Loan No.: 50-2860302 Walker
Ranch Apartments
SEC INDEMNITY AND GUARANTY
AGREEMENT
THIS
SEC INDEMNITY AND GUARANTY AGREEMENT (as the same may hereafter be
amended, consolidated, renewed or replaced, this “
Agreement ”), made as of April 12, 2007,
by NNN APARTMENT REIT, INC., a Maryland corporation (“
Indemnitor ”), whose address is c/o Triple Net
Properties, LLC, 1551 North Tustin Avenue, Suite 300, Santa
Ana, California 92705, in favor of WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association (together with its
successors and assigns, “ Lender ”),
whose address is Commercial Real Estate Services, 8739 Research
Drive URP - 4, NC 1075, Charlotte, North Carolina
28262.
W I T N E S S E T H:
WHEREAS, Apartment REIT Walker Ranch, LP, a
Texas limited partnership (“ Borrower ”),
has obtained a loan (the “ Loan ”) in the
principal amount of Twenty Million and No/100 Dollars
($20,000,000.00) from Lender; and
WHEREAS, the Loan is evidenced by a Promissory
Note (as the same may from time to time be amended, consolidated,
renewed or replaced, the “ Note ”) dated
of even date herewith, executed by Borrower and payable to the
order of Lender, in the stated principal amount of Twenty Million
and No/100 Dollars ($20,000,000.00), and is secured by a Deed of
Trust, Security Agreement and Fixture Filing dated of even date
herewith (as the same may from time to time be amended,
consolidated, renewed or replaced, the “ Security
Instrument ”) from Borrower for the benefit of
Lender, encumbering that certain real property situated in the
County of Bexar, State of Texas, as more particularly described on
Exhibit “A” attached hereto and
incorporated herein by this reference, together with the buildings,
structures and other improvements now or hereafter located thereon
(the “ Property ”) and by other documents
and instruments (the Note, the Security Instrument and such other
documents and instruments, as the same may from time to time be
amended, consolidated, renewed or replaced, being collectively
referred to herein as the “ Loan Documents
”); and
WHEREAS, as a condition to making the Loan to
Borrower, Lender has required that Indemnitor execute and deliver
this Agreement; and
WHEREAS, the extension of the Loan to Borrower
is of substantial benefit to Indemnitor and, therefore, Indemnitor
desires to execute and delivery this Agreement.
NOW,
THEREFORE, to induce Lender to extend the Loan to Borrower and in
consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Indemnitor hereby covenants and agrees for the
benefit of Lender, as follows:
1. Indemnity and Guaranty .
Indemnitor irrevocably and unconditionally guarantees to Lender the
prompt payment of all liabilities, obligations, losses, damages,
costs and expenses (including, without limitation, attorneys’
fees), causes of action, suits, claims, demands and judgments of
any nature or description whatsoever (collectively, “
Costs ”) arising out of or attributable to
(i) the violation of any applicable law governing the sale of
securities in connection with the structure, organization, sale or
syndication of partnership interests in Apartment REIT Walker
Ranch, LP, or in the sale or syndication or tenant in common
ownership interest in the property and (ii) the Securities
Liabilities (as hereinafter defined) and any legal or other
expenses reasonably incurred by Lender, in investigating or
defending the Securities Liabilities, to the extent such Securities
Liabilities relate to a Securities and Exchange Commission (“
SEC ”) investigation, inquiry or proceeding
relating to Triple Net Properties, LLC or any of its affiliates. As
used herein, the term “ Securities Liabilities
” shall mean any liability, obligation or other remedy
(including, without limitation, any right or rescission in favor of
any Borrower or any member of any Borrower) arising from or related
to that certain investigation by the SEC captioned “In the
matter of Triple Net Properties, LLC” (as well as any
subsequent related investigation involving any affiliate of Triple
Net Properties, LLC) pursuant to which the SEC has requested
information, including financial information, from Triple Net
Properties, LLC relating to disclosure in securities offerings
sponsored by Triple Net Properties, LLC and its
affiliates.
This
is a guaranty of payment and performance and not of collection. The
liability of Indemnitor under this Agreement shall be direct and
immediate and not conditional or contingent upon the pursuit of any
remedies against Borrower or any other person (including, without
limitation, other guarantors, if any), nor against the collateral
for the Loan. Indemnitor waives any right to require that an action
be brought against Borrower or any other person or to require that
resort be made to any collateral for the Loan or to any balance of
any deposit account or credit on the books of Lender in favor of
Borrower or any other person. In the event of a default under the
Loan Documents which is not cured within any applicable grace or
cure period, Lender shall have the right to enforce its rights,
powers and remedies (including, without limitation, foreclosure of
all or any portion of the collateral for the Loan) thereunder or
hereunder, in any order, and all rights, powers and remedies
available to Lender in such event shall be non-exclusive and
cumulative of all other rights, powers and remedies provided
thereunder or hereunder or by law or in equity. If the indebtedness
and obligations guaranteed hereby are partially paid or discharged
by reason of the exercise of any of the remedies available to
Lender, this Agreement shall nevertheless remain in full force and
effect, and Indemnitor shall remain liable for all remaining
indebtedness and obligations guaranteed hereby, even though any
rights which Indemnitor may have against Borrower may be destroyed
or diminished by the exercise of any such remedy.
2. Indemnification Procedures
.
(a) If any action shall be brought against
Lender based upon any of the matters for which Lender is
indemnified hereunder, Lender shall notify Indemnitor in writing
thereof and Indemnitor shall promptly assume the defense thereof,
including, without limitation, the employment of counsel acceptable
to Lender and the negotiation of any settlement; provided ,
however , that any failure of Lender to notify Indemnitor of
such matter shall not impair or reduce the obligations of
Indemnitor hereunder. Lender shall have the right, at the expense
of Indemnitor (which expense shall be included in Costs), to employ
separate counsel in any such action and to participate in the
defense thereof. In the event Indemnitor shall fail to discharge or
undertake to defend Lender against any claim, loss or liability for
which Lender is indemnified hereunder, Lender may, at its sole
option and election, defend or settle such claim, loss or
liability. The liability of Indemnitor to Lender hereunder shall be
conclusively established by such settlement, provided such
settlement is made in good faith, the amount of such liability to
include both the settlement consideration and the costs and
expenses, including, without limitation, attorneys’ fees and
disbursements, incurred by Lender in effecting such settlement. In
such event, such settlement consideration, costs and expenses shall
be included in Costs and Indemnitor shall pay the same as
hereinafter provided. Lender’s good faith in any such
settlement shall be conclusively established if the settlement is
made on the advice of independent legal counsel for
Lender.
(b) Indemnitor shall not, without the prior
written consent of Lender: (i) settle or compromise any
action, suit, proceeding or claim or consent to the entry of any
judgment that does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to Lender of a full and
complete written release of Lender (in form, scope and substance
satisfactory to Lender in its sole discretion) from all liability
in respect of such action, suit, proceeding or claim and a
dismissal with prejudice of such action, suit, proceeding or claim;
or (ii) settle or compromise any action, suit, proceeding or
claim in any manner that may adversely affect Lender or obligate
Lender to pay any sum or perform any obligation as determined by
Lender in its sole discretion.
(c) All Costs shall be immediately
reimbursable to Lender when and as incurred and, in the event of
any litigation, claim or other proceeding, without any requirement
of waiting for the ultimate outcome of such litigation, claim or
other proceeding, and Indemnitor shall pay to Lender any and all
Costs within ten (10) days after written notice from Lender
itemizing the amounts thereof incurred to the date of such notice.
In addition to any other remedy available for the failure of
Indemnitor to periodically pay such Costs, such Costs, if not paid
within said ten-day period, shall bear interest at the Default
Interest Rate (as defined in the Note).
3. Reinstatement of Obligations .
If at any time all or any part of any payment made by Indemnitor or
received by Lender from Indemnitor under or with respect to this
Agreement is or must be rescinded or returned for any reason
whatsoever (including, but not limited to, the insolvency,
bankruptcy or reorganization of Indemnitor or Borrower), then the
obligations of Indemnitor hereunder shall, to the extent of the
payment rescinded or returned, be deemed to have continued in
existence, notwithstanding such previous payment made by
Indemnitor, or receipt of payment by Lender, and the obligations of
Indemnitor hereunder shall continue to be effective or be
reinstated, as the case may be, as to such payment, all as though
such previous payment by Indemnitor had never been made.
4. Waivers by Indemnitor . To the
extent permitted by law, Indemnitor hereby waives and agrees not to
assert or take advantage of:
(a) Any right to require Lender to proceed
against Borrower or any other person or to proceed against or
exhaust any security held by Lender at any time or to pursue any
other remedy in Lender’s power or under any other agreement
before proceeding against Indemnitor hereunder;
(b) Any defense that may arise by reason of
the incapacity, lack of authority, death or disability of any other
person or persons or the failure of Lender to file or enforce a
claim against the estate (in administration, bankruptcy or any
other proceeding) of any other person or persons;
(c) Demand, presentment for payment, notice
of nonpayment, protest, notice of protest and all other notices of
any kind, or the lack of any thereof, including, without limiting
the generality of the foregoing, notice of the existence, creation
or incurring of any new or additional indebtedness or obligation or
of any action or non-action on the part of Borrower, Lender, any
endorser or creditor of Borrower or of Indemnitor or on the part of
any other person whomsoever under this or any other instrument in
connection with any obligation or evidence of indebtedness held by
Lender;
(d) Any defense based upon an election of
remedies by Lender;
(e) Any right or claim of right to cause a
marshalling of the assets of Indemnitor;
(f) Any principle or provision of law,
statutory or otherwise, which is or might be in conflict with the
terms and provisions of this Agreement;
(g) Any duty on the part of Lender to
disclose to Indemnitor any facts Lender may now or hereafter know
about Borrower or the Property, regardless of whether Lender has
reason to believe that any such facts materially increase the risk
beyond that which Indemnitor intends to assume or has reason to
believe that such facts are unknown to Indemnitor or has a
reasonable opportunity to communicate such facts to Indemnitor, it
being understood and agreed that Indemnitor is fully responsible
for being and keeping informed of the financial condition of
Borrower, of the condition of the Property and of any and all
circumstances bearing on the risk that liability may be incurred by
Indemnitor hereunder;
(h) Any lack of notice of disposition or of
manner of disposition of any collateral for the Loan;
(i) Any invalidity, irregularity or
unenforceability, in whole or in part, of any one or more of the
Loan Documents;
(j) Any deficiencies in the collateral for
the Loan or any deficiency in the ability of Lender to collect or
to obtain performance from any persons or entities now or hereafter
liable for the payment and performance of any obligation hereby
guaranteed;
(k) An assertion or claim that the
automatic stay provided by 11 U.S.C. §362 (arising upon the
voluntary or involuntary bankruptcy proceeding of Borrower) or any
other stay provided under any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become
applicable, shall operate or be interpreted to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any
of its rights, whether now or hereafter required, which Lender may
have against Indemnitor or the collateral for the Loan;
(l) Any modifications of the Loan Documents
or any obligation of Borrower relating to the Loan by operation of
law or by action of any court, whether pursuant to the Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law
(whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise.
Without limiting the generality of the foregoing, Indemnitor
expressly waives any and all rights to which Indemnitor may
otherwise have been entitled under any suretyship laws in effect
from time to time, including (without limitation) any rights
pursuant to
