Document:

Exhibit 10.15

Exhibit 10.15

PPM Loan No. 10-03101

LOAN AGREEMENT

by and between

JACKSON NATIONAL LIFE INSURANCE COMPANY, as Lender

and

NETREIT, INC., as Borrower

Date: As of August ___, 2010

Project: 4995 Murphy Canyon Road, San Diego, California

 

 

 

LOAN AGREEMENT

This Agreement is made as of the date set forth on the preceding cover page by and between the
Borrower and Lender described on such page.

RECITALS

A. Borrower owns the Land and the Improvements (both hereafter defined).

B. Pursuant to the Application/Commitment (hereafter defined), Borrower has applied to Lender
for the Loan (hereafter defined), and Lender has agreed to make the Loan on the terms and
conditions contained herein.

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

1. DEFINED TERMS. The following terms, together with the terms and provisions set forth on
Exhibit B hereto, as used herein shall have the following meanings:

Affiliated Party: (i) if Borrower or any Affiliated Party is a general or
limited partnership, the general partners thereof and any person or entity directly or
indirectly controlling any general partner thereof; (ii) if Borrower or any Affiliated Party
is a joint venture, its joint venture partners and any person or entity directly or
indirectly controlling any joint venture partner thereof; (iii) if Borrower is a corporation
or limited liability company, any person or entity directly or indirectly controlling
Borrower; (iv) each Indemnitor.

Agreement: This Loan Agreement, as originally executed or as may be hereafter
supplemented or amended from time to time in writing.

Application/Commitment: The meaning set forth on Exhibit B attached
hereto and incorporated herein by reference.

Appraisal: An appraisal prepared by a member of a national appraisal
organization that has adopted the Uniform Standards of Professional Appraisal Practice
(USPAP) established by the Appraisal Standards Board of the Appraisal Foundation. The
appraiser shall use assumptions and limiting conditions established by Lender, and the
appraisal shall be in conformity with Lender’s appraisal guidelines and the requirements of
the Application/Commitment.

Borrower: The meaning set forth on Exhibit B attached hereto and
incorporated herein by reference.

Building Laws: All federal, state and local laws, statutes, regulations,
codes, ordinances, orders, rules and requirements applicable to the development,
construction, use, operation, management and maintenance of the Project, including without
limitation, all access, building, zoning, planning, subdivision, fire, traffic, safety,
health, labor, discrimination, Hazardous Materials Laws, shoreline, flood plain laws,
regulations and
ordinances, including, without limitation, all applicable requirements of the Fair
Housing Act of 1988, as amended, the Americans with Disabilities Act of 1990, as amended,
and all orders or decrees of any court adopted or enacted with respect thereto applicable to
the Project, as any of the same may from time to time be amended, modified or supplemented.

 

 

 

Cash Collateral Account: The meaning set forth in Section 8.3 of this
Agreement.

Consenting Party: Each person required to execute a consent to any assignment
of Service Agreements or Permits.

Default: Any event which, if it were to continue uncured, would, with notice
or lapse of time or both, constitute an Event of Default (as such term is defined in
Section 7.1 of this Agreement).

Default Rate: The default interest rate specified in the Note.

Environmental Indemnity Agreement: The Environmental Indemnity Agreement
described in Section 2.2 of this Agreement, executed by Borrower and Indemnitor, as
originally executed or as may be hereafter supplemented or amended from time to time in
writing.

Environmental Report: The meaning set forth on Exhibit B attached
hereto and incorporated herein by reference.

Escrow Account: The meaning set forth in Section 3.1(a) of this
Agreement.

Executive Order and Patriot Act: Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the “Executive Order”) and Public Law
107-56, known as the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”).

ERISA: Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder from time to time.

Event of Default: The meaning set forth in Section 7.1 of this
Agreement.

Foreclosure Conveyance: Any conveyance of the Project by foreclosure of the
Security Instrument, exercise of a power of sale under the Security Instrument or conveyance
in lieu of foreclosure.

Governmental Approvals: All consents, licenses and permits and all other
authorizations or approvals relating to the use and operation of the Project.

Governmental Authority: Any federal, state, county or municipal government, or
political subdivision thereof, any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality, or public body, or any court,
administrative tribunal, or public utility.

Loan Agreement

 

2

 

Hazardous Materials: (i) Any substance, material, waste, solid, liquid, gas,
odor or form of energy, from whatever source, that is subject to or regulated by any current
or future Hazardous Materials Law; (ii) those substances included within the definitions of
“hazardous substances,” “hazardous materials,” “toxic substances,” “pollutant,”
“contaminant” or “solid waste” in any Hazardous Materials Law; (iii) mold, fungi or other
similar substance, and (iv) more specifically, but not by way of limitation, (a) any
substance now or in the future designated pursuant to Section 311(b)(2)(A) of the Clean
Water Act, as amended, 33 U.S.C. 1321(b)(2)(A); (b) any toxic pollutant listed under Section
307(a) of the Clean Water Act, 33 U.S.C. 1317; (c) any “hazardous substance” or “pollutant
or contaminant” as defined in Sections 101(14) and 101(33) of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601(14) & 9601(33); (d)
any element, compound, mixture, solution or substance designated pursuant to Section 102 of
the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9602;
(e) petroleum, including crude oil or any fraction thereof; (f) any hazardous waste having
the characteristics identified under or listed pursuant to the Solid Waste Disposal Act, as
amended, 42 U.S.C. 6921 et seq.; (g) any material defined as “hazardous waste” pursuant to
40 C.F.R. Part 260; (h) any hazardous air pollutant listed under Section 112 of the Clean
Air Act, 42 U.S.C. 7412; (i) and any imminently hazardous chemical substance or mixture for
which the Administrator of the Environmental Protection Agency has taken action pursuant to
Section 7 of the Toxic Substances Control Act, 15 U.S.C. 2606; (j) any substance, the
presence of which causes or threatens to cause a nuisance on the Project or a nuisance or
trespass to real estate in the vicinity of the Project; (k) polychlorinated biphenyls; (l)
underground storage tanks; (m) asbestos and asbestos containing materials (whether friable
or non friable); (n) atmospheric radon at indoor concentrations exceeding 4 picoCuries per
cubic liter; and (o) urea formaldehyde and related substances. Notwithstanding the
foregoing, the term “Hazardous Materials” does not include (A) a substance used in the
cleaning and maintenance of the Project, if the quantity and manner of its use are
customary, prudent, and do not violate applicable Laws, or (B) automotive motor oil in
immaterial quantities, if leaked from vehicles in the ordinary course of the operation of
the Project and cleaned up in accordance with reasonable property management procedures and
in a manner that violates no applicable Laws.

Hazardous Materials Claims: Any and all investigation, enforcement, cleanup,
removal, assessment, remedial or other governmental or regulatory action, agreement or order
threatened, instituted or completed pursuant to any Hazardous Materials Law, together with
any and all claims made or threatened by any governmental entity or other third party
against Borrower, Lender or the Project, for indemnification, damage, contribution, cost
recovery, compensation, loss or injury resulting from any actual, proposed or threatened
use, storage, holding, existence, release (including any spilling, leaking, pumping,
pouring, emitting, emptying, dumping, disposing into the environment and the continuing
migration into or through soil, surface water, or groundwater), emission, discharge,
generation, processing, abatement, removal, disposition, handling or transportation to or
from the Project of any Hazardous Materials, including, without limitation, the movement or
migration of any Hazardous Material from surrounding property or groundwater in, into or
onto the Project and any residual Hazardous Material contamination on or under the Project.

Loan Agreement

 

3

 

Hazardous Materials Laws: Any federal, state or local statute, regulation,
rule, code, ordinance, common law or requirement of any governmental or quasi governmental
authority regulating, relating to, or imposing obligations, liability, or standards of
conduct concerning pollution, natural resources, wetlands, protection of human health,
protection of the environment, industrial hygiene, Hazardous Materials (as defined herein),
the manufacture, production, processing, distribution, use, treatment, storage, discharge,
disposal, transport or handling of Hazardous Materials or the environmental conditions on,
under or about the Project. The term “Hazardous Materials Laws” shall include, without
limitation, any common law of nuisance or trespass, any law or regulation relating to
emissions, discharges, releases or threatened releases of Hazardous Materials into the
environment (including without limitation, ambient air, indoor air, surface water,
groundwater, land surface or subsurface strata).

Improvements: The meaning set forth on Exhibit B attached hereto and
incorporated herein by reference.

Include or including: Including but not limited to.

Indemnification Agreement: The Indemnification Agreement described in
Section 2.2 of this Agreement, executed by Indemnitor, as originally executed or as
may be hereafter supplemented or amended from time to time in writing.

Indemnified Parties: The meaning set forth in Section 3.19 of this
Agreement.

Indemnitor: The meaning set forth on Exhibit B attached hereto and
incorporated herein by reference.

Internal Revenue Code: The Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder from time to time.

Land: The land legally described in Exhibit A hereto.

Laws: Collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or precedential
authority in the applicable jurisdiction, as any of the same may from time to time be
amended, modified or supplemented.

Lender: Jackson National Life Insurance Company, an affiliate of PPM Finance,
Inc., and PPM Finance, Inc., on behalf of and acting as the investment advisor and
authorized representative for the Lender.

LLC: The meaning set forth in Section 3.20(c) of this Agreement.

Loan: The meaning set forth on Exhibit B attached hereto and
incorporated herein by reference.

Loan Documents: This Agreement, the Environmental Indemnity, the
Indemnification Agreement, the Security Instrument, the Note, the other documents and
instruments listed in Section 2.2 of this Agreement, and all other documents
and instruments given to Lender from time to time in connection with or to secure the Loan,
as originally executed or as any of the same may be hereafter supplemented or amended from
time to time, in writing.

Loan Agreement

 

4

 

Loan Fees: The meaning set forth in Section 3.24 of this Agreement.

Loan Maturity: Maturity Date (as defined in the Note).

Loan Opening Date: The date of the disbursement of the Loan.

Mortgage Correspondent: As of the Loan Opening Date, the Mortgage
Correspondent is the group that will service the Loan for Lender post-closing and has the
meaning set forth on Exhibit B attached hereto and incorporated herein by reference.

Note: The mortgage note described in Section 2.2 of this Agreement, as
originally executed or as may be hereafter supplemented or amended from time to time in
writing.

Permits: All building permits, governmental permits, licenses, variances,
conditional or special use permits, and other authorizations now or hereafter issued in
connection with the construction, development ownership, operation or use of the Project, to
the fullest extent that the same or any interest therein may be legally assigned by
Borrower, together with any use permits or licenses issued to any tenant or other user of
the Project (to the extent that Borrower has an interest in such permit or license).

Permitted Exceptions: (i) The lien of taxes and assessments not yet due and
payable and (ii) those matters of public record listed as special exceptions in the Lender’s
title insurance policy insuring the priority of the Security Instrument.

PPM Finance, Inc.: The investment advisor and authorized representative and
affiliate of Lender.

Proceedings The meaning set forth in Section 9.14 of this Agreement.

Project: The meaning set forth on Exhibit B attached hereto and
incorporated herein by reference.

Qualified Property Manager: Either (i) a financially sound, professional
property management company, experienced in managing properties similar in type and quality
to the Project, and which is one of the top three institutional property management
companies in the real estate market where the Project is located, based on the square
footage of space under its management or (ii) another property management company approved
in writing by the Lender.

Real Property: That portion of the Project constituting real property.

Recourse Events: The meaning set forth in Section 9.18 of this
Agreement.

Loan Agreement

 

5

 

Rent Roll: The meaning set forth in Section 4.5 of this Agreement.

Security Instrument: The Deed of Trust, Mortgage, Security Deed, Deed To
Secure Debt or similar instrument described in Section 2.2 of this Agreement, as
originally executed or as may be hereafter supplemented or amended from time to time in
writing.

Service Agreements: (i) all agreements heretofore or hereafter entered into
relating to the construction, ownership, operation or use of the Project; (ii) any and all
present and future amendments, modifications, supplements, and addenda to any of the items
described in clause (i), above; and (iii) any and all guarantees, warranties and
other undertakings (including payment and performance bonds) heretofore or hereafter entered
into or delivered with respect to any of the items described in clause (i), above.

Single-Member LLC: The meaning set forth in Section 3.20(c) of this
Agreement.

Special Member: The meaning set forth in Section 3.20(c) of this
Agreement.

Title Insurer: The meaning set forth on Exhibit B attached hereto and
incorporated herein by reference.

Defined terms may be used in the singular or the plural. When used in the singular preceded
by “a,” “an,” or “any,” such term shall be taken to indicate one or more members of the relevant
class. When used in the plural, such term shall be taken to indicate all members of the relevant
class.

2. TERMS OF LOAN AND DOCUMENTS.

2.1 Agreement to Borrow and Lend. Subject to all of the terms, provisions and
conditions set forth in this Agreement, Lender agrees to make and Borrower agrees to accept the
Loan. Borrower agrees to pay all indebtedness evidenced and secured by the Loan Documents in
accordance with the terms thereof.

2.2 Loan Documents. In consideration of Lender’s entry into this Agreement and
Lender’s agreement to make the Loan, Borrower agrees that it will, in sufficient time for review by
Lender and its counsel prior to the Loan Opening Date, execute and deliver or cause to be executed
and delivered to Lender the following documents and instruments in form and substance acceptable to
Lender:

(a) A mortgage note (the “Note”) as described on Exhibit B attached
hereto and incorporated herein for all purposes;

(b) A first deed of trust (the “Security Instrument”) on Borrower’s fee simple
estate in the Project securing the Note, subject only to the Permitted Exceptions;

(c) An assignment to Lender of all rents, income, issues and profits of, and all
leases, licenses, concessions and other similar agreements relating to or connected with
the Project which shall be a present first priority absolute assignment of all present
and future leases of all or any part of the Project, all guarantees thereof and all rents
and other sums payable thereunder;

Loan Agreement

 

6

 

(d) A security agreement granting Lender a security interest in all personal property,
tangible and intangible, owned or hereafter acquired by Borrower and relating to operation
or maintenance of the Project, including bank accounts, accounts receivable, all escrow,
impound or reserve accounts required in the Loan Documents, and other intangible property,
which agreement may be combined with the Security Instrument;

(e) Uniform Commercial Code financing statements, in duplicate, naming Borrower as
debtor and Lender as secured party with respect to all of the personal property;

(f) An indemnity agreement with respect to certain matters including environmental
covenants (the “Environmental Indemnity”);

(g) An indemnity agreement with respect to certain matters excluded from the
non-recourse provisions of the Loan Documents, executed by Indemnitor (the “Indemnification
Agreement”);

(h) If a portion of the Loan proceeds shall be utilized by Borrower to purchase the
Project, a final settlement statement executed by the seller at the Loan Opening Date; and

(i) Such other papers and documents as may be required by the Application/Commitment or
this Agreement or as Lender may reasonably require.

2.3 Terms of the Loan. The Loan will bear interest for the period and at the rate or
rates set forth in the Note, and be payable in accordance with the terms of the Note. The
outstanding principal balance, all accrued and unpaid interest and all other sums due and payable
under the Note or other Loan Documents, if not sooner paid, shall be paid in full at Loan Maturity.

2.4 Prepayments. Borrower shall have no right to make prepayments of the Loan in
whole except in accordance with the terms of the Note.

2.5 Conditions to Disbursement. Borrower agrees to perform and satisfy all conditions
precedent to the disbursement of the Loan set forth in the Application/Commitment, including those
set forth in Sections 2.4 (Third Party Reports) and 3 (The Closing) thereof.

2.6 Sources and Uses. Borrower shall use the proceeds of the Loan solely for the
purposes agreed to in writing by and between Lender and Borrower, and in all events, the
description of such proceeds shall be accurately set forth in the settlement statement executed by
Borrower at the Loan Opening Date. The sources and uses statement must be in substantial
accordance with the sources and uses statement attached to the Application/Commitment and updated
prior to closing.

Loan Agreement

 

7

 

3. BORROWER’S COVENANTS. Borrower further covenants and agrees with Lender as follows:

3.1 Escrow Deposits.

(a) Borrower shall deposit monthly with Lender or its Mortgage Correspondent a sum
equal to one-twelfth (1/12th) of the amount estimated by Lender or its Mortgage
Correspondent to be required to pay, at least thirty (30) days prior to their respective due
dates, annual property taxes, assessments, ground rent and insurance premiums for the
Project (the “Escrow Account”). Lender shall not pay interest on or segregate the
Escrow Account unless required to do so under applicable Laws. If Lender is required to
segregate the Escrow Account, Borrower shall (1) execute such documents as Lender, in its
sole discretion, deems necessary to perfect its security interest in the Escrow Account and
(2) pay the costs of setting-up and maintaining the Escrow Account. At closing, Lender will
determine the amount of the initial deposit that must be made by the Borrower to the Escrow
Account at closing; and

(b) The Escrow Account is hereby pledged as additional security for the Loan and shall
be held to be irrevocably applied for the purposes for which made hereunder and shall not be
subject to the direction or control of Borrower; provided, however, that neither Lender,
Mortgage Correspondent nor any depository holding such funds shall be liable for any failure
to apply to the payment of taxes, assessments, ground rent or insurance premiums any amount
so deposited unless: (i) Borrower shall have requested Lender, Mortgage Correspondent or
said depository in writing to make application of such funds to the payment of the
particular taxes, assessments, ground rent or insurance premiums as the case may be,
accompanied by the bills therefor, (ii) there shall exist no Default or Event of Default
hereunder or under any of the Loan Documents, (iii) there are sufficient funds in the Escrow
Account to pay the particular taxes, assessments, ground rent or insurance premiums, and
(iv) following payment of such taxes, assessments, ground rent or insurance premiums, the
Escrow Account will be “in balance” in the reasonable opinion of Lender.

3.2 Payment of Taxes. Borrower shall pay all real estate taxes, assessments and
charges of every kind upon the Project before the same become delinquent and, upon request of
Lender, Borrower shall furnish Lender evidence of such payment; provided, however, that Borrower
shall have the right to pay any such tax, assessment or charge under protest or to otherwise
contest any such tax, assessment or charge but only if (i) such contest has the effect of
preventing the collection of such tax, assessment or charge so contested and also preventing the
sale or forfeiture of the Project or any part thereof or any interest therein, (ii) Borrower has
notified Lender in writing in advance of its intent to contest such tax, assessment or charge, and
(iii) Borrower has deposited security in form and amount satisfactory to Lender, in its sole
judgment, and increases the amount of such security so deposited promptly after Lender’s request
therefor. If Borrower shall fail to commence such contest or, having commenced such contest, and
having deposited such security required by Lender for its full amount, shall thereafter fail to
prosecute such contest in good faith or with due diligence, or, upon adverse conclusion of any such
contest, shall fail to pay the tax, assessment or charge so contested, Lender may at its election
(but shall not be required to), pay and discharge any such tax, assessment or charge, and
any interest or penalty thereon, and any amounts so expended by Lender shall be deemed to
constitute disbursements of the Loan proceeds hereunder (even if the total amount of disbursements
would exceed the face amount of the Note), and shall bear interest from the date expended at the
Default Rate and be payable with such interest upon demand. Lender in making any payment hereby
authorized relating to any tax, assessment or charge, may do so according to any bill, statement or
estimate procured from the appropriate public office without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, charge, sale, forfeiture,
tax lien or title or claim thereof.

Loan Agreement

 

8

 

3.3 Maintenance of Insurance.

(a) Insurance Coverage Requirements: Borrower shall maintain insurance
coverage as contained in the Application/Commitment and as attached hereto and made a part
hereof as Exhibit E.

(b) No Other Insurance. Borrower shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be maintained
hereunder unless Lender is included thereon under a standard, non-contributory Lender clause
acceptable to Lender. Borrower shall immediately notify Lender whenever any such separate
insurance is taken out and shall promptly deliver to Lender the original policy or policies
of such insurance.

(c) Lender’s Right to Obtain Insurance: Notwithstanding this Section
3.3, upon an Event of Default under this Agreement or a Default under any of the other
Loan Documents, Lender or Mortgage Correspondent shall have the right (but not the
obligation) to place and maintain insurance required to be placed and maintained by Borrower
hereunder, and use funds on deposit in the Escrow Account for the payment of insurance to
pay for same. Any additional amounts expended therefor shall constitute additional
disbursements of Loan proceeds (even if the total amount of disbursements would exceed the
face amount of the Note), and shall bear interest from the date expended at the Default Rate
and be payable together with such interest upon demand.

3.4 Mechanics’ Liens and Contest Thereof. Borrower will not suffer or permit any
mechanics’ lien claims to be filed or otherwise asserted against the Project and will promptly
discharge the same if any claims for lien or any proceedings for the enforcement thereof are filed
or commenced; provided, however, that Borrower shall have the right to contest in good faith and
with due diligence the validity of any such lien or claim upon furnishing to the Title Insurer such
security or indemnity as it may require to induce the Title Insurer to insure against all such
claims, liens or proceedings; and provided further that Lender will not be required to make any
further disbursements of the Loan proceeds unless (a) any mechanics’ lien claims shown by any title
insurance commitments or interim binders or certifications have been released or insured against by
the Title Insurer, or (b) Borrower shall have provided Lender with such other security with respect
to such claim as may be acceptable to Lender, in its sole discretion.

Loan Agreement

 

9

 

3.5 Settlement of Mechanics’ Lien Claims. If Borrower shall fail promptly to
discharge any mechanics’ lien claim filed or otherwise asserted or to contest any such claims and
give security or indemnity in the manner provided in Section 3.4 hereof, or, having
commenced
to contest the same, and having given such security or indemnity, shall thereafter fail to
prosecute such contest in good faith or with due diligence, or fail to maintain such indemnity or
security so required by the Title Insurer for its full amount, or, upon adverse conclusion of any
such contest, shall fail to cause any judgment or decree to be satisfied and lien to be promptly
released, then, and in any such event, Lender may, at its election (but shall not be required to):
(i) procure the release and discharge of any such claim and any judgment or decree thereon, without
inquiring into or investigating the amount, validity or enforceability of such lien or claim, and
(ii) effect any settlement or compromise of the same, or may furnish such security or indemnity to
the Title Insurer, and any amounts expended by Lender in doing so, including premiums paid or
security furnished in connection with the issuance of any surety company bonds, shall be deemed to
constitute disbursements of the Loan proceeds hereunder (even if the total amount of disbursements
would exceed the face amount of the Note), and shall bear interest from the date expended at the
Default Rate and be payable together with such interest upon demand.

3.6 Maintenance, Repair and Restoration of Improvements. Borrower shall (i) promptly
repair, restore or rebuild any Improvements which may become damaged or be destroyed; and (ii) keep
the Improvements in good condition and repair, without waste.

3.7 Leases and Lease Reports. Except as set forth on Exhibit B, Borrower shall not
enter into, modify, amend, waive any material provision of, terminate or cancel any lease(s) of
space in the Project without the prior written consent of Lender. Borrower shall submit each and
every proposed lease to Lender and Mortgage Correspondent for their prior written consent. All
lessees shall be required, at Lender’s election, to execute estoppel certificates and
subordination, non-disturbance and attornment agreements in form and substance satisfactory to
Lender. Within thirty (30) days following the end of each year, except for multifamily properties,
Borrower shall deliver to Lender and Mortgage Correspondent a report showing the status of the
leasing of space in the Project certified by Borrower. Such report shall include information on
the amount of space covered by any letters of intent, leases out for execution, and fully executed
leases; the rental amount under each lease agreement or proposed lease agreement; the term of each
lease agreement; and a summary of any terms which vary from the standard form of lease, if
applicable, previously approved by Lender. Except as set forth on Exhibit B, any new lease,
modification, amendment, waiver of any material provision, termination or cancellation of any lease
of space in the Project without the prior written consent of Lender shall be deemed by Lender in
its sole discretion, as an Event of Default.

3.8 Compliance With Laws. Borrower shall promptly comply with all applicable Laws of
any Governmental Authority having jurisdiction over Borrower or the Project, and shall take all
actions necessary to bring the Project into compliance with all applicable Laws, including without
limitation all Building Laws (whether now existing or hereafter enacted). Borrower shall
immediately notify Lender if Borrower receives any actual notice, action or lien notice or
otherwise becomes aware that the Project violates or is alleged to violate any Building Law, and of
a condition or situation on the Project which will constitute violation of a Building Law (whether
now existing or hereafter enacted). The notice to Lender shall describe with particularity the
Building Law violation and the Borrower’s plan to promptly correct the violation. At its own cost,
Borrower will take all actions necessary to bring the Project into compliance with all applicable
Laws (whether now existing or hereafter enacted).

Loan Agreement

 

10

 

3.9 Alterations/New Improvements. Without the prior written consent of Lender,
Borrower shall not (1) make any material alterations to the Project (other than completion of
tenant work required in accordance with leases entered into in accordance with the terms of this
Agreement) or (2) construct any new Improvements of any kind on the Land.

3.10 Personal Property. (i) All of Borrower’s personal property, fixtures,
furnishings, furniture, attachments and equipment located on or used in connection with the
Project, shall always be located at the Project and shall also be kept free and clear of all
chattel mortgages, conditional vendor’s liens and all other liens, encumbrances and security
interests of any kind whatever, (ii) Borrower will be the absolute owner of said personal property,
fixtures, furnishings, furniture, attachments and equipment, and (iii) Borrower shall, from time to
time, furnish Lender with evidence of such ownership satisfactory to Lender, including searches of
applicable public records.

3.11 Prohibition against Cash Distributions and Application of Cash Flow. Borrower
shall first apply all cash flow from the Project to pay Project expenses, including amounts due to
Lender pursuant to the Loan Documents. No cash flow from the Project shall be distributed to any
partners, principals, members or shareholders of Borrower or applied to the payment of any
obligations, debts or expenses not related to the Project if an Event of Default has occurred or if
there is a reasonable likelihood that such money will be necessary for capital expenditures that
are required to prevent a material decrease in the value of the Project, the operation of the
Project or the payment of principal and interest due in connection with the Loan within ninety (90)
days following any contemplated cash flow distribution.

3.12  Inspection by Lender. Borrower will cooperate (and will cause the property
manager to cooperate) with Lender in arranging for inspections of the Project from time to time by
Lender and its agents and representatives.

3.13 Furnishing Information. Borrower shall deliver or cause to be delivered to
Lender and Mortgage Correspondent 1) annual financial statements for Borrower (and for the Project
if it is not the only asset owned by Borrower); 2) annual financial statements for Indemnitor; and
3) annual tenant sales for any tenant where tenant sales are required under the terms of the lease
or any amendment or modification thereto, in each of the foregoing cases as soon as available and
in all events no later than ninety (90) days after the close of each fiscal year of Borrower and
Indemnitor (as applicable). Annual financial statements of Borrower and the Project shall include
a current rent roll for the Project to be submitted within ninety (90) days after the end of
Borrower’s fiscal year. Lender shall have the right to require that the Borrower provide quarterly
financial statements and rent rolls (including aged delinquency reports) at any time during the
Loan term.

Notwithstanding the foregoing requirement at Section 3.13(3), if Borrower or Indemnitor
have any ownership interest in (whether direct or indirect) or are under common control or
related entities with any tenant, then and in that case, regardless of the requirements under
the lease, or any amendment or modification thereto, Borrower shall deliver or cause to be
delivered annual tenant financial statements and tenant sales, if applicable, as required above.

Loan Agreement

 

11

 

On the occurrence of an Event of Default, Borrower and Indemnitor shall promptly provide Lender and
Mortgage Correspondent with such additional financial reports and such additional financial
information as Lender may require. If an Event of Default has occurred, or Lender
reasonably
believes that previously provided financial statements are inaccurate, the annual statements shall
be audited by certified public accountants acceptable to Lender and prepared in accordance with
generally accepted accounting principles. Borrower shall also furnish a current operating
statement for the Project (including a rent roll if there are any leases of the Project or any part
thereof), at the time it delivers its financial statements. Additionally, Borrower and Indemnitor
will:

(a) promptly supply Lender and Mortgage Correspondent with such information concerning
Borrower’s and Indemnitor’s respective affairs relating to the Project as Lender may
hereafter request from time to time;

(b) at any time during regular business hours permit Lender, Mortgage Correspondent or
any of its agents or representatives to have access to and examine all of its books and
records regarding the development and operation of the Project;

(c) permit Lender and Mortgage Correspondent to copy and make abstracts from any and
all of such books and records;

(d) immediately notify Lender and Mortgage Correspondent if Borrower receives any
actual notice, action or lien notice or otherwise becomes aware that the Project violates or
is alleged to violate any Building Law, or of a condition or situation on the Project which
will constitute violation of a Building Law (whether now existing or hereafter enacted).
The notice to Lender shall describe with particularity the Building Law violation and the
Borrower’s plan to promptly correct the violation; and

(e) promptly furnish to Lender and Mortgage Correspondent copies of all (a) filings by
it with the government securities commission or any national securities exchange, (b)
mailings by it to its shareholders, (c) reports furnished by it to rating agencies and
relating to its outstanding commercial paper, (d) information generally supplied by it in
writing to security analysts, and (e) other information concerning Borrower as is reasonably
requested from time to time by Lender.

3.14 Documents of Further Assurance. Borrower shall, from time to time, upon Lender’s
request, execute, deliver, record and furnish such documents as Lender may reasonably deem
necessary or desirable to: (i) perfect and maintain perfected as valid liens upon the Project, the
liens granted by Borrower to Lender under the Security Instrument and the collateral assignments
and other security interests under the other Loan Documents as contemplated by this Agreement, (ii)
correct any errors of a typographical nature or inconsistencies which may be contained in any of
the Loan Documents, and (iii) consummate fully the transaction contemplated under this Agreement.

3.15 Furnishing Reports. Borrower shall provide Lender and Mortgage Correspondent
promptly after receipt with copies of all inspections, reports, test results and other information
received by Borrower from time to time from its employees, agents, representatives, architects and
engineers, which in any way relate to the Project, or any part thereof.

3.16 Operation of Project and Zoning. As long as any portion of the Loan remains
outstanding, the Project shall be operated in a first-class manner as described on Exhibit
B attached hereto. Borrower shall fully and faithfully perform all of its covenants,
agreements and obligations under each of the leases of space in the Project. Borrower shall not
initiate or
acquiesce in a zoning variation or reclassification without Lender’s consent.

Loan Agreement

 

12

 

3.17 Management Agents’ and Brokers’ Contracts. Borrower shall not enter into,
modify, amend, waive any material provision of, terminate or cancel any management agreement for
the Project without the prior written approval of Lender. If, in the ordinary course of business,
Borrower shall enter into, modify, amend, waive any provision of, terminate or cancel any contracts
or agreements (other than property management agreements) with leasing agents or brokers, Borrower
shall notify Lender within ten (10) days after such action.

3.18 Furnishing Notices. Borrower shall deliver to Lender and Mortgage Correspondent
copies of all material notices received or given by Borrower (or its agents or representatives) in
connection with the Project.

3.19 Indemnification. Borrower shall indemnify, defend and hold Lender, Mortgage
Correspondent and their respective directors, officers, members, shareholders, employees, agents
contractors, licensees, invitees, successors and assigns (collectively, “Indemnified Parties”)
harmless from and against all claims, injury, damage, loss, costs (including reasonable attorney
fees and costs) and liability of any and every kind incurred by Indemnified Parties by reason of:
(i) the operation or maintenance of the project or any construction at the project; (ii) the
payment of any brokerage commissions or fees of any kind with respect to the Application/Commitment
or the Loan, and for any reasonable legal fees or expenses incurred by Lender in connection with
any claims for such commissions or fees; (iii) any other action or inaction by, or matter which is
the responsibility of, Borrower; (iv) the breach of any representation or warranty or failure to
fulfill any of Borrower’s obligations under this Agreement or any other Loan Document; (v) any
default that occurs, including an Event of Default; and (vi) the death or incapacity of any
Indemnitor or any other individual(s) having direct or indirect management or control over the
Project and/or Borrower. The foregoing indemnity shall include the cost of all alterations, repairs
and replacements to the Project (including without limitation architectural, engineering, legal and
accounting costs), all fines, fees and penalties, and all legal and other expenses (including
reasonable attorney fees), incurred in connection with the Project being in violation of Building
Laws and for the cost of collection of the sums due under this indemnity, whether or not Borrower
is in possession of the Project. If Lender shall become the owner of or acquire an interest in or
rights to the Project by a Foreclosure Conveyance, the foregoing indemnification obligation shall
survive such Foreclosure Conveyance. Notwithstanding anything in this Agreement to the contrary,
the indemnity provided under this Section 3.19 will not apply to any liability, loss, cost,
expense or damage (including reasonable attorney fees) to the extent that they solely result from
the gross negligence, willful misconduct or bad faith of Lender.

Loan Agreement

 

13

 

3.20 Organizational Documents.

(a) Without the prior written consent of Lender and except as permitted under Section
6.3, Borrower shall not permit or suffer any of the following (as applicable): (i) if
Borrower is a partnership or joint venture, it shall not permit nor suffer any amendment or
modification of its partnership or joint venture agreement, and shall not permit or suffer
the admission of any new partner or venturer; (ii) if Borrower is a corporation, it shall
not permit nor suffer any amendment or modification of its articles of incorporation or
by-laws, and shall not permit or suffer the admission of any new shareholder; (iii) if
Borrower is a limited liability company, it shall not permit nor suffer any amendment or
modification of its member control agreement or operating agreement, and shall not permit or
suffer the admission of any new member; and (iv) if Borrower is a trust, it shall not permit
nor suffer any amendment or modification of its trust agreement, and shall not permit or
suffer the admission of any new trustee or beneficiary.

(b) Borrower will continuously maintain its existence and its rights to do business in the
state where the Project is located together with its franchises and trade names.

(c) If Borrower, or any of its general partners is a limited liability company with
only one member (a “Single-Member LLC”), then such Single-Member LLC must be
duly organized and in good standing under the laws of the state of Delaware (or another
jurisdiction satisfactory to Lender in its sole discretion), and shall maintain in
effect an operating agreement or other operative entity document that provides for the
continued existence of Borrower (or such general partner) in the event of the death,
dissolution, resignation, bankruptcy or other legal incapacity of its single member (so
that the Single-Member LLC will continue to exist notwithstanding such event).

3.21 Publicity. During the term of the Loan, Lender and Mortgage Correspondent may
issue or publish releases or announcements stating that the financing for the Project is being
provided by Lender to Borrower, and Borrower hereby consents thereto. If any such release or
announcement shall include detailed information about Borrower, Lender shall provide Borrower with
advance notice of any release or announcement and Borrower shall have an opportunity to review such
information and correct any misstatements or information that may be inconsistent with Borrower’s
financial statements or disclosure statements.

3.22 Lender’s Attorney Fees and Expenses. If at any time hereafter prior to repayment
of the Loan in full, Lender employs counsel for advice or other representation (whether or not any
suit has been or shall be filed and whether or not other legal proceedings have been or shall be
instituted and, if such suit is filed or legal proceedings instituted, through all administrative,
trial, and appellate levels) with respect to the Loan, the Project or any part thereof, this
Agreement or any of the Loan Documents (expressly excluding, however, legal fees incurred by Lender
in any general audit of Lender’s loan portfolio, but expressly including, without limitation, any
proposed or actual restructuring of the Loan, or to protect, collect, lease, sell, take possession
of, or liquidate any of the Project, or to attempt to enforce any security interest or lien on any
of the Project, or to enforce any rights of Lender or any of Borrower’s obligations hereunder or
those of any other person, firm or corporation which may be obligated to Lender by virtue of this
Agreement or any other agreement, instrument or document heretofore or hereafter delivered to
Lender by or for the benefit of Borrower, or to analyze and respond to any request for consent or
approval made by Borrower), then, in any such event, all of the reasonable attorney fees and
expenses arising from such services, and all expenses, costs and charges relating thereto, shall
bear interest from the date expended at the Default Rate and shall be paid by Borrower on demand
and if Borrower fails to pay such fees, costs and expenses payment thereof by Lender shall be
deemed to constitute disbursement of the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note) and shall constitute additional
indebtedness of Borrower to Lender, payable on demand and secured by the Security Instrument and
other Loan Documents.

Loan Agreement

 

14

 

3.23 Loan Expenses. Borrower agrees to pay all expenses of the Loan, including all
amounts payable pursuant to Section 3.24 of this Agreement, and also including all
recording charges, title insurance charges, costs of surveys, costs for certified copies of
instruments, escrow charges, fees, expenses and charges of architectural/engineering consultants of
Lender, fees and expenses of Lender’s attorneys, and all costs and expenses incurred by Lender in
connection with the determination of whether Borrower has performed the obligations undertaken by
Borrower under this Agreement or has satisfied any conditions precedent to the obligations of
Lender under this Agreement. All such expenses, charges, costs and fees shall be the Borrower’s
obligation regardless of whether the Loan is disbursed in whole or in part unless such failure to
disburse is due to Lender’s wrongful failure to disburse hereunder. Any and all advances or
payments made by Lender under this Agreement from time to time, or for fees of architectural and
engineering consultants and attorney fees and expenses, if any, and all other Loan expenses shall,
as and when advanced or incurred by Lender, constitute additional indebtedness evidenced by the
Note and secured by the Security Instrument and the other Loan Documents to the same extent and
effect as if the terms and provisions of this Agreement were set forth therein, whether or not the
aggregate of such indebtedness shall exceed the aggregate face amount of the Note.

3.24 Loan Fees. Borrower agrees to pay the loan fees (“Loan Fees”) as are set forth
in the Application/Commitment, subject to the terms and conditions set forth therein. Borrower
shall pay all Loan Fees at the times set forth in the Application/Commitment and shall pay all
expenses incurred by Lender at the Loan Opening Date and on demand at such subsequent times as
Lender may determine, including administrative fees and expenses in connection with any
modification of any of the terms of the Loan, and including any administrative costs or
out-of-pocket fees and expenses (including without limitation fees and expenses of any attorneys,
accountants or consultants engaged by Lender) as a result of the death or incapacity of any
Indemnitor or any other individual(s) having direct or indirect management or control over the
Project and/or Borrower. Lender may require the payment of such fees and expenses as a condition
to the disbursement of the Loan.

3.25 No Additional Debt. Borrower shall not, without the prior written consent of
Lender, incur any indebtedness (whether personal or nonrecourse, secured or unsecured) in
connection with the Project, other than customary trade payables paid within sixty (60) days after
they are incurred.

Loan Agreement

 

15

 

3.26 Service Agreements and Permits.

(a) Borrower hereby assigns, grants, conveys and transfers to Lender, as security
for the timely payment and performance by Borrower of all of its obligations under
the Loan Documents and all other obligations of Borrower which are secured by the
Security Instrument, all of Borrower’s rights, titles, interests, privileges,
benefits and remedies in, to and under (i) all Service Agreements and any and all
present and future amendments, modifications, supplements, and addenda thereto, and
(ii) Permits to the fullest extent that the same or any interest therein may be
legally assigned by Borrower. By its funding of the Loan and so long as an Event of
Default shall not have occurred and be continuing under this Agreement, Lender
hereby grants to Borrower a revocable license to enforce the Service Agreements, and
to utilize all of the Permits and the trade names, trademarks and logos necessary
for the ownership and operation of the Project.

(b) Borrower shall at all times faithfully abide by, perform and discharge each of
its obligations under the Service Agreements and the Permits, diligently enforce its
rights in, under and to the Service Agreements and the Permits, unless otherwise
directed by Lender in writing, and shall, at Borrower’s sole cost and expense,
appear in and defend Lender in any action or proceeding in any way connected with
any of the Service Agreements or Permits, and shall pay all reasonable costs and
expenses, including, without limitation, attorneys’ fees, which Lender may incur in
connection with Lender’s appearance, voluntarily or otherwise, in any such action or
proceeding.

3.27 Project Management. The Real Property shall be managed at all times by Borrower,
by Indemnitors or by a Qualified Property Manager. Borrower shall cause each property manager to
execute an agreement acceptable to Lender conditionally assigning such manager’s property
management agreement to Lender and subordinating manager’s right to receive fees and expenses under
such agreement while any sums payable to Lender remain outstanding under the Loan Documents.

3.28 Intentionally Deleted.

3.29 Death or Legal Incapacity of Individual Indemnitor. Upon the death or legal
incapacity of any Indemnitor which is a natural person, Borrower shall promptly a) notify Lender of
such death or incapacity of any Indemnitor and b) cause an Indemnification Agreement, in the same
form as executed and delivered to Lender by such Indemnitor pursuant to Section 2.2(g) as of the
date of this Agreement, to be executed and delivered to and for the benefit of Lender by a
substitute Indemnitor (“Substitute Indemnitor”) satisfactory to Lender in Lender’s sole discretion.
Failure of Borrower to provide such notice and agreement shall constitute a default under the Loan
Documents.

In connection with Lender’s consideration for approval of a proposed Substitute Indemnitor,
Borrower shall cause such proposed Substitute Indemnitor to deliver to Lender a current financial
statement, certified as correct by Indemnitor, along with such other information
concerning such proposed Substitute Indemnitor as Lender may reasonably require. If approved,
and on a going forward basis, Borrower shall cause the Substitute Indemnitor to furnish information
in accordance with Section 3.13 of this Agreement.

Loan Agreement

 

16

 

4. REPRESENTATIONS AND WARRANTIES. To induce Lender to execute this Agreement and perform the
obligations of Lender hereunder, Borrower hereby represents and warrants to Lender as follows:

4.1 Title. On the Loan Opening Date and thereafter, Borrower will have good and
marketable fee simple title to the Real Property, subject only to the Permitted Exceptions.

4.2 No Litigation. Except for claims fully covered by insurance, where the insurance
company is defending such claims and such defense is not being provided under a reservation of
rights, and except as disclosed in writing to Lender prior to the date hereof, there is no pending
litigation or unsatisfied judgment entered of record against Borrower or the Project. No
litigation or proceedings are pending, or to Borrower’s knowledge are threatened, against any
Affiliated Party (i) which might affect the validity or priority of the lien of the Security
Instrument, (ii) which might affect the ability of Borrower or any Indemnitor to perform their
respective obligations pursuant to and as contemplated by the terms and provisions of this
Agreement and the other Loan Documents, or (iii) which could materially affect the operations or
financial condition of the Project, Borrower, or any Affiliated Party.

4.3 Due Authorization. The execution and delivery of the Loan Documents and all other
documents executed or delivered by or on behalf of Borrower and pertaining to the Loan have been
duly authorized or approved by Borrower and, when executed and delivered by Borrower or when caused
to be executed and delivered on behalf of Borrower, will constitute the legal, valid and binding
obligations of the obligor thereon, enforceable in accordance with their respective terms except as
limited by bankruptcy, insolvency, or other laws of general application relating to the enforcement
of creditor’s rights, and the payment or performance thereof will be subject to no offsets, claims
or defenses of any kind or nature whatsoever.

4.4 Breach of Laws or Agreements. The execution, delivery and performance of this
Agreement and the other Loan Documents have not constituted (and will not, upon the giving of
notice or lapse of time or both, constitute) a breach or default under any other agreement to which
Borrower or any Indemnitor is a party or may be bound or affected, or a violation of any Law which
may affect the Project, any part thereof, any interest therein, or the use thereof, or Borrower or
any Indemnitor.

4.5 Leases. Borrower and its agents have not entered into any leases or other
arrangements for occupancy of space within the Project other than leases shown on the rent roll, a
current copy of which is attached hereto as Exhibit D, and made a part hereof (the
“Rent Roll”), or entered into in accordance with the requirements of this Agreement. All
leases disclosed on the Rent Roll are in full force and effect and to Borrower’s knowledge, there
are no existing defaults thereunder other than as disclosed in writing to Lender. Copies of the
leases previously furnished to Lender, and each Estoppel Certificate from each tenant thereunder,
are true, correct and complete.

Loan Agreement

 

17

 

4.6 Condemnation. (i) No condemnation of any portion of the Project, (ii) no
condemnation or relocation of any roadways abutting the Project, and (iii) no denial of access to
the Project from any point of access to the Project, has commenced or, to Borrower’s knowledge, is
contemplated by any Governmental Authority.

4.7 Condition of Improvements.

(a) To the best of Borrower’s knowledge, the foundations and structure of the
Improvements are structurally sound and the various mechanical systems have adequate
capacities and are in good working condition. The Improvements are in full compliance with
all applicable Building Laws. Certificates of occupancy with respect to the Improvements,
and any other certificates which may be required to evidence compliance with building codes
and permits and approval for full occupancy of the Improvements and all installations
therein have been issued by all appropriate authorities. Borrower has no knowledge of
required capital expenditures or deferred maintenance other than those that would be
normally expected for a building of similar age and type. No notice of violation of any
Building Law has been received.

(b) To Borrower’s actual knowledge, the Project in its current condition (including,
without limitation, any condition or situation on the Project as a result of any
construction, alterations or improvements thereto) are in accordance with and their uses
comply fully with all Building Laws (as hereinafter defined) applicable to the Project, and
certificates of occupancy have been issued by all appropriate authorities.

(c) No notice of violation of any Building Law has been received, and all Governmental
Approvals have been complied with.

(d) All buildings located on the Project are higher than the 100-year flood plain or
will be continuously covered by adequate flood insurance.

(e) For all buildings there has been issued such certificates as may be required to
evidence compliance with building codes and permits and approval for full occupancy of the
buildings and of all installations therein.

(f) BORROWER SHALL UNCONDITIONALLY, JOINTLY AND SEVERALLY INDEMNIFY, DEFEND AND HOLD
LENDER HARMLESS FROM ANY AND ALL LOSS LIABILITY COST AND EXPENSE THREATENED AGAINST OR
SUFFERED BY LENDER BY REASON OF BREACH OF ANY OF THE REPRESENTATIONS, WARRANTIES AND
AGREEMENTS SET FORTH IN THIS SECTION 4.7. The foregoing indemnity shall include the
cost of all alterations, repairs and replacements to the Project (including without
limitation architectural, engineering, legal and accounting costs), all fines, fees and
penalties, and all legal and other expenses (including attorney fees), incurred in
connection with the Project being in violation of the Building Laws and for the cost of
collection of the sums due under this indemnity, whether or not Borrower is in possession of
the Project. If Lender shall become the owner of or acquire an interest in or rights to
the Project pursuant to a Foreclosure Conveyance, the foregoing indemnification
obligation shall survive such Foreclosure Conveyance.

(g) All information previously provided by Borrower to Lender regarding compliance of
the Project with applicable Building Laws is accurate and complete to Borrower’s actual
knowledge.

Loan Agreement

 

18

 

4.8 Information Correct. All financial statements furnished to Lender or Mortgage
Correspondent by Borrower or any Affiliated Party fairly present the financial condition of such
persons or entities and were prepared in accordance with a method of preparation approved by
Lender, consistently applied, and all other information previously furnished by Borrower or any
Affiliated Party to Lender in connection with the Loan are true, complete and correct in all
respects except as otherwise disclosed to Lender in writing and do not fail to state any material
fact necessary to make the statements made not misleading. Neither Borrower nor Indemnitor has
misstated or failed to disclose to Lender any material fact relating to: (i) the condition, use or
operation of the Project, (ii) the status or any material condition of any tenant or lease at the
Project known to it, (iii) Borrower, (iv) any Indemnitor, or (v) the litigation disclosure provided
by Borrower and Indemnitor, except as disclosed in writing to Lender prior to the date hereof.
There have been no material adverse changes in the financial condition of the Indemnitor since the
delivery of such financial statements (as described on Exhibit B, attached hereto and
incorporated herein for all purposes).

4.9 Material Adverse Change. No material adverse change in the operations or
financial condition of Borrower or Indemnitor has occurred since the respective effective dates of
their financial statements previously submitted to Lender or Mortgage Correspondent, and no
material adverse change in the condition (physical or otherwise) of the Project has occurred since
the date of the Application/Commitment.

4.10 Solvency. Neither Borrower, nor, if Borrower is a partnership, any general
partner of Borrower nor any Indemnitor is (a) currently insolvent on a balance sheet basis, or (b)
currently unable to pay its debts as they come due; and no bankruptcy or receivership proceedings
are contemplated or pending as to any of them.

4.11 Restrictions. The use of the Project (including contemplated accessory uses)
does not violate any restrictions of record, or any agreement affecting the Project or any part
thereof.

4.12 Utilities. The Project has adequate water, gas and electrical supply, storm and
public sanitary sewerage facilities, other required public utilities, fire and police protection,
and means of appropriate access between the Project and public highways.

4.13 Brokerage Fees. No brokerage fees or commissions are payable by or to any person
in connection with this Agreement or the Loan to be disbursed hereunder other than fees payable to
Mortgage Correspondent, which fees shall be paid by Borrower.

4.14 Encroachments. No building or other improvement in the Project encroaches upon
any building line, setback line, side yard line, or any recorded or visible easement (or other
easement of which Borrower has knowledge of with respect to the Project).

Loan Agreement

 

19

 

4.15 Separate Tax Parcel. The Project is taxed separately without regard to any other
property and for all purposes the Project may be mortgaged, conveyed, and otherwise dealt with as
an independent parcel.

4.16 ERISA. The subject loan transaction will not result in a prohibited transaction
as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code. The transactions
contemplated by this Agreement by or with Borrower are not in violation of Laws regulating
investments of and fiduciary obligations with respect to governmental plans, as defined in Section
3(32) of ERISA. The Borrower or members of Borrower may be required to provide appropriate
documentation to Lender evidencing this representation.

4.17 Executive Order and Patriot Act. None of the Borrower or any entity or person
owning an interest in or being an investor or otherwise, in Borrower, Indemnitor or their
respective constituents or affiliates are in violation of any laws relating to terrorism or money
laundering, including the Executive Order and the Patriot Act.

4.18 No Default. No Default or Event of Default has occurred and is continuing.

4.19 Trade Name; Principal Place of Business. Except as previously disclosed to
Lender in writing, Borrower uses no trade name other than its actual name set forth herein. The
principal place of business of Borrower is as stated on page 1 hereof.

4.20 FIRPTA. Borrower is not a “foreign person” within the meaning of Sections 1445
or 7701 of the Internal Revenue Code.

4.21 RICO. Borrower has not been charged with nor, to its knowledge, is it under
investigation for, possible violations of the Racketeer Influenced and Corrupt Organizations Act,
the Continuing Criminal Enterprise Act, the Controlled Substance Act of 1978, or similar laws
providing for the possible forfeiture of any of its respective assets or properties.

4.22 No Casualty. No part of the Project has been damaged by fire or other casualty
except as disclosed in writing to Lender.

4.23 Truth of Recitals. All statements set forth in the Recitals are true and
correct.

4.24 Personal Property and Inventory. That attached hereto as Exhibit C is a
true and correct list of the inventory of tangible personal property and equipment owned and used
in the operation of the Project.

4.25 Project Documents. The Project is not subject to any reciprocal easements,
covenants, conditions or restrictions or development agreements, except as reflected in the policy
of title insurance accepted by Lender with respect to the Loan.

Loan Agreement

 

20

 

4.26 Service Agreements and Permits. No previous assignment, sale, pledge, transfer,
mortgage or other encumbrance of any interest in the Service Agreements, the Permits, or any of
them, has been made, and Borrower agrees not to assign, sell, pledge, transfer, mortgage or
otherwise encumber its interest in the Service Agreements, the Permits, or any of them, so long as
any portion of the Loan remains unpaid. Borrower further represents and
warrants that (i) Borrower has not performed any act which might prevent Borrower from
performing its undertakings hereunder or which might prevent Lender from operating under or
enforcing any of the terms and conditions hereof or which would limit Lender in such operation or
enforcement, (ii) Borrower is not in default under the Service Agreements, the Permits, or any of
them, and no other party to the respective Service Agreements is in default thereunder except as
disclosed in writing to Lender, (iii) no amendments to any of the Service Agreements, and no change
in the Permits, will be made or consented to by Borrower without the prior written consent of
Lender, and (iv) upon execution of each Service Agreement and the issuance of each Permit, Borrower
will deliver, if requested by Lender, a copy of the same (or the original at Lender’s request) to
Lender and will require such of the parties thereto as Lender may designate to execute and deliver
to Lender a consent to this Agreement, such consent to be in form and content satisfactory to
Lender.

5. CASUALTY AND CONDEMNATION.

5.1 Lender’s Right to Settle Claims; Election to Apply Insurance and Condemnation Proceeds
to Indebtedness. Except as otherwise provided in this Section, in the event of any loss or
damage to any portion of the Project due to fire or other casualty, or any taking of any portion of
the Project by condemnation or under power of eminent domain, Lender may, in its sole and absolute
discretion, either apply the proceeds to the Loan balance or disburse them for the purposes of
repair and restoration. Notwithstanding the immediately preceding sentence, Borrower has the right
to use insurance or condemnation proceeds to rebuild following a casualty or a condemnation of the
Improvements, or to remedy the effect on the Project of any condemnation, provided that (i) Lender
shall have the right to settle any claim or award that Borrower has not settled on or before one
hundred twenty (120) days after the date of such loss or prior to the date of such taking and (ii)
each of the following is satisfied in the determination of Lender: (a) no Default exists, (b) no
payment Event of Default has occurred during the preceding twelve months, (c) the proceeds received
by Lender, together with any additional funds deposited with Lender by Borrower, are sufficient, in
Lender’s sole and absolute discretion, either to restore the Project to its condition before the
casualty or to remedy the condemnation, (d) local building and zoning laws allow the Project to be
rebuilt to that which existed prior to the casualty or condemnation, (e) a loss of no more than 5%
of the commercial tenant rental income results through commercial tenants exercising rights to
terminate their leases as a result of casualty or condemnation, and (f) the Loan-to-Value ratio of
the Project on completion will be 55% or less, as determined by an Appraisal (provided, however, in
the event the casualty or condemnation proceeds received are less than 3% of the original Loan
amount, Borrower will not have to satisfy this subpart (f) to rebuild). The Appraisal
required pursuant to the foregoing provision shall be at Borrower’s expense and Borrower is
required to provide proof of such payment to Lender and Lender’s Mortgage Correspondent.

Provided that no Event of Default exists, Borrower may settle all claims up to the lesser of
(1) $50,000 or (2) 1% of the original Loan Amount directly with the insurance company without the
prior consent of Lender provided that (i) Borrower uses the proceeds of any claim to rebuild or
restore the Project to its condition prior to the casualty, (ii) Borrower provides Lender with
written notice of the casualty, and (iii) local building and zoning laws allow the Project to be
rebuilt to the condition prior to the casualty. Failure to rebuild and restore will constitute an
Event of Default under the Loan Documents. Failure to use the insurance proceeds received
directly from the insurance company to rebuild and restore is a Recourse Event as defined in
Section 9.18 of this Agreement.

Loan Agreement

 

21

 

In all other cases, Lender shall have the right (but not the obligation) to collect, retain
and apply to the indebtedness of Borrower under this Agreement and the other Loan Documents all
insurance and condemnation proceeds (after deduction of all expense of collection and settlement,
including attorney and adjusters’ fees and expenses), and if such proceeds are insufficient to pay
such amount in full, to declare the balance remaining unpaid on the Note and Security Instrument to
be due and payable forthwith and to avail itself of any of the remedies afforded thereby as in the
case of any Event of Default. Any proceeds remaining after application to the indebtedness of
Borrower under this Agreement and the other Loan Documents shall be paid by Lender to Borrower or
the party then entitled thereto.

5.2 Borrower’s Obligation to Rebuild and Use of Proceeds Therefor. If Lender does not
elect to or is not entitled to apply fire or casualty insurance proceeds to the indebtedness, all
insurance proceeds received will be deposited into a third party escrow account controlled by
Lender or its Mortgage Correspondent. Lender may also require that Borrower deposit any deficit
between the business interruption or loss of rents proceeds received and the debt service due under
the Loan Documents during the period of rebuilding or restoration of the Improvements. As provided
under Section 5.1 of this Agreement, Lender shall have the right (but not the obligation)
to settle, collect and retain such proceeds, and after deduction of all expenses of collection and
settlement, including attorney and adjusters’ fees and expenses, to release the same to Borrower
periodically provided that Borrower shall:

(a) Expeditiously repair and restore all damage to the portion of the Project in
question resulting from such fire or other casualty, including completion of the
construction if such fire or other casualty shall have occurred prior to completion, so that
the Project will be completed in accordance with the plans and specifications therefor; and

(b) If the proceeds of fire or casualty insurance (and the undisbursed available Loan
proceeds for construction) are, in Lender’s sole judgment, insufficient to complete the
repair and restoration of the buildings, structures and other improvements constituting the
Project, then Borrower shall promptly deposit with Lender the amount of such deficiency.

Any request by Borrower for a disbursement by Lender of fire or casualty insurance proceeds
and funds deposited by Borrower pursuant to this Section 5.2 and the disbursement thereof
shall be conditioned upon Borrower’s compliance with and satisfaction of the same conditions
precedent as would be applicable in connection with construction loans made by institutional
lenders for projects similar to the Project, including approval of plans and specifications,
submittal of evidence of completion, updated title insurance, lien waivers, and other customary
safeguards.

Loan Agreement

 

22

 

6. ASSIGNMENTS.

6.1 Lender’s Right to Assign. Lender shall have the right to assign, transfer, sell,
negotiate, pledge or otherwise hypothecate this Agreement and any of its rights and security
hereunder, including the Note, Security Instrument, and any other Loan Documents. Lender shall
have the right to hire outside firms it deems necessary to assist with the servicing,
administration and monitoring of the Loan. Borrower hereby agrees that all of the rights and
remedies of Lender in connection with the interest so assigned shall be enforceable against
Borrower by such assignee with the same force and effect and to the same extent as the same would
have been enforceable by Lender but for such assignment. Borrower agrees that Lender shall have
the right to sell participations in the Loan or to include the Note in a securitized pool of
indebtedness without the consent of Borrower.

6.2 Prohibition of Assignments by Borrower. Borrower shall not assign or attempt to
assign its rights under this Agreement. Borrower will not suffer or permit any of its interest or
rights in the Project to be assigned, transferred, sold, pledged, vested, encumbered, hypothecated
or otherwise disposed of (the foregoing are hereinafter referred to individually as a “Transfer,”
collectively as “Transfers”) until the provisions of this Agreement have been fully complied with
and the Loan and all other sums evidenced by the Note and/or secured by the Security Instrument and
other Loan Documents, have been repaid in full. Borrower shall promptly notify Lender of the death
or incapacity of any Indemnitor or any other individual(s) having direct or indirect management or
control over the Property and/or Borrower. Failure of Borrower to provide such notice shall
constitute a default under the Loan Documents.

6.3 Transfers of Interests in Borrower. For estate-planning purposes only, Borrower,
or any partner, member or shareholder of Borrower shall be permitted to make a Transfer of any
direct or indirect interest in Borrower (other than a general partnership interest in Borrower if
Borrower is a partnership, or a Managing Member or Manager interest in Borrower, if Borrower is a
limited liability company) to or for the benefit of a spouse or lineal descendant (including by
adoption), up to an aggregate of 49% of the total interests of Borrower, without the prior consent
of Lender, provided that any such Transfer does not change the direct or indirect control or
management of Borrower. Copies of any and all documents evidencing any such Transfer must be
provided to Lender within fifteen (15) days after the occurrence of said Transfer including,
without limitation, a statement detailing the Transfer and a listing of reallocations and
percentages of ownership interest in Borrower. Other than for estate-planning purposes as outlined
above, no direct or indirect managing or controlling interest, nor any other interest representing
(directly or indirectly) a more than ten percent (10%) interest in the Borrower or the Project, may
be Transferred (including without limitation any Transfer resulting from death of any natural
person holding any direct or indirect interest in Borrower or the Project) without the prior
written consent of Lender (which Lender may withhold at its sole discretion); and the occurrence of
such an event will constitute an Event of Default under the Loan Documents. Without limiting the
generality of the foregoing any Transfers that would result in there being any co-borrowers, other
than or in addition to Borrower, shall be strictly prohibited.

Loan Agreement

 

23

 

7. EVENTS OF DEFAULT.

7.1 Event of Default. The occurrence of any one or more of the following shall
constitute an “Event of Default,” as such term is used herein:

(a) If Borrower fails to pay principal or interest under the Note when due;

(b) If Borrower defaults in the performance of any of its other covenants, agreements
and obligations under this Agreement involving the payment of money;

(c) If Borrower defaults in the performance of any of its covenants, agreements and
obligations under this Agreement not expressly described in other subparts of this Section,
and fails to cure such default within thirty (30) days after written notice thereof from
Lender provided, however, that if such default is reasonably susceptible of cure, but cannot
be cured within such thirty (30) day period, then so long as Borrower promptly commences
cure and thereafter diligently pursues such cure to completion, the cure period shall be
extended for an additional thirty (30) days, within which Borrower may complete such cure;

(d) If at any time or times hereafter any representation or warranty (including the
representations and warranties of Borrower set forth in any Loan Document), statement,
report or certificate furnished to Lender in connection with the Loan is not true and
correct in any material respect;

(e) If any petition is filed by or against Borrower or any Affiliated Party under the
Bankruptcy Code or any similar state or federal Law, whether now or hereafter existing (and,
in the case of involuntary proceedings, failure to cause the same to be vacated, stayed or
set aside within thirty (30) days after filing);

(f) If any assignment, pledge, encumbrance, transfer, hypothecation, failure of notice
or other disposition is made in violation of Section 6.2 or Section 6.3 of
this Agreement;

(g) If Borrower, any general partner of Borrower or Indemnitor shall fail to pay any
debt owed by it or is in default under any agreement with Lender or any other party (other
than a failure or default for which the maximum liability of Borrower or such general
partner or Indemnitor does not exceed 25% of their respective assets) and such failure or
default continues after any applicable grace period specified in the instrument or agreement
relating thereto;

(h) If a default (other than those set forth in this Section 7.1) occurs under
any of the Loan Documents and continues beyond the applicable grace period, if any,
contained therein; or

(i) If Borrower defaults in the performance of any of its covenants, agreements and
obligations set forth in Section 3.20 of this Agreement.

Loan Agreement

 

24

 

8. REMEDIES.

8.1 Remedies Conferred Upon Lender. Upon the occurrence of any Event of Default,
including without limitation the filing, by Borrower, of a voluntary petition under Chapter 11 of
the Bankruptcy Code, Lender shall have the right (but not the obligation) to pursue any one or more
of the following remedies concurrently or successively, it being the intent
hereof that all such remedies shall be cumulative and that no such remedy shall be to the
exclusion of any other:

(a) Declare the Note to be immediately due and payable;

(b) Use and apply any monies deposited by Borrower with Lender, including amounts in
the Escrow Account, regardless of the purpose for which the same was deposited, to cure any
such default or to apply on account of any indebtedness under this Agreement which is due
and owing to Lender;

(c) Exercise or pursue any other right or remedy permitted under this Agreement or any
of the Loan Documents or conferred upon or available to Lender at law or in equity or
otherwise; and

(d) To correct any such Event of Default in such manner and to such extent as Lender
may deem necessary to protect the security hereof, including, without limitation, the right
(but not the obligation) to appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Lender, and also the right (but not
the obligation) to perform and discharge each and every obligation, covenant, condition and
agreement of Borrower under the Service Agreements and the Permits. Lender shall not be
obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any
obligation, duty or liability under any of the Service Agreements nor any of the Permits, or
by reason of this Agreement, unless or until Lender exercises its rights hereunder. Lender
may, at its option, upon written notice to the appropriate Consenting Party in the case of a
Service Agreement, exercise any or all of the rights and remedies granted to Borrower under
any Service Agreement or Permit, including any right or remedy with respect to the
Consenting Party in question in the case of a Service Agreement, as if Lender had been an
original party to such Service Agreement or the permittee under the Permit. After an Event
of Default, upon giving such notice to any Consenting Party with respect to a Service
Agreement, Lender may elect to assume all obligations of Borrower under any Service
Agreement between Borrower and the Consenting Party or with respect to any Permit; but in
any case Lender shall not be responsible for any default of Borrower under the Service
Agreement occurring prior to the time Lender gives such notice to the Consenting Party or
assumes the obligations under any Permit. Each Consenting Party is hereby authorized by
Borrower to perform its obligations under the Service Agreements to which it is a party for
the benefit of Lender without any obligation to determine whether or not an Event of Default
has in fact occurred.

8.2 Non-Waiver of Remedies. No waiver of any breach or default hereunder shall
constitute or be construed as a waiver by Lender of any subsequent breach or default or of any
breach or default of any other provision of this Agreement.

8.3 Cash Collateral Account. Upon the occurrence of an Event of Default, Lender may
require Borrower to deposit all revenues from the operation of the Project into an account held by
and pledged to Lender (“Cash Collateral Account”) after Borrower has failed to promptly
cure as provided for in the Loan Documents. Lender shall not pay interest on any amounts held
on deposit in the Cash Collateral Account, unless required to do so under applicable Laws.
Borrower shall execute such documents as Lender, in its sole discretion, deems necessary to perfect
its interest in the Cash Collateral Account.

Loan Agreement

 

25

 

9. GENERAL PROVISIONS.

9.1 Captions. The captions and headings of various Articles and Sections of this
Agreement and Exhibits pertaining hereto are for convenience only and are not to be considered as
defining or limiting in any way, the scope or intent of the provisions hereof.

9.2 Merger. This Agreement, the Application/Commitment and the Loan Documents and
instruments delivered in connection herewith, as may be amended from time to time in writing,
constitute the entire agreement of the parties with respect to the Project and the Loan, and all
prior discussions, negotiations and document drafts are merged herein and therein. If there are
any inconsistencies between the Application/Commitment and this Agreement or the Loan Documents,
the terms contained in this Agreement and the other Loan Documents shall prevail. Neither Lender
nor any employee of Lender has made or is authorized to make any representation or agreement upon
which Borrower may rely unless such matter is made for the benefit of Borrower and is in writing
signed by an authorized officer of Lender. Borrower agrees that it has not and will not rely on
any custom or practice of Lender, or on any course of dealing with Lender, in connection with the
Loan unless such matters are set forth in this Agreement or the Loan Documents or in an instrument
made for the benefit of Borrower and in a writing signed by an authorized officer of Lender.

9.3 Notices. Any notice, demand, request or other communication which any party
hereto may be required or may desire to give hereunder shall be in writing, in capitalized, bold
letters using a font size of at least 12 pts., addressed as follows and shall be deemed to have
been properly given if hand delivered, if sent by reputable overnight courier (effective the
business day following delivery to such courier) or if mailed (effective two business days after
mailing) by United States registered or certified mail, postage prepaid, return receipt requested
to such addresses (for the applicable person or party) as set forth on Exhibit B hereto; or
at such other address as the party to be served with notice may have furnished in writing to the
party seeking or desiring to serve notice as a place for the service of notice. Notices given in
any other fashion shall be deemed effective only upon receipt. The communication shall clearly
state, in the same format as above, the number of days, business or otherwise, in which Lender has
to review the communication before consent is deemed given, when applicable.

9.4 Modification; Waiver. No modification, waiver, amendment, discharge or change of
this Agreement shall be valid unless the same is in writing and signed by the party against which
the enforcement of such modification, waiver, amendment, discharge or change is sought. Lender
reserves the right to charge an administrative fee for any such modification, waiver, amendment,
discharge, or change of this Agreement.

9.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROJECT IS LOCATED AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA.

Loan Agreement

 

26

 

9.6 Acquiescence Not to Constitute Waiver of Lender’s Requirements. Lender may at any
time by a specific writing waive compliance by Borrower with any covenant in any Loan Document,
consent to Borrower’s doing any act which in any Loan Document Borrower is prohibited from doing,
or to Borrower’s failing to do any act which in any Loan Document Borrower is required to do,
release any part of the Project or any interest therein from the lien and security interest of the
Security Instrument, or release any person liable for any part of the Loan without impairing or
releasing the liability of any other person. Lender may waive any Default without waiving any
other prior or subsequent Default. Lender may remedy any Default without waiving the Default
remedied. Neither failure by Lender to exercise, nor delay by Lender in exercising, nor
discontinuance of the exercise of any right, power or remedy upon any Default shall be construed as
a waiver of such Default or as a waiver of the right to exercise any such right, power or remedy
(including the right to accelerate the maturity of the Loan or any part thereof) at a later date.
No single or partial exercise by Lender of any right, power or remedy under any Loan Document shall
exhaust the same or shall preclude any other or further exercise thereof, and every such right,
power or remedy under any Loan Document may be exercised at any time and from time to time. No
modification or waiver of any provision of any Loan Document nor consent to any departure by
Borrower therefrom shall in any event be effective unless in writing signed by Lender and then such
waiver or consent shall be effective only in the specific instance, for the purpose for which given
and to the extent therein specified. No notice to nor demand on Borrower in any case shall of
itself entitle Borrower to any other or further notice or demand in similar or other circumstances.

9.7 Disclaimer by Lender.

(a) This Agreement is made for the sole benefit of Borrower and Lender (and Lender’s
successors and assigns and participants, if any), and no other person or persons shall have
any benefits, rights or remedies under or by reason of this Agreement, or by reason of any
actions taken by Lender pursuant to this Agreement. Lender shall not be liable for any
debts or claims accruing in favor of any third parties against Borrower or others or against
the Project. Borrower is not and shall not be an agent of Lender for any purposes. Except
as expressly set forth in the Loan Documents, Lender is not and shall not be an agent of
Borrower for any purposes. Lender, by making the Loan or taking any action pursuant to any
of the Loan Documents, shall not be deemed a partner or a joint venturer with Borrower or
fiduciary of Borrower.

(b) Any review, investigation or inspection conducted by Lender, any architectural or
engineering consultants retained by Lender or any agent or representative of Lender in order
to verify independently Borrower’s satisfaction of any conditions precedent to the
disbursement of the Loan, Borrower’s performance of any of the covenants, agreements and
obligations of Borrower under this Agreement, or the truth of any representations and
warranties made by Borrower hereunder (regardless of whether or not the party conducting
such review, investigation or inspection should have discovered that any of such conditions
precedent were not satisfied or that any such covenants, agreements or obligations were not
performed or that any such representations or warranties were not true), shall not affect
(or constitute a waiver by Lender of) (i) any of Borrower’s representations and warranties
under this Agreement or Lender’s reliance
thereon, or (ii) Lender’s reliance upon any certifications required under this
Agreement or any other facts, information or reports furnished Lender by Borrower hereunder.

Loan Agreement

 

27

 

(c) By accepting or approving anything required to be observed, performed, fulfilled or
given to Lender pursuant to the Loan Documents, including any certificate, statement of
profit and loss or other financial statement, survey, appraisal, lease or insurance policy,
Lender shall not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term provision or condition thereof,
and such acceptance or approval thereof shall not constitute a warranty or representation to
anyone with respect thereto by Lender.

9.8 Right of Lender to Make Advances to Cure Borrower’s Defaults. If Borrower shall
fail to perform in a timely fashion any of Borrower’s covenants, agreements or obligations
contained in this Agreement or the Loan Documents, Lender may (but shall not be required to)
perform any of such covenants, agreements and obligations. Any funds advanced by Lender in the
exercise of its judgment that the same are needed to protect its security for the Loan are deemed
to be obligatory advances hereunder and any amounts expended (whether by disbursement of
undisbursed Loan proceeds or otherwise) by Lender in so doing, shall constitute additional
indebtedness evidenced and secured by the Note, the Security Instrument and the other Loan
Documents, shall bear interest from the date expended at the Default Rate and be payable together
with such interest upon demand.

9.9 Definitions Include Amendments. Definitions contained in this Agreement which
identify documents, including the Loan Documents, shall be deemed to include all amendments and
supplements to such documents from the date hereof, and all future amendments and supplements
thereto entered into from time to time to satisfy the requirements of this Agreement or otherwise
with the consent of the Lender. Reference to this Agreement contained in any of the foregoing
documents shall be deemed to include all amendments and supplements to this Agreement.

9.10 Time Is of the Essence. Time is hereby declared to be of the essence of this
Agreement and of every part hereof.

9.11 Execution in Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement.

9.12 Waiver of Consequential Damages. In no event shall Lender be liable to Borrower
for consequential damages, whatever the nature of a breach by Lender of its obligations under this
Agreement, or any of the Loan Documents, and Borrower for itself and all Affiliated Parties hereby
waives all claims for consequential damages.

9.13 Claims Against Lender. Lender shall not be in default under this Agreement, or
under any other Loan Documents, unless a written notice specifically setting forth the claim of
Borrower shall have been given to Lender within thirty (30) days after Borrower first had knowledge
of, or reasonably should have had knowledge of, the occurrence of the event which
Borrower alleges gave rise to such claim and Lender does not remedy or cure the default, if
any there be, promptly thereafter. If it is determined in any proceedings that Lender has
improperly failed to grant its consent or approval, where such consent or approval is required by
this Agreement or any other Loan Documents, Borrower’s sole remedy shall be to obtain declaratory
relief determining such withholding to have been improper, and for itself and all Affiliated
Parties, Borrower hereby waives all claims for damages or set-off against Lender resulting from any
withholding of consent or approval by Lender.

Loan Agreement

 

28

 

9.14 Jurisdiction and Venue. With respect to any suit, action or proceedings relating
to this Agreement, the Project, or any of the other Loan Documents (“Proceedings”) each
party irrevocably (i) submits to the non-exclusive jurisdiction of the state and federal courts
located in the State where the Project is located, and (ii) waives any objection which it may have
at any time to the laying of venue of any proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have jurisdiction over such
party. Nothing in this Agreement shall preclude either party from bringing Proceedings in any
other jurisdiction nor will the bringing of Proceedings in any one or more jurisdictions preclude
the bringing of Proceedings in any other jurisdiction.

9.15 Severability. The parties hereto intend and believe that each provision in this
Agreement comports with all applicable local, state and federal Laws. However, if any provision or
provisions, or if any portion of any provision or provisions, in this Agreement is found by a court
of law to be in violation of any applicable Laws, and if such court declares such portion,
provision, or provisions of this Agreement to be illegal, invalid, unlawful, void or unenforceable
as written, then it is the intent of all parties hereto that such portion, provision, or provisions
shall be given force to the fullest possible extent that they are legal, valid and enforceable, and
that the remainder of this Agreement shall be construed as if such illegal, invalid, unlawful,
void, or unenforceable portion, provision, or provisions were not contained herein, and that the
rights, obligations, and interests of Borrower and Lender under the remainder of this Agreement
shall continue in full force and effect.

9.16 Incorporation of Recitals. The Recitals set forth herein and the Exhibits
attached hereto are incorporated herein and expressly made a part hereof.

9.17 WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH HEREBY WAIVE (TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN,
THE APPLICATION FOR THE LOAN, THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF
NOTEHOLDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH; AND AGREE THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

Loan Agreement

 

29

 

9.18 Limitation of Liability. Subject to the provisions of this Section 9.18,
the Lender agrees that it shall not seek to enforce any monetary judgment with respect to the
indebtedness evidenced by the Note against Borrower except through recourse to the Project.
Notwithstanding the foregoing, Borrower and, if Borrower is a partnership, its general partner,
shall be liable for and SHALL INDEMNIFY AND DEFEND THE INDEMNIFIED PARTIES AGAINST, AND HOLD THE
INDEMNIFIED PARTIES HARMLESS FROM AND REIMBURSE THE INDEMNIFIED PARTIES FOR, ANY AND ALL CLAIMS,
DEMANDS, JUDGMENTS, PENALTIES, LIABILITIES, COSTS, DAMAGES AND EXPENSES, DIRECTLY OR INDIRECTLY
INCURRED BY THE INDEMNIFIED PARTIES, INCLUDING COURT COSTS AND ATTORNEY FEES (PRIOR TO TRIAL, AT
TRIAL AND ON APPEAL), DIRECTLY OR INDIRECTLY CAUSED BY, RESULTING FROM OR ARISING OUT OF ANY OF THE
FOLLOWING ACTS OR OMISSIONS (COLLECTIVELY, THE “RECOURSE EVENTS”) committed, permitted or omitted
by any of the Indemnitor, Borrower or any of their respective agents, employees and/or contractors:
(i) waste to or of the Project or a failure to maintain the condition of the Project in the manner
required by the Loan Documents; (ii) fraud or material misrepresentation by Borrower or Indemnitor;
(iii) failure to pay (unless separately escrowed for under the Loan Documents) insurance premiums,
taxes, assessments, ground rent or any other lienable impositions as required under the Loan
Documents, failure to furnish sums toward restoration of the Project (in an amount equal to the
deductible referenced in Exhibit E attached hereto and by this reference incorporated herein), or
failure to apply insurance proceeds that are not deposited with Lender to the restoration of the
Project; (iv) misapplication of tenant escrows, security deposits, insurance proceeds or
condemnation proceeds; (v) failure while in monetary default to pay to Lender all rents, income and
profits of and from the Project, net of reasonable and customary operating expenses; (vi) breach
of, or failure to perform the environmental warranties, representations, covenants or
indemnifications described in the Environmental Indemnity Agreement; (vii) destruction or removal
of fixtures or personal property securing the Loan from the Project, unless replaced by items of
equal value; (viii) terminating, settling, amending or entering into a lease of the Project in
violation of the Loan Documents; (ix) failure of the Project to comply with any Building Laws after
any Governmental Authority has notified Borrower, its agents, employees and/or contractors of such
non-compliance; (x) breaches of representations or covenants contained in the Loan Documents
relating to compliance with the Executive Order or the Patriot Act; (xi) failure to pay to Lender
any rent, income or profits of and from the Project which have been prepaid more than thirty (30)
days in advance; (xii) willful or grossly negligent violation of applicable Laws; and (xiii)
failure to pay all amounts payable under the Note in full, together with reasonable attorney fees,
if Borrower transfers or encumbers the Project in contravention of the Loan Documents, or if
Borrower files a voluntary petition under Chapter 11 of the Bankruptcy Code prior to the two-year
anniversary of the transfer of title to the Project to Lender by a Foreclosure Conveyance.

Nothing contained herein shall be construed to prevent Lender from exercising any remedy
allowed by Law or by the terms of this Agreement or any other Loan Document which does not result
in an obligation by Borrower or, if Borrower is a general partnership, any of its general partners,
to pay money with respect to the Note.

9.19 Payment of Interest. With respect to any disbursement of the Loan by Lender, the
obligation of Borrower to pay interest to Lender under the Note shall begin at the time that Lender
initiates its wire transfer of Loan proceeds.

Loan Agreement

 

30

 

9.20 Authorization to Slipsheet. Borrower’s legal counsel is authorized and directed
to authorize Lender or its legal counsel to do any or all of the following: (i) to insert the
effective date of the Loan Documents into each such document, (ii) to attach exhibits to the Loan
Documents or other documents furnished to Lender or Lender’s legal counsel in connection with the
Loan, (iii) to substitute pages to the Loan Documents (as approved by Borrower’s legal counsel),
and (iv) insert executed signature pages into the final Loan Documents. In no event shall
Borrower’s consent be required with respect to any matter set forth in this Section 9.20.

10. SPECIAL PROVISIONS. In the event of any inconsistencies between the terms and conditions
of Exhibit B and the other provisions of this Agreement, the terms and conditions of the
Exhibit B shall control and be binding.

[The remainder of this page is intentionally left blank.]

Loan Agreement

 

31

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the day and year first
set forth above.

NOTICE OF INDEMNIFICATION: BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT CONTAINS
CERTAIN INDEMNIFICATION PROVISIONS PURSUANT TO SECTIONS 3.19, 4.7(f) AND 9.18 HEREOF.

	 	 	 	 	 
	 	BORROWER:

NETREIT, INC., a Maryland corporation

 	 
	 	By:  	 	 
	 	 	Name:  	Kenneth W. Elsberry 	 
	 	 	Title:  	Chief Financial Officer 	 

[Signatures continued on next page.]

Loan Agreement

 

32

 

	 	 	 	 	 	 	 	 	 
	 	 	LENDER:
 	 	 
	 	 	JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan
corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	PPM FINANCE, INC.,

its authorized agent	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 
	Exhibits:	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	—
	 	Legal Description
	Exhibit B

	 	—
	 	Defined Terms and Certain Terms
	Exhibit C

	 	—
	 	Personal Property and Inventory
	Exhibit D

	 	—
	 	Rent Roll
	Exhibit E

	 	—
	 	Insurance Requirements
	Exhibit F

	 	—
	 	Immediate Repair Items

Loan Agreement

 

33

 

EXHIBIT A

LEGAL DESCRIPTION

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, DESCRIBED
AS FOLLOWS:

PARCEL 3, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AS SHOWN ON PAGE
12986 OF PARCEL MAPS, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, NOVEMBER 4,
1983.
EXCEPTING THEREFROM ALL OIL, GAS, HYDROCARBONS AND OTHER MINERALS OF ANY KIND AND NATURE BELOW A
DEPTH OF 500 FEET BENEATH THE SURFACE, ALL WITHOUT RIGHT OF ENTRY OF THE SURFACE OF WITHIN THE
FIRST 500 FEET BELOW THE SURFACE AS RESERVED BY DECLARATION OF COVENANTS, CONDITIONS AND
RESTRICTIONS RECORDED FEBRUARY 28, 1984 AS FILE NO. 84-070034 OF OFFICIAL RECORDS.

Loan Agreement — Exhibit A

 

 

EXHIBIT B

DEFINITIONS AND CERTAIN TERMS

A. DEFINITIONS.

(1) Application/Commitment: Collectively, the “Application” to PPM Finance, Inc. for
the Loan dated July 16, 2010, and the acceptance thereof as a commitment dated August 6, 2010.

(2) Borrower: NetREIT, Inc., a Maryland corporation, which has its principal place of
business at 1282 Pacific Oaks Place, Escondido, California 92029.

(3) Environmental Report: The report dated August 3, 2010, prepared by AEI
Environmental & Engineering Services, covering the environmental condition of the Project.

(4) Improvements:   The following improvements located on the Land: a four story
office building consisting of 57,644 net rentable square feet on 2.43 acres with 195 parking
spaces.

(5) Indemnitor: NONE.

(6) Loan; Note: A mortgage Loan from Lender to Borrower evidenced by that note from
Borrower payable to the order of Lender in the original principal amount of FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00).

(10) Mortgage Correspondent: As of the Loan Opening Date, the Mortgage Correspondent
is Northmarq Capital and their address is: 3500 American Blvd. W. Suite 500, Bloomington, Minnesota
55431. Lender retains the right to change the Mortgage Correspondent at any time during the term
of the Loan. Borrower hereby acknowledges that Lender may utilize Mortgage Correspondent or other
outside third parties selected by Lender in any aspects of the Loan, including but not limited to,
the servicing, administration and monitoring of the Loan. For purposes of this Agreement, where it
is referenced that information will be provided to “Mortgage Correspondent and Lender”, unless
designated otherwise by Lender, the information shall be provided to Mortgage Correspondent, who
will provide the same to Lender. Lender may, at any time, request that the information be provided
to both Mortgage Correspondent and Lender or to another third party in place of Mortgage
Correspondent.

(11) Notice Addresses:

	 	 	 	 	 
	 

	 	If to Borrower:	 	NetREIT, Inc.
	 

	 	 	 	1282 Pacific Oaks Place
	 

	 	 	 	Escondido, California 92029
	 

	 	 	 	Attn.: Kathryn Richman, General Counsel
	 
	 	 	 	 

Loan Agreement — Exhibit B

 

 

 

	 	 	 	 	 
	 

	 	with a copy to:
	 	NetREIT, Inc.
	 

	 	 	 	1282 Pacific Oaks Place
	 

	 	 	 	Escondido, California 92029
	 

	 	 	 	Attn.: Jack Heilbron, CEO and President
	 
	 	 	 	 
	 

	 	If to Lender:
	 	Jackson National Life Insurance Company
	 

	 	 	 	c/o PPM Finance, Inc.
	 

	 	 	 	225 West Wacker Drive, Suite 1200
	 

	 	 	 	Chicago, Illinois 60606
	 

	 	 	 	Attn.: Vice President, Loan Servicing
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Jackson National Life Insurance Company
	 

	 	 	 	c/o PPM Finance, Inc.
	 

	 	 	 	225 West Wacker Drive, Suite 1200
	 

	 	 	 	Chicago, Illinois 60606
	 

	 	 	 	Attn.: Vice President, Settlements & Administration

(12) Operation of Project: The Project shall be operated in a first-class manner as
an office building.

(13) Project: The Land together with the Improvements and any and all other
buildings, structures and improvements located or to be located thereon and all rights, privileges,
easements, hereditaments and appurtenances, thereunto relating or appertaining, including parking
for at least 256 vehicles, but in any event parking in compliance with any applicable zoning
ordinance and tenant leases, and all personal property, fixtures and equipment required or used (or
to be used) for the operation thereof.

(14) Title Insurer: Chicago Title Company, or such other title insurance company
licensed in the State of California, as may be approved by Lender in connection with the Loan.

B. CERTAIN TERMS. In the event of any inconsistencies between the terms and
conditions of this Section B of Exhibit B and the other provisions of this
Agreement, the terms and conditions of this Section B shall control and be binding.

(1) Conditional Waiver of Reserves. Lender conditionally waives the provisions of
this Agreement, which require the monthly deposit in escrow of funds for insurance premiums as
described in the Loan Documents; provided, however, Lender reserves the right, at its sole
election, to again invoke the provisions of the Loan Documents relating to the escrow of insurance
premiums at any time during the term of the loan and to enforce the payment of such escrow upon
giving the Borrower at least thirty (30) days advance written notice in the event of the following:

(a) Borrower’s failure to pay any taxes, assessments, insurance premiums or
ground rent when due;

(b) An Event of Default occurring under the terms of this Agreement or any
other Loan Document;

Loan Agreement — Exhibit B

 

2

 

(c) Monthly installment payments of principal and/or interest payable with
respect to the loan have not been paid when due three (3) or more times in a
twelve-month period;

(d) Borrower’s failure to provide evidence to Lender of the payment of
insurance premiums within thirty (30) days after the date such payment is due;

(e) If the required insurance coverage outlined in Section 3.3 of this
Agreement lapses or should not be in place at any time;

(f) The sale, conveyance, transfer or other vesting of any direct or indirect
interest in Borrower with or without Lender’s consent.

This waiver of reserves is personal to Borrower (and to any transferee or successor for which
there is no prohibition nor Lender consent requirement as set forth in Section 6.2 of this
Agreement) and is not assignable nor transferable.

(2) Leasing Guidelines. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, COPIES OF ALL
LEASES, NEW LEASES, LEASE AMENDMENTS OR MODIFICATIONS, LEASE EXTENSIONS, LEASE ASSIGNMENTS AND
RENEWALS MUST BE FORWARDED TO LENDER IMMEDIATELY UPON EXECUTION THROUGHOUT THE TERM OF THE LOAN.
Lender shall have the right to review and approve the execution, renewal, modification, settling or
termination or any other proposed action (“Leasing Action”) relating to any space currently
occupied by a Key Lease. “Key Lease” shall mean the following leases: Agilent
Tecnhnologies; Panasonic Corporation; Department of Consumer Affairs; Wachovia Dealer Services; and
Republic Indemnity of America. Any Leasing Action related to a space not occupied by a Key Lease
will not require Lender’s written consent if the following conditions are met with respect to such
proposed Leasing Action, Lender’s consent shall not be required to such Leasing Action:

(a) The tenant under the Lease to which the proposed Leasing Action relates
leases (and would lease after the consummation of the proposed Leasing Action), in
the aggregate, 2,884 or less square feet of space at the Project;

(b) The term (including the base term and all optional or mandatory extension
terms that do not adjust rent under the applicable lease to a market rate at the
time of the applicable extension) of the lease subject to the proposed Leasing
Action is (and would be after consummation of the proposed Leasing Action) ten years
or less;

(c) The net effective rental rate payable under the lease to which the proposed
Leasing Action relates, taking into account all economic terms of the applicable
lease including, without limitation, free rent or other concessions, tenant
improvements that exceed market or building standards, operating expense and tax
reimbursements, and improvement allowances, is (and would be after the consummation
of the applicable Leasing Action) greater than or equal to $1.95 per net rentable
square foot per month;

Loan Agreement — Exhibit B

 

3

 

(d) The lease shall contain a base year expense stop;

(e) The lease to which the proposed Leasing Action relates, together with all
documentation related to the proposed Leasing Action, is in the same form as a
standard form of lease for the Borrower approved by Lender in writing as such
“standard form of lease” without any material deviations or alterations therefrom
(to facilitate Lender’s review of Leasing Actions, Borrower shall submit a
black-lined lease showing any alteration or deletion to the proposed lease from the
“standard form of lease”);

(f) The lease to which the applicable Leasing Action relates, together with all
documentation related to the proposed Leasing Action, does not contain any
obligation of any Borrower with respect to property other than the Project subject
to the applicable Leasing Action, including, without limitation, any rental space
takeover, any take back provisions, any option to lease additional space which would
cause the occupied square footage to exceed the limits of item (a) above, nor any
rights or options of the applicable tenant to purchase all or any portion of the
Project subject to the applicable Leasing Action or any interest therein. No lease
shall (i) contain any representations, warranties or indemnifications by the
landlord with respect to hazardous substances or asbestos, (ii) permit prepayment of
rent more than one month in advance;

(g) The proposed Leasing Action is the result of an arm’s length negotiation
and transaction with a tenant that is not affiliated with any Borrower; and

(h) No Default or Event of Default under the Loan Documents is continuing on
the date any Borrower takes the applicable Leasing Action.

Borrower will provide copies of all documentation for any Leasing Action not requiring Lender
approval within ten (10) business days of the occurrence of such Leasing Action. Lender will
require executed Estoppel Certificates and Subordination, Non-Disturbance and Attornment Agreements
on Lender’s standard form when Leasing Actions occur. For a Leasing Action which does not meet
the above criteria, Lender approval of the Leasing Action is required. Lender will be deemed to
have consented to any Leasing Action if it does not notify Borrower that it is withholding its
consent within ten (10) business days of its receipt of (a) notification of the proposed Leasing
action and (b) all materials reasonably requested to permit Lender to review the proposed leasing
action.

(3) Repairs. With respect to the disbursement of the proceeds of the Loan (the
“Disbursement”), Borrower has advised Lender that, prior to the Disbursement, Borrower will
be unable to complete the repair and/or satisfy the property condition objection matters set forth
on Exhibit F attached hereto and incorporate herein by reference (such matters singularly
and collectively referred to as the “Immediate Repair Items”). Lender has agreed to enter
into the Loan and to make the Disbursement notwithstanding the existence of the Immediate Repair
Items, based solely upon Borrower’s representation, warranty, covenant and agreement that the
Immediate Repair Items shall be repaired, remediated or otherwise satisfied on or before ninety
(90) days following the date of this Agreement. Accordingly, Borrower represents, warrants,
covenants and agrees with Lender that the Immediate Repair Items shall be repaired, remediated or
otherwise satisfied on or before ninety (90) days following the date of this Agreement and the
failure to perform the same shall, in Lender’s sole discretion, constitute an Event of Default.

Loan Agreement — Exhibit B

 

4

 

EXHIBIT C

PERSONAL PROPERTY AND INVENTORY

[The schedule of Personal Property and Inventory follows this cover page.]

Loan Agreement — Exhibit C

 

 

 

EXHIBIT D

RENT ROLL

[The Rent Roll follows this cover page.]

Loan Agreement — Exhibit D

 

 

 

EXHIBIT E

PPM FINANCE, INC. PROPERTY AND LIABILITY INSURANCE REQUIREMENTS 
FOR JACKSON NATIONAL LIFE INSURANCE COMPANY revised July 2010

PPM Finance, Inc. (“PPM”) is an affiliate of and authorized agent for Jackson National Life
Insurance Company (“Mortgagee” and/or “Lender”), and as such has established the following
insurance requirements to be complied with during the lifetime of the loan.

REQUIREMENTS OF ALL POLICIES:

Insureds: The Borrower’s full name (per loan documents) must be either the Named Insured
or Additional Insured on all policies. If a third party or tenant provides coverage, the Borrower
must be endorsed as Additional Insured on all policies required herein. If a third party or tenant
provides coverage, the Lender must be endorsed as Mortgagee and Loss Payee on all property policies
required herein and Additional Insured on the general liability policy.

Additional Interests: Lender must be designated as Mortgagee and Loss Payee on building,
business income, business personal property, and boiler and machinery/equipment breakdown coverage
forms; and Additional Insured on the general liability policy. The Additional Interest and
Certificate Holder wording should read:

Jackson National Life Insurance Company,

its successors, assigns, and/or affiliates

as their interests may appear (atima is acceptable)

c/o correspondent/servicer’s address.

Evidence of Insurance: Acceptable evidence of insurance can include any of the
following at closing and renewal:

	 
	Property

	 	•	 	A Copy of the Policy

	 	•	 	Acord 28

	 	•	 	Acord 27 Showing the following Coverages, Limits, Deductibles, and Forms:

	 	•	 	Building

	 	•	 	Rents

	 	•	 	Equipment Breakdown/Boiler & Machinery

	 	•	 	Ordinance and Law Coverage A

	 	•	 	Agreed Amount/Waiver of Coinsurance

	 	•	 	Replacement Cost Valuation

	 	•	 	Special/All Risk Cause of Loss

	 	•	 	Earthquake, Flood, and Wind (Waiver Required for < 100% Replacement
Value) PPM does not recognize PML as a viable alternative to full replacement
value for Wind

	 	•	 	Terrorism

Loan Agreement — Exhibit E

 

 

 

	 	•	 	Proprietary Carrier Forms identifying the prescribed Coverages, Limits, Deductibles, and
Forms

	 	•	 	If the policy is a first time issue, we will accept a Binder of Insurance that lists all
required coverages, limits and deductibles, pending issue of the policy

	 	•	 	If either the borrower or a tenant is permitted to “self insure”; a document
acknowledging the intent to self insure must be received annually

Policy Copies or Endorsements: A Copy of the Policy for single entity properties must be
received within 60 days of closing or renewal.

For multiple location polices with more than one lender; PPM will accept copies of the
endorsements naming Jackson as Mortgagee and Loss Payee. The endorsements must be received within
60 days of closing or renewal.

Liability — Acceptable evidence of insurance can include any of the following at closing
and renewal:

	 	•	 	A Copy of the Policy

	 	•	 	Acord 25 Showing the Coverages, Limits, Deductibles/SIR, and Forms

	 	•	 	Proprietary Carrier forms referencing the required information

	 	•	 	If either the borrower or a tenant is permitted to “self insure” a document
acknowledging their intent to self insure must be received annually

	 	•	 	A copy of the general liability endorsement naming Jackson as Additional Insured must be
received within 60 days of closing or renewal

Both the Evidence of Property Insurance and Certificate of Liability must reference the Collateral
Property Address(s) and Borrowing Entity.

Notice of Cancellation: All policies and certificates shall contain a provision requiring
the insurance company to provide at least 30 days (10 days for non-payment of premium) written
notice cancellation or changes to the policy to Lender c/o correspondent that affect the Lender’s
interest in accordance with policy provisions or as required by law.

Evidence of Property Insurance wording stating cancellation notice “will be delivered in accordance
with the policy provisions” will also be accepted as compliant.

Acceptable Carriers: All insurance carriers participating on all layers evidencing the
required coverage must carry an AM Best Financial Strength Rating (FSR) of A- and a Financial Size
Category (FSC) of IX during the entire life of the loan. Carriers not rated by AM Best must be
approved on an individual basis. Carriers must be licensed to conduct business in the state where
the property is located.

Risk Retention Groups (RRG’s) and Risk Purchasing Groups (RPG’s) will not be accepted unless
approved in writing by PPM. All insured locations on the policy must have some common ownership to
a single Borrower, Sponsor, or Parent.

Loan Agreement — Exhibit E

 

 

 

PROPERTY INSURANCE REQUIREMENTS:

Building and Personal Property / Business Income / Boiler & Machinery/Equipment Breakdown
Coverage: Building and business personal property coverage must be written on an “All Risk” or
“Special Causes of Loss” form (as defined by the insurance contracts) on a Replacement Cost
valuation basis. Coverage is to include Wind and Hail and Ordinance or Law (Coverage A to be a
minimum of 50% of the building amount for a single building property or 50% of the highest valued
collateral building in multiple location properties). If the property has multiple buildings and
is written on a Blanket Basis, the policy must not contain a Margin Clause; an Occurrence
Limit of Liability Endorsement; or any other form wording designed to dilute or delete the benefit
of Blanket Coverage.

Boiler and Machinery/Equipment Breakdown coverage is to include property damage, business income,
extra expense and hazardous substance. If the Building and Boiler and Machinery/Equipment
Breakdown coverages are provided by separate policies, a Joint Loss Agreement Endorsement should be
obtained on each policy.

A Seismic Report is required on all properties located in Seismic Zone 3 or 4 as designated in the
1997 edition of the Uniform Building Code. Earthquake insurance is required on properties that
exceed the tolerance levels established by the Jackson National Life Insurance Company Seismic
Report Guidelines (usually > 20%).

The building and business personal property coverage limits must be for the full
Replacement Cost of the property unless waived in writing by PPM. This requirement includes Wind,
and when required, Flood. The policy must contain an Agreed Amount Endorsement or Waiver of
Coinsurance Clause. Blanket policies should not contain a Margin Clause. The Agreed Amount
Endorsement must identify the insured property by its street address and include Business Income.

Property in Flood Zones A and V and/or all zones in the 100 year flood zone plain as determined by
FEMA must obtain flood coverage through the National Flood Insurance Program (NFIP). Excess Flood
coverage will be required if the NFIP limits fall below full Replacement Cost of the
building.

Business Income Coverage is required for the loss of gross rental income and other gross income for
an amount not less than 12 months rental income or on an Actual Loss Sustained form of coverage.
Coverage must provide a period of restoration of not less than 12 months. If the tenant insures
the building under a triple net lease and the lease contains a Rent Abatement Clause, the
Borrower must carry Business Income Coverage independently from any coverage the tenant may
provide.

The Borrower may use multiple policies to satisfy the requirements stated above as long as each
carrier used is rated A- IX or better by AM Best and the insurance program as a whole satisfies all
the requirements herein. No gaps of coverage between policy layers are acceptable.

Loan Agreement — Exhibit E

 

 

 

Vacant Property: When a property is vacant for 60 consecutive days or more, PPM is
to receive a Vacancy Permit (ISO form CP 04 05 or a form containing equivalent language) issued by
the property insurance carriers on each location when the vacancy rate is greater than 69% of the
total net rentable square footage.

If any buildings are constructed, added, or significantly altered by 10% or more of the property
value and/or affect any part of the rents, a Builder’s Risk Insurance Policy is required on a
completed value form in an amount equal to 100% of hard costs. There must be delayed income
insurance covering not less than 12 months anticipated loss of gross income. All builder’s risk
coverage terms and conditions are subject to PPM approval. Once the project has been completed,
the property in its entirety must comply with all the PPM insurance requirements stated herein.

Acceptable maximum per occurrence Deductibles are the following:

	 	 	 
	Property

	 	$25,000 per occurrence
	 
	 	 
	Boiler & Machinery/Equipment Breakdown

	 	$25,000 per occurrence
	 
	 	 
	Business Income

	 	72 hour (3 day) waiting period
	 
	 	 
	Named Windstorm

	 	% of insured value — Negotiable per Loan Basis
	 
	 	 
	Earthquake

	 	% of insured value — Negotiable per Loan Basis
	 
	 	 
	Flood

	 	$5,000 NFIP Policies; Excess Flood — % of insured value — Negotiable per
Loan Basis

LIABILITY INSURANCE REQUIREMENTS:

General Liability: A General Liability Policy 
must  be written on an Occurrence form.
 Contractual Liability covering “Insured Contracts” must be included. If the Borrower sells or
serves liquor, the Certificate of Liability Insurance must evidence Dram Shop or Liquor Liability.

Loan Agreement — Exhibit E

 

 

 

Minimum Acceptable Primary limits:

	 	 	 
	Bodily Injury and Property Damage

	 	$1,000,000 per occurrence
	 

	 	$2,000,000 in the aggregate
	Personal and Advertising Injury

	 	$1,000,000 per occurrence and in the aggregate

No deductible is acceptable on the General Liability policy.

Professional Liability: Healthcare Professional Liability with a minimum $1,000,000 per
occurrence limit must be carried by all facilities providing “Assisted Living, Extended Stay,
Rehabilitation, or Medical” services or treatments for their residents.

Owned/Non-Owned Automobile Liability: Coverage must be provided when Borrower has
employees and or owned vehicles. Policy to extend to owned, hired, leased and non-owned vehicles
to include, not by way of limitation, employee’s vehicles while on company business. Required
limits:

	 	 	 
	Combined Single Limit:

	 	$1,000,000 per occurrence and in the aggregate
	or
	 	 
	Bodily Injury per person

	 	$1,000,000 per occurrence and in the aggregate
	Bodily Injury per accident

	 	$1,000,000 per occurrence and in the aggregate
	Property Damage

	 	$1,000,000 per occurrence and in the aggregate

No deductible is acceptable on the owned/non-owned automobile liability policy.

Workers’ Compensation/Employers’ Liability: Coverage must be provided when Borrower has
employees. Required limits:

	 	 	 
	Workers’ Compensation

	 	Statutory limits (State where employees are located/hired)
	Employers’ Liability

	 	$500,000 each accident
	 

	 	$500,000 disease policy limit

	 

	 	$500,000 disease each employee

No deductible is acceptable on the employers’ liability policy.

Umbrella/Excess Liability: Properties not in the Hospitality or “Assisted Living”
industries must provide Umbrella and/or Excess Liability coverage evidencing a limit of not
less than $5,000,000 per occurrence and in the aggregate with a Self-Insured Retention (SIR)
not greater than $10,000 over all required underlying liability policies. PPM reserves the right
to require higher limits from properties where liquor is sold.

Properties in the Hospitality and “Assisted Living” industries must provide Umbrella and/or
Excess Liability coverage evidencing a limit of not less than $10,000,000 per occurrence
and in the aggregate with a Self-Insured Retention (SIR) not greater than $10,000 over all required
underlying liability policies.

Loan Agreement — Exhibit E

 

 

 

Limits provided by the Umbrella/Excess Liability policies must be excess over all the policy
extensions and the required underlying liability coverages and policies, including Liquor
Liability.

Underground and/or Above Ground Fuel Storage Tanks: Properties that have fuel and/or oil
storage tanks are required to carry an insurance policy covering damage to owned property as well
as bodily injury and property damage to third parties caused by tank overflow and/or leakage or
seepage. Coverage is to include, not by way of limitation, clean up costs. A minimum limit of
$1,000,000 is required or limit as required by law which ever is greater.

Terrorism Coverage: PPM reserves the right to require Terrorism (TRIA) Coverage on any of
the coverage listed above for properties with an exposure to loss from terrorist acts as determined
by PPM criteria.

Mold, Fungus, and Lead Exposures: PPM reserves the right to require coverage for damage to
owned property as well as bodily injury and property damage to third parties caused by mold and/or
fungi and/or other environmental exposures where engineering and/or environmental reports would
indicate an exposure.

The Borrower may use multiple policies to satisfy the Liability requirements stated above as long
as each carrier used is rated A- IX  or better by AM Best and the insurance program as a whole
satisfies all the requirements herein. No gaps of coverage between policy layers are acceptable.

PPM reserves the right to modify any and all of the requirements above in accordance with standard
practices in the lending industry as these standards may change from time to time.

Loan Agreement — Exhibit E

 

 

 

EXHIBIT F

(Immediate Repair Items)

(1) Within ninety (90) days days from the date hereto, Borrower shall repair the cracks in the
stopping slab at the upper deck of parking garage with epoxy (estimated cost $5000.00), and anchor
the boiler for the HVAC system (estimated cost $500.00).

(2) Within ninety (90) days from the date hereto, Borrower shall complete, or cause to be
completed, the ADA work set forth on the attached Exhibit F-1.

 

 

EXHIBIT F-1

ADA WORK

(Follows this page)Exhibit 10.16

Exhibit 10.16

PPM Loan No. 10-03101

FIXED RATE PROMISSORY NOTE

Date: August ___, 2010

The following terms or provisions are used in this Note and are incorporated by reference herein.

Maker: NetREIT, Inc., a Maryland corporation

	 	 	 
	Maker’s Mailing Address:

	 	NetREIT, Inc.
	 

	 	1282 Pacific Oaks Place
	 

	 	Escondido, California 92029
	 

	 	Attn.: Kathryn Richman

			
	Noteholder:	 	JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan
corporation, its successors or assigns

Place for Payment: the office of Noteholder’s correspondent, Northmarq Capital at 3500 American
Blvd. W. Suite 500, Bloomington, Minnesota 55431, or at such other place as from time to time may
be designated in writing by Noteholder.

Principal Amount: Five Million Dollars ($5,000,000.00)

Interest Rate: Four and sixty-five one-hundredths percent (4.65%) per annum, as may be adjusted to
the Reset Rate (as defined in Section 9).

Prepaid Interest Period: the period commencing on the date of this Note through and including
August 31, 2010

First Monthly Payment Date: October 1, 2010

Monthly Payment: equal monthly payments of $28,219.04 each (consisting of principal and interest
based upon an amortization schedule of 25 years), as may be adjusted during the Extended Term
pursuant to the terms of Section 9 hereof

Maturity Date: September 1, 2015, as shall be extended to September 1, 2020, pursuant to the terms
of Section 9 hereof

1. Promise to Pay. FOR VALUE RECEIVED, the Maker hereby promises to pay to the order
of Noteholder, the Principal Amount (the “Loan”), with interest on the outstanding
principal balance thereof from the date hereof until Maturity Date at the Interest Rate or the
Default Rate (as applicable), both principal and interest being payable as hereinafter provided in
lawful money of the United States of America at the Place for Payment. Interest shall be
calculated and paid on the basis of a 30-day month and 360-day year, unless otherwise noted herein.

Fixed Rate Promissory Note

 

 

 

2. Payments. A payment of interest only, based on a 365-day year, on the outstanding
principal balance of this Note shall be due and payable in advance on the date hereof in an amount
equal to interest accrued during the Prepaid Interest Period. Maker agrees to pay Noteholder the
Monthly Payments commencing on the First Monthly Payment Date and continuing thereafter on the same
day of each succeeding month through and including the Maturity Date, on which date all unpaid
principal and interest, together with any other sums due under the terms of this Note, shall be due
and payable.

3. Treatment of Payments. All payments of principal, interest, late charges (as
described below), and prepayment premium (as described below), if any, due under this Note shall be
paid to Noteholder by wire transfer pursuant to Noteholder’s written wire transfer instructions or
by check of immediately available funds delivered to the place for payment set forth in the Terms
section above and in such other manner, as Noteholder may from time to time designate in writing.
If such payment is received by 2:00 p.m., eastern time, such payment will be credited to Maker’s
account as of the date on which received. If such payment is received after 2:00 p.m., eastern
time, such payment will be credited to Maker’s account on the business day next following the date
on which received. Each installment payment under this Note shall be applied first to the payment
of any cost or expense for which Maker is liable hereunder or under the other Loan Documents,
including any unpaid late charge, then to accrued interest and the remainder to the reduction of
unpaid principal. Time is of the essence as to all payments hereunder.

4. Late Charges. If any monthly installment of principal and/or interest is not paid
in full on or before the tenth day of the month in which such payment is due, then a charge for
late payment (“Late Charge”) in the amount of five percent (5%) of the amount of such
installment shall be immediately assessed and shall be immediately due and payable by Maker. The
parties hereby recognize that the Late Charge is a reasonable approximation of an actual loss
difficult to estimate. Noteholder’s failure to collect such Late Charge shall not constitute a
waiver of Noteholder’s right to require such payment of such Late Charge for past or future
defaults. The Late Charge shall be in addition to all other rights and remedies available to
Noteholder upon the occurrence of an Event of Default, as hereinafter defined.

5. Default Interest. Upon the occurrence of (a) an Event of Default or (b) the
Maturity Date, interest shall accrue hereunder at an annual rate (the “Default Rate”) equal
to the lesser of (i) eighteen percent (18%) and (ii) the maximum rate allowed by law. The Default
Rate shall accrue on the entire outstanding balance hereof, including, without limitation,
delinquent interest and any and all costs and expenses incurred by Noteholder in connection
therewith.

6. Security; Definitions.

	 	a.	 	This Note is made pursuant to a Loan Agreement of even date
herewith between Noteholder and Maker (the “Loan Agreement”) and
secured by, among other things, the Security Instrument of even date herewith
in favor of Noteholder granting a first lien on certain real property described
therein, and granting a security interest in certain personal property,
fixtures and equipment described therein.

	 
	 	b.	 	Capitalized terms not otherwise defined in the preamble or in
other provisions of this Note shall have the meanings ascribed to such terms in
the Loan Agreement.

	 
	 	c.	 	The terms and provisions of the Loan Agreement are incorporated
herein by reference (as if such terms and provisions were set forth in this
Note).

Fixed Rate Promissory Note

 

2

 

7. Event of Default. Upon the occurrence of an Event of Default, Noteholder shall
have the option of declaring the indebtedness evidenced hereby to be immediately due and payable
(the “Loan Acceleration”). After the Loan Acceleration, Noteholder shall have the option
of applying any payments received to principal or interest or any other costs due pursuant to the
terms of this Note or the other Loan Documents. Interest at the Default Rate shall continue to
accrue on any judgment Noteholder may obtain against Maker on this Note or the Security Instrument
until Noteholder acquires record title to the Project or the judgment and interest and costs have
been paid in full. Noteholder may include any applicable prepayment premium, attorney fees and
costs of suit in any complaint, judgment or assessment of damages filed or entered pursuant to this
Note and/or the Security Instrument.

8. Prepayment. Interest accruing during the calendar month of any prepayment shall be
calculated and paid on the basis of a 365-day year (and shall include the day such prepayment is
received by Lender. No prepayment of the principal balance of this Note shall be allowed until
after the Lockout Period Expiration Date. For purposes hereof, the Lockout Period Expiration Date
shall mean the date which is thirty (30) months after the First Monthly Payment Date. Prepayment
of the principal balance of this Note shall be allowed beginning with the first day of the first
month following the Lockout Period Expiration Date.

After the Lockout Period Expiration Date, prepayment is permitted in full but not in part,
upon thirty (30) days’ written notice, with payment to Noteholder of a yield maintenance premium
(“Premium”) equal to the greater of (i) one percent (1%) of the outstanding principal
balance at the time of prepayment or (ii) the present value on the date of prepayment of all future
principal and interest payments beginning with the next payment due on the month following the
pay-off date, including any balloon payments assuming payment in accordance with the repayment
terms of this Note, less the current outstanding principal balance of the Loan. The interest rate
used in calculating the present value shall be the Treasury Rate, as defined herein, divided by
twelve (12).

If more than two years remain from the payoff date to the Maturity Date, the term “Treasury
Rate,” as used herein, shall be the straight line interpolation of the current annual yield (or, if
none, the most recent previous yield) of the two Key U.S. Treasury Securities (as hereinafter
defined), which are closest to the Maturity Date (both before and after). The “Key U.S. Treasury
Securities” are the 2, 5, 10 and 30 year U.S. Treasury Securities as published by Bloomberg, at 4
p.m. central time three (3) days prior to the payoff date. By way of example and not limitation,
if 7 and 1/2 years remain until the Maturity Date at the time of prepayment, the straight line
interpolation of the Treasury Rate would be the average of the then annual current yield (or, if
none, the most recent previous yield) of the 5-year and the 10-year U.S. Treasury Securities. If
less than two years remain from the payoff date to the Maturity Date, the term “Treasury Rate” as
used herein, shall mean the Interpolated Curve Function (“ICUR”)as
calculated by Bloomberg at 4 p.m. central time three (3) days prior to the payoff date. The
ICUR interpolates the relevant shorter term U.S. Treasury Bonds or Notes to provide a current
annual yield for the remaining term.

Fixed Rate Promissory Note

 

3

 

If any of the Key U.S. Treasury Securities are no longer in use or if for any reason Bloomberg
ceases to publish such information, the Treasury Rate shall be based on the annual yields reported
in another publication of comparable reliability and institutional acceptance or other relevant
replacement of U.S. Treasury Securities as selected by Noteholder in its sole discretion.

During the Extended Term, the aforementioned prepayment schedule shall recommence and shall
apply to the Extended Term except that no Premium shall apply to a payment in full during the last
ninety (90) days of the Extended Term.

No Premium shall apply to a payment due to taking through condemnation or a casualty where
Lender applies proceeds to pay down the Loan. No involuntary partial prepayment shall suspend or
reduce any required monthly payments. If the Loan has been accelerated after an Event of Default
and Maker wishes to pay the Loan in full, the payment tendered must include either (i) the
applicable prepayment premium, if the payment is tendered after the lockout period expiration date,
or (ii) the greater of such prepayment premium or 10% of the principal amount owed on the date of
such Event of Default, if the payment is tendered prior to the lockout period expiration date.

Maker acknowledges that, in establishing the Interest Rate, Noteholder has assumed and taken
into account the fact that the loan evidenced hereby will not be prepaid (other than at the times,
and on the terms, herein provided) and that there will be no prohibited transfer of the Property or
any other event which would cause Noteholder to accelerate the Maturity Date. The provisions
hereof relating to Maker’s payment of a premium in the event of an acceleration are intended to
compensate Noteholder in the event that this assumption proves to be incorrect. Maker hereby
acknowledges that: (a) the inclusion of this waiver of prepayment rights and agreement to pay the
prepayment charge for the right to prepay this Note was separately negotiated with Noteholder; (b)
the economic value of the various elements of this waiver and agreement was discussed; (c) the
consideration given by Maker for the loan was adjusted to reflect the specific waiver and agreement
negotiated between Maker and Noteholder and contained herein; and (d) this waiver is intended to
comply with California Civil Code Section 2954.10.

NETREIT, Inc., a Maryland corporation

	 	 	 	 	 
	BY:
	 	 	 	 
	 

	 	 

Name: Kenneth W. Elsberry
	 	 
	 

	 	Its: Chief Financial Officer	 	 

9. Interest Rate Reset and Extension of Maturity Date. The Maturity Date shall be
extended from September 1, 2015, to September 1, 2020 (the “Extended Term”), as set forth in this
Section 9.

Fixed Rate Promissory Note

 

4

 

(a) Noteholder, in its sole and absolute discretion, may reset the interest rate (the “Reset
Rate”) during the Extended Term. If Noteholder so elects to implement a Reset Rate, then during
the fifty forth (54th) full month to the fifty sixth (56th) full month of the
Loan term Noteholder shall provide Maker with written notice of its intent to do a Reset Rate (the
“Rate Notice”). The Rate Notice shall set forth the new interest rate spread and index to be used
to determine the Reset Rate, each of which shall be determined by Noteholder in its sole and
absolute discretion. The final Reset Rate shall be calculated and disclosed to Maker during the
first two weeks of the fifty ninth (59th) full month of the Loan term. If Maker accepts
the Reset Rate it shall do so unconditionally and in writing not later than the last day of the
fifty ninth (59th) full month of the Loan term, and upon acceptance of the Reset Rate
the Maturity Date shall automatically be extended to September 1, 2020. Commencing on the first
day of the Extended Term, interest shall accrue at the Reset Rate and the Monthly Payment shall be
adjusted based upon the Reset Rate (using the same amortization schedule). Maker shall execute
and/or deliver such documentation as Noteholder shall require to evidence the extension, including
the change in interest rate and Monthly Payment. If Maker does not accept the Reset Rate within
the time period set forth above, Maker shall be deemed to have rejected the Reset Rate and rejected
the Extension Term and the Loan shall be due and payable on the original Maturity Date. Maker
shall deliver to Noteholder such Project information (such as current operating statements, rent
rolls, market data and financial statements) as Noteholder may require in connection with its
determination of whether to impose a Reset Rate and a failure to promptly deliver such information
upon Noteholder’s request shall constitute an Event of Default. All costs and expenses of the
extension, including any title charges and Noteholder’s reasonable attorneys fees, shall be borne
by Maker.

(b) If Noteholder does not deliver a Rate Notice to Maker as set forth in Section 9(a)
above, then the Loan shall be deemed automatically extended and the Extended Term shall
automatically take effect on the original Maturity Date.

10. Limitation on Personal Liability. The provisions of Section 9.18 of the
Loan Agreement are hereby incorporated by reference.

11. Non-Usurious Loan. It is the intent of Noteholder and Maker in this Note and the
other Loan Documents now or hereafter securing this Note to contract in strict compliance with
applicable usury law. In furtherance thereof, Noteholder and Maker stipulate and agree that none
of the terms and provisions contained in this Note, or in any other instrument executed in
connection herewith, including, the Loan Documents, shall ever be construed to create a contract to
pay for the use, forbearance or detention of money, or interest at a rate in excess of the maximum
interest rate permitted to be charged by applicable law. Neither Maker nor any guarantors,
endorsers or other parties now or hereafter becoming liable for payment of this Note shall ever be
required to pay interest on this Note at a rate in excess of the maximum interest that may be
lawfully charged under applicable law, and the provisions of this paragraph shall control over all
other provisions of this Note, the Loan Documents and any other instruments now or hereafter
executed in connection herewith which may be in apparent conflict herewith. Noteholder expressly
disavows any intention to charge or collect excessive unearned interest or finance charges in the
event the maturity of this Note is accelerated. If the maturity of this Note is accelerated for
any reason or if the principal of this Note is paid prior to the Maturity Date, and as a result
thereof the interest received for the actual period of existence of this Note exceeds the
applicable maximum lawful rate, Noteholder shall, at its option, either refund the amount of such
excess or credit the amount of

Fixed Rate Promissory Note

 

5

 

 such excess against the principal balance of this Note then  outstanding and thereby shall render inapplicable any and all penalties of any kind provided
by applicable law as a result of such excess interest. In the event that Noteholder collects
monies which are deemed to constitute interest which would increase the effective interest rate on
this Note to a rate in excess of that permitted to be charged by applicable law, all such sums
deemed to constitute interest in excess of the lawful rate shall, upon such determination, at the
option of Noteholder, be either immediately returned or credited against the principal balance of
this Note then outstanding, in which event any and all penalties of any kind under applicable law
as a result of such excess interest shall be inapplicable. By execution of this Note Maker
acknowledges that it believes this Note and all interest and fees paid in connection with the loan
represented by this Note, to be non-usurious. Maker agrees that if, at any time, Maker should
believe that this Note or the loan represented by this Note is in fact usurious, Maker will give
Noteholder notice of such condition and Maker agrees that Noteholder shall have ninety (90) days in
which to make appropriate refund or other adjustment in order to correct such condition if in fact
such condition exists. The term “applicable law” as used in this Note shall mean the laws of the
State of California or the laws of the United States, whichever allows the greater rate of
interest, as such laws now exist or may be changed or amended or come into effect in the future.

12. Noteholder’s Attorney Fees. Should the indebtedness represented by this Note or
any part thereof be collected at law or in equity or through any bankruptcy, receivership, probate
or other court proceedings or if this Note is placed in the hands of attorneys for collection after
an Event of Default, or if the lien or priority of the lien represented by the Security Instrument
or the other Loan Documents is the subject of any court proceeding, Maker and all endorsers,
guarantors and sureties of this Note jointly and severally agree to pay to Noteholder in addition
to the principal and interest due and payable hereon reasonable attorney and collection fees
including those incurred by Noteholder for any appeal.

13. Maker’s Waivers. Maker and all endorsers, guarantors and sureties of this Note
and all other persons liable or to become liable on this Note severally waive presentment for
payment, demand, notice of demand and of dishonor and nonpayment of this Note, notice of intention
to accelerate the maturity of this Note, notice of acceleration, protest and notice of protest,
diligence in collecting, and the bringing of suit against any other party, and agree to all
renewals, extensions, modifications, partial payments, releases or substitutions of security, in
whole or in part, with or without notice, before or after maturity.

14. Payment of Taxes and Fees. Maker agrees to pay the cost of any revenue, tax or
other documentary fee or stamps now or hereafter required by law to be affixed to this Note or the
Security Instrument.

Fixed Rate Promissory Note

 

6

 

15. Governing Law. This Note and the rights, duties and liabilities of the parties
hereunder and/or arising from or relating in any way to the indebtedness evidenced by this Note or
the transaction of which such indebtedness is a part shall be governed and construed for all
purposes by the law of the State of California.

16. Replacement or Bifurcation of Note. If this Note is lost or destroyed, the Maker
shall, at the Noteholder’s request, execute and return to the Noteholder a replacement promissory
note identical to this Note, provided the Noteholder delivers to the Maker an affidavit to the
foregoing effect. Upon delivery of the executed replacement Note, the Noteholder shall
indemnify the Maker from and against its actual damages suffered as a result of the existence of
two Notes evidencing the same obligation. No replacement of this Note under this Section shall
result in a novation of the Maker’s obligations under this Note. In addition, the Noteholder may
at its sole and absolute discretion require that the Maker execute and deliver two separate
promissory notes, which shall replace this Note as evidence of the Maker’s obligations. The two
replacement notes shall, taken together, evidence the exact obligations set forth in this Note.
The replacement notes shall be independently transferable. If this Note is so replaced, the
Noteholder shall return this Note to the Maker marked to evidence its cancellation. Noteholder
shall pay all costs incurred by it with respect to documenting such replacement notes. Maker
acknowledges the need to act promptly upon its receipt of the documentation evidencing any request
by Noteholder that the Note be replaced pursuant to this Section and agrees that Maker will meet
the reasonable deadlines of Noteholder provided that Maker has received the applicable documents at
least ten (10) business days prior to such deadline. Furthermore, Maker agrees to reasonably
cooperate with Noteholder to effectuate the obtainment of such title policy endorsements, or new
title evidence and other assurances and documents as Noteholder shall reasonably require.

[The remainder of this page is intentionally left blank.]

Fixed Rate Promissory Note

 

7

 

IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	NETREIT, INC., a Maryland corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	BY:	 	 	 	 
	 

	 	 	 	 

Name: Kenneth W. Elsberry
	 	 
	 

	 	 	 	Its: Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Taxpayer Identification: 33-0841255	 	 

Fixed Rate Promissory Note

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]