall consist of (1) a balance sheet as of the end of the relevant
fiscal year, (2) statements of income and expenses of Borrower for such fiscal year
(together, in each case, with the comparable figures for the previous fiscal year),
(3) statements of income and expenses and changes in financial position of the Project for
such fiscal year (together, in each case with comparable figures for the corresponding
fiscal year), and (4) cash flow statements of Borrower;




(b) copies of filed federal income tax returns of Borrower and Guarantor for each
taxable year (with all K-1s and other forms and supporting schedules attached), on or before
October 30 of each year;




(c) a copy of the filed Form 10-K of Guarantor for each fiscal year, within one hundred
twenty (120) days after Guarantor’s fiscal year end;




(d) Intentionally Omitted.




(e) as soon as the same are available, and in any event within sixty (60) days after
the end of each fiscal quarter, deliver to Lender a detailed rent roll, in form and detail
reasonably satisfactory to Lender, for the Project for the preceding fiscal quarter; and




(f) such other information concerning Borrower, Guarantor, the Project, and the assets,
business, financial condition, operations, property, prospects, and results of operations of
Borrower and Guarantor as Lender reasonably requests from time to time.




10.9 Representations and Warranties . Until repayment of the Note and all other
obligations secured by the Mortgage, the representations and warranties of Article IX shall
remain true and complete in all material respects.




10.10 Trade Names. Borrower shall immediately notify Lender in writing of any
change in the legal, trade or fictitious business names used by Borrower and shall, upon Lender’s
request, execute any additional financing statements and other certificates necessary to reflect
the change in trade names or fictitious business names.




10.11 Further Assurances. Borrower shall execute and deliver from time to time,
promptly after any request therefor by Lender, any and all instruments, agreements and documents
and shall take such other action as may be necessary or desirable in the opinion of Lender to
maintain, perfect or insure Lender’s security provided for herein and in the other Loan
Documents, including, without limitation, the authorization of UCC-1 renewal statements, the
execution of such amendments to the Mortgage and the other Loan Documents and the delivery of
such endorsements to the Title Company, all as Lender shall reasonably require, and Borrower
shall pay all fees and expenses (including reasonable attorneys’ fees) related thereto. Promptly
upon the request of Lender, Borrower shall execute and deliver a Certification of Non- Foreign
Status.




10.12 Notice of Litigation. Borrower shall give, or cause to be given, prompt
written notice to Lender of (a) any action or proceeding which is instituted by or against
Borrower or Guarantor in any Federal or state court or before any commission or other regulatory
body, Federal, state or local, foreign or domestic, or any such proceedings which are threatened
in writing against it, which, if adversely determined, would be likely to have a material and
adverse effect upon Borrower’s or Guarantor’s (as applicable) business, operations, properties,
assets, management, ownership or condition (financial or otherwise), (b) any other action, event
or condition of any nature which may have a material and adverse effect upon Borrower’s or
Guarantor’s (as applicable) business, operations, management, assets, properties, ownership or
condition (financial or otherwise), or which, with notice or lapse of time or both, would
constitute an Event of Default or a default under any other contract, instrument or agreement to
which Borrower or Guarantor is a party to by or to which Borrower or Guarantor or any of their
properties or assets may be bound or subject, and (c) any actions, proceedings or notices
adversely affecting the Project or Lender’s interest therein by any zoning, building or other
municipal officers, offices or departments having jurisdiction with respect to the Project.




10.13 Good Standing. Borrower shall maintain its good standing in Delaware and
Colorado and preserve its existence and all rights and franchises material to its business and
shall cause Guarantor (if other than an individual) to maintain and preserve its existence.




10.14 Hazardous Materials. Borrower will not use, and will not permit the use of,
any Hazardous Substance (as defined in the Environmental Indemnity) in connection with the
Project except as permitted by applicable law and the Environmental Indemnity.




10.15 Intentionally Omitted.




10.16 Government Regulation. Borrower shall not (a) be or become subject at any
time to any law, regulation, or list of any government agency (including, without limitation, the
U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from making any
advance or extension of credit to Borrower or from otherwise conducting business with Borrower,
or (b) fail to provide documentary and other evidence of Borrower’s identity as and when
requested by Lender at any time to enable Lender to verify Borrower’s identity or to comply with
any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot
Act of 2001, 31 U.S.C. Section 5318.




10.17 Negative Covenants. Borrower shall not, without the prior written consent of
Lender in Lender’s sole and absolute discretion, do or permit to be done any of the following:




(a) Indebtedness. Borrower shall not incur or become liable for any
Indebtedness, whether secured or unsecured, in favor of any Person, other than:




(1) the Loan;




(2) trade debt incurred in the ordinary course of Borrower’s business and paid
in the ordinary course of Borrower’s business and in any event in not more than
sixty (60) days; and




(3) obligations under Swap Contracts permitted under Section 12.27 hereof.




(b) Liens and Encumbrances. Borrower shall not create, incur or suffer to
exist any lien or encumbrance in, of or on any of the property of Borrower except for
Permitted Exceptions.




(c) Fundamental Changes. Borrower shall not, and Borrower shall not permit
Guarantor to, dissolve or liquidate or become a party to any merger or consolidation.




(d) Distributions. Borrower shall not declare or pay any distributions or
redeem, repurchase or otherwise acquire or retire any of its capital stock or other
ownership interest at any time outstanding, except that, for so long as no Event of Default
or Unmatured Event of Default has occurred and is continuing, Borrower may make
distributions to its members so long as after giving effect to any such distribution no
Event of Default or Unmatured Event of Default shall have occurred.




(e) Affiliates. Borrower will not enter into any transaction (including the
purchase or sale of any property or service) with, or make any payment or transfer to, any
Affiliate of Borrower except in the ordinary course of business and pursuant to the
reasonable requirements of Borrower’s business and upon fair and reasonable terms no less
favorable to Borrower than Borrower would obtain in a comparable arms-length transaction.




(f) Amendments to Organizational Documents. Borrower shall not allow any
amendments to be made in the terms of Borrower’s or Guarantor’s organizational documents
which would adversely effect in any material respect Borrower, Guarantor, the Project,
Borrower’s or Guarantor’s ability to perform their obligations under the Loan Documents or
Lender’s security interests.




(g) No Other Business. Borrower will not engage in any business other than the
ownership, management, and operation of the Project and Borrower will conduct and operate
its business as presently conducted and operated.




(h) No Commingling. Borrower will not commingle its funds and other assets
with those of any Affiliate, Guarantor, any of Borrower’s members, managers, partners or
shareholders or any other Person.




(i) Changes. Borrower will not change or in any manner cause or seek a change
in any laws, requirements of Governmental Authorities or obligations created by private
contracts and leases which now or hereafter may significantly adversely affect the
ownership, use or operation of the Project, without the prior written consent of Lender.




(j) Change in Ownership. Borrower will not suffer to occur or exist, whether
occurring voluntarily or involuntarily, any change in, or lien or encumbrance with respect
to the legal or beneficial ownership of any interest in Borrower, any member in Borrower or
any other direct or indirect ownership interest in Borrower or the members in Borrower
(except for shares of stock in NNN Healthcare/Office REIT, Inc. which may be transferred
without violating the provisions of this clause (i).




(k) Leases. Borrower shall not enter into, amend or modify any lease in excess
of 5,000 square feet (each such lease, a “Material Lease”) covering any portion of the
Project without Lender’s prior written consent, in Lender’s sole discretion; provided,
however, Borrower shall also not enter any lease which is not a Material Lease for which the
rent payable under such lease is not a market rent or the terms are not otherwise market
without Lender’s prior written consent, in Lender’s sole discretion. Borrower shall furnish
to Lender, upon execution, a fully executed copy of each lease entered into by Borrower,
together with all exhibits and attachments thereto and all amendments and modifications
thereof. Borrower shall provide Lender with a copy of each proposed Material Lease and with
financial information on the proposed tenant to aid Lender in determining whether it will
consent thereto. Lender may declare each such Material Lease (or any other lease) to be
prior or subordinate to the Mortgage, at Lender’s sole option.




10.18 Post-Closing Deliveries.




(a) Borrower shall, within thirty (30) days after the Closing Date, deliver to Lender
an updated survey for the Project, certified to Lender and its successors and assigns in
accordance with the survey requirements and certification Lender provided to Borrower prior
to the Closing Date. Borrower previously delivered to Lender a survey of the Project
completed prior to the Closing Date and referenced in the Title Insurance Policy (the “Prior
Survey”). If the updated survey identifies any encroachments or other matters not disclosed
in the Prior Survey and such encroachments or other matters constitute violations of law or
otherwise adversely affect in any material way (as reasonably determined by Lender) the
value or ability to finance or market for sale the Project (“Adverse Survey Matters”),
Borrower shall promptly (and in any event within (90) days) take such corrective measures as
Lender reasonably requires (including, if required by Lender, obtaining endorsements to the
Title Insurance Policy) to eliminate, insure over or otherwise correct the Adverse Survey
Matters.



ARTICLE XI




EVENTS OF DEFAULT AND REMEDIES





11.1 Events of Default. The occurrence of any one or more of the following shall
constitute an Event of Default under this Agreement:




(a) Failure of Borrower or Guarantor to pay any amounts due pursuant to this Agreement,
the Note or the Loan Documents (including, without limitation, principal, interest, fees, or
other amounts) within ten (10) days after the date such amount is due.




(b) Failure by Borrower or Guarantor to pay any amount (other than principal or
interest) when due under this Agreement or any other Loan Document and the expiration of
ten (10) days after written notice of such failure by Lender to Borrower.




(c) Failure by Borrower, Guarantor or any other Person referred to therein to comply
with any of the provisions of Article VII or Sections 10.4, 10.16 or 10.17(b), (c), (d)
and (j).




(d) Failure by Borrower or Guarantor to perform any other obligation, or to comply with
any term or condition, applicable to Borrower or Guarantor under any Loan Document that is
not referred to in another Section of this Section 11.1 and the expiration of thirty (30)
days after written notice of such failure by Lender to Borrower; provided, however, that if
such default is susceptible of cure but such cure cannot be accomplished with reasonable
diligence within said period of time, and if Borrower commences to cure such default
promptly after receipt of notice thereof from Lender, and thereafter prosecutes the curing
of such default with reasonable diligence, such period of time shall be extended for such
period of time as may be necessary to cure such default with reasonable diligence, but not
to exceed an additional sixty (60) days.




(e) Any representation or warranty by Borrower or Guarantor in any Loan Document is
materially false, incorrect or misleading as of the date made or renewed.




(f) The occurrence of any event (including, without limitation, a change in the
financial condition, business, or operations of Borrower or Guarantor for any reason
whatsoever) that materially and adversely affects the ability of Borrower or Guarantor to
perform any of its obligations under the Loan Documents or under any Swap Contracts.




(g) Borrower or Guarantor (i) is unable or admits in writing Borrower’s or Guarantor’s
inability to pay its monetary obligations as they become due, (ii) fails to pay when due any
monetary obligation, whether such obligation be direct or contingent, to any person in
excess of $250,000, (iii) makes a general assignment for the benefit of creditors, or
(iv) applies for, consents to, or acquiesces in, the appointment of a trustee, receiver, or
other custodian for Borrower or Guarantor or the property of Borrower or Guarantor or any
part thereof, or in the absence of such application, consent, or acquiescence a trustee,
receiver, or other custodian is appointed for Borrower or Guarantor or the property of
Borrower or Guarantor or any part thereof, and such appointment is not discharged within
sixty (60) days.




(h) Commencement of any case under the Bankruptcy Code, Title 11 of the United State
Code, or commencement of any other bankruptcy arrangement, reorganization, receivership,
custodianship, or similar proceeding under any federal, state, or foreign law by Borrower or
Guarantor.




(i) If a receiver, trustee or similar officer shall be appointed for Borrower or
Guarantor or for all or any substantial part of the property of Borrower or Guarantor
without the application or consent of Borrower or Guarantor and such appointment shall
continue undischarged for a period of sixty (60) days (whether or not consecutive); or any
bankruptcy, insolvency, reorganization, arrangements, readjustment of debt, dissolution,
liquidation or similar proceedings shall be instituted (by petition, application, or
otherwise) against Borrower or Guarantor and shall remain undismissed for a period of
sixty (60) days (whether or not consecutive).




(j) Any material litigation or proceeding is commenced before any Governmental
Authority against or affecting Borrower or the property of Borrower or any part thereof and
such litigation or proceeding is not defended diligently and in good faith by Borrower. Any
litigation or proceeding is commenced before any Governmental Authority against or affecting
Guarantor which if decided against Guarantor would materially adversely affect the Project
or Guarantor’s ability to perform its obligations under the Guaranty, and such litigation or
proceeding is not defended diligently and in good faith by Guarantor.




(k) A final judgment or decree for monetary damages or a monetary fine or penalty (not
subject to appeal or as to which the time for appeal has expired) entered against Borrower
or Guarantor by any Government Authority, which together with the aggregate amount of all
other such judgments and decrees against Borrower or Guarantor that remain unpaid or that
have not been discharged or stayed, exceeds $250,000.00, is not paid and discharged or
stayed within thirty (30) days after the entry thereof.




(l) Commencement of any action or proceeding which seeks as one of its remedies the
dissolution of Borrower.




(m) All or any part of the property of Borrower, or all or any part of the property of
Guarantor valued in excess of $500,000 in the aggregate, is attached, levied upon, or
otherwise seized by legal process, and such attachment, levy, or seizure is not quashed,
stayed, or released within thirty (30) days of the date thereof.




(n) The occurrence of any Accelerating Transfer (as defined in the Mortgage), unless
Lender has consented to such Accelerating Transfer in its sole and absolute discretion, as
more particularly provided in the Mortgage.




(o) The occurrence of any Event of Default, as such term is defined in any other Loan
Document, after taking into account applicable cure periods.




(p) (i) A default shall occur in the payment when due (after giving effect to any
applicable notice and grace periods), whether by acceleration or otherwise, with respect to
indebtedness of Borrower or Guarantor in an aggregate amount exceeding $50,000; or (ii) a
default shall occur in the performance or observance of any obligation or condition with
respect to indebtedness in an aggregate amount exceeding $50,000 if the effect of such
default described in this clause (ii) is to permit the acceleration of the maturity of such
indebtedness.




(q) Borrower, Guarantor or any Person on behalf of Borrower or Guarantor shall claim or
assert that the Loan Documents are not legal, valid and binding agreements enforceable
against Borrower or Guarantor in accordance with their respective terms; or the Loan
Documents shall in any way be terminated (except in accordance with their terms) or become
or be judicially declared ineffective or inoperative or shall in any way cease to give or
provide the respective liens, security interests, rights, titles, interests, remedies,
powers or privileges intended to be created thereby.




(r) Any Governmental Authorities take or institute action, which in the reasonable
opinion of Lender, will adversely affect Borrower’s or Guarantor’s ability to repay the Loan
or which will materially affect Borrower’s or Guarantor’s condition or operations, if such
action remains effective for more than thirty (30) days.




(s) Lender fails to have a legal, valid, binding, and enforceable first priority lien
acceptable to Lender (subject to Permitted Exceptions) on the Property, Improvements and all
other collateral.




(t) Failure of Guarantor to perform or comply with any financial covenant or agreement
contained in the Environmental Indemnity which remains uncured for thirty (30) days after
written notice of such failure by Lender to Guarantor.




11.2 Remedies.




(a) Notwithstanding any provision to the contrary herein or any of the other Loan
Documents, upon the happening of any Event of Default under this Agreement, or upon an Event
of Default under any of the other Loan Documents: (i) Lender’s obligation to make further
advances of the Loan shall be suspended, and (ii) if the Event of Default shall not be cured
within the applicable notice and cure periods, then Lender shall, at its option, have the
remedies provided in the Loan Document breached by Borrower, including, without limitation,
the option to declare all outstanding indebtedness to be immediately due and payable without
presentment, demand, protest or notice of any kind, and the following remedies: Lender’s
obligation to make further disbursements to Borrower shall terminate; Lender may, at its
option, apply any of Borrower’s funds in its possession to the outstanding indebtedness
under the Note whether or not such indebtedness is then due; and Lender may exercise all
rights and remedies available to it under any or all of the Loan Documents. All sums
expended by Lender for such purposes shall be deemed to have been disbursed to and borrowed
by Borrower and should be secured by the Mortgage on the Property.




(b) Effective from and after the occurrence of and during the continuance of an Event
of Default, Borrower hereby constitutes and appoints Lender, or an independent contractor
selected by Lender, as its true and lawful attorney-in-fact with full power of substitution
for the performance of Borrower’s obligations under this Agreement in the name of Borrower,
and hereby empower said attorney-in-fact to do any or all of the following upon the
occurrence of an Event of Default:




(1) to employ attorneys to defend against attempts to interfere with the
exercise of power granted hereby;




(2) to pay, settle or compromise all existing bills and claims which are or may
be liens against the Property, the Improvements or the Project;




(3) to execute all applications and certificates in the name of Borrower, which
may be required by any other contract;




(4) to prosecute and defend all actions or proceedings in connection with the
Project and to take such action, require such performance and do any and every other
act as is deemed necessary with respect to the operation of the Project which
Borrower might do on its own behalf;




(5) to let new or additional contracts to the extent not prohibited by their
existing contracts; and




(6) to take such action and require such performance as it deems necessary
under any of the bonds or insurance policies to be furnished hereunder, to make
settlements and compromises with the sureties or insurers thereunder, and in
connection therewith to execute instruments of release and satisfaction.



It is understood and agreed that the foregoing power of attorney shall be deemed to be a power
coupled with an interest which cannot be revoked until repayment of the Loan and performance of all
other obligations under the Loan Documents or any Swap Contracts entered into pursuant to Section
12.27 hereof.



ARTICLE XII




MISCELLANEOUS





12.1 Assignment. Borrower shall not assign any of its rights under this Agreement
without the prior written consent of Lender, which may be granted or withheld in the sole and
absolute discretion of Lender.




12.2 Notices. All demands or notices required or which any party desires to give
hereunder or under any other Loan Document shall be in writing (including, without limitation,
telecopy, telegraphic, telex, or cable communication) and, unless otherwise specifically provided
in such other Loan Document, shall be deemed sufficiently given or furnished if delivered by
personal delivery, by nationally recognized overnight courier service or by certified United
States mail, postage prepaid, addressed to the party to whom directed at the applicable address
specified at the end of this paragraph (unless changed by similar notice in writing given by the
particular party whose address is to be changed) or by facsimile. Any demand or notice shall be
deemed to have been given either at the time of personal delivery or, in the case of courier or
mail, as of the date of first attempted delivery at the address and in the manner provided
herein, or, in the case of facsimile, upon receipt; provided that service of a demand or notice
required by any applicable statute shall be considered complete when the requirements of that
statute are met. Notwithstanding the foregoing, no notice of change of address shall be
effective except upon actual receipt. This Section shall not be construed in any way to affect
or impair any waiver of notice or demand provided in this Agreement or in any other Loan Document
or to require giving of notice or demand to or upon any Person in any situation or for any
reason. The addresses for notices are as follows:



	 	 	 	 	 
	If to Lender:
	 	Wachovia Bank, National Association
	 
	 	Real Estate Financial Services
	 
	 	General Banking Group
	 
	 	Mail Code: CA 6233
	 
	 	15750 Alton Parkway
	 
	 	Irvine, California  92618
	 
	 	Attn:  Anne McNeil
	If to Borrower:
	 	G&E Healthcare REIT County Line Road, LLC
	 
	 	c/o Triple Net Properties, LLC
	 
	 	1551 N. Tustin Avenue, Suite 300
	 
	 	Santa Ana, California  92705
	 
	 	Attn:  Shannon Johnson
	With a copy to:
	 	Cox, Castle & Nicholson LLP
	 
	 	2049 Century Park East, 28th Floor
	 
	 	Santa Monica, California 90067
	 
	 	Attention: Kevin Kinigstein, Esq.







12.3 Authority to File Notices. Borrower irrevocably appoints Lender at its
attorney-in-fact, with full power of substitution, to file for record, at Borrower’s cost and
expense and in Borrower’s name, any notices of completion, notices of cessation of labor, or any
other notices that Lender considers necessary or desirable to protect its security.




12.4 Inconsistencies with the Loan Documents. In the event of any inconsistencies
between the terms of this Agreement and any terms of any of the Loan Documents, the terms of this
Agreement shall govern and prevail.




12.5 No Waiver. No disbursement of proceeds of the Loan shall constitute a waiver
of any conditions to Lender’s obligation to make further disbursements nor, in the event Borrower
is unable to satisfy any such conditions, shall any such waiver have the effect of precluding
Lender from thereafter declaring such inability to constitute a default under this Agreement.




12.6 Lender Approval of Instruments and Parties. All proceedings taken in
accordance with transactions provided for herein; all surveys, appraisals and documents required
or contemplated by this Agreement and the persons responsible for the execution and preparation
thereof; shall be satisfactory to and subject to reasonable approval by Lender. Lender’s counsel
shall be provided with copies of all documents which they may reasonably request in connection
with the Agreement.




12.7 Lender Determination of Facts. Lender shall at all times be free to establish
independently, to its satisfaction, the existence or nonexistence of any fact or facts, the
existence or nonexistence of which is a condition of this Agreement.




12.8 Incorporation of Preamble, Recitals and Exhibits. The preamble, recitals and
exhibits hereto are hereby incorporated in to this Agreement.




12.9 Third-Party Consultants. Lender may hire such third-party consultants as it
deems necessary, the costs of which shall be paid by Borrower, to provide the following services:
(a) perform environmental assessments; (b) to provide Appraisals; and (c) perform such other
services as may, from time to time, be reasonably required by Lender. This obligation on the
part of Borrower shall survive the closing of the Loan and the repayment thereof.




12.10 Payment of Expenses. Borrower shall pay all taxes and assessments and all
expenses, charges, costs and fees provided for in this Agreement or relating to the Loan or the
Project, including, without limitation, any fees incurred for recording or filing any of the Loan
Documents, title insurance premiums and charges, tax service contract fees, fees of any
consultants, Lender’s processing and closing fees, Lender’s inspection fees, reasonable fees and
expenses of Lender’s counsel (and any counsel to any assignee of Lender to which the Loan
Documents are pledged as security), printing, photostating and duplicating expenses, air freight
charges, escrow fees, costs of surveys, premiums of hazard insurance policies and surety bonds
and fees for any appraisal, appraisal review, market or feasibility study required by Lender.
Borrower hereby authorizes Lender to disburse the proceeds of the Loan to pay such expenses,
charges, costs and fees notwithstanding that Borrower may not have requested a disbursement of
such amount. Such disbursement shall be added to the outstanding principal balance of the Note.
The authorization hereby granted shall be irrevocable, and no further direction or authorization
from Borrower shall be necessary for Lender to make such disbursements. However, the provision
of this Section 12.10 shall not prevent Borrower from paying such expense, charges, costs and
fees from its own funds. All such expenses, charges, costs and fees shall be Borrower’s
obligation regardless of whether or not Borrower has requested and met the conditions for a
disbursement of the Loan. The obligations on the part of Borrower under this Section 12.10 shall
survive the closing of the Loan and the repayment thereof.




12.11 Disclaimer by Lender. Lender shall not be liable to any contractor,
subcontractor, supplier, laborer, architect, engineer or any other party for services performed
or materials supplied in connection with the Project. Lender shall not be liable for any debts
or claims accruing in favor of any such parties against Borrowers or others or against the
Property or the Project. Borrower is not and shall not be an agent of Lender for any purpose.
Lender is not a joint venture partner with Borrower in any manner whatsoever. Prior to default
by Borrower under this Agreement and the exercise of remedies granted herein, Lender shall not be
deemed to be in privity of contract with any contractor or provider of services to the Project,
nor shall any payment of funds directly to a contractor, subcontractor, or provider of services
be deemed to create any third party beneficiary status or recognition of same by Lender.
Approvals granted by Lender for any matters covered under this Agreement shall be narrowly
construed to cover only the parties and facts identified in any written approval or, if not in
writing, such approvals shall be solely for the benefit of Borrower.




12.12 Indemnification. To the fullest extent permitted by law, Borrower agrees to
protect, indemnify, defend and hold harmless Lender, its directors, officers, agents and
employees from and against any and all liability, expense or damage of any kind or nature and
from any suits, claims or demands, including reasonable legal fees and expenses on account of any
matter or thing or action or failure to act by Lender, whether in suit or not, arising out of
this Agreement or in connection herewith, other than such claims and liabilities as arise solely
from the gross negligence or intentional misconduct of Lender. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Lender believes is covered by this
indemnity, Lender shall give Borrower notice of the matter and an opportunity to defend it, at
Borrower’s sole cost and expense, with legal counsel satisfactory to Lender. Lender may also
require Borrower to defend the matter. The obligations on the part of Borrower under this
Section 12.12 shall survive the closing of the Loan and the repayment thereof.




12.13 Titles and Headings. The titles and headings of sections of this Agreement
are intended for convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.




12.14 Brokers. Borrower and Lender represent to each other that neither of them
knows of any brokerage commissions or finders’ fee due or claimed with respect to the transaction
contemplated hereby. Borrower and Lender shall indemnify and hold harmless the other party from
and against any and all loss, damage, liability, or expense, including costs and reasonable
attorney fees, which such other party may incur or sustain by reason of or in connection with any
misrepresentation by the indemnifying party with respect to the foregoing.




12.15 Change, Discharge, Termination, or Waiver. No provision of this Agreement may
be changed, discharged, terminated, or waived except in writing signed by the party against whom
enforcement of the change, discharge, termination, or waiver is sought. No failure on the part
of Lender to exercise and no delay by Lender in exercising any right or remedy under the Loan
Documents or under the law shall operate as a waiver thereof.




12.16 CHOICE OF LAW. THIS AGREEMENT AND THE TRANSACTION CONTEMPLATED HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES.




12.17 Disbursements in Excess of Loan Amount. In the event the total disbursements
by Lender exceed the amount of the Loan the total of all disbursements shall be secured by the
Mortgage. All other sums expended by Lender pursuant to this Agreement or any other Loan
Documents shall be deemed to have been paid to Borrower and shall be secured by, among other
things, the Mortgage.




12.18 Participations. Lender shall have the right at any time to sell, assign,
transfer, negotiate or grant participations in all or any part of the Loan or the Note to one or
more participants.




12.19 Submission to Jurisdiction; Waiver of Venue; Service of Process.




(a) BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF COLORADO SITTING IN DOUGLAS
COUNTY, THE COURTS OF THE STATE OF CALIFORNIA SITTING IN ORANGE COUNTY, THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF COLORADO AND THE UNITED STATES DISTRICT COURT OF
THE CENTRAL DISTRICT OF CALIFORNIA AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN
THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.




(b) BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (a) OF THIS SECTION. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.




(c) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED
FOR NOTICES IN SECTION 12.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.




12.20 Counterparts. This Agreement may be executed in any number of counterparts
each of which shall be deemed an original, but all such counterparts together shall constitute
but one agreement.




12.21 Time is of the Essence. Time is of the essence of this Agreement.




12.22 Attorneys’ Fees. Borrower shall promptly pay to Lender from Borrower’s own
funds or from the proceeds of the Loan, upon demand, with interest thereon from the date of
demand at the default interest rate, reasonable attorneys’ fees and all costs and other expenses
paid or incurred by Lender in enforcing or exercising its rights or remedies created by,
connected with or provided for in this Agreement, any of the other Loan Documents or under any
Swap Contracts, and payment thereof shall be secured by the Mortgage. If at any time Borrower
fails, refuses or neglects to do any of the things herein provided to be done by Borrower, Lender
shall have the right, but not the obligation, to do the same but at the expense and for the
account of Borrower. The amount of any monies so expended or obligations so incurred by Lender,
together with interest thereon at the default interest rate, shall be repaid to Lender forthwith
upon written demand therefor and payment thereof shall be secured by the Mortgage.




12.23 Signs. Through the term of the Loan, Lender shall have the right to erect one
of more signs on the Project indicating its provision of financing for the Project, and Lender
shall also have the right to publicize its financing of the Project as Lender may deem
appropriate.




12.24 Waiver Of Jury Trial. BORROWER AND LENDER HEREBY IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). BORROWER AND LENDER (A) CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGE THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




12.25 WAIVER OF SPECIAL DAMAGES. BORROWER WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT BORROWER MAY HAVE TO CLAIM OR RECOVER FROM LENDER IN ANY LEGAL
ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.




12.26 USA Patriot Act Notification. The following notification is provided to
Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:



IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help
the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain,
verify, and record information that identifies each person or entity that
opens an account, including any deposit account, treasury management
account, loan, other extension of credit, or other financial services
product. What this means for Borrower: When Borrower opens an account, if
Borrower is an individual, Lender will ask for Borrower’s name, taxpayer
identification number, residential address, date of birth, and other
information that will allow Lender to identify Borrower, and, if Borrower is
not an individual, Lender will ask for Borrower’s name, taxpayer
identification number, business address, and other information that will
allow Lender to identify Borrower. Lender may also ask, if Borrower is an
individual, to see Borrower’s driver’s license or other identifying
documents, and, if Borrower is not an individual, to see Borrower’s legal
organizational documents or other identifying documents.




12.27 Swap Contracts. Borrower may enter into Swap Contracts with Lender (or its
Affiliates), or with another financial institution acceptable to Lender, for the purpose of
hedging and protecting against interest rate fluctuation risks with respect to the Loan, on such
terms and conditions as are mutually approved by Borrower and Lender (or its Affiliates). So
long as any Mortgage encumbers the Project and the Swap Contract has been provided by Lender (or
its Affiliates) in connection with the Loan, Borrower’s obligations (including any payment
obligations) with respect to any such Swap Contract shall be secured by the Deeds of Trust and
any other Collateral, and any default by Borrower under any such Swap Contract shall, at the
discretion of Lender, constitute an Event of Default under this Agreement. All Swap Contracts,
if any, between Borrower and Lender (or its Affiliates) are independent Agreements governed by
the written provisions of the Swap Contracts, which will remain in full force and effect,
unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms
of any Notes or other Loan Documents, except as otherwise expressly provided in the written Swap
Contracts, and any payoff statement from Lender relating to the Note shall not apply to the Swap
Contracts except as otherwise expressly provided in such payoff statement. By its signature
below, Borrower waives any right to prepay the Loan, in whole or in part, without payment of any
and all amounts specified or required under the terms of any Swap Contracts (the “Indemnified
Amounts”). Borrower acknowledges that prepayment of the Loan may result in Lender (or its
Affiliates) incurring additional losses, costs, expenses and liabilities, including lost revenues
and lost profits in connection with the Swap Contract or otherwise. Borrower therefore agrees to
pay any and all Indemnified Amounts if the Loan is prepaid, whether voluntarily or by reason of
acceleration, including acceleration upon any transfer or conveyance of any right, title or
interest in any Property giving Lender the right to accelerate the maturity of the Loan as
provided in the Loan Documents. Borrower agrees that Lender’s willingness to offer the Loan to
Borrower is sufficient and independent consideration, given individual weight by Borrower, for
this waiver. Borrower understands that Lender would not offer the Loan to Borrower absent this
waiver. Notwithstanding anything to the contrary contained in this Agreement, any obligations of
Borrower under any Swap Contracts owed to Wachovia Bank, N.A. (or any of its Affiliates) shall,
at Wachovia Bank, N.A.’s (or its Affiliates’) discretion, be secured pari passu with any and all
indebtedness and obligations of Borrower secured pursuant to the Loan Documents.



ARTICLE XIII




EXHIBITS




The following exhibits to this Agreement are fully incorporated herein as if set forth at
length:




Exhibit A — Property Description




Exhibit B — Budget




Exhibit C — Closing Requirements



[Signatures Appear on Following Page.]




2




IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be duly executed
and delivered as of the date first above written.



	 
	"Lender”

WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association

By: /s/Anne McNeil

Name: Anne McNeil

Title: Vice President

	"Borrower”

G&E HEALTHCARE REIT COUNTY LINE ROAD, LLC,

a Delaware limited liability company

By: /s/ Shannon KS Johnson

Name: Shannon K S Johnson

Title: Authorized Signatory

	Employer Identification No. [     ]








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