Loan and Security Agreement
Exhibit 10.1
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Borrowers:
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RW HOLDINGS NNN REIT, INC., a Maryland corporation (“NNN Holdings”)
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RICH UNCLES NNN LP, LLC, a Delaware limited liability company (“NNN LLC”)
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RICH UNCLES NNN OPERATING PARTNERSHIP, LP, a Delaware limited partnership (“NNN OP”)
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BRIXINVEST, LLC, a Delaware limited liability company (“BrixInvest”)
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KATANA MERGER SUB, LP, a Delaware limited partnership (“Katana”)
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MODIV, LLC, a Delaware limited liability company (“Modiv”)
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Address:
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0000 Xxxxxxx Xxxxxx, Xxxxx 000
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Xxxxx Xxxx, XX 00000
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Date:
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December 19, 2019
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THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between PACIFIC MERCANTILE BANK (“Lender”), whose address is 000 Xxxxx Xxxxx Xxxxx, 0xx Xxxxx, Xxxxx Xxxx, XX
00000, and the borrower(s) named above (jointly and severally, the “Borrower”), whose chief executive office is located at the above address (“Borrower’s Address”). The Schedule to this Agreement (the “Schedule”) shall for all purposes be deemed to
be a part of this Agreement, and the same is an integral part of this Agreement. (Definitions of certain terms used in this Agreement are set forth in Section 8 below.)
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1A.
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2019 BRIXINVEST LSA AND 2019 NNN LOAN AGREEMENT.
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1A.1 2019 BrixInvest LSA. Reference is made to that certain Loan and Security Agreement dated April 30, 2019 between
BrixInvest and Lender (as amended, the “2019 BrixInvest LSA”), which 2019 BrixInvest LSA amended, restated, replaced and superseded that certain Business Loan Agreement dated October 1, 2018 between Lender and BrixInvest, that certain Promissory Note
dated October 1, 2018 by BrixInvest in favor of Lender, and that certain Commercial Security Agreement dated October 1, 2018 between Lender and BrixInvest (collectively, the “2018 BrixInvest LSA”). Borrower represents, warrants and covenants to
Lender that (a) on or prior to December 31, 2019, BrixInvest shall contribute all of its assets and certain of its liabilities and other obligations (such contributed assets, liabilities and obligations, collectively, the “BrixInvest A&O”),
including without limitation those under and with respect to the 2019 BrixInvest LSA but excluding certain other assets with an aggregate book value not in excess of $100,000, to Modiv and Modiv shall accept and assume the BrixInvest A&O (such
contribution, acceptance and assumption, the “BrixInvest Contribution”), (b) as of the date of such BrixInvest Contribution, Modiv shall have all of the same rights, title and interest in the BrixInvest A&O as BrixInvest had immediately prior to
the BrixInvest Contribution, and shall have no liabilities or other obligations other than those BrixInvest had immediately prior to the BrixInvest Contribution, and (c) Borrower shall provide Lender with written notice and reasonable evidence of the
consummation of the BrixInvest Contribution. Borrower hereby assumes and agrees to pay and perform when due all present and future indebtedness, liabilities and obligations of BrixInvest and Modiv under, based upon, or arising out of the 2019
BrixInvest LSA and all other Loan Documents (as defined in the 2019 BrixInvest LSA), including without limitation all of the “Obligations” as defined in the 2019 BrixInvest LSA, as the same are amended hereby. This Agreement amends, restates,
replaces and supersedes, in its entirety, the 2019 BrixInvest LSA. This Agreement does not constitute a novation of the 2019 BrixInvest LSA but, rather, an amendment and continuation thereof. Without limitation on the generality of the foregoing,
Borrower and Lender acknowledge and agree that Loans that are outstanding under the 2019 BrixInvest LSA shall be deemed Nonformula Loans (as defined in Section 1 of the Schedule to this Agreement) hereunder, and subject to the terms hereof.
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1A.2 2019 NNN Loan Agreement. Reference is made to that certain Loan Agreement dated April 30,
2019 between NNN Borrower and Lender (as amended, the “2019 NNN Loan Agreement”), which 2019 NNN Loan Agreement amended, restated, replaced and superseded that certain Business Loan Agreement dated February 20, 2018 between Lender and NNN Borrower
and that certain Promissory Note dated February 20, 2018 by NNN Borrower in favor of Lender. Borrower hereby assumes and agrees to pay and perform when due all present and future indebtedness, liabilities and obligations of NNN Borrower under, based
upon, or arising out of the 2019 NNN Loan Agreement and all other Loan Documents (as defined in the 2019 NNN Loan Agreement), including without limitation all of the “Obligations” as defined in the 2019 NNN Loan Agreement, as the same are amended
hereby. This Agreement amends, restates, replaces and supersedes, in its entirety, the 2019 NNN Loan Agreement. This Agreement does not constitute a novation of the 2019 NNN Loan Agreement but, rather, an amendment and continuation thereof.
Without limitation on the generality of the foregoing, Borrower and Lender acknowledge and agree that (i) Purchase Contract Loans that are outstanding under the 2019 NNN Loan Agreement shall be deemed Purchase Contract Loans (as defined in Section 1
of the Schedule to this Agreement) hereunder, (ii) Loans other than Purchase Contract Loans that are outstanding under the 2019 NNN Loan Agreement shall be deemed Other Loans (as defined in Section 1 of the Schedule to this Agreement) hereunder, and
such Purchase Contract Loans and Other Loans shall be subject to the terms hereof.
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1.
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LOANS.
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1.1 Loans. Lender will make loans to Borrower (the “Loans”) as described, and in amounts not to exceed the limits shown (the “Credit
Limits”), on the Schedule, subject to the provisions of this Agreement and subject to deduction of such Reserves as Lender deems proper from time to time in its Good Faith Business Judgment.
1.2 Interest. All Loans and all other monetary Obligations shall bear interest at the interest rate shown on the Schedule. Accrued
interest shall be payable monthly for each month on the fifteenth (15th) day of the following month, and shall be debited to Borrower’s Deposit Account maintained with
the Lender designated by Borrower (or as selected by Lender in the absence of such a designation). Borrower shall at all times maintain sufficient funds in said Deposit Account to enable payment of all interest and other sums to be so paid to Lender
by such debit.
1.3 Overadvances. If at any time or for any reason any Loan, Loans and/or other monetary Obligations exceeds any applicable Credit Limit
(an “Overadvance”), Borrower shall immediately pay the amount of the excess to Lender, without notice or demand. Without limiting Borrower’s obligation to repay to Lender the amount of any Overadvance, Borrower agrees to pay Lender interest on the
outstanding amount of any Overadvance, on demand, at the Default Rate.
1.4 Fees. Borrower shall pay Lender the fees shown on the Schedule, which are in addition to all interest and other sums payable to Lender
and are not refundable.
1.5 Loan Requests. To obtain a Loan, Borrower shall make a request to Lender, as further described in the Schedule. Lender may rely on any
request for a Loan given by a person whom Lender believes is an Authorized Person (as set forth on the Schedule), and Borrower will indemnify Lender for any loss Lender suffers as a result of that reliance.
1.6 Conditions. The making of the first disbursement of any Loan is subject to the satisfaction
of the following conditions precedent, which Borrower agrees to satisfy within five Business Days after the date hereof: (i) all filings have been completed that are necessary or advisable to perfect the security interest of Lender in the Collateral,
including without limitation filings in the United States Copyright Office and United States Patent and Trademark Office, (ii) all documents relating to this Agreement have been executed and delivered, (iii) Lender has confirmed to its satisfaction
that there has been no Material Adverse Change since the date of the last financial statements provided to Lender prior to the date hereof, (iv) UCC and other searches deemed necessary by Lender have been completed and the results thereof are
satisfactory to Lender, (v) no Default or Event of Default has occurred and is continuing, and (vi) all other matters relating to the Loans have been completed to Lender’s satisfaction.
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2. SECURITY INTEREST. To secure the payment and performance of all of the Obligations when due, each of Modiv and
BrixInvest hereby grants to Lender a security interest in all of the following (collectively, the “Collateral”): all of its right, title and interest of in and to all of the following, whether now owned or hereafter arising or acquired and wherever
located: all Accounts; all Inventory; all Equipment; all Deposit Accounts; all General Intangibles (including without limitation all Intellectual Property); all Investment Property; all Other Property; and any and all claims, rights and interests in
any of the above, and all guaranties and security for any of the above, and all substitutions and replacements for, additions, accessions, attachments, accessories, and improvements to, and proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties) of, any and all of the above, and all its books relating to any and all of the above. BrixInvest and Modiv confirm and agree (i) to the security interest of Lender in BrixInvest’s assets
pursuant to the 2019 BrixInvest LSA and Loan Documents (as defined therein), and (ii) that the assets to be transferred from BrixInvest to Modiv pursuant to the BrixInvest Contribution shall be transferred subject to Lender’s security interests
therein and such security interests shall survive the BrixInvest Contribution and continue pursuant to this Agreement, as amended by this Agreement, securing the Obligations.
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3.
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
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In order to induce Lender to enter into this Agreement and to make Loans, Borrower represents and warrants to Lender as follows, and Borrower covenants that the following representations will continue
to be true in all material respects (except to the extent that such representation or warranty relates to a particular date), and that Borrower will at all times comply with all of the following covenants, throughout the term of this Agreement and
until all Obligations have been paid and performed in full:
3.1 Corporate Existence and Authority. Borrower is, and will continue to be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization. Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which any failure to do so would reasonably be expected to result in liability on
the part of Borrower in excess of $10,000. The execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby (i) have been duly and validly authorized, (ii) are not subject to any consents, which have
not been obtained, (iii) are enforceable against Borrower in accordance with their terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors’
rights generally), and (iv) do not violate Borrower’s articles or certificate of incorporation, or Borrower’s by-laws, or any law or any material agreement or instrument, which is binding upon Borrower or its property, and (v) do not constitute
grounds for acceleration of any indebtedness or obligations in excess of $50,000 in the aggregate, under any agreement or instrument which is binding upon Borrower or its property.
3.2 Name; Trade Names and Styles. As of the date hereof, the name of Borrower set forth in the heading to this Agreement is its correct
name. Listed in the Schedule are all prior names of Borrower and all of Borrower’s present and prior trade names, as of the date hereof. Borrower shall give Lender 30 days’ prior written notice before changing its name or doing business under any
other name. Borrower has complied, and will in the future comply, in all material respects, with all laws relating to the conduct of business under a fictitious business name.
3.3 Place of Business; Location of Collateral. As of the date hereof, the address set forth in the heading to this Agreement is Borrower’s
chief executive office. In addition, as of the date hereof, Borrower has places of business and Collateral is located only at the locations set forth in the Schedule. Borrower will give Lender at least 20 days prior written notice before opening
any additional place of business, changing its chief executive office, or moving any of the Collateral to a location other than Borrower’s Address or one of the locations set forth in the Schedule (if any), except that Borrower may maintain sales
offices in the ordinary course of business at which not more than a total of $50,000 fair market value of Equipment and Inventory is located.
3.4 Title to Collateral; Perfection; Permitted Liens.
(a) ModivBrix is now, and will at all times in the future be, the sole owner of all the Collateral, except for items of Equipment which are leased to ModivBrix, and except for non-exclusive licenses
granted by ModivBrix to its customers in the ordinary course of business. Borrower’s assets now are and will remain free and clear of any and all Liens and adverse claims, except for Permitted Liens. Lender now has, and will continue to have, a
first-priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and ModivBrix will at all times defend Lender and the Collateral against all claims of others.
(b) Borrower has set forth in the Schedule all of Borrower’s Deposit Accounts as of the date hereof, and Borrower will give Lender five Business Days advance written notice before establishing any
new Deposit Accounts and, if Modiv or BrixInvest is establishing any new Deposit Accounts other than at Lender, Modiv or BrixInvest (as applicable) will cause the institution where any such new Deposit Account is maintained to execute and deliver to
Lender a control agreement in form sufficient to perfect Lender’s security interest in the Deposit Account and otherwise satisfactory to Lender in its Good Faith Business Judgment. Nothing herein limits any requirements which may be set forth in the
Schedule as to where Deposit Accounts will be maintained.
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(c) In the event that Modiv or BrixInvest shall at any time after the date hereof have any commercial tort claims against others, which it is asserting or intends to assert, and in which the
potential recovery exceeds $100,000, Modiv or BrixInvest (as applicable) shall promptly notify Lender thereof in writing and provide Lender with such information regarding the same as Lender shall request. Such notification to Lender shall
constitute a grant of a security interest in the commercial tort claim and all proceeds thereof to Lender, and Modiv or BrixInvest shall execute and deliver all such documents and take all such actions as Lender shall request in connection therewith.
(d) None of the Collateral now is or will be affixed to any real property in such a manner, or with such intent, as to become a fixture. Borrower is not and will not become a lessee under any real
property lease pursuant to which the lessor may obtain any rights in any of the Collateral and no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair ModivBrix’s right to remove any Collateral from the leased premises.
Borrower will keep in full force and effect, and will comply with all material terms of, any lease of real property where any of the Collateral now or in the future may be located.
(e) Except as disclosed in the Schedule, neither Modiv nor BrixInvest is a party to, nor is it bound by, any license or other agreement that is important for the conduct of Borrower’s business and
that prohibits or otherwise restricts Modiv or BrixInvest from granting a security interest in Modiv’s or BrixInvest’s interest in such license or agreement or any other property of Modiv or BrixInvest important for the conduct of Borrower’s
business.
(f) Each of Modiv and BrixInvest is the sole owner of its Intellectual Property, except for non-exclusive licenses granted by it to its customers in the ordinary course of business. To the best of
Borrower’s knowledge, each of Modiv’s and BrixInvest’s Copyrights, Trademarks and Patents is valid and enforceable, and no part of Modiv’s or BrixInvest’s Intellectual Property has been judged invalid or unenforceable, in whole or in part, and no
claim has been made to Borrower that any part of Modiv’s or BrixInvest’s Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse Change.
3.5 Maintenance of Collateral. Each of Modiv and BrixInvest will maintain its Inventory in good and merchantable condition and maintain
all other tangible Collateral in good working condition (ordinary wear and tear excepted), and Borrower will not use the Collateral for any unlawful purpose. Each of Modiv and BrixInvest will immediately advise Lender in writing of any loss or
damage to its Collateral exceeding $100,000.
3.6 Books and Records. Borrower has maintained and will maintain at Borrower’s Address books and records, which are complete and accurate
in all material respects, and comprise an accounting system in accordance with GAAP.
3.7 Financial Condition, Statements and Reports. All financial statements now or in the future delivered to Lender have been, and will be,
prepared in conformity with GAAP, and now and in the future will fairly present the results of operations and financial condition of Borrower, in accordance with GAAP, at the times and for the periods therein stated (except, as applicable, for
non-compliance with FAS 123R in monthly financial statements, and, in the case of interim financial statements, for the lack of footnotes and subject to year-end adjustments). Between the last date covered by any such statement provided to Lender
and the date hereof, there has been no Material Adverse Change.
3.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed, and will timely file, all required tax returns and
reports, and Borrower has timely paid, and will timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions now or in the future owed by Borrower. Borrower may, however, defer payment of any contested taxes,
provided that Borrower (i) in good faith contests Borrower’s obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (ii) notifies Lender in writing of the commencement of, and any material development
in, the proceedings, and (iii) posts bonds or takes any other steps required to keep the contested taxes from becoming a Lien upon any of Borrower’s assets. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid, and shall continue to pay all amounts necessary to fund all present and future pension, profit sharing and deferred compensation plans in
accordance with their terms, and Borrower has not and will not withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. Borrower shall concurrently execute and deliver to Lender an IRS Form 8821, Tax Information
Authorization, and Borrower shall maintain the same in full force and effect throughout the term of this Agreement.
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3.9 Compliance with Law.
(a) Borrower has, to the best of its knowledge, complied, and will in the future comply, in all material respects, with all provisions of all foreign, federal, state and local laws and regulations
applicable to Borrower, including, but not limited to, those relating to Borrower’s ownership of real or personal property, the conduct and licensing of Borrower’s business, and all environmental matters, except where the failure to do so would not
reasonably be expected to result in liability on the part of Borrower in excess of $100,000. Borrower has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental
authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where the failure to do so would not reasonably be expected to result in liability on the part of Borrower in excess of $100,000.
(b) Borrower is not in violation and shall not violate any of the country or list based economic and trade sanctions administered and enforced by OFAC or as otherwise published from time to time.
Neither Borrower, nor to the knowledge of Borrower, any director, officer, employee, agent, affiliate or representative thereof, (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has its assets located in a Sanctioned Entity, (iii) derives
revenues from investments in, or transactions with a Sanctioned Person or a Sanctioned Entity or (iv) is owned or controlled by a Sanctioned Entity or a Sanctioned Person.
(c) Borrower is in compliance with, and will continue to comply with, all applicable Anti-Terrorism Laws. Borrower does not deal in, or otherwise engage in any transaction relating to, any property
or interests in property blocked pursuant to any OFAC Sanctions Programs. Borrower is not any of the following (each a “Blocked Person”): (i) a Person that is prohibited pursuant to any of the OFAC Sanctions Programs, including a Person named on
OFAC’s list of Specially Designated Nationals and Blocked Persons; (ii) a Person that is owned or controlled by, or that owns or controls any Person described in (i) above; or (iii) a Person with which Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law. No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any government official or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
(d) Borrower shall not (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or
for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224, (iii) engage in or conspire to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act, or any other Anti-Terrorism Law, and the Borrower shall deliver to
Lender any certification or other evidence requested from time to time by Lender in its sole discretion, confirming Borrower’s compliance with this Section, (iv) become (including by virtue of being owned or controlled by a Blocked Person), own or
control a Blocked Person or any Person that is the target of sanctions imposed by the United Nations or the European Union including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or
(v) engage in any business or activity in violation of the Trading with the Enemy Act.
3.10 Litigation. Except as otherwise described in Note 10 of Notes to Consolidated Financial Statements
of NNN Holdings’ September 30, 2018 Form 10-Q, as of the date hereof, there is no claim, suit, litigation, proceeding or investigation pending or, to Borrower’s knowledge, threatened against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) involving any claim against Borrower of more than $50,000. Borrower will promptly inform Lender in writing of any claim, proceeding, litigation or investigation in the future threatened
or instituted against Borrower involving any claim against Borrower of more than $50,000.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for Borrower’s business operations, including acquisitions of real
estate properties in the ordinary course of business and working capital. Borrower is not purchasing or carrying any “margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve System) and no part of the proceeds of
any Loan will be used to purchase or carry any “margin stock” or to extend credit to others for the purpose of purchasing or carrying any “margin stock.”
3.12 Solvency, Payment of Debts. Borrower is able to pay its debts (including trade debts) as they mature; the fair saleable value of
Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.
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4.
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ACCOUNTS.
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4.1 Accounts. All statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing ModivBrix’s Accounts are and shall be true and correct in all material respects, and all such invoices, instruments and other documents and all of Borrower’s books and records are and shall be genuine and in all
material respects what they purport to be. All sales and other transactions underlying or giving rise to each of ModivBrix’s Accounts shall comply in all material respects with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements relating to all ModivBrix’s Accounts are and shall be genuine, and all such documents, instruments and agreements are and shall be legally enforceable in accordance with their
terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors’ rights generally). After the occurrence and during the continuance of an Event of
Default, Lender may, from time to time, verify directly with the respective Account Debtors on Modiv’s and BrixInvest’s Accounts the validity, amount and other matters relating to such Accounts, by means of mail, telephone or otherwise, either in the
name of Borrower or Lender or such other name as Lender may choose, and Lender or its designee may, at any time, after the occurrence and during the continuance of an Event of Default, notify Account Debtors on Modiv’s and BrixInvest’s Accounts that
it has a security interest in such Accounts.
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5.
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ADDITIONAL DUTIES OF BORROWER.
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5.1 Financial and Other Covenants. Borrower shall at all times comply with the financial and other covenants set forth in the Schedule.
5.2 Insurance. Borrower shall at all times insure its tangible assets and carry such other business insurance, with insurers reasonably
acceptable to Lender, as is reasonable and is customary and in accordance with standard practices for Borrower’s industry and locations, and, without limiting the foregoing, as may be legally required. In addition and not in limitation of the
foregoing, ModivBrix shall at all times insure all of its tangible personal property Collateral and carry such other business insurance, with insurers reasonably acceptable to Lender, in such form and amounts as Lender may reasonably require and that
are customary and in accordance with standard practices for ModivBrix’s industry and locations. All such insurance policies insuring the Collateral shall name Lender as an additional loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Lender and shall name Lender as additional insured with regard to liability coverage. Upon receipt of the proceeds of any such insurance, Lender shall apply such proceeds in reduction of the Obligations as Lender shall
determine in its sole discretion, except that, provided no Default or Event of Default has occurred and is continuing, Lender shall release to Borrower insurance proceeds with respect to Equipment totaling less than $50,000, which shall be utilized
by Borrower for the replacement of the Equipment with respect to which the insurance proceeds were paid. Lender may require reasonable assurance that the insurance proceeds so released will be so used. If Borrower fails to provide or pay for any
insurance, Lender may, but is not obligated to, obtain the same at Borrower’s expense. Borrower shall promptly deliver to Lender copies of all material reports made to insurance companies. At Lender’s request, Borrower shall provide evidence of
such insurance to Lender.
5.3 Reports. Borrower, at its expense, shall provide Lender with the written reports set forth in the Schedule, and such other written
reports with respect to Borrower as Lender shall from time to time specify in its Good Faith Business Judgment.
5.4 Access to Assets, Books and Records. At reasonable times, and on one Business Day’s notice, Lender, or its agents, shall have the
right to inspect Borrower’s assets, and the right to audit and copy Borrower’s books and records. The foregoing inspections and audits shall be at Borrower’s expense and the charge therefor shall be Lender’s then current standard charge for the same,
plus reasonable out-of-pocket expenses (including without limitation any additional costs and expenses of outside auditors retained by Lender).
5.5 Negative Covenants. Except as may be specifically permitted in this Agreement (including the Schedule), Borrower shall not, without
Lender’s prior written consent (which shall be a matter of its Good Faith Business Judgment), do any of the following:
(i) merge or consolidate with another corporation or entity, except that during calendar year 2020 Katana may merge into NNN OP, with NNN OP being the surviving entity, with thirty days prior
written notice to Lender;
(ii) acquire any assets, except in the ordinary course of business, and except that during calendar year 2020 NNN OP may acquire all the ownership interests in or assets of Katana with thirty days
prior written notice to Lender;
(iii) enter into any other transaction outside the ordinary course of business;
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(iv) sell or transfer any assets, except for (A) the sale or transfer of either of the two Chevron real estate properties owned by Katana as of the date hereof in the ordinary course of Borrower’s
business, (B) the sale or transfer to NNN OP of all the ownership interests in or the assets of Katana with thirty days prior written notice to Lender, (C) the sale of finished Inventory in the ordinary course of Borrower’s business, (D) the sale of
obsolete Equipment in the ordinary course of business, in an amount not more than $50,000 in any fiscal year, and (E) non-exclusive licenses of Intellectual Property in the ordinary course of business;
(v) store any assets with any warehouseman or other third party, unless there is in place an agreement by such warehouseman or other third party in favor of Lender in such form as Lender shall
specify in its Good Faith Business Judgment;
(vi) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent basis;
(vii) make any loans of any money or other assets or any other Investments, other than Permitted Investments;
(viii) create, incur, assume or permit to be outstanding any Indebtedness other than Permitted Indebtedness;
(ix) guarantee or otherwise become liable with respect to the obligations of another party or entity, except for (i) guaranties or indemnities by NNN Borrower of the obligations of a Single-Purpose
Subsidiary of NNN OP to such Single-Purpose Subsidiary’s mortgage lender, or by Katana of the obligations of a Single-Purpose Subsidiary of Katana to such Single-Purpose Subsidiary’s mortgage lender; in each case limited to (a) damages or loss
suffered by such mortgage lender arising from certain customary “carve out” obligations, including without limitation, the gross negligence or fraud of such Single-Purpose Subsidiary, commission of waste, mechanics’ liens, breach of environmental
representations, warranties and covenants pertaining to hazardous substances, failure to apply rental income to the operation of the mortgaged property, failure to pay property taxes or failure to maintain required insurance, and (b) repayment of
the mortgage loan if there is an unpermitted change of ownership of any part of the real property owned by the Single-Purpose Subsidiary securing the mortgage loan or in the ownership of the Single-Purpose Subsidiary, if there is a bankruptcy of the
Single-Purpose Subsidiary, or if such mortgage lender’s right to recourse to the mortgaged property is prejudiced by NNN Borrower or Katana (as applicable), the Single-Purpose Subsidiary, or any other party liable for the mortgaged loan, and (ii)
customary environmental indemnity agreements by NNN Borrower in favor of a mortgage lender to a Single-Purpose Subsidiary of NNN OP pertaining to the mortgaged property or by Katana in favor of a mortgage lender to a Single-Purpose Subsidiary of
Katana pertaining to the mortgaged property;
(x) [intentionally omitted];
(xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Borrower’s stock or other equity securities, except that NNN Holdings may continue to make ordinary course of
business repurchases of its stock as approved by NNN Holding’s Board of Directors and consistent with its past practices provided that Lender has not given NNN Holdings notice to cease or limit such repurchases after the occurrence and during the
continuance of an Event of Default;
(xii) engage, directly or indirectly, in any business other than the businesses currently engaged in by Borrower or reasonably related thereto, or become an “investment company” within the meaning
of the Investment Company Act of 1940;
(xiii) directly or indirectly enter into, or permit to exist, any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s business,
and are on fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person; or
(xiv) reincorporate or reorganize in another state;
(xv) change its fiscal year;
(xvi) create a Subsidiary except for Single-Purpose Subsidiaries (as defined in the Schedule) created in the ordinary course of business;
(xvii) dissolve or elect to dissolve, except that NNN LLC may dissolve, with ten Business Day prior written notice to the Lender, if all of its assets are distributed to NNN Holdings; or
(xviii) agree to do any of the foregoing, unless such agreement provides that it is subject to the prior written consent of Lender.
Transactions permitted by the foregoing provisions of this Section are only permitted if no Default or Event of Default has occurred and is continuing, or would occur as a result of such transaction.
5.6 Litigation Cooperation. Should any third-party suit or proceeding be instituted by or against Lender with respect to any Collateral or
relating to Borrower, Borrower shall, without expense to Lender, make available Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Lender may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.
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5.7 Notification of Changes. Borrower will give Lender written notice of any change in its
executive officers within ten days after the date of such change.
5.8 Registration of Modiv’s and BrixInvest’s Intellectual Property Rights.
(a) Each of Modiv and BrixInvest shall promptly give Lender written notice of any applications or registrations it files or obtains with respect to Intellectual Property filed with the
United States Patent and Trademark Office or the United States Copyright Office, including the date of any such filing and the registration or application numbers, if any, and shall execute and deliver such documents and take such actions as are
reasonably necessary or advisable in Lender’s Good Faith Business Judgment to perfect or reflect of record Lender’s security interest in the same, and to file the same in the United States Patent and Trademark Office or the United States Copyright
Office, as the case may be.
(b) Borrower shall use commercially reasonable efforts to (i) protect, defend and maintain the validity and enforceability of Modiv’s and BrixInvest’s Intellectual Property that is material
to Borrower, (ii) detect infringements of any material Intellectual Property of Modiv or BrixInvest, and (iii) not allow any material Intellectual Property of Modiv or BrixInvest to be abandoned, forfeited or dedicated to the public without the
written consent of Lender, which shall not be unreasonably withheld.
(c) Lender
shall have the right, but not the obligation, to take, at Borrower’s sole expense, any actions that Borrower is required under this Section 5.8 to take but which Borrower fails to take, after fifteen days’ notice to Borrower. Borrower shall
reimburse and indemnify Lender for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this Section.
5.9 [Intentionally Omitted].
5.10 Further Assurances. Borrower agrees, at its expense, on request by Lender, to execute all documents and take all actions, as Lender,
may, in its Good Faith Business Judgment, deem necessary or useful in order to perfect and maintain Lender’s perfected first-priority security interest in the Collateral (subject only to Permitted Liens), and in order to fully consummate the
transactions contemplated by this Agreement.
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6.
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TERM.
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6.1 Maturity Date. This Agreement shall continue in effect until the maturity date set forth on the Schedule (the “Maturity Date”),
subject to Sections 6.2 and 6.3 below.
6.2 Early Termination. This Agreement may be terminated prior to the Maturity Date as follows: (i) by Borrower, effective 20 days after
written notice of termination is given to Lender; or (ii) by Lender at any time after the occurrence and during the continuance of an Event of Default, without notice, effective immediately.
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6.3 Payment of Obligations. On the Maturity Date or on any earlier effective date of termination, Borrower shall pay and perform in full
all Obligations, whether evidenced by installment notes or otherwise, and whether or not all or any part of such Obligations are otherwise then due and payable. Notwithstanding any termination of this Agreement, all of Lender’s security interests in
all of the Collateral and all of the terms and provisions of this Agreement shall continue in full force and effect until all Obligations have been paid and performed in full; provided that Lender may, in its sole discretion, refuse to make any
further Loans after termination. No termination shall in any way affect or impair any right or remedy of Lender, nor shall any such termination relieve Borrower of any Obligation to Lender, until all of the Obligations have been paid and performed
in full. Lender shall, at Borrower’s expense, release or terminate all financing statements and other filings in favor of Lender as may be required to fully terminate Lender’s security interests, provided that there are no suits, actions, proceedings
or claims pending or threatened against any Person indemnified by Borrower under this Agreement with respect to which indemnity has been or may be sought, upon Lender’s receipt of the following, in form and content reasonably satisfactory to Lender:
(i) cash payment in full of all of the Obligations and performance by Borrower of all non-monetary Obligations under this Agreement, (ii) written confirmation by Borrower that the commitment of Lender to make Loans under this Agreement has
terminated, (iii) a general release of all claims against Lender, its officers, directors, agents, attorneys and Affiliates by Borrower relating to Lender’s performance and obligations under the Loan Documents, on Lender’s standard form, and (iv) an
agreement by Borrower to indemnify Lender for any payments received by Lender that are applied to the Obligations that may subsequently be returned or otherwise not paid for any reason.
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7.
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EVENTS OF DEFAULT AND REMEDIES.
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7.1 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” under this Agreement, and
Borrower shall give Lender immediate written notice thereof:
(a) Any warranty, representation, statement, report or certificate made or delivered to Lender by Borrower or any of Borrower’s officers, employees or agents, now or in the future, shall be untrue or
misleading in a material respect when made or deemed to be made; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon or any other monetary Obligation; or
(c) the Loans and other Obligations outstanding at any time shall exceed any applicable Credit Limit; or
(d) Borrower shall fail to comply with any non-monetary Obligation (i) which by its nature cannot be cured or (ii) which by its nature can be cured but is similar to an Obligation with respect to
which Lender has given Borrower notice of failure of compliance within the preceding 12 months; or
(e) Borrower shall fail to perform any other non-monetary Obligation, and as to any such failure that can be cured, shall fail to cure such failure within 10 Business Days after Borrower receives
notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if such failure cannot by its nature be cured within the 10 Business Days period or cannot after diligent attempts by Borrower be cured within such 10 Business
Days period, and such failure is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 60 days) to attempt to cure such failure, and within such reasonable time
period the failure to have cured such failure shall not be deemed an Event of Default but no Loans will be made; or
(f) any Collateral or any material assets become subject to any Lien (other than a Permitted Lien) which is not cured within ten Business Days after the occurrence of the same; or
(g) any Collateral or any material assets are attached, seized, subjected to a writ or distress warrant, or is levied upon, and such attachment, seizure, writ or distress warrant or levy has not been
removed, discharged or rescinded within ten Business Days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim
becomes a Lien on any of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency;
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(h) any default or event of default occurs under any obligation secured by a Permitted Lien, which is not cured within any applicable cure period or waived in writing by the holder of the Permitted
Lien; or
(i) a default or event of default shall occur under any documents or agreements evidencing or relating to any Permitted Indebtedness which is not cured within any applicable cure period.
(j) Borrower breaches any material contract or obligation, which has resulted or may reasonably be expected to result in a Material Adverse Change; or
(k) a final, judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least $250,000 shall be rendered against Borrower, and the same remain unsatisfied and
unstayed for a period of 10 Business Days or more; or
(l) Dissolution, termination of existence, temporary or permanent suspension of business, insolvency or business failure of Borrower; or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the commencement of any Insolvency Proceeding by Borrower; or
(m) the commencement of any Insolvency Proceeding against Borrower or any Guarantor, which is not cured by the dismissal thereof within 45 days after the date commenced; or
(n) revocation or termination of, or limitation or denial of liability upon, or default under, any guaranty of the Obligations or any attempt to do any of the foregoing, or commencement of any
Insolvency Proceeding by any Guarantor, or death of any Guarantor; or
(o) revocation or termination of, or limitation or denial of liability upon, or default under, any pledge of any certificate of deposit, securities or other property or asset of any kind pledged by
any third party to secure any or all of the Obligations, or any attempt to do any of the foregoing, or commencement of any Insolvency Proceeding by or against any such third party; or
(p) Borrower makes any payment on account of any Subordinated Debt, other than as permitted in the applicable subordination agreement, or if any Person who has subordinated such indebtedness or
obligations terminates or in any way limits its subordination agreement; or
(q) a Change in Control shall occur; or
(r) [Intentionally Omitted]; or
(s) Borrower shall generally not pay its debts as they become due, or Borrower shall conceal, remove or transfer any part of its property, with intent to hinder, delay or defraud its creditors, or
make or suffer any transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or
(t) Any director, officer, or owner of 20% or more of the issued and outstanding common stock of Borrower is indicted for a felony offense under state or federal law and, as to a director or an
officer, such director or officer is not terminated by Borrower within thirty (30) days after Borrower has actual knowledge of such indictment, or Borrower hires an officer or has a director who has been convicted of any such felony offense, or a
Person becomes an owner of at least 20% of the issued and outstanding common stock of Borrower who has been convicted of any such felony offense; or
(u) a Material Adverse Change shall occur.
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Lender may cease making any Loans hereunder during any of the above cure periods, and thereafter if an Event of Default has occurred and is continuing.
7.2 Remedies. Upon the occurrence and during the continuance of any Event of Default, and at any time thereafter, Lender, at its option,
and without notice or demand of any kind (all of which are hereby expressly waived by Borrower), may do any one or more of the following: (a) Cease making Loans or otherwise extending credit to Borrower under this Agreement or any other Loan
Document; (b) Accelerate and declare all or any part of the Obligations to be immediately due, payable, and performable, notwithstanding any deferred or installment payments allowed by any instrument evidencing or relating to any Obligation (except
that all Obligations shall be automatically accelerated and due and payable upon the commencement of any Insolvency Proceeding by Borrower or any Event of Default under Section 7.1(m)); (c) Take possession of any or all of the Collateral wherever it
may be found, and for that purpose Borrower hereby authorizes Lender without judicial process to enter onto any of Borrower’s premises without interference to search for, take possession of, keep, store, or remove any of the Collateral, and remain on
the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge for so long as Lender deems it necessary, in its Good Faith Business Judgment, in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Lender seek to take possession of any of the Collateral by court process, Borrower hereby irrevocably waives: (i) any bond and any surety or security relating thereto required by any
statute, court rule or otherwise as an incident to such possession; (ii) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (iii) any requirement that Lender retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require Borrower to assemble any or all of the Collateral and make it available to Lender at places designated by Lender which are reasonably convenient to Lender and Borrower,
and to remove the Collateral to such locations as Lender may deem advisable; (e) Complete the processing, manufacturing or repair of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Lender shall have
the right to use Borrower’s premises, vehicles, hoists, lifts, cranes, and other Equipment and all other property without charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its condition at the time Lender obtains possession of
it or after further manufacturing, processing or repair, at one or more public and/or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Lender shall have the right to conduct such disposition on Borrower’s premises without charge, for such time or times as Lender deems reasonable, or on Lender’s premises, or elsewhere and the Collateral
need not be located at the place of disposition. Lender may directly or through any Affiliate purchase or lease any Collateral at any such public disposition, and if permissible under applicable law, at any private disposition. Any sale or other
disposition of Collateral shall not relieve Borrower of any liability Borrower may have if any Collateral is defective as to title or physical condition or otherwise at the time of sale; (g) demand payment of, and collect any Accounts and General
Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably authorizes Lender to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents, to take possession of and open mail addressed to
Borrower and remove therefrom payments made with respect to any item of the Collateral or proceeds thereof, and, in Lender’s Good Faith Business Judgment, to grant extensions of time to pay, compromise claims and settle Accounts and the like for less
than face value; (h) demand and receive possession of any of Borrower’s federal and state income tax returns and the books and records utilized in the preparation thereof or referring thereto; and (i) set off any of the Obligations against any
general, special or other Deposit Accounts of Borrower maintained with Lender. All reasonable attorneys’ fees, expenses, costs, liabilities and obligations incurred by Lender with respect to the foregoing shall be added to and become part of the
Obligations, shall be due on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. Without limiting any of Lender’s rights and remedies, from and after the occurrence and during the
continuance of any Event of Default, the interest rate applicable to the Obligations shall be increased by an additional six percent per annum (the “Default Rate”).
7.3 Standards for Determining Commercial Reasonableness. Borrower and Lender agree that a sale or other disposition (collectively, “Sale”)
of any Collateral which complies with the following standards will conclusively be deemed to be commercially reasonable: (i) notice of the Sale is given to Modiv or BrixInvest (as applicable) at least ten days prior to the Sale, and, in the case of
a public Sale, notice of the Sale is published at least five days before the date of the Sale in a newspaper of general circulation in the county where the Sale is to be conducted; (ii) notice of the Sale describes the Collateral in general,
non-specific terms; (iii) the Sale is conducted at a place designated by Lender, with or without the Collateral being present; (iv) the Sale commences at any time between 8:00 a.m. and 6:00 p.m; (v) payment of the purchase price in cash or by
cashier’s check or wire transfer is required; (vi) with respect to any Sale of any of the Collateral, Lender may (but is not obligated to) direct any prospective purchaser to ascertain directly from Modiv or BrixInvest (as applicable) any and all
information concerning the same. Lender shall be free to employ other methods of noticing and selling the Collateral, in its discretion, if they are commercially reasonable.
7.4 Investment Property. If an Event of Default has occurred and is continuing, Modiv and BrixInvest shall hold all payments on, and
proceeds of, and distributions with respect to, Investment Property in trust for Lender, and shall deliver all such payments, proceeds and distributions to Lender, immediately upon receipt, in their original form, duly endorsed, to be applied to the
Obligations in such order as Lender shall determine. Borrower recognizes that Lender may be unable to make a public sale of any or all of the Investment Property, by reason of prohibitions contained in applicable securities laws or otherwise, and
expressly agrees that a private sale to a restricted group of purchasers for investment and not with a view to any distribution thereof shall be considered a commercially reasonable sale thereof.
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7.5 Power of Attorney. Upon the occurrence and during the continuance of any Event of Default, without limiting Lender’s other rights and
remedies, Borrower grants to Lender an irrevocable power of attorney coupled with an interest, authorizing and permitting Lender (acting through any of its employees, attorneys or agents) at any time, at its option, but without obligation, with or
without notice to Borrower, and at Borrower’s expense, to do any or all of the following, in Borrower’s name or otherwise, but Lender agrees that if it exercises any right hereunder, it will do so in good faith and in a commercially reasonable
manner: (a) execute on behalf of Modiv or BrixInvest any documents that Lender may, in its Good Faith Business Judgment, deem advisable in order to perfect and maintain Lender’s security interest in the Collateral, or in order to exercise a right of
Modiv, BrixInvest or Lender, or in order to fully consummate all the transactions contemplated under this Agreement, and all other Loan Documents; (b) execute on behalf of Modiv or BrixInvest, any invoices relating to any Account thereof, any draft
against any Account Debtor thereof and any notice to any Account Debtor thereof, any proof of claim in bankruptcy, any Notice of Lien, claim of mechanic’s, materialman’s or other Lien, or assignment or satisfaction of mechanic’s, materialman’s or
other Lien; (c) take control in any manner of any cash or non-cash items of payment or proceeds of Collateral; endorse the name of Modiv or BrixInvest upon any instruments, or documents, evidence of payment or Collateral thereof that may come into
Lender’s possession; (d) endorse on behalf of Modiv or BrixInvest all checks and other forms of remittances thereof received by Lender; (e) pay, contest or settle any Lien and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; (f) grant on behalf of Modiv or BrixInvest extensions of time to pay, compromise claims and settle Accounts and General Intangibles thereof for less than face value and execute
all releases and other documents in connection therewith; (g) pay any sums required on account of Borrower’s taxes or to secure the release of any Liens therefor, or both; (h) settle and adjust, and give releases of, any insurance claim that relates
to any of the Collateral and obtain payment therefor; (i) instruct any third party having custody or control of any books or records belonging to, or relating to, Borrower to give Lender the same rights of access and other rights with respect thereto
as Lender has under this Agreement; and (j) take any action or pay any sum required of Borrower pursuant to this Agreement and any other Loan Documents; (k) enter into a short-form intellectual property security agreement with respect to Modiv’s or
BrixInvest’s Intellectual Property consistent with the terms of this Agreement for recording purposes only or modify, in its sole discretion, any intellectual property security agreement entered into between Modiv and Lender or BrixInvest and Lender
without first obtaining Borrower’s approval of or signature to such modification by amending exhibits thereto, as appropriate, to include reference to any right, title or interest in any Copyrights, Patents or Trademarks acquired by Modiv or
BrixInvest (as applicable) after the execution hereof or to delete any reference to any right, title or interest in any Copyrights, Patents or Trademarks in which Modiv or BrixInvest (as applicable) no longer has or claims to have any right, title or
interest; and (l) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Lender may exercise such power of attorney to sign the name of Modiv or BrixInvest on
any of the documents described in clauses (k) and (l) above, regardless of whether an Event of Default has occurred. Any and all reasonable sums paid and any and all reasonable costs, expenses, liabilities, obligations and attorneys’ fees incurred
by Lender with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. In no event shall
Lender’s rights under the foregoing power of attorney or any of Lender’s other rights under this Agreement be deemed to indicate that Lender is in control of the business, management or properties of Borrower.
7.6 Application of Proceeds. All proceeds realized as the result of any Sale of the Collateral shall be applied by Lender first to the
reasonable costs, expenses, liabilities, obligations and attorneys’ fees incurred by Lender in the exercise of its rights under this Agreement, second to the interest due upon any of the Obligations, and third to the principal of the Obligations, in
such order as Lender shall determine in its sole discretion. Any surplus shall be paid to applicable Borrower or other persons legally entitled thereto; Borrower shall remain liable to Lender for any deficiency. If, Lender, in its Good Faith
Business Judgment, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any Sale of Collateral, Lender shall have the option, exercisable at any time, in its Good Faith Business Judgment, of either
reducing the Obligations by the principal amount of purchase price or deferring the reduction of the Obligations until the actual receipt by Lender of the cash therefor.
7.7 Remedies Cumulative. In addition to the rights and remedies set forth in this Agreement, Lender shall have all the other rights and
remedies accorded a creditor, secured party or other contracting party (as applicable) under the Uniform Commercial Code and under all other applicable laws, and under any other instrument or agreement now or in the future entered into between Lender
and Borrower, and all of such rights and remedies are cumulative and none is exclusive. Exercise or partial exercise by Lender of one or more of its rights or remedies shall not be deemed an election, nor bar Lender from subsequent exercise or
partial exercise of any other rights or remedies. The failure or delay of Lender to exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.
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8.
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DEFINITIONS.
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As used in this Agreement, the following terms have the following meanings:
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“Account Debtor” means the obligor on an Account.
“Accounts” means all present and future “accounts” as defined in the Uniform Commercial Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes
without limitation all accounts receivable and other sums owing to Borrower.
“Affiliate” means, with respect to any Person, a relative, partner, shareholder, director, officer, or employee of such Person, or any parent or subsidiary of such Person, or any Person
controlling, controlled by or under common control with such Person.
“this Agreement”, “the Loan Agreement” and “this Loan Agreement” mean collectively to this Loan and Security Agreement and the Schedule and all exhibits and schedules thereto, as
the same may be modified, amended or restated from time to time by a written agreement signed by Borrower and Lender.
“Anti-Terrorism Laws” means (i) the Money Laundering Control Act of 1986 (i.e., 18 U.S.C. §§ 1956 and 1957), (ii) the Bank Secrecy Act, as amended by the USA PATRIOT Act, (iii) the laws,
regulations and Executive Orders administered by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), (iv) the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 and implementing
regulations by the United States Department of the Treasury, (v) the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), (vi) any law enacted in the United States, Canada or any other jurisdiction in which any Borrower or any
of its Subsidiaries operate prohibiting or directed against terrorist activities or the financing of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), (vii) the foreign asset control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto, or (viii) any similar laws relating to terrorism or money laundering enacted in the United States, Canada or any other jurisdictions in which
Borrower or any of its Subsidiaries operate, as any of the foregoing laws may from time to time be amended, renewed, extended, or replaced and all other legal requirements of any Governmental Authority governing, addressing, relating to, or
attempting to eliminate, terrorist acts and acts of war and any regulations promulgated pursuant thereto.
“Business Day” means a day on which Lender is open for business other than Saturday, Sunday or Federal holiday.
“Change in Control” means: (i) NNN Holdings shall cease to own, beneficially and of record, 100% of the ownership interests of NNN LLC, without the prior written consent of Lender; or (ii) NNN Holdings and NNN LLC shall cease to own, beneficially and of record, a combined 100% of the ownership interests of NNN OP, less not more than 21% owned by Daisho
and its members, without the prior written consent of Lender; or (iii) NNN Holdings and NNN LLC shall cease to own, beneficially and of record, a combined 100% of the ownership interests of Katana, without the prior written consent of Lender, except
that Katana may merge into NNN OP in accordance with Section 5.5(i); or (iv) NNN OP shall cease to own, beneficially and of record, 100% of the ownership interests of Modiv, without the prior written consent of Lender; or (v) a transaction other than
a bona fide equity financing or series of financings on terms and from investors reasonably acceptable to Lender in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock (or equivalent ownership interests, e.g., membership units) then outstanding of
Borrower ordinarily entitled to vote in the election of the management of Borrower (e.g., the Board of Directors, as applicable), empowering such “person” or “group” to elect a majority of the management of Borrower (e.g., the Board of Directors, as
applicable), who did not have such power before such transaction.
“Code” means the Uniform Commercial Code as adopted and in effect in the State of California from time to time.
“Collateral” has the meaning set forth in Section 2 above.
“Compliance Certificates” has the meaning set forth in Section 6 of the Schedule.
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“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter
of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided,
however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined
amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however,
that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.
“continuing” and “during the continuance of” when used with reference to a Default or Event of Default means that the Default or Event of Default has occurred and has not been either
waived in writing by Lender or cured within any applicable cure period.
“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published
or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.
“Daisho” means Daisho OP Holdings, LLC, a Delaware limited liability company.
“Default” means any event which with notice or passage of time or both, would constitute an Event of Default.
“Default Rate” has the meaning set forth in Section 7.2 above.
“Deposit Accounts” means all present and future “deposit accounts” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes
without limitation all general and special bank accounts, demand accounts, checking accounts, savings accounts and certificates of deposit.
“Equipment” means all present and future “equipment” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.
“Event of Default” means any of the events set forth in Section 7.1 of this Agreement.
“GAAP” means generally accepted accounting principles consistently applied, as in effect from time to time in the United States.
“General Intangibles” means all present and future “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all Intellectual Property, payment intangibles, royalties, contract rights, goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income tax refunds,
security and other deposits, options to purchase or sell real or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights to payment of any kind.
“Good Faith Business Judgment” means Lender’s business judgment, exercised honestly and in good faith and not arbitrarily.
“Guarantor” means any Person who has guaranteed, or in the future guarantees, any of the Obligations.
“including” means including (but not limited to).
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“Indebtedness” means (a) all indebtedness created, assumed or incurred in any manner by Borrower representing money borrowed (including by the issuance of debt securities, notes,
bonds debentures or similar instruments), (b) all indebtedness for the deferred purchase price of property or services, (c) the Obligations, (d) obligations and liabilities of any Person secured by a Lien or claim on property owned by Borrower, even
though Borrower has not assumed or become liable therefor, (e) obligations and liabilities created or arising under any capital lease or conditional sales contract or other title retention agreement with respect to property used or acquired by
Borrower, even though the rights and remedies of the lessor, seller or lender are limited to repossession or otherwise limited; (f) all obligations of Borrower on or with respect to letters of credit, bankers’ acceptances and other similar extensions
of credit whether or not representing obligations for borrowed money; and (g) the amount of any Contingent Obligations.
“Intellectual Property” means all right, title, and interest in and to the following: Copyrights, Trademarks and Patents; any and all trade secrets, and any and all intellectual property rights
in computer software and computer software products now or hereafter existing, created, acquired or held; any and all design rights which may be available now or hereafter existing, created, acquired or held; any and all claims for damages by way of
past, present and future infringement of any of the rights included above, with the right, but not the obligation, to xxx for and collect such damages for said use or infringement of the intellectual property rights identified above; all licenses or
other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use; and all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.
“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other state, federal
or other bankruptcy or insolvency law, now or hereafter in effect, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization,
arrangement, readjustment of debt, dissolution or liquidation, or other relief.
“Inventory” means all present and future “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody or possession or in transit,
and including any returned goods and any documents of title representing any of the above.
“Investment” means any beneficial ownership interest in any Person (including stock, securities, partnership interest, limited liability company interest, or other interests), and any loan,
advance or capital contribution to any Person, including the creation or capital contribution to a wholly-owned or partially-owned subsidiary)
“Investment Property” means all present and future investment property, securities, stocks, bonds, debentures, debt securities, partnership interests, limited liability company interests,
options, security entitlements, securities accounts, commodity contracts, commodity accounts, and all financial assets held in any securities account or otherwise, and all options and warrants to purchase any of the foregoing, wherever located, and
all other securities of every kind, whether certificated or uncertificated.
“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.
“Loan Documents” means, collectively, this Agreement and all other present and future documents, instruments and agreements between Lender and Borrower, including, but not limited to those
relating to this Agreement, and all amendments and modifications thereto and replacements therefor.
“Material Adverse Change” means a material adverse effect on (i) the operations, business, prospects or financial condition of Borrower, (ii) the ability of Borrower to repay the Obligations or
otherwise perform its obligations under the Loan Documents, or (iii) Borrower’s interest in, the value of, or the perfection or priority of Lender’s security interest in, the Borrower’s assets.
“ModivBrix” means, (i) prior to the BrixInvest Contribution, BrixInvest, and (ii) after the BrixInvest Contribution, Modiv.
“NNN Borrower” means, jointly and severally, NNN Holdings, NNN LLC and NNN OP.
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“Obligations” means all present and future Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties and indebtedness at any time owing by Borrower to Lender, whether
arising under this Agreement, or any note or other instrument or document, or otherwise, whether arising from an extension of credit, opening of a letter of credit, banker’s acceptance, loan, guaranty, indemnification or otherwise, whether direct or
indirect (including, without limitation, those acquired by assignment and any participation by Lender in Borrower’s debts owing to others, and any interest and other obligations that accrue after the commencement of an Insolvency Proceeding),
absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses, fees, attorney’s fees, expert witness fees, audit fees, letter of credit fees, collateral monitoring fees, closing fees, facility fees,
termination fees, minimum interest charges and any other sums chargeable to Borrower under this Agreement or under any other Loan Documents.
“Other Property” means the following as defined in the Code in effect on the date hereof with such additions to such term as may hereafter be made, and all rights relating thereto: all present
and future “commercial tort claims” (including without limitation any commercial tort claims identified in the Schedule), “documents”, “instruments”, “promissory notes”, “chattel paper”, “letters of credit”, “letter-of-credit rights”, “fixtures”,
“farm products” and “money”; and all other goods and personal property of every kind, tangible and intangible, whether or not governed by the Code.
“Overadvance” is defined in Section 1.3.
“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.
“Payment” means all checks, wire transfers and other items of payment received by Lender (including proceeds of Accounts and payment of the Obligations in full) for credit to Borrower’s
outstanding Loans.
“Permitted Indebtedness” means:
(i) the Obligations;
(ii) Subordinated Debt;
(iii) Indebtedness existing on the date hereof in a total principal amount not in excess of $4,800,000;
(iv) trade payables incurred in the ordinary course of business;
(v) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;
(vi) capitalized leases and purchase money Indebtedness secured by Permitted Liens in an aggregate amount not exceeding $250,000 at any time outstanding, provided the amount of such capitalized
leases and purchase money Indebtedness do not exceed, at the time they were incurred, the lesser of the cost or fair market value of the property so leased or financed with such Indebtedness;
(vii) extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness in clauses (iii) through (vi) above, provided that the principal amount thereof is
not increased and the terms thereof are not modified to impose more burdensome terms upon Borrower.
“Permitted Investments” means:
(i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of
acquisition thereof, commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Xxxxx’x Investors Service, Lender’s
certificates of deposit maturing no more than one year from the date of investment therein, and Lender’s money market accounts; Investments in regular deposit or checking accounts held with Lender or subject to a control agreement in favor of Lender;
(ii) Investments of a Borrower in another Borrower;
(iii) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and
other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business; and
(iv) ownership interests of NNN OP in Single-Purpose Subsidiaries (as defined in the Schedule) obtained in the ordinary course of business; ownership interests of Katana in Single-Purpose
Subsidiaries (as defined in the Schedule) obtained in the ordinary course of business, and in two real estate properties acquired as a consequence of the merger of Rich Uncles REIT I into Katana; and ownership interests of Modiv in Rich Uncles NNN
REIT Operator LLC, Brix Student Housing Operator LLC, and Single-Purpose Subsidiaries (as defined in the Schedule) obtained in the ordinary course of business during 2020 for purposes of the expansion of Modiv’s advisory services or for tax purposes.
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“Permitted Liens” means the following:
(i) purchase money security interests in specific items of Equipment;
(ii) leases of specific items of Equipment;
(iii) Liens for taxes not yet payable;
(iv) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default;
(v) security interests being terminated substantially concurrently with this Agreement;
(vi) Liens incurred on deposits made in the ordinary course of business in connection with workers compensation, unemployment insurance, social security and other like laws or to secure the
performance of statutory obligations, in an aggregate amount not exceeding $50,000 at any time;
(vii) Liens of mechanics, materialmen, workers, repairmen, fillers and common carriers arising by operation of law for amounts that are not yet due and payable or which are being contested in good
faith by Borrower by appropriate proceedings, in an aggregate amount not exceeding $25,000 at any time; and
(viii) deposits or pledges of cash to secure leases arising in the ordinary course of business, in an aggregate amount not exceeding $140,000 at any time.
“Person” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, government, or any
agency or political division thereof, or any other entity.
“Prime Rate” means the variable rate of interest per annum, shown as the “prime rate” or “bank prime rate”, as published in the Wall Street Journal.
If for any reason the Wall Street Journal does not publish a “prime rate” or “bank prime rate”, then the “Prime Rate” shall be such rate as Lender shall select in its Good Faith Business Judgment from time
to time, which is reasonably comparable to the “prime rate” or “bank prime rate”, as published in the Wall Street Journal.
“REIT Portfolio Debt Default” means any default or event of default under any documents or agreements evidencing or relating to any Indebtedness for borrowed money owed by any Subsidiary of NNN
OP or any Subsidiary of Katana.
“Reserves” means, as of any date of determination, such amounts as Lender may from time to time establish and revise in its Good Faith Business Judgment, reducing the amount of Loans, and other
financial accommodations which would otherwise be available to Borrower under the lending formulas provided in the Schedule: (a) to reflect events, conditions, contingencies or risks which, as determined by Lender in its Good Faith Business
Judgment, do or may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Modiv or BrixInvest Accounts), (ii) the assets, business
or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Lender in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect Lender’s good faith belief that any Collateral,
asset or financial information furnished by or on behalf of Borrower or any Guarantor to Lender is or may have been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of facts which Lender determines in good
faith constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.
“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its
government, or (d) a Person resident in or determined to be resident in a country, in each case, that is subject to a country sanctions program administered and enforced by OFAC.
“Sanctioned Person” means a Person named on the OFAC-maintained list of “Specially Designated Nationals” (as defined by OFAC).
“Subordinated Debt” means unsecured Indebtedness which is on terms acceptable to Lender in its Good Faith Business Judgment, and which is subordinated to the Obligations pursuant to a
Subordination Agreement in such form as Lender shall specify in its Good Faith Business Judgment.
“Subsidiary” means, with respect to any Person, a Person of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by such Person or
one or more Affiliates of such Person.
“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the
business connected with and symbolized by such trademarks.
“Trigger Event” has the meaning set forth in Section 8 of the Schedule hereto.
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“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been,
or shall hereafter be, renewed, extended, amended or replaced.
“Xxxxx Guarantors” means, collectively, Guarantors Xxxxxxx X. Xxxxx and the Xxxxx Family Trust dated July 5, 1985, as amended August 15, 2006 and April 22, 2016.
Other Terms. All accounting terms used in this Agreement, unless otherwise indicated, shall have the meanings given to such terms in accordance with GAAP, consistently applied. All other
terms contained in this Agreement, unless otherwise indicated, shall have the meanings provided by the Code, to the extent such terms are defined therein.
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9.
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GENERAL PROVISIONS.
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9.1 Application of Payments. All payments with respect to the Obligations may be applied, and in Lender’s Good Faith Business Judgment
reversed and re-applied, to the Obligations, in such order and manner as Lender shall determine in its Good Faith Business Judgment. Lender shall not be required to credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Lender in its Good Faith Business Judgment, and Lender may charge Borrower’s loan account for the amount of any item of payment which is returned to Lender unpaid. In computing interest on the Obligations, all Payments will be
deemed received when received in immediately available funds, and if such immediately available funds are received after 1:00 PM Pacific Time on any day, they shall be deemed received on the next Business Day.
9.2 Increased Costs and Reduced Return. If Lender shall have determined that the adoption or
implementation of, or any change in, any law, rule, treaty or regulation, or any policy, guideline or directive of, or any change in, the interpretation or administration thereof by, any court, central bank or other administrative or governmental
authority, or compliance by Lender with any directive of, or guideline from, any central bank or other Governmental Authority or the introduction of, or change in, any accounting principles applicable to Lender (whether or not having the force of
law) shall (i) subject the Lender to any tax, duty or other charge with respect to this Agreement or any Loan made hereunder, or change the basis of taxation of payments to Lender of any amounts payable hereunder (except for taxes on the overall net
income of Lender), (ii) impose, modify or deem applicable any reserve, special deposit or similar requirement against any Loan, or against assets of or held by, or deposits with or for the account of, or credit extended by, Lender, or (iii) impose on
Lender any other condition regarding this Agreement or any Loan, and the result of any event referred to in clauses (i), (ii) or (iii) above shall be to increase the cost to Lender of making any Loan, or agreeing to make any Loan or to reduce any
amount received or receivable by Lender, then, upon demand by Lender, the Borrower shall pay to Lender such additional amounts as will compensate the Lender for such increased costs or reductions in amount. All amounts payable under this Section
shall bear interest from the date of demand by the Lender until payment in full to the Lender at the highest interest rate applicable to the Obligations. A certificate of the Lender claiming compensation under this Section, specifying the event
herein above described and the nature of such event shall be submitted by the Lender to the Borrower, setting forth the additional amount due and an explanation of the calculation thereof, and the Lender’s reasons for invoking the provisions of this
Section, and the same shall be final and conclusive absent manifest error.
9.3 Charges to Accounts. Lender may, in its discretion, require that Borrower pay monetary Obligations in cash to Lender, or charge them
to Borrower’s Loan account (in which event they will bear interest at the same rate applicable to the Loans), or any of Borrower’s Deposit Accounts maintained with Lender.
9.4 Monthly Accountings. Lender may provide Borrower monthly with an account of advances, charges, expenses and payments made pursuant to
this Agreement. Such account shall be deemed correct, accurate and binding on Borrower and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by Lender), unless Borrower notifies Lender in
writing to the contrary within 60 days after such account is rendered, describing the nature of any alleged errors or omissions.
9.5 Notices. All notices to be given under this Agreement shall be in writing and shall be given either personally or by reputable private
delivery service (including commercial overnight courier such as FedEx, GSO or UPS) or by Express Mail or by United States certified mail return receipt requested, addressed (i) to Borrower at the address shown in the heading to this Agreement, or
(ii) to Lender at the address shown in the heading to this Agreement, or (iii) for either party at any other address designated in writing by one party to the other party. All notices shall be deemed to have been given upon delivery in the case of
notices personally delivered, or at the expiration of one Business Day following delivery to the overnight private delivery service, or two Business Days following the deposit thereof in the Express Mail or United States certified mail, with postage
prepaid.
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9.6 Severability. Should any provision of this Agreement be held by any court of competent jurisdiction to be void or unenforceable, such
defect shall not affect the remainder of this Agreement, which shall continue in full force and effect.
9.7 Integration. This Agreement and such other written agreements, documents and instruments as may be executed in connection herewith are
the final, entire and complete agreement between Borrower and Lender and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not set forth in this Agreement or in other written agreements signed by the parties in connection herewith.
9.8 Waivers; Indemnity. The failure of Lender at any time or times to require Borrower to strictly comply with any of the provisions of
this Agreement or any other Loan Document shall not waive or diminish any right of Lender later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent,
and whether or not similar. None of the provisions of this Agreement or any other Loan Document shall be deemed to have been waived by any act or knowledge of Lender or its agents or employees, but only by a specific written waiver signed by an
authorized officer of Lender and delivered to Borrower. Borrower waives the benefit of all statutes of limitations relating to any of the Obligations or this Agreement or any other Loan Document, and Borrower waives demand, protest, notice of
protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, General Intangible, document or guaranty at any time held by Lender on
which Borrower is or may in any way be liable, and notice of any action taken by Lender, unless expressly required by this Agreement. Borrower hereby agrees to indemnify Lender and its affiliates, subsidiaries, parent, directors, officers, employees,
agents, and attorneys, and to hold them harmless from and against any and all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, costs and expenses (including reasonable attorneys’ fees), of every kind, which they
may sustain or incur based upon or arising out of any of the Obligations, or any relationship or agreement between Lender and Borrower, or any other matter, relating to Borrower or the Obligations; provided that this indemnity shall not extend to
damages proximately caused by the indemnitee’s own gross negligence or willful misconduct. Notwithstanding any provision in this Agreement to the contrary, the indemnity agreement set forth in this Section shall survive any termination of this
Agreement and shall for all purposes continue in full force and effect.
9.9 Liability. NEITHER LENDER NOR ANY OF ITS AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR ATTORNEYS SHALL BE LIABLE
FOR ANY CLAIMS, DEMANDS, LOSSES OR DAMAGES, OF ANY KIND WHATSOEVER, MADE, CLAIMED, INCURRED OR SUFFERED BY BORROWER OR ANY OTHER PARTY THROUGH THE ORDINARY NEGLIGENCE OF LENDER, OR ITS PARENT OR ANY OF ITS AFFILIATES, SUBSIDIARIES, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR ATTORNEYS, BUT NOTHING HEREIN SHALL RELIEVE LENDER FROM LIABILITY FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. NEITHER LENDER NOR ANY OF ITS AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
ATTORNEYS SHALL BE RESPONSIBLE OR LIABLE TO BORROWER OR TO ANY OTHER PARTY FOR ANY INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES OR LOST PROFITS WHICH MAY BE ALLEGED AS A RESULT OF ANY FINANCIAL ACCOMMODATION HAVING BEEN EXTENDED, SUSPENDED
OR TERMINATED UNDER THIS AGREEMENT OR AS A RESULT OF ANY OTHER ACT, OMISSION OR TRANSACTION.
9.10 Amendment. The terms and provisions of this Agreement may not be waived or amended, except in a writing executed by Borrower and a
duly authorized officer of Lender.
9.11 Time of Essence. Time is of the essence in the performance by Borrower of each and every obligation under this Agreement.
9.12 Attorneys Fees and Costs. Borrower shall reimburse Lender for all reasonable attorneys’ and consultant’s fees (including without
limitation those of Lender’s outside counsel and in-house counsel, and whether incurred before, during or after an Insolvency Proceeding), and all filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by
Lender, pursuant to, or in connection with, or relating to this Agreement (whether or not a lawsuit is filed), including, but not limited to, any reasonable attorneys’ fees and costs Lender incurs in order to do the following: prepare and negotiate
this Agreement and all present and future documents relating to this Agreement; obtain legal advice in connection with this Agreement or Borrower; enforce, or seek to enforce, any of its rights; prosecute actions against, or defend actions by,
Account Debtors; commence, intervene in, or defend any action or proceeding; initiate any complaint to be relieved of any automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim, third-party claim, or other claim; examine,
audit, copy, and inspect any of Borrower’s assets or any of Borrower’s books and records; protect, obtain possession of, lease, dispose of, or otherwise enforce Lender’s security interest in, the Collateral; and otherwise represent Lender in any
litigation relating to Borrower. If either Lender or Borrower files any lawsuit against the other predicated on a breach of this Agreement, the prevailing party in such action shall be entitled to recover its reasonable costs and attorneys’ fees,
including (but not limited to) reasonable attorneys’ fees and costs incurred in the enforcement of, execution upon or defense of any order, decree, award or judgment from the non-prevailing party. All attorneys’ fees and costs to which Lender may be
entitled pursuant to this Paragraph shall immediately become part of Borrower’s Obligations, shall be due on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations.
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9.13 Benefit of Agreement. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors,
assigns, heirs, beneficiaries and representatives of Borrower and Lender; provided, however, that Borrower may not assign or transfer any of its rights under this Agreement without the prior written consent of Lender, and any prohibited assignment
shall be void. No consent by Lender to any assignment shall release Borrower from its liability for the Obligations.
9.14 Joint and Several Liability. If Borrower consists of more than one Person, their liability shall be joint and several, and the
compromise of any claim with, or the release of, any Borrower shall not constitute a compromise with, or a release of, any other Borrower.
9.15 Limitation of Actions. Any claim or cause of action by Borrower against Lender, its
directors, officers, employees, agents, accountants or attorneys, based upon, arising from, or relating to this Loan Agreement, or any other Loan Document, or any other transaction contemplated hereby or thereby or relating hereto or thereto, or any
other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done by Lender, its directors, officers, employees, agents, accountants or attorneys, shall be barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint within one year after the first act, occurrence or omission upon which such claim or cause of action, or any part thereof, is based, and the service of a summons and
complaint on an officer of Lender, or on any other person authorized to accept service on behalf of Lender, within thirty (30) days thereafter. Borrower agrees that such one-year period is a reasonable and sufficient time for Borrower to investigate
and act upon any such claim or cause of action. The one-year period provided herein shall not be waived, tolled, or extended except by the written consent of Lender in its sole discretion. This provision shall survive any termination of this Loan
Agreement or any other Loan Document.
9.16 Section Headings; Construction; Signing. Section headings are only used in this Agreement for convenience. Borrower and Lender
acknowledge that the headings may not describe completely the subject matter of the applicable section, and the headings shall not be used in any manner to construe, limit, define or interpret any term or provision of this Agreement. This Agreement
has been fully reviewed and negotiated between the parties and no uncertainty or ambiguity in any term or provision of this Agreement shall be construed strictly against Lender or Borrower under any rule of construction or otherwise. This Agreement
may be executed and delivered by exchanging original signed counterparts, or signed counterparts by facsimile, pdf or other electronic means, or a combination of the foregoing, and this Agreement shall be fully effective if so executed and delivered.
9.17 Public Announcement. Borrower hereby agrees that Lender may make a public announcement of
the transactions contemplated by this Agreement, and may publicize the same in marketing materials, newspapers and other publications, and otherwise, and in connection therewith may use the Borrower’s name, tradenames and logos.
9.18 Confidentiality. Lender agrees to use the same degree of care that it exercises with respect
to its own proprietary information, to maintain the confidentiality of any and all proprietary, trade secret or confidential information provided to or received by Lender from the Borrower, which indicates that it is confidential or would reasonably
be understood to be confidential, including business plans and forecasts, non-public financial information, confidential or secret processes, formulae, devices and contractual information, customer lists, and employee relation matters, provided that
Lender may disclose such information to its officers, directors, employees, attorneys, accountants, affiliates, participants, prospective participants, assignees and prospective assignees, and such other Persons to whom Lender shall at any time be
required to make such disclosure in accordance with applicable law, and provided, that the foregoing provisions shall not apply to disclosures made by Lender in its Good Faith Business Judgment in connection with the enforcement of its rights or
remedies after an Event of Default. The confidentiality agreement in this Section supersedes any prior confidentiality agreement of Lender relating to Borrower.
9.19 PATRIOT Act Notice. Lender hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to
obtain, verify and record information that identifies Borrower and each of its Subsidiaries, which information includes the names and addresses of each Borrower and each of its Subsidiaries and other information that will allow it to identify
Borrower and each of its Subsidiaries in accordance with the USA PATRIOT Act.
9.20 Governing Law; Jurisdiction; Venue. This Agreement and all acts, transactions, disputes and controversies arising hereunder or
relating hereto, and all rights and obligations of the parties shall be governed by, and construed in accordance with, the internal laws (and not the conflict of laws rules) of the State of California. All disputes, controversies, claims, actions and
other proceedings involving, directly or indirectly, any matter in any way arising out of, related to, or connected with, this Agreement or the relationship between Borrower and Lender, and any and all other claims of Borrower against Lender of any
kind, shall be brought only in a court located in Orange County, California, and each party consents to the jurisdiction of an such court and the referee referred to in Section 9.21 below, and waives any and all rights the party may have to object to
the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding, including, without limitation, any objection to venue or request for change in venue based on the doctrine of forum
non conveniens; provided that, notwithstanding the foregoing, nothing herein shall limit the right of Lender to bring proceedings against Borrower in the courts of any other jurisdiction. Borrower consents to service of process in any action
or proceeding brought against it by Lender, by personal delivery, or by mail addressed as set forth in this Agreement or by any other method permitted by law.
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9.21 Dispute Resolution. Any controversy, dispute or claim between the parties based upon, arising out of, or in any way relating to: (i)
this Agreement or any supplement or amendment thereto; or (ii) any other present or future instrument or agreement between the parties hereto; or (iii) any breach, conduct, acts or omissions of any of the parties hereto or any of their respective
directors, officers, employees, agents, attorneys or any other person affiliated with or representing any of the parties hereto; in each of the foregoing cases, whether sounding in contract or tort or otherwise (a “Dispute”) shall be resolved
exclusively by judicial reference in accordance with Sections 638 et seq. of the California Code of Civil Procedure (“CCP”) and Rules 3.900 et seq. of the California Rules of Court (“CRC”), subject to the following terms and conditions. (All
references in this section to provisions of the CCP and/or CRC shall be deemed to include any and all successor provisions.)
(a) The reference shall be a consensual general reference pursuant to CCP Sections 638 and 644(a). Unless the parties otherwise agree in writing, the reference shall be to a single referee.
The referee shall be a retired Judge of the Los Angeles County or Orange County Superior Court (“Superior Court”) or a retired Justice of the California Court of Appeal or California Supreme Court. Nothing in this section shall be construed to limit
the right of Lender, pending or after the appointment of the referee, to seek and obtain provisional relief from the Superior Court or such referee, or any other court in a jurisdiction in which any collateral is located or having jurisdiction over
any collateral, including without limitation, writ of attachment, writ of possession, appointment of a receiver, temporary restraining order and/or preliminary injunction, or other “provisional remedy” (as such term is defined in CCP Section 1281.8).
(b) Within fifteen (15) days after a party gives written notice in accordance with this Agreement to all other parties to a Dispute that the Dispute exists, all parties to the Dispute shall
attempt to agree on the individual to be appointed as referee. If the parties are unable to agree on the individual to be appointed as referee, the referee shall be appointed, upon noticed motion or ex parte application by any party, by the Superior
Court in accordance with CCP Section 640, subject to all rights of the parties to challenge or object to the appointment, including without limitation the right to peremptory challenge under CCP Section 170.6. If the referee (or any successor
referee) appointed by the Superior Court is unable, or at any time becomes unable, to serve as referee in the Dispute, the Superior Court shall appoint a new referee as agreed to by the parties or, if the parties cannot agree, in accordance with CCP
Section 640, which new referee shall then have the same powers, and be subject to the same terms and conditions, as the predecessor referee.
(c) Venue for all proceedings before the referee, and for any Superior Court proceeding for the appointment of the referee, shall be exclusively within the County of Orange, State of
California. The referee shall have the exclusive power to determine whether a Dispute is subject to judicial reference pursuant to this section. Trial, and all proceedings and hearings on dispositive motions, conducted before the referee shall be
conducted in the presence of, and shall be transcribed by, a court reporter, unless otherwise agreed in writing by all parties to the proceeding. The referee shall issue a written statement of decision, which shall be subject to objections of the
parties pursuant to CRC Rule 3.1590 as if the statement of decision were issued by the Superior Court. The referee’s powers include, in addition to those set forth in CCP Sections 638, et seq., and CRC Rules 3.900 et seq., (i) the power to grant
provisional relief, including without limitation, writ of attachment, writ of possession, appointment of a receiver, temporary restraining order and/or preliminary injunction, or other “provisional remedy” (as such term is defined in CCP Section
1281.8), and (ii) the power to hear and resolve all post-trial matters in connection with the Dispute that would otherwise be determined by the Superior Court, including without limitation motions for new trial, reconsideration, to vacate judgment,
to stay execution or enforcement, to tax costs, and/or for attorneys’ fees. The parties shall, subject to the referee’s power to award costs to the prevailing party, bear equally the costs of the reference proceeding, including without limitation the
fees and costs of the referee and the court reporter.
(d) The parties acknowledge and agree that (i) the referee alone shall determine all issues of fact and/or law in the Dispute, without a jury (subject, however, to the right of a party,
pending or after the appointment of the referee, to seek and obtain provisional relief from the Superior Court or such referee, including without limitation, writ of attachment, writ of possession, appointment of a receiver, temporary restraining
order and/or preliminary injunction, or other “provisional remedy” (as such term is defined in CCP Section 1281.8)), (ii) the referee does not have the power to empanel a jury, (iii) the Superior Court shall enter judgment on the decision of the
referee pursuant to CCP Section 644(a) as if the decision were issued by the Superior Court, (iv) the decision of the referee shall not be subject to review by the Superior Court, and (v) the decision of the referee, once entered as a judgment by the
Superior Court, shall be binding, final and conclusive, shall have the full force and effect of a judgment of the Superior Court, and shall be subject to appeal to the same extent as a judgment of the Superior Court.
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Pacific Mercantile Bank
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Loan and Security Agreement
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9.22 Multiple Borrowers; Suretyship Waivers.
(a) Borrowers’ Agent. Each Borrower hereby irrevocably appoints each other Borrower, as the agent, attorney-in-fact and legal representative of all Borrowers for all purposes, including requesting
disbursement of Loans and receiving account statements and other notices and communications to Borrowers (or any of them) from Lender. Lender may rely, and shall be fully protected in relying, on any request for a Loan, disbursement instruction,
report, information or any other notice or communication made or given by any Borrower, whether in its own name, as Borrowers’ agent, or on behalf of one or more Borrowers, and Lender shall not have any obligation to make any inquiry or request any
confirmation from or on behalf of any other Borrower as to the binding effect on it of any such request, instruction, report, information, other notice or communication, nor shall the joint and several character of Borrowers’ obligations hereunder be
affected thereby.
(b) Waivers. Each Borrower hereby waives: (i) any right to require Lender to institute suit against, or to exhaust its rights and remedies against, any other Borrower or any other person,
or to proceed against any property of any kind which secures all or any part of the Obligations, or to exercise any right of offset or other right with respect to any reserves, credits or deposit accounts held by or maintained with Lender or any
indebtedness of Lender to any other Borrower, or to exercise any other right or power, or pursue any other remedy Lender may have; (ii) any defense arising by reason of any disability or other defense of any other Borrower or any Guarantor or any
endorser, co-maker or other person, or by reason of the cessation from any cause whatsoever of any liability of any other Borrower or any Guarantor or any endorser, co-maker or other person, with respect to all or any part of the Obligations, or by
reason of any act or omission of Lender or others which directly or indirectly results in the discharge or release of any other Borrower or any Guarantor or any other person or any Obligations or any security therefor, whether by operation of law or
otherwise; (iii) any defense arising by reason of any failure of Lender to obtain, perfect, maintain or keep in force any Lien on, any property of any Borrower or any other person; (iv) any defense based upon or arising out of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any other Borrower or any Guarantor or any endorser, co-maker or other person, including without limitation any discharge of,
or bar against collecting, any of the Obligations (including without limitation any interest thereon), in or as a result of any such proceeding. Until all of the Obligations have been paid, performed, and discharged in full, nothing shall discharge
or satisfy the liability of Borrower hereunder except the full performance and payment of all of the Obligations. If any claim is ever made upon Lender for repayment or recovery of any amount or amounts received by Lender in payment of or on account
of any of the Obligations, because of any claim that any such payment constituted a preferential transfer or fraudulent conveyance, or for any other reason whatsoever, and Lender repays all or part of said amount by reason of any judgment, decree or
order of any court or administrative body having jurisdiction over Lender or any of its property, or by reason of any settlement or compromise of any such claim effected by Lender with any such claimant (including without limitation any other
Borrower), then and in any such event, Borrower agrees that any such judgment, decree, order, settlement and compromise shall be binding upon Borrower, notwithstanding any revocation or release of this Agreement or the cancellation of any note or
other instrument evidencing any of the Obligations, or any release of any of the Obligations, and the Borrower shall be and remain liable to Lender under this Agreement for the amount so repaid or recovered, to the same extent as if such amount had
never originally been received by Lender, and the provisions of this sentence shall survive, and continue in effect, notwithstanding any revocation or release of this Agreement. Each Borrower hereby expressly and unconditionally waives all rights of
subrogation, reimbursement and indemnity of every kind against any other Borrower, and all rights of recourse to any assets or property of any other Borrower, and all rights to any collateral or security held for the payment and performance of any
Obligations, including (but not limited to) any of the foregoing rights which Borrower may have under any present or future document or agreement with any other Borrower or other person, and including (but not limited to) any of the foregoing rights
which Borrower may have under any equitable doctrine of subrogation, implied contract, or unjust enrichment, or any other equitable or legal doctrine. Each Borrower further hereby waives any other rights and defenses that are or may become available
to the Borrower by reason of California Civil Code Sections 2787 to 2855 (inclusive), 2899, and 3433, as now in effect or hereafter amended, and under all other similar statutes and rules now or hereafter in effect.
(c) Consents. Each Borrower hereby consents and agrees that, without notice to or by Borrower and without affecting or impairing in any way the obligations or liability of Borrower
hereunder, Lender may, from time to time before or after revocation of this Agreement, do any one or more of the following in Lender’s sole and absolute discretion: (i) accept partial payments of, compromise or settle, renew, extend the time for the
payment, discharge, or performance of, refuse to enforce, and release all or any parties to, any or all of the Obligations; (ii) grant any other indulgence to any Borrower or any other person in respect of any or all of the Obligations or any other
matter; (iii) accept, release, waive, surrender, enforce, exchange, modify, impair, or extend the time for the performance, discharge, or payment of, any and all property of any kind securing any or all of the Obligations or any guaranty of any or
all of the Obligations, or on which Lender at any time may have a Lien, or refuse to enforce its rights or make any compromise or settlement or agreement therefor in respect of any or all of such property; (iv) substitute or add, or take any action
or omit to take any action which results in the release of, any one or more other Borrowers or any endorsers or Guarantors of all or any part of the Obligations, including, without limitation one or more parties to this Agreement, regardless of any
destruction or impairment of any right of contribution or other right of Borrower; (v) apply any sums received from any other Borrower, any Guarantor, endorser, or co-signer, or from the disposition of any collateral or security, to any indebtedness
whatsoever owing from such person or secured by such collateral or security, in such manner and order as Lender determines in its sole discretion, and regardless of whether such indebtedness is part of the Obligations, is secured, or is due and
payable. Borrower consents and agrees that Lender shall be under no obligation to marshal any assets in favor of Borrower, or against or in payment of any or all of the Obligations. Borrower further consents and agrees that Lender shall have no
duties or responsibilities whatsoever with respect to any property securing any or all of the Obligations. Without limiting the generality of the foregoing, Lender shall have no obligation to monitor, verify, audit, examine, or obtain or maintain
any insurance with respect to, any property securing any or all of the Obligations.
(d) Foreclosure of Trust Deeds. Each Borrower waives all rights and defenses that the Borrower may have because any other Borrower’s Obligations are secured by real property. This means,
among other things: (1) Lender may collect from the Borrower without first foreclosing on any real or personal property collateral pledged by the other Borrower; and (2) If Lender forecloses on any real property collateral pledged by another
Borrower: (A) The amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (B) Lender may collect from the Borrower even if
Lender, by foreclosing on the real property collateral, has destroyed any right the Borrower may have to collect from the other Borrower. This is an unconditional and irrevocable waiver of any rights and defenses the Borrower may have because any
other Borrower’s Obligations are secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure. Each Borrower waives
all rights and defenses arising out of an election of remedies by Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the Borrower’s rights of
subrogation and reimbursement against another Borrower or any other person by the operation of Section 580d of the California Code of Civil Procedure or otherwise.
(e) Independent Liability. Each Borrower hereby agrees that one or more successive or concurrent actions may be brought hereon against Borrower, in the same action in which any other
Borrower may be sued or in separate actions, as often as deemed advisable by Lender. Each Borrower is fully aware of the financial condition of each other Borrower and is executing and delivering this Agreement based solely upon its own independent
investigation of all matters pertinent hereto, and Borrower is not relying in any manner upon any representation or statement of Lender with respect thereto. Each Borrower represents and warrants that it is in a position to obtain, and each Borrower
hereby assumes full responsibility for obtaining, any additional information concerning any other Borrower’s financial condition and any other matter pertinent hereto as Borrower may desire, and Borrower is not relying upon or expecting Lender to
furnish to it any information now or hereafter in Lender’s possession concerning the same or any other matter.
(f) Subordination. All indebtedness of a Borrower now or hereafter arising held by another Borrower is subordinated to the Obligations and the Borrower holding the indebtedness shall take all
actions reasonably requested by Lender to effect, to enforce and to give notice of such subordination.
[Signatures on Next Page]
Form Version: -5.6 (11-16)
Document Version -5
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Pacific Mercantile Bank
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Loan and Security Agreement
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9.23 Mutual Waiver of Jury Trial. LENDER AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT
IT MAY BE WAIVED. EACH OF THE PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), ACTION OR INACTION OF ANY OF THEM. THESE
PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY LENDER OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. IF FOR ANY REASON THE PROVISIONS OF THIS SECTION ARE VOID, INVALID OR UNENFORCEABLE,
THE SAME SHALL NOT AFFECT ANY OTHER TERM OR PROVISION OF THIS AGREEMENT, AND ALL OTHER TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE UNAFFECTED BY THE SAME AND CONTINUE IN FULL FORCE AND EFFECT.
Borrower:
Borrower:
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By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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RICH UNCLES NNN OPERATING PARTNERSHIP, LP
By: RW HOLDINGS NNN REIT, INC., general partner
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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RICH UNCLES NNN LP, LLC
By: RW HOLDINGS NNN REIT, INC., managing member
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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KATANA MERGER SUB, LP
By: RW HOLDINGS NNN REIT, INC., general partner
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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MODIV, LLC
By: DAISHO OP HOLDINGS, LLC, its Manager
By: BRIXINVEST, LLC, its Manager
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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BRIXINVEST, LLC
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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Lender:
PACIFIC MERCANTILE BANK
By: /s/XXXX XXXXXXXXX
Name: Xxxx Xxxxxxxxx
Title: Senior Vice President
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Schedule to
Loan and Security Agreement
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Borrowers:
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RW HOLDINGS NNN REIT, INC., a Maryland corporation (“NNN Holdings”)
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RICH UNCLES NNN LP, LLC, a Delaware limited liability company (“NNN LLC”)
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RICH UNCLES NNN OPERATING PARTNERSHIP, LP, a Delaware limited partnership (“NNN OP”)
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BRIXINVEST, LLC, a Delaware limited liability company (“BrixInvest”)
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KATANA MERGER SUB, LP, a Delaware limited partnership] (“Katana”)
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MODIV, LLC, a Delaware limited liability company (“Modiv”)
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Address:
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0000 Xxxxxxx Xxxxxx, Xxxxx 000
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Xxxxx Xxxx, XX 00000
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Date:
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December 19, 2019
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This Schedule forms an integral part of the Loan and Security Agreement between PACIFIC MERCANTILE BANK and the borrower(s) named above (jointly and severally, the “Borrower”) of even date (the “Loan Agreement”).
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Pacific Mercantile Bank
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Schedule to Loan and Security Agreement
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1. CREDIT LIMITS
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(Section 1.1):
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The Loans shall consist of Purchase Contract Loans (as defined below), Nonformula Loans (as defined below) and Other Loans (as defined below), as follows. (“Loans” as used in this Loan Agreement means, collectively, the Purchase
Contract Loans, Nonformula Loans and Other Loans.)
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(a) Purchase Contract Loans Facility.
(1) Purchase Contract Loans Credit Limits. The Purchase Contract Loans shall be in an aggregate amount not to exceed the lesser of the limits described in (A) and (B) below (each, a “Credit Limit”):
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a total of $10,000,000 at any one time outstanding; or
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| (B) |
the maximum amount of Purchase Contract Loans available and allowed to be outstanding as described below.
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(2) Purchase Contract Loans Advance Rate. Subject to the terms and conditions of this Agreement, Lender shall from time to time before the Purchase Contract Loans Maturity Date make Loans to Borrower,
each such Loan in an amount of up to 70% (an “Advance Rate”) of the purchase price that the applicable Single Purpose Subsidiary (as defined below) of NNN OP is obligated to pay pursuant to an Eligible
Purchase Contract (as defined below) (each such Loan, a “Purchase Contract Loan”). There may be more than one Purchase Contract Loan outstanding at any one time, subject to the Purchase Contract Loan Credit Limits.
For purposes hereof, the following terms shall have the following meanings:
“Eligible Property” means a single-tenant, income producing commercial, office, industrial or retail real estate property located within the United States.
“Eligible Purchase Contract” means a contract for the purchase by a Single-Purpose Subsidiary of NNN OP of an Eligible Property, which contract has been fully executed by the parties thereto, is in full force and
effect, has not yet closed, and arises in the ordinary course of NNN OP’s business, which Lender, in its Good Faith Business Judgment, shall deem eligible for borrowing.
“Single-Purpose Subsidiary” means, (i) with respect to a company other than Modiv, a wholly-owned subsidiary of such company that will only own and operate one Eligible Property and engage in no other business, or
(ii) with respect to Modiv, a wholly-owned subsidiary of Modiv obtained in the ordinary course of business during 2020 for purposes of the expansion of Modiv’s advisory services or for tax purposes.
(3) Requesting Purchase Contract Loans; Repayment. An Authorized Person (as defined below) may, from time to time before the Purchase Contract Loans Maturity Date, request a Purchase Contract Loan
from Lender (in writing if required by Lender) provided that (i) Borrower has provided Lender with an executed updated Compliance Certificate, (ii) the closing of the applicable Single-Purpose Subsidiary’s purchase of the applicable Eligible
Property pursuant to the Eligible Purchase Contract to which the Purchase Contract Loan relates shall close at the time or promptly after Lender makes such Purchase Contract Loan and (iii) if Lender shall so require, Borrower has provided Lender
with the following, all in form and substance acceptable to Lender: (y) the Eligible Purchase Contract upon which the Purchase Contract Loan is to be based and (z) such other documents or information as Lender shall request in its Good Faith
Business Judgment. Borrower agrees to fully repay to Lender each Purchase Contract Loan on or before the earlier of the 90th day following the day such Purchase
Contract Loan was advanced to Borrower and the Purchase Contract Loans Maturity Date, provided that any Purchase Contract Loan made prior to the date hereof pursuant to the 2019 NNN Loan Agreement shall be repaid by Borrower to Lender on or before
March 31, 2020.
(4) Other Loans. Subject to the terms and conditions of this Agreement, Lender may from time to time in its sole discretion make Loans other than Purchase Contract Loans or Nonformula Loans to
Borrower subject to such requirements and conditions as Lender shall determine (“Other Loans”). Unless Lender shall agree in writing otherwise, (i) the amount of such Other Loans outstanding shall reduce the Purchase Contract Loans available and
allowed to be outstanding by the same amount, and (ii) Borrower shall fully repay to Lender each such Other Loan on or before the earlier of the 90th day following the
day such Loan was advanced to Borrower and the Purchase Contract Loans Maturity Date, provided that any Other Loan made prior to the date hereof pursuant to the 2019 NNN Loan Agreement shall be repaid by Borrower to Lender on or before March 31,
2020.
(5) Miscellaneous Regarding Purchase Contract Loans. Lender may, from time to time, adjust the Advance Rate, in its Good Faith Business Judgment, upon notice to NNN OP, based on changes in risk
factors or other issues or factors relating to any Eligible Purchase Contract, Eligible Property, Single-Purpose Subsidiary or Borrower; provided that the Advance Rate shall not be reduced below 65% of the purchase price that the applicable Single
Purpose Subsidiary is obligated to pay pursuant to an Eligible Purchase Contract.
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Pacific Mercantile Bank
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Schedule to Loan and Security Agreement
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(b) Nonformula Loans Facility. (Loans made pursuant to this section may be referred to as “Nonformula Loans”.)
(1) Nonformula Loans Credit Limit; Repayment. Subject to the terms and conditions of this Agreement, Lender shall from time to time make Nonformula Loans to Borrower in an amount not to exceed a total
of $2,000,000 at any one time outstanding (a “Credit Limit”). Nonformula Loans may be borrowed, repaid and reborrowed from time to time (within said Nonformula Loans Credit Limit) prior to the Nonformula
Loans Maturity Date. There may be more than one Nonformula Loan outstanding at any one time, subject to the Nonformula Loans Credit Limit. On the Nonformula Loans Maturity Date Borrower shall repay to Lender all Nonformula Loans.
(2) Requesting Loans. An Authorized Persons may, from time to time, request Nonformula Loans from Lender (in writing if required by Lender).
(3) Yearly Zero Balance Requirement. During each calendar year, Borrower shall maintain a zero ($0.00) outstanding Nonformula Loan balance for at least thirty (30) consecutive days during such year,
and Borrower shall make such payments to Lender as are necessary to meet such requirements.
(c) Authorized Persons; Miscellaneous Regarding Loans. For purposes of this Section 1 to the Schedule to Loan Agreement, “Authorized Person” shall mean any one of the following: Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx or Xxxxx Xxxxxx. In Lender’s
discretion Loans may be made separately to each Borrower based on each Borrower’s assets, liabilities and/or relationship to the Single-Purpose Subsidiaries. When Borrower requests a Loan, Borrower’s request shall be deemed to be a representation,
warranty and covenant by Borrower that all the limits, requirements and conditions to such Loan that are set forth in this Section 1 of the Schedule and in the other portions of this Schedule and in the Loan Agreement are met, complied with and
satisfied, including in the case of a Purchase Contract Loan that the purchase contract upon which the Loan is to be based is an Eligible Purchase Contract and that the amount of the requested Purchase Contract Loan does not exceed the Advance Rate
of the purchase price. With respect to each Purchase Contract Loan, Borrower agrees to cause the purchaser under the applicable Eligible Purchase Contract to remain a Single-Purpose Subsidiary of NNN OP and the owner of the applicable Eligible
Property until such Purchase Contract Loan has been repaid in full.
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2. INTEREST.
Interest
Rate (Section 1.2):
A rate equal to the Prime Rate in effect from time to time, plus the Applicable Margin (as defined below), provided that the interest rate in effect on any day shall not be less than
5.50% per annum. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. The interest rate applicable to the Obligations shall change on each date there is a change in the Prime Rate.
As used herein, “Applicable Margin” shall mean 1.00% per annum, provided that, in the event that Borrower fails to maintain its Deposit
Accounts with Lender and/or maintain ACH automated payments hereunder, the “Applicable Margin” shall, at the Lenders option, mean 1.25% per annum, for the remaining term of this Agreement.
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3. FEES (Section 1.4):
| Loan Fee: |
$2,500, payable concurrently herewith and which Borrower authorizes Lender, in its discretion, to deduct from any of Borrower’s operating accounts held with Lender.
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Pacific Mercantile Bank
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Schedule to Loan and Security Agreement
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4. MATURITY DATE
| (Section 6.1): |
The Purchase Contract Loans Maturity Date shall be October 1, 2020 (the “Purchase Contract Loans Maturity Date”).
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The Nonformula Loans Maturity Date shall be October 15, 2020 (the “Nonformula Loans Maturity Date”).
The Maturity Date shall be the later of the Purchase Contract Loans Maturity Date and the Nonformula Loans Maturity Date (the “Maturity Date”).
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5. FINANCIAL COVENANTS
| (Section 5.1): |
Borrower shall comply with each of the following covenants:
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| Debt Service Coverage Ratio: |
NNN Holdings, on a consolidated basis, shall maintain a Debt Service Coverage Ratio of not less than 1.25 to 1.00 for the 12-month periods ending as of December 31, 2019 and as of the last day of each calendar quarter thereafter.
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As used herein, “Debt Service Coverage Ratio” means for any applicable period, for NNN Holdings on a consolidated basis, (i) the result of NNN Holding’s net income before interest, taxes, depreciation and amortization
for such period, plus Net New Investor Equity for such period, plus Allowed Merger Transaction Add-Backs for such period, less cash tax expense for such period, less dividends and other distributions to stockholders, members or owners for such
period, and less repurchases by NNN Holdings of common stock for such period; divided by (ii) the sum of NNN Holding’s current portion of long-term debt (inclusive of the current portion of long-term debt of Subsidiaries of NNN OP
and of Subsidiaries of Katana, as noted in the Portfolio Status Reports (as defined in Section 6 below)), excluding (without duplication) Subordinated Debt and the $4,800,000 of Unsecured Convertible Notes Payable (the “$4,800,000 Convertible
Notes”) set forth in BrixInvest’s balance sheet as of September 30, 2019 and further described in Note 8 of notes to consolidated financial statements of BrixInvest as of September 30, 2019 (without duplication in excluding Subordinated Debt), for
such period, plus capitalized lease expense for such period, plus interest expense (inclusive of interest on long-term debt of Subsidiaries of NNN OP and of Subsidiaries of Katana, as noted in the Portfolio Status Reports (as defined in Section 6
below)), excluding (without duplication) interest expense for Subordinated Debt and the $4,800,000 Convertible Notes, for such period; calculated from NNN Holding’s 10-Q Financial Statements/10-K.
As used herein, “Net New Investor Equity” means for any applicable period, proceeds from NNN Holding’s issuance of common stock, plus stock compensation expense, less the reclassification of redeemable common stock;
and “Allowed Merger Transaction Add-Backs” means expenses paid or accrued (without duplication) during the quarters ending September 30, 2019 and December 31, 2019 for legal and accounting fees, financial advisor fees, valuation professionals fees
and proxy filing, printing and solicitation costs arising with respect to the Restructuring Transactions (as defined in Section 8 below), provided that the add-backs are acceptable to Lender and in an aggregate amount not exceeding $1,250,000.
| Guarantors’ Liquidity: |
Borrower shall cause the Xxxxx Guarantors to maintain a combined aggregate value of their unrestricted and unencumbered cash plus unrestricted and unencumbered readily marketable securities, of at least $17,000,000, measured as of
the end of each calendar quarter and and as calculated by Lender in its Good Faith Business Judgment based upon such Xxxxx Guarantors’ Liquidity Statements (as defined in Section 6 below). For purposes of clarity, the parties
acknowledge and agree that such unrestricted and unencumbered cash is to be net of any outstanding margin loan balance.
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Pacific Mercantile Bank
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Schedule to Loan and Security Agreement
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6. REPORTING.
(Section 5.3):
Borrower shall provide Lender with the following, all of which shall be in such form as Lender shall specify:
| (a) |
Annual financial statements of NNN Holdings, on a consolidated basis, as soon as available, and in any event within 90 days following the end of NNN Holdings’s fiscal year, certified by, and with an unqualified opinion of, Squar
Xxxxxx or other independent certified public accountants reasonably acceptable to Lender (the “Annual Financial Statements”);
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| (b) |
Quarterly financial statements of NNN Holdings, on a consolidated basis, that NNN Holdings has filed with the U.S. Securities and Exchange Commission, as soon as available, and in any event within 45 days after the end of each of NNN
Holdings’s fiscal quarters (“Quarterly Financial Statements”);
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| (c) |
Each of the Quarterly Financial Statements shall be accompanied by compliance certificates (“Compliance Certificates”), in such form as Lender shall reasonably specify, signed by the Chief Financial Officer of NNN Holdings,
certifying that as of the end of such period and the date of such Certificate Borrower was in full compliance with all of the terms and conditions of the Loan Agreement, and no Default or Event of Default had occurred, and setting forth
calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Lender shall request in its Good Faith Business Judgment;
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(d) |
A portfolio status report (including without limitation the status of the REIT portfolios, operating statements, and debt schedules), in form and substance acceptable to Lender (a “Portfolio Status Report”), from NNN Holdings as soon
as available, and in any event within 50 days after the end of each of NNN Holdings’s fiscal quarters;
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| (e) |
A report of any REIT Portfolio Debt Default, within three (3) Business Days after Borrower first having knowledge of its occurrence;
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| (f) |
Promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems;
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| (g) |
Such budgets, sales projections, operating plans or other financial information as Lender may reasonably request from time to time; and
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| (h) |
For all Guarantors: (a) their personal financial statements in form and substance acceptable to Lender within 60 days after the end of each calendar year, (b) such asset verifications as Lender shall from time to time request (e.g.,
liquidity and/or brokerage statements), in form and substance acceptable to Lender (“Liquidity Statements”), within 30 days after the end of each calendar quarter, and (c) copies of their federal tax returns (including any Schedule K-1s
and all other schedules), within 15 days after the earlier of the date they are filed or the date they are due (after giving effect to any proper filing deadline extension actually received, a copy of which is provided to Lender).
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7. BORROWER INFORMATION:
Borrower represents and warrants to Lender as follows:
| (1) |
Prior Names and Styles. Further to Section 3.2 of the Loan Agreement, the following are all of Borrower’s prior names, and existing and prior trade names, within the last five years: NNN
Holdings has prior names of Rich Uncles REIT, Inc. and Rich Uncles Real Estate Investment Trust, Inc. and a fictitious business name of Rich Uncles NNN REIT, Inc.
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| (2) |
Place of Business. Further to Section 3.3 of the Loan Agreement, in addition to Borrower’s address set forth in the heading to the Loan Agreement, Borrower only has the following places of
business as of the date hereof: None.
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| (3) |
Deposit Accounts. Further to Section 3.4(b) of the Loan Agreement, the following are all of Borrower’s Deposit Accounts as of the date hereof: (i) various accounts at Lender; (ii) the
following two accounts of NNN Holdings at Xxxxx Fargo Bank that are used for investor transactions: Nos. 4152788030 and 433-7887525; and a payroll account of Modiv at Xxxxx Fargo Bank.
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| (4) |
Certain Licenses and Agreements. Further to Section 3.4(e) of the Loan Agreement, neither Modiv nor BrixInvest is a party to, nor is it bound by, any license or other agreement that is
important for the conduct of Borrower’s business and that prohibits or otherwise restricts Modiv or BrixInvest from granting a security interest in its interest in such license or agreement or any other property important for the
conduct of Borrower’s business, except: None.
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| (5) |
Commercial Tort Claims. Neither Modiv nor BrixInvest has any interest in any “commercial tort claims” (as defined in the Code) except: None.
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Pacific Mercantile Bank
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Schedule to Loan and Security Agreement
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8. ADDITIONAL PROVISIONS
(a) Subordination of Indebtedness. Concurrently herewith, Borrower shall cause The Xxxxx Family Trust dated July 5, 1985, as amended August 15,
2006 and April 22, 2016 (aka Xxxxxxx X. Xxxxx and Xxxxxx Xxxxx, Trustees of The Xxxxx Family Trust dated July 5, 1985) to execute and deliver to Lender a Debt Subordination Agreement in such form as Lender shall specify, subordinating the existing
Indebtedness of Borrower to said Trust, which does not exceed $791,845 (the amount as of September 30, 2019), to the Obligations.
(b) Subordination of Inside Debt. All present and future indebtedness of Borrower to its officers, directors and shareholders (“Inside Debt”) shall,
at all times, be subordinated to the Obligations pursuant to a subordination agreement on Lender’s standard form, except that the foregoing shall not require that the Beaumont Notes (as defined below) and the Employee Notes (as defined below) be so
subordinated. Borrower represents and warrants that there is no Inside Debt presently outstanding, except for the following: (i) an amount not exceeding $791,845 (the amount as of September 30, 2019) owed to the Xxxxx Family Trust dated July 5,
1985, as amended August 15, 2006 and April 22, 2016, pursuant to two promissory notes by BrixInvest (and assumed by Modiv), each dated October 23, 2017 and each in the stated principal amount of $500,000, (ii) $2,561,875 remaining of the original
$4,000,000 of unsecured notes due to Beaumont RU Holdings LLC (the “Beaumont Notes”) plus the 20% maturity date extension consideration of $512,375 with respect thereto, and (iii) two notes aggregating $42,500 of the original $4,000,000 of
unsecured notes due to Xx. Xxxxx Xxxxxx and Xx. Xxxx Xx (the “Employee Notes”) plus the 20% maturity date extension consideration of $8,500 with respect thereto. Prior to incurring any Inside Debt in the future, Borrower shall cause the person to
whom such Inside Debt will be owed to execute and deliver to Lender a subordination agreement on Lender’s standard form.
(c) Deposit Accounts; Automatic Payments. Concurrently herewith, Borrower shall transfer all of its Deposit Accounts (except for payroll-specific
accounts previously approved by Lender) and investment accounts to Lender, and at all times thereafter Borrower shall maintain the foregoing with Lender. Borrower shall (and hereby does) authorize Lender to initiate Automated Clearing House
(“ACH”) loan payment transactions and Borrower shall sign documentation prior to or in conjunction with disbursement of Loans hereunder which will authorize Lender’s initiation of ACH debit entries from its operating account to cover all amounts
due under this Agreement.
(d) Triggered Guaranties. Concurrently herewith, Borrower shall cause each of the Xxxxx Guarantors to execute and deliver to Lender a Continuing
Guaranty with respect to all of the Obligations, on Lender’s standard form, and certifications of trust or other evidence of authority with respect to the execution and delivery of such Guaranties. Said Guaranties (the “Triggered
Guaranties”) shall provide that the guaranties therein become effective upon the occurrence of any of the following events (each, a “Trigger Event”): (i) any Event of Default, including without limitation Borrower’s failure to fully pay any Loan
when due pursuant to the terms hereof; or (ii) any Resolution Failure Trigger Event; or (iii) any REIT Portfolio Debt Default which is not cured to Lender’s satisfaction within 30 days of its occurrence. If after the Guaranties become effective,
all Trigger Events are cured to Lender’s satisfaction in its sole discretion, then Lender may, in its discretion, by written notice to the Xxxxx Guarantors, make the Guaranties ineffective again (subject to again becoming effective upon the
occurrence of another Trigger Event). Throughout the term of the Loan Agreement Borrower shall cause such Guaranties to continue in full force and effect.
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Pacific Mercantile Bank
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Schedule to Loan and Security Agreement
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(e) Foreign Assets. Borrower represents and warrants that it does not have, and covenants that, during the term of the Loan Agreement, it will not
have, any assets located outside the United States.
(f) SEC Investigation. Reference is made to the investigation conducted by the Securities and Exchange Commission (“SEC”) related to the
advertising and sale of securities by NNN Holdings in connection with its registered offering, as further described in Note 10 of Notes to Consolidated Financial Statements of NNN Holdings’ September 30,
2018 Form 10-Q (the “SEC Investigation”). Borrower represents, warrants and covenants that the SEC Investigation has been settled and terminated with respect to Borrower pursuant to the terms described in NNN Holdings’ Form 8-K filed with the
Securities and Exchange Commission on September 26, 2019 (the “SEC Settlement”) and that such terms include the temporary suspension of the sale of shares of NNN Holdings and Brix REIT (the “Suspended Share Sales”). Borrower shall promptly notify
Lender, in writing, of all material new developments related to the SEC Settlement, and shall provide Lender with written updates of the status of the SEC Settlement (including such information and copies of filings, correspondence, pleadings and
other documents as Lender shall request in Lender’s Good Faith Business Judgment) from time to time as Lender shall request in Lender’s Good Faith Business Judgment. Any breach of, default under or other failure to comply with the terms of the SEC
Settlement shall constitute an Event of Default under this Loan Agreement. If the Suspended Share Sales are not re-opened for sale, through a FINRA-licensed broker dealer and in accordance with SEC requirements, on or before December 31, 2019,
such failure to be re-opened for sale shall not constitute an Event of Default under this Loan Agreement but shall constitute a “Resolution Failure Trigger Event” (as used above with respect to the Triggered Guaranties). If the Suspended Share
Sales are not re-opened for sale, through a FINRA-licensed broker dealer and in accordance with SEC requirements, on or before January 31, 2020, such failure to be re-opened for sale shall constitute an Event of Default under this Loan Agreement.
(g) Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more participation
interests in any Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have
about Borrower or about any other matter relating to the Loans, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a
participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loans irrespective of the failure or insolvency of any holder of any interest in any Loan. Borrower further agrees
that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.
(h) Consent to Restructuring Transactions. Subject to the terms of this Loan Agreement, Lender hereby consents to the following (collectively, the
“Restructuring Transactions”): (i) the BrixInvest Contribution occurring on or prior to December 31, 2019, provided that immediately thereafter Modiv becomes a wholly-owned subsidiary of NNN OP, (ii) on or about the date of the BrixInvest
Contribution, BrixInvest transferring its ownership interest in its wholly-owned subsidiary Daisho to the BrixInvest members, (iii) on or about the date of the BrixInvest Contribution, Daisho obtaining an ownership interest in NNN OP not exceeding
the ownership interest described in the definition of “Change in Control” set forth in Section 8 of the Loan Agreement, (iv) on or before the date of the BrixInvest Contribution, Katana becoming wholly owned by NNN Holdings (as Katana’s sole
general partner) and NNN LLC (as Katana’s sole limited partner), and (v) on or about the date of the BrixInvest Contribution, Rich Uncles Real Estate Investment Trust I merging into Katana (with Katana being the surviving company), provided that
the only consideration therefor is shares of stock of NNN Holdings.
(i) Modiv Intellectual Property Security Agreement. Promptly following the earlier of December 31, 2019 and Modiv acquiring any Intellectual
Property from modiv co, Modiv shall execute and deliver to Lender an intellectual property security agreement in the form previously provided by Lender to Borrower.
[Signatures on Next Page]
Form Version: -5.6 (11-16)
Document Version -5
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Pacific Mercantile Bank
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Schedule to Loan and Security Agreement
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Borrower:
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RICH UNCLES NNN OPERATING PARTNERSHIP, LP
By: RW HOLDINGS NNN REIT, INC., general partner
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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RICH UNCLES NNN LP, LLC
By: RW HOLDINGS NNN REIT, INC., managing member
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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KATANA MERGER SUB, LP
By: RW HOLDINGS NNN REIT, INC., general partner
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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MODIV, LLC
By: DAISHO OP HOLDINGS, LLC, its Manager
By: BRIXINVEST, LLC, its Manager
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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BRIXINVEST, LLC
By: /s/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: CFO
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Lender:
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PACIFIC MERCANTILE BANK
By: /s/XXXX XXXXXXXXX
Name: Xxxx Xxxxxxxxx
Title: Senior Vice President
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