Exhibit 10.1

 

 

 

 

TERM LOAN AGREEMENT

 

by and between

 

AmREIT LANTERN LANE, LP,

a Texas limited partnership, as

Borrower

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

a national banking association,

as Lender

 

Property:

Lantern Lane Shopping Center

12500 Memorial Drive, Houston, TX

 

Dated: Effective as of October 7, 2011

 

 

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ARTICLE 1 DEFINITIONS AND INTERPRETATION

 

1

 

 

 

 

Section 1.1

 

Defined Terms

 

1

 

Section 1.2

 

Singular and Plural Terms

 

9

 

Section 1.3

 

Accounting Principles

 

9

 

Section 1.4

 

Exhibits Incorporated

 

9

 

Section 1.5

 

References

 

9

 

Section 1.6

 

Other Terms

 

10

 

Section 1.7

 

Headings

 

10

 

Section 1.8

 

Other Documents

 

10

 

Section 1.9

 

Intention

 

10

 

 

 

 

 

 

ARTICLE 2 THE LOAN

 

10

 

 

 

 

Section 2.1

 

Purpose of Loan

 

10

 

Section 2.2

 

Principal

 

10

 

Section 2.3

 

Interest

 

11

 

Section 2.4

 

Prepayment

 

12

 

Section 2.5

 

Regulatory Change; Conversion of Interest Rate

 

12

 

Section 2.6

 

Payments

 

13

 

 

 

 

 

 

ARTICLE 3 FEES AND COSTS

 

14

 

 

 

 

Section 3.1

 

Commitment Fee

 

14

 

Section 3.2

 

Reimbursement of Lender

 

14

 

 

 

 

 

 

ARTICLE 4 SPECIAL COVENANTS

 

15

 

 

 

 

Section 4.1

 

Voluntary Cleanup Program; Escrow Account

 

15

 

Section 4.2

 

Deadlines Regarding Environmental Issues; Cash Reserve Account

 

16

 

Section 4.3

 

CVS Lease; Lease Trigger Event

 

17

 

Section 4.4

 

Property Condition Report; Repair Reserve

 

18

 

Section 4.5

 

Rice Lease; Lease Reserve

 

18

 

 

 

 

 

 

ARTICLE 5 LOAN DOCUMENTS

 

19

 

 

 

 

Section 5.1

 

Security Documents

 

19

 

Section 5.2

 

Guaranty

 

20

 

Section 5.3

 

Environmental Indemnity; Environmental Insurance

 

20

 

Section 5.4

 

Assignment and Subordination of Management Agreement

 

20

 

 

 

 

 

 

ARTICLE 6 RESERVED

 

20

 

 

 

ARTICLE 7 RESERVED

 

20

v

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ARTICLE 8 REPRESENTATIONS AND WARRANTIES

 

20

 

 

 

 

Section 8.1

 

Formation, Qualification and Compliance

 

20

 

Section 8.2

 

Execution and Performance of Loan Documents

 

20

 

Section 8.3

 

Sole Assets

 

21

 

Section 8.4

 

Tax Liability

 

21

 

Section 8.5

 

Government Requirements

 

21

 

Section 8.6

 

No Adverse Conditions

 

22

 

Section 8.7

 

Rights of Others

 

22

 

Section 8.8

 

Reserved

 

22

 

Section 8.9

 

Litigation

 

22

 

Section 8.10

 

Reserved

 

22

 

Section 8.11

 

Condemnation

 

22

 

Section 8.12

 

Name and Principal Place of Business

 

22

 

Section 8.13

 

ERISA

 

22

 

Section 8.14

 

Brokers

 

22

 

Section 8.15

 

Anti-Terrorism Regulations

 

22

 

Section 8.16

 

Financial Statements

 

23

 

Section 8.17

 

Title to the Property

 

24

 

Section 8.18

 

Governmental Regulations

 

24

 

Section 8.19

 

Utilities

 

24

 

Section 8.20

 

Other Lands

 

24

 

Section 8.21

 

Permits

 

24

 

Section 8.22

 

Representations and Warranties

 

25

 

 

 

 

 

 

ARTICLE 9 AFFIRMATIVE COVENANTS

 

25

 

 

 

 

Section 9.1

 

Protection of Liens

 

25

 

Section 9.2

 

Payment of Taxes, Assessments, Costs and Expenses

 

25

 

Section 9.3

 

Reserved

 

25

 

Section 9.4

 

Continued Compliance

 

25

 

Section 9.5

 

Books and Records

 

26

 

Section 9.6

 

Maintenance and Security of Property

 

26

 

Section 9.7

 

Financial Statements

 

26

 

Section 9.8

 

Notice of Certain Matters

 

27

 

Section 9.9

 

Notice of Junior Liens

 

28

 

Section 9.10

 

Additional Reports and Information

 

28

 

Section 9.11

 

Further Assurances

 

28

 

Section 9.12

 

Reserved

 

28

 

Section 9.13

 

Continued Existence

 

28

 

Section 9.14

 

Guarantor Covenants

 

28

 

Section 9.15

 

Leases

 

28

 

Section 9.16

 

Operating Income

 

29

 

Section 9.17

 

Single Purpose Entity

 

29

 

Section 9.18

 

Interest Rate Protection

 

31

 

Section 9.19

 

Appraisals

 

32

vi

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ARTICLE 10 NEGATIVE COVENANTS

 

32

 

 

 

 

 

 

 

Section 10.1

 

Liens on Property

 

32

 

Section 10.2

 

Liens on Personal Property

 

32

 

Section 10.3

 

Reserved

 

33

 

Section 10.4

 

Sale or Lease of Property

 

33

 

Section 10.5

 

Assignments of Obligations

 

33

 

Section 10.6

 

Removal of Personal Property

 

33

 

Section 10.7

 

Transfer of Equity Interests

 

34

 

Section 10.8

 

ERISA

 

34

 

Section 10.9

 

Debt

 

34

 

Section 10.10

 

Distributions

 

34

 

Section 10.11

 

Management Agreement

 

34

 

 

 

 

 

 

ARTICLE 11 RESERVED

 

35

 

 

 

 

 

 

ARTICLE 12 INSURANCE

 

35

 

 

 

 

 

 

 

Section 12.1

 

Policies Required

 

35

 

Section 12.2

 

Adjustment of Condemnation and Insurance Claims

 

36

 

Section 12.3

 

Delivery of Proceeds to Lender

 

36

 

Section 12.4

 

Utilization of Compensation and Proceeds

 

36

 

 

 

 

 

 

ARTICLE 13 CONDEMNATION

 

37

 

 

 

 

 

 

ARTICLE 14 DEFAULTS AND REMEDIES

 

37

 

 

 

 

 

 

 

Section 14.1

 

Events of Default

 

37

 

Section 14.2

 

Remedies Upon Default

 

39

 

Section 14.3

 

Cumulative Remedies; No Waiver

 

40

 

Section 14.4

 

Setoff

 

40

 

 

 

 

 

 

ARTICLE 15 MISCELLANEOUS

 

40

 

 

 

 

 

 

 

Section 15.1

 

Actions

 

40

 

Section 15.2

 

Nonliability of Lender

 

40

 

Section 15.3

 

No Representations by Lender

 

41

 

Section 15.4

 

Indemnity

 

41

 

Section 15.5

 

Easements

 

42

 

Section 15.6

 

Joint and Several; Relationship with Lender

 

42

 

Section 15.7

 

Survival

 

42

 

Section 15.8

 

Reserved

 

42

 

Section 15.9

 

Notices

 

42

 

Section 15.10

 

No Third Parties Benefited

 

43

 

Section 15.11

 

Binding Effect

 

43

 

Section 15.12

 

Counterparts

 

44

 

Section 15.13

 

Prior Agreements; Amendments; Consents

 

44

vii

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Section 15.14

 

Governing Law

 

44

 

Section 15.15

 

Maximum Rate

 

45

 

Section 15.16

 

Waivers

 

45

 

Section 15.17

 

Severability of Provisions

 

46

 

Section 15.18

 

Time of the Essence

 

46

 

Section 15.19

 

Assignments and Participations

 

46

 

Section 15.20

 

No Consequential Damages

 

47

 

Section 15.21

 

Lender Not in Control

 

47

 

Section 15.22

 

USA Patriot Act Notice

 

48

 

Section 15.23

 

DTPA Waiver

 

48

viii

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Exhibits

 

 

Description

 

 

A

 

Legal Description of the Land

B

 

Site Plan of Shopping Center

C

 

Closing Conditions

C-1

 

Post-Closing Conditions

D

 

Insurance Requirements

E

 

Survey Requirements

F

 

Extension Option

ix

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TERM LOAN AGREEMENT

          THIS TERM LOAN AGREEMENT is made and entered into effective as of the
7th day of October, 2011, by and between AmREIT LANTERN LANE, LP, a Texas
limited partnership (“Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national
banking association (“Lender”).

RECITALS

          A.           Borrower owns fee title to approximately 6.7 acres of
real property located in Harris County, Texas, being more fully described in
Exhibit A attached hereto (the “Land”).

          B.           The Land is improved with a retail shopping center (the
“Shopping Center”), as more particularly shown on the site plan of the Shopping
Center affixed hereto as Exhibit B, containing approximately 79,462 square feet
of retail space, together with applicable parking, amenities, and on-site and
off-site improvements and appurtenances located on the Property (or necessary
therefor) and/or in such improvements (collectively, the “Improvements”).

          C.           Borrower has requested that Lender make a term loan (the
“Loan”) to Borrower to refinance certain indebtedness encumbering the Shopping
Center, which Loan will be evidenced, in part, by this Agreement and by a
Promissory Note dated of even date herewith, executed by Borrower and made
payable to the order of Lender in the principal face amount of up to
$12,800,000.00 (such Promissory Note it may hereafter be renewed, extended,
supplemented, increased or modified and in effect from time to time, and all
other notes given in substitution therefor, or in modification, renewal, or
extension thereof, in whole or in part, is herein called the “Note”).

          D.           The Loan will be secured by a Deed of Trust, Assignment
of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement
dated of even date herewith, executed by Borrower and Lender, recorded or to be
recorded in the Real Property Records of Harris County, Texas (as amended,
restated, modified or supplemented from time to time, is herein called the “Deed
of Trust”), and (ii) an Assignment of Leases and Rents dated of even date
herewith, executed by Borrower and Lender and recorded or to be recorded in the
Real Property Records of Harris County, Texas (as amended, restated, modified or
supplemented from time to time, is herein called the “Assignment of Leases”).

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

ARTICLE 1
DEFINITIONS AND INTERPRETATION

          Section 1.1     Defined Terms. As used in this Agreement (and in all
other Loan Documents, unless otherwise defined), the following capitalized terms
shall have the following meanings:

TERM LOAN AGREEMENT - Page 1

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                    “Accessibility Regulation” means any federal, state or local
law, statute, code, ordinance, rule, regulation or requirement including,
without limitation, the United States Americans With Disabilities Act of 1991,
as amended, (the “ADA”) relating to accessibility to facilities or properties
for disabled, handicapped, physically challenged persons or other persons
covered by the ADA.

                    “Adjusted Expenses” means, for any period, the aggregate,
actual cash operating expenses of the Property (excluding non-cash expenses such
as depreciation and expenses paid from reserves) for such period, but: (a) not
including payments of principal or interest on the Loan during such period; and
(b) adjusted to include (but without duplication of the above) appropriate
monthly accruals for the Property for such period for: (1) a management fee of
at least three and one half of one percent (3.50%) per annum, (2) periodic
expenses such as property taxes and insurance, and (3) a reserve (not less than
$0.25 per square foot of leasable space in the Improvements per annum) for
capital repairs and replacements.

                    “Adjusted Income” means, for any period, all actual
recurring cash rental income received by Borrower during such period pursuant to
Approved Leases, adjusted for each calendar month during such period as
necessary to reflect a vacancy factor/collection loss equal the greater of (i)
5%, or (ii) the actual vacancy factor for each month during such period.

                    “Adjusted Net Operating Income” means, for any period, (A)
the Adjusted Income for such period, adjusted to include only cash rental income
received by Borrower under Approved Leases pursuant to which the Tenant under
such Approved Lease has (i) accepted and taken occupancy of its respective
leased premises in accordance with such Approved Lease, and (ii) commenced the
payment of base rent under such Approved Lease, minus (B) the Adjusted Expenses
for such period.

                    “Affiliate” means, as to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person or any subsidiary of
such Person. The term “control” (including the terms “controlled by” or “under
common control with”) means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of a Control Percentage, by contract or otherwise.

                    “Agreement” means this Term Loan Agreement as it may be
supplemented, amended, renewed, restated, extended or replaced from time to
time.

                    “Anti-Terrorism Laws” means any laws relating to terrorism
or money laundering, including Executive Order No. 13224, the USA Patriot Act,
the Laws comprising or implementing the Bank Secrecy Act, and the laws
administered by the United States Treasury Department’s Office of Foreign Asset
Control (as any of the foregoing laws may from time to time be amended, renewed,
extended, or replaced).

                    “Applicable Rate” is defined in Section 2.3 of this
Agreement.

                    “Appraisal” means an appraisal prepared by an appraiser
approved by Lender which appraisal is acceptable to Lender and done in
conformity with the following standards:

TERM LOAN AGREEMENT - Page 2

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Uniform Standards of Professional Appraisal Practice, the requirements of the
Code of Professional Ethics and the Standards of Professional Appraisal Practice
of the Appraisal Institute, the appraisal requirements set forth by the office
of the Comptroller of the Currency and the Federal Reserve Board, which shall be
used for the determination by Lender in its sole and absolute discretion of the
Appraised Value.

                    “Appraised Value” means the value of the Property or portion
thereof as determined by Lender based upon Lender’s review of a current
Appraisal (or a current update to an Appraisal previously reviewed and approved
by Lender) of the Property.

                    “Approved Lease” is defined in Section 9.15 of this
Agreement.

                    “Approved Lease Form” is defined in Section 9.15 of this
Agreement.

                    “Assignment and Subordination of Management Agreement” means
the Assignment of Agreements to be executed and delivered by Borrower, which
collaterally assigns to Lender all rights of Borrower under the Management
Agreement.

                    “Assignment of Leases” is defined in the Recitals to this
Agreement.

                    “Borrower” shall have the meaning given such term in the
preamble to this Agreement.

                    “Business Day” means any day other than a Saturday, a
Sunday, or a legal holiday on which Lender is not open for business.

                    “Cash Reserve Account” is defined in Section 4.2 of this
Agreement.

                    “Casualty” means any act or occurrence of any kind or nature
that results in damage, loss or destruction to the Property.

                    “Claim” means any liability, suit, action, claim, demand,
loss, expense, penalty, fine, judgment, or other cost of any kind or nature
whatsoever, including fees, costs and expenses of attorneys, consultants,
contractors and experts.

                    “Closing Date” means the date of this Agreement.

                    “Code” means The Internal Revenue Code of 1986, as amended.

                    “Commitment” means an amount equal to the aggregate maximum
unpaid principal amount of the Loan which may from time to time be outstanding
hereunder, being the maximum sum of $12,800,000.00, which amount shall be
reduced automatically by payments of principal on the Loan made by Borrower to
Lender.

                    “Commitment Fee” is defined in Section 3.1 of this
Agreement.

                    “Compensation” is defined in Article 13.

TERM LOAN AGREEMENT - Page 3

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                    “Condemnation” means any taking of title to, use of, or any
other interest in the Property under the exercise of the power of condemnation
or eminent domain, whether temporarily or permanently, by any Governmental
Agency or by any other Person acting under or for the benefit of a Government
Agency.

                    “Control Percentage” means, with respect to any Person, the
percentage of the outstanding capital stock of such Person having ordinary
voting power which gives the direct or indirect holder of such stock the power
to elect a majority of the Board of Directors of such Person.

                    “CVS Lease” means that certain Lease dated as of October 3,
2011, executed by Borrower and CVS Pharmacy, Inc. (“CVS”).

                    “CVS Reletting Requirement” is defined in Section 4.2 of
this Agreement.

                    “DCR Program” is defined in Section 4.1 of this Agreement.

                    “Debt” means (a) indebtedness for borrowed money; (b)
obligations evidenced by bonds, debentures, notes, or other similar instruments;
(c) obligations to pay the deferred purchase price of property or services
(including trade obligations); (d) obligations as lessee under any lease of any
property by such Person as lessee which would, in accordance with generally
accepted accounting principles, be required to be classified and accounted for
as a capital lease on the balance sheet of such Person; and (e) obligations
under guaranties, endorsements, performance bonds, assurances of payment,
required investments, assurances against loss, and all other contingent
obligations relating to the assurance of another Person against loss.

                    “Deed of Trust” is defined in the Recitals to this
Agreement.

                    “Default Rate” means an annual rate equal to the lesser of
(i) 5% in excess of the Applicable Rate, as such rate may fluctuate from time to
time, or (ii) the Maximum Rate.

                    “Environmental Indemnity” means an Hazardous Substances
Indemnity Agreement of even date herewith executed by Borrower and Guarantor in
favor of Lender, as now or hereafter amended, modified, supplemented, or
restated from time to time with the consent of Lender.

                    “Environmental Laws” has the meaning assigned to such term
in the Environmental Indemnity.

                    “Environmental Reports” has the meaning assigned to such
term in the Environmental Indemnity.

                    “Environmental Trigger Event” is defined in Section 4.2 of
this Agreement.

TERM LOAN AGREEMENT - Page 4

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                    “ERISA” means the Employee Retirement Income Security Act of
1974, as the same may from time to time be amended, and the rules and
regulations promulgated thereunder by any Governmental Agency, as from time to
time in effect.

                    “Escrow Account” is defined in Section 4.1 of this
Agreement.

                    “Escrow Deposit” is defined in Section 4.1 of this
Agreement.

                    “Event of Default” means any event so designated in Article
14 hereof.

                    “Excess Cash Flow” is defined in Section 4.2 of this
Agreement.

                    “Financing Statement” means any Uniform Commercial
Code - Financing Statement - Form UCC-1, perfecting the security interest
created by the Deed of Trust or any other security interest or assignment
relating to the Loan.

                    “General Partner” means AmREIT Lantern Lane GP, LLC, a Texas
limited liability company

                    “Governmental Agency” means any governmental or
quasi-governmental entity, including any court, department, commission, board,
bureau, agency, administration, service, district or other instrumentality of
any governmental entity.

                    “Guarantor” means, collectively, AmREIT Monthly Income &
Growth Fund III, Ltd., a Texas limited partnership, and any Person who now or
hereafter guarantees, in part or in full, the prompt payment and performance of
any indebtedness or other obligation to Lender under any of the Loan Documents
and the term “Guarantors” means all of such Persons, collectively.

                    “Guaranty” that certain Limited Payment Guaranty of even
date herewith, executed by Guarantor to and for the benefit of Lender, as now or
hereafter amended, modified, supplemented, or restated from time to time with
the consent of Lender.

                    “Improvements” is defined in the Recitals to this Agreement.

                    “Indemnitees” is defined in Section 15.4 of this Agreement.

                    “Interest Rate Protection” means any agreement, whether or
not in writing, relating to any transaction that is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap or option, bond, note or bill option, interest rate option, forward
foreign exchange transaction, interest cap, collar or floor transaction,
currency swap, cross-currency rate swap, swap option, currency option or any
other similar transaction (including any option to enter into the foregoing) or
any combination of the foregoing, and, unless the context otherwise clearly
requires, any form of master agreement published by the International Swaps and
Derivatives Association, Inc., or any other master agreement, entered into
between Lender (or its affiliate) and Borrower (or its affiliate) in connection
with the Loan, together with any related schedules and confirmations, as
amended,

TERM LOAN AGREEMENT - Page 5

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supplemented, superseded or replaced from time to time, relating to or governing
any or all of the foregoing.

                    “IRP Counterparty” is defined in Section 9.18 of this
Agreement.

                    “Land” is defined in the Recitals to this Agreement.

                    “Laws” means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations, ordinances,
codes and administrative or judicial decisions or precedents, of or by any
Governmental Agency.

                    “Lease” means any and all present and future ground lease,
space lease, sublease or sub-sublease, letting, license, concession or other
agreement (whether written or oral and whether now or hereafter in effect),
pursuant to which any Person is granted a possessory interest in, or right to
use or occupy, all or any portion of any space in the Property, and every
modification, amendment or other agreement relating to such lease, sublease,
sub-sublease or other agreement entered into in connection with such lease,
sublease, sub-sublease or other agreement and every guarantee of the performance
and observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto, together with any and all extensions or
renewals of said leases and agreements.

                    “Lease Payment” is defined in Section 4.5 of this Agreement.

                    “Lease Reserve” is defined in Section 4.5 of this Agreement.

                    “Lease Reserve Account” is defined in Section 4.5 of this
Agreement.

                    “Lease Trigger Event” is defined in Section 4.3 of this
Agreement.

                    “LIBOR Rate” is defined in Section 2.3 of this Agreement.

                    “Loan” means the loan evidenced by the Note to be made by
Lender to Borrower in the amount of $12,800,000.

                    “Loan Documents” means, collectively, this Agreement, the
Note, the Security Documents, the Guaranty, the Environmental Indemnity, the
Assignment and Subordination of Management Agreement, the Interest Rate
Protection, and any other document that Lender requires from time to time to
effectuate the purposes of this Agreement.

                    “Management Agreement” means any contract regarding the
management or leasing of the Property now or hereafter executed by Borrower and
any Property Manager, as the same may be amended or modified from time to time
in accordance with the terms of this Agreement.

                    “Material Adverse Effect” means any set of circumstances or
events which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of any Loan
Document, (b) is or could reasonably be expected to be

TERM LOAN AGREEMENT - Page 6

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material and adverse to the condition (financial or otherwise), business,
assets, or operations of Borrower, Guarantor, or the Property or (c) materially
impairs or could reasonably be expected to materially impair the ability of
Borrower or Guarantor to perform the Obligations.

                    “Maturity Date” means the earlier of (i) April 7, 2013, and
(ii) any date on which the Loan is required to be paid in full, by acceleration
or otherwise, under this Agreement or any of the Loan Documents. The Maturity
Date is subject to extension pursuant to the provisions of Exhibit F attached
hereto.

                    “Maximum Rate” is defined in Section 15.15 of this
Agreement.

                    “Money Markets” means one or more wholesale funding markets
available to Lender, including negotiable certificates of deposit, commercial
paper, eurodollar deposits, bank notes, federal funds, interest rate swaps or
others.

                    “Net Operating Income” means, for any period, the amount, if
any, by which the Adjusted Income for such period exceeds the Adjusted Expenses
for the Property for the same period.

                    “New York Banking Day” means any day (other than a Saturday
or Sunday) on which commercial banks are open for business in New York, New
York.

                    “Note” is defined in the Recitals to this Agreement.

                    “Obligations” means all present and future debts,
obligations and liabilities of Borrower to Lender arising pursuant to, or on
account of, the provisions of this Agreement, the Note, the Security Documents,
and any of the other Loan Documents, and all amounts secured by the Security
Documents, including the obligation: (a) to pay all principal, interest, late
charges, prepayment premiums (if any) and other amounts due at any time under
the Note; (b) to pay all fees, charges, costs and expenses, indemnification
payments, and other amounts due at any time under the Security Documents and any
of the other Loan Documents, together with interest thereon as provided in the
Security Documents and such other Loan Documents; (c) to pay and perform all
obligations of Borrower under any Interest Rate Protection; and (d) to perform,
observe and comply with all of the terms, covenants and conditions, expressed or
implied, which Borrower is required to perform, observe or comply with pursuant
to the terms of the Security Documents and the other Loan Documents.

                    “PBGC” means The Pension Benefit Guaranty Corporation or any
successor board, authority, agency, officer or official of the United States
administering the principal functions assigned on the date hereof to the Pension
Benefit Guaranty Corporation under ERISA.

                    “Permitted Costs” is defined in Section 4.1 of this
Agreement.

                    “Permitted Encumbrances” is defined in the Deed of Trust.

                    “Permitted Transfer” is defined in Section 10.7 of this
Agreement.

TERM LOAN AGREEMENT - Page 7

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                    “Person” means any entity, whether an individual, trustee,
corporation, partnership, trust, unincorporated organization, Governmental
Agency or otherwise.

                    “Personal Property” means all of Borrower’s interest in all
furniture, furnishings, fixtures, machinery, equipment, inventory and other
personal property of every kind, whether now existing or hereafter acquired,
tangible and intangible, now or hereafter located on or about the Land, and used
or to be used in the future in connection with the operation of the
Improvements.

                    “Proceeds” is defined in Section 12.3.

                    “Property” means the Land, the Improvements, and all
Personal Property related thereto.

                    “Property Condition Report” means that certain report
entitled “Property Review Summary, Lantern Lane Shopping Center, Houston, Texas”
dated October 4, 2011, prepared for Lender by AECC, Inc. (AECC, Inc. Project
No.: 11281).

                    “Property Manager” means any leasing agent, broker or
property management company providing leasing, brokerage and property management
services for the Property, each of which shall be subject to the reasonable
approval by Lender.

                    “Regulation” is defined in Section 2.5 of this Agreement.

                    “Repair Reserve” is defined in Section 4.4 of this
Agreement.

                    “Repair Reserve Account” is defined in Section 4.4 of this
Agreement.

                    “Required Repairs” is defined in Section 4.4 of this
Agreement.

                    “Rice Lease” means that certain Lease dated as of August 25,
1997, executed by Borrower’s predecessor in title, as landlord, and Rice Food
Markets, Inc. (“Rice”), as tenant, as amended.

                    “Security Agreement” means that certain Security Agreement
(Deposit Account), dated of even date herewith, executed by Borrower for the
benefit of Lender regarding the Escrow Account, Cash Reserve Account, Lease
Reserve Account and Repair Reserve Account, together with any other security
agreements, assignments, deposit control agreements or other instruments now or
hereafter executed by Borrower in connection with the required pledge and
assignment of funds and accounts to Lender under this Agreement.

                    “Security Documents” means, collectively, the Deed of Trust,
the Financing Statement, the Assignment of Leases, the Security Agreement, and
any other mortgage, deed of trust, security agreement or assignment now,
heretofore or hereafter executed to secure the obligations of Borrower or
Guarantor to Lender under any Loan Document.

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                    “SNDA” means, with respect to any Approved Lease, a
subordination, non-disturbance and attornment agreement in form reasonably
acceptable to Lender.

                    “TCEQ” is defined in Section 4.1 of this Agreement.

                    “Tenant” means each tenant of the Shopping Center under an
Approved Lease.

                    “Title Company” means Fidelity National Title Insurance
Company.

                    “Title Policy” shall mean a standard TLTA mortgagee title
insurance policy in the most current approved form (without modification,
revision or amendment) issued by Title Company, insuring Lender that, on the
Closing Date, Borrower owns fee simple title to the Property and that the Deed
of Trust is a valid first lien on the Property, in the amount of the Loan.

                    “Treasury Rate” means, as of any date, the rate of interest
per annum on U.S. Treasury Notes having a maturity of ten (10) years as shown in
the 10-year listing in the “this week” column under the heading “Treasury
Constant Maturities,” of the FEDERAL RESERVE statistical release FORM H-15 which
has been most recently published (or, if for any reason that published rate as
of a date not more than 10 days prior to such first Business Day is not
available, another rate determined by Lender to be comparable, in its discretion
reasonably exercised, shall be used for this purpose).

                    “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.

                    “VCP” is defined in Section 4.1 of this Agreement.

                    “Water Authority” is defined in Section 4.1 of this
Agreement.

          Section 1.2     Singular and Plural Terms. Any defined term used in
the plural in any Loan Document shall refer to all members of the relevant class
and any defined term used in the singular shall refer to any number of the
members of the relevant class.

          Section 1.3     Accounting Principles. Any accounting term used and
not specifically defined in any Loan Document shall be construed in conformity
with, and all financial data required to be submitted under any Loan Document
shall be prepared in conformity with, generally accepted accounting principles
applied on a consistent basis.

          Section 1.4     Exhibits Incorporated. All exhibits to this Agreement,
as now existing and as the same may from time to time be supplemented and
modified, are incorporated herein by this reference.

          Section 1.5     References. Any reference to any Loan Document or
other document shall include such document both as originally executed and as it
may from time to time be supplemented and modified. References herein to
Articles, Sections and Exhibits shall be

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construed as references to this Agreement unless a different document is named.
References to subparagraphs shall be construed as references to the same Section
in which the reference appears.

          Section 1.6     Other Terms. The term “document” is used in its
broadest sense and encompasses agreements, certificates, opinions, consents,
instruments and other written material of every kind. The terms “including” and
“include” mean including (include) without limitation. The requirement that any
party “deliver” any item to another party shall be construed to require that the
first party “deliver or cause to be delivered” such item to the second party.
The term “any” as a modifier to any noun, shall be construed to mean “any and/or
all” preceding the same noun in the plural. The terms “herein”, “hereunder” and
other similar compounds of the word “here” refer to the entire document in which
the term appears and not to any particular provision or section of the document.
In all cases where Lender’s approval or consent is required hereunder, such
approval or consent may be withheld in Lender’s sole and absolute discretion.

          Section 1.7     Headings. All headings appearing in this Agreement and
article and section headings in the Loan Documents are for convenience of
reference only and shall be disregarded in construing this Agreement and the
Loan Documents.

          Section 1.8     Other Documents. This Agreement shall be deemed a
supplement to the other Loan Documents and shall not be construed as a
modification thereto. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control.

          Section 1.9     Intention. The provisions of this Article 1 shall
apply in every instance except where a different meaning, construction or
reference is clearly specified and intended.

ARTICLE 2
THE LOAN

          Section 2.1     Purpose of Loan. Borrower has purchased the Property
and has applied to Lender for a loan for the purpose of refinancing the existing
indebtedness encumbering the Property. Lender is willing to make such a loan to
Borrower on the terms and conditions contained in this Agreement and the other
Loan Documents. Subject to the terms and conditions hereof, Lender agrees to
lend to Borrower and Borrower agrees to borrow from Lender, the proceeds of the
Loan, which proceeds shall be disbursed by Lender to Borrower in a single
advance.

          Section 2.2     Principal.

                       (a)      From and after the Closing Date to and until
April 7, 2013, interest only shall be payable on the Loan. If the Maturity Date
of the Loan is extended pursuant to Exhibit F attached hereto, then commencing
on May 1, 2013 and continuing on the 1st day of each calendar month thereafter
until the final Maturity Date of the Loan, Borrower shall make monthly principal
payments on the Loan in an amount per month equal to $16,318.00.

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                       (b)      The entire principal balance of the Note shall
mature and be payable at the Maturity Date.

                       (c)      Lender shall enter in its records the amount of
the Loan, the rate of interest borne thereon and the payments of the principal
balance received by Lender, and such records shall be conclusive evidence of the
subject matter thereof, absent manifest error.

          Section 2.3     Interest.

                       (a)      Interest on the outstanding principal balance of
the Loan shall accrue at a rate per annum (herein, the “Applicable Rate”) equal
to 3.00% plus the one-month LIBOR rate quoted by Lender from Reuters Screen
LIBOR01 Page or any successor thereto, which shall be the one-month LIBOR rate
in effect and reset each New York Banking Day, adjusted for any reserve
requirement and any subsequent costs arising from a change in government
regulation, such rate rounded up to the nearest one-sixteenth percent (a “LIBOR
Rate”). If Borrower elects to obtain Interest Rate Protection from Lender, the
LIBOR Rate shall be modified, by written agreement of Borrower and Lender, to
conform to the repayment obligations in respect of such Interest Rate
Protection.

                       (b)      If the interest and/or charges in the nature of
interest, if any, provided for by this Agreement or by any other Loan Document,
shall contravene the Maximum Rate, if any, Borrower shall pay only such amounts
as would legally be permitted; provided, however, that if the defense of usury
and all similar defenses are unavailable to Borrower, Borrower shall pay all
amounts provided for herein. If, for any reason, amounts in excess of the
amounts permitted in the foregoing sentence shall have been paid, received,
collected or applied hereunder, whether by reason of acceleration or otherwise,
then, and in that event, any such excess amounts shall be applied to principal,
unless principal has been fully paid, in which event such excess amount shall be
refunded to Borrower.

                       (c)      Interest shall accrue on the principal amount of
the Loan from and after the date it is made by Lender to Borrower. Interest
computed at the Applicable Rate shall be computed on the basis of a 360 day
year, but shall be charged for the actual number of days principal is unpaid.

                       (d)      Interest on the Loan computed at the Applicable
Rate shall be payable, as accrued, on the first day of each calendar month,
commencing on the first day of the next calendar month following the calendar
month in which the Loan is funded to Borrower, and all unpaid, accrued interest
shall be paid in full at the Maturity Date.

                       (e)      If the Loan has not been repaid on or before the
Maturity Date or if an Event of Default occurs pursuant to this Agreement or any
other Loan Document, then the entire unpaid balance of the Loan shall (without
notice to or demand upon Borrower) become due and payable on said date, together
with all unpaid, accrued interest thereon, and with interest computed at the
Default Rate from and after that date until the Loan is paid in full. Interest
at the Default Rate shall be payable on the first day of each calendar month or
on demand, at Lender’s option.

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                       (f)      If Borrower fails to make any required payment
of principal or interest on the Loan (other than the balloon payment at the
Maturity Date) on or before the fifth (5th) day following the due date thereof,
Borrower shall pay to Lender, if requested by Lender, in addition to interest at
the Default Rate, a late payment charge equal to five percent (5%) of the amount
of the overdue payment, for the purpose of reimbursing Lender for a portion of
the expense incident to handling the overdue payment. This late charge shall
apply individually to all payments past due and there will be no daily prorated
adjustment. This provision shall not be deemed to excuse a late payment or be
deemed a waiver of any other rights Lender may have including the right to
declare the entire unpaid principal and/or interest immediately due and payable.
Borrower agrees that the “late charge” is a provision for liquidated damages and
represents a fair and reasonable estimate of the damages Lender will incur by
reason of the late payment considering all circumstances known to Borrower and
Lender on the date hereof. Borrower further agrees that proof of actual damages
will be difficult or impossible.

          Section 2.4     Prepayment. Borrower may prepay all or any portion of
the unpaid principal balance of the Note and accrued interest thereon, in full
or in part, without premium or penalty (except as provided in Section 2.5
hereof), after at least three (3) Business Days’ prior written notice from
Borrower to Lender of the date of prepayment. If Borrower shall fail to provide
such three (3) Business Days’ notice when required herein, Lender will charge,
and Borrower shall pay, additional interest on the amount prepaid, at the
Applicable Rate or the Default Rate whichever is applicable, through the date
three (3) Business Days after the date of prepayment, together with any breakage
costs or fees incurred by Lender arising out of such prepayment in connection
with any Interest Rate Protection relating to the Loan. Lender shall not be
obligated hereunder or under any of the other Loan Documents to re-advance to
Borrower any sums prepaid by Borrower, whether prepaid voluntarily or
involuntarily.

          Section 2.5     Regulatory Change; Conversion of Interest Rate.

                       (a)      If there shall occur any adoption or
implementation of, or change to, any Regulation, or interpretation or
administration thereof, which shall have the effect of imposing on Lender (or
Lender’s holding company) any increase or expansion of or any new: tax
(excluding taxes on its overall income and franchise taxes), charge, fee,
assessment or deduction of any kind whatsoever, or reserve, capital adequacy,
special deposits or similar requirements against credit extended by, assets of,
or deposits with or for the account of Lender or other conditions affecting the
extensions of credit under this Agreement; then Borrower shall pay to Lender
such additional amount as Lender deems necessary to compensate Lender for any
increased cost to Lender attributable to the extension(s) of credit under this
Agreement and/or for any reduction in the rate of return on Lender’s capital
and/or Lender’s revenue attributable to such extension(s) of credit. As used
above, the term “Regulation” shall include any federal, state or international
law, governmental or quasi-governmental rule, regulation, policy, guideline or
directive (including but not limited to the Dodd-Frank Wall Street Reform and
Consumer Protection Act and enactments, issuances or similar pronouncements by
the Bank for International Settlements, the Basel Committee on Banking
Regulations and Supervisory Practices or any similar authority and any successor
thereto) that applies to Lender. Lender’s determination of the additional
amount(s) due under this paragraph shall be binding in the

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absence of manifest error, and such amount(s) shall be payable within 15 days of
demand and, if recurring, as otherwise billed by Lender.

                       (b)      If, on the date for determining the LIBOR Rate,
Lender shall determine (which determination shall be conclusive in the absence
of manifest error) that, by reason of circumstances affecting the Money Markets,
adequate and fair means do not exist for ascertaining the LIBOR Rate, Lender
shall promptly give to Borrower telephonic notice (confirmed as soon as
practicable in writing) of the nature and effect of such circumstances. After
receipt of such notice and during the existence of such circumstances, the
Applicable Rate shall be determined based upon an alternate index selected by
Lender, in its sole discretion, reasonably comparable to that of LIBOR, intended
to generate a return substantially the same as that generated by the LIBOR rate.

                       (c)      Notwithstanding anything to the contrary herein
contained, if any adoption or implementation of, or change to, any Regulation,
or interpretation or administration thereof, shall make it unlawful for Lender
to make or maintain the Loan at the LIBOR Rate or to give effect to its
obligations as contemplated hereby, then, by written notice to Borrower, Lender
may require that the Applicable Rate be converted as described in the preceding
paragraph. Borrower shall indemnify Lender against any loss or expense which
Lender may sustain or incur (including, without limitation, any loss or expense
sustained or incurred in obtaining, liquidating or employing deposits or other
funds acquired to effect, fund or maintain the LIBOR Rate) as a consequence of
(a) any failure of Borrower to make any payment when due of any amount
hereunder, or (b) the occurrence of any Event of Default, including but not
limited to any loss or expense sustained or incurred or to be sustained or
incurred in liquidating or employing deposits from third parties acquired to
effect or maintain the LIBOR Rate. Lender shall provide to Borrower a statement
signed by an officer of Lender explaining any such loss or expense and setting
forth, if applicable, the computation pursuant to the preceding sentence which,
in the absence of manifest error, shall be conclusive and binding on Borrower.

          Section 2.6     Payments.

                       (a)      All payments and prepayments of principal of,
and interest on, the Note and all fees, expenses and other obligations under the
Loan Documents payable to Lender shall be made, without deduction, set off, or
counterclaim, in immediately available funds not later than 2:00 o’clock p.m.,
Dallas, Texas time on the dates due, to Lender at the office specified by it
from time to time, except as otherwise specifically provided in this Agreement.
Funds received on any day after 2:00 o’clock p.m., Dallas, Texas time shall be
deemed to have been received on the next Business Day. Whenever any payment to
be made hereunder or on the Note shall be stated to be due on a day which is not
a Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of any interest
or fees. Borrower authorizes Lender to charge any of Borrower’s accounts
maintained at Lender for the amount of any payment or prepayment on the Note or
other amount owing pursuant to any of the other Loan Documents, which charge may
be made by Lender if Borrower fails to make any payment required of Borrower
under this Agreement.

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                       (b)      All payments received by Lender for application
to the principal, interest, fees, costs and expenses due to Lender shall be
applied in the following order: (i) first, to any fees, costs and expenses due
to Lender hereunder; (ii) second, to any unpaid interest then due to Lender
hereunder; and (iii) third, to the unpaid principal balance of the Note.

ARTICLE 3
FEES AND COSTS

          Section 3.1     Commitment Fee. Borrower agrees to pay to Lender, a
one-time, nonrefundable loan commitment fee (“Commitment Fee”) in the amount of
$128,000, in consideration of the agreement of Lender to make the Loan to
Borrower. Borrower acknowledges and agrees that the Commitment Fee is a bona
fide fee and is intended as reasonable compensation to Lender for such purpose
and shall be deemed fully earned and nonrefundable on the Closing Date. No
termination or reduction of the Commitment shall entitle Borrower to a refund of
any portion of the Commitment Fee. Borrower agrees to keep the above described
Commitment Fee confidential and not to disclose the Commitment Fee set forth
above to any other federal or state savings and loan, national bank or other
lending or banking institution; except that such Commitment Fee may be disclosed
in tax filings, financial statements, to direct or indirect owners of Borrower
or as required by applicable law or court order.

          Section 3.2     Reimbursement of Lender. Borrower shall reimburse
Lender within fifteen (15) days following receipt of Lender’s demand for all
reasonable payments made by Lender and all reasonable costs incurred by Lender
(including appraisal fees, inspection fees and the fees and expenses of Lender’s
attorneys) in connection with the negotiation, preparation, execution, delivery,
construction loan administration, modification, extension, performance and
enforcement of the Loan Documents and all related matters, including, but not
limited to, the following:

                       (a)      Title insurance premiums, realty tax services,
recording fees, filing fees, and release and reconveyance fees.

                       (b)      Funds advanced by Lender pursuant to the Loan
Documents following an Event of Default or in connection with the performance by
Lender of any Obligation that Borrower has failed or refused to perform.

                       (c)      Lender’s commencement of, appearance in or
defense of any action or proceeding purporting to affect the rights or
obligations of Lender with respect to the Property or of the parties to any Loan
Document.

                       (d)      All claims, demands, causes of action,
liabilities, losses, commissions and other costs against which Lender is
indemnified hereunder, including specifically under Section 15.4 and under the
Environmental Indemnity.

                       (e)      Any expenditures by Lender on behalf of Borrower
pursuant to any other Loan Document.

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Borrower’s reimbursement Obligations shall be part of the Loan and part of the
outstanding principal balance of the Note, shall bear interest at the Default
Rate following the date reimbursement is due pursuant to this Section 3.2, and
shall be secured by the Security Documents, notwithstanding that such
Obligations may cause the principal balance of the Note to exceed its face
amount. Borrower’s reimbursement Obligations with respect to costs occurred
prior to cancellation of the Note shall survive the cancellation of the Note and
the release and reconveyance of the Security Documents, provided nothing herein
shall be interpreted to release Borrower from any Obligations specified in the
Loan Documents for Obligations that occur on or after cancellation of the Note.

ARTICLE 4
SPECIAL COVENANTS

          Section 4.1     Voluntary Cleanup Program; Escrow Account.

                       (a)      Borrower hereby represents to and covenants with
Lender as follows: The Property is currently enrolled in the Texas Commission on
Environmental Quality (“TCEQ”) Voluntary Cleanup Program (“VCP”) due to the
prior use of a portion of the Property for the operation of a dry cleaner plant.
TCEQ recommended that Borrower’s predecessor in title make application for a
Municipal Setting Designation (MSD) for the Property which would permit TCEQ to
issue a VCP Certificate of Completion for the Property without requiring
treatment of known contaminants resulting from the operation of the dry cleaner
plant. Borrower has submitted its application for a MSD and is diligently
pursuing (and will continue to diligently pursue) completion of all requirements
for approval of the MSD for the Property and issuance of the VCP Certificate of
Completion. Borrower has advised Lender that, in order to satisfy all
requirements for approval of its application for the MSD, Borrower was required
to (and did) provide written notice of its pending application for the MSD to
one or more municipal water authorities as required by applicable law (each a
“Water Authority”) and either (i) each Water Authority must adopt a resolution
objecting to or opposing such application, or (ii) a period of 120 days must
elapse after Borrower’s notice to such Water Authority without action by such
Water Authority (which failure of such Water Authority to act will be deemed its
approval of Borrower’s application). If, within said 120 day period, any Water
Authority takes action to indicate its disapproval of Borrower’s application,
Borrower will promptly notify Lender and promptly and diligently take such steps
as may be necessary to transfer the Property from the VCP into the TCEQ’s Dry
Cleaner Remediation Program (the “DCR Program”). If each Water Authority either
fails to take action within said 120-day period, Borrower will promptly notify
Lender and will diligently pursue issuance of the VCP Certificate of Completion.

                       (b)      Simultaneously with the execution of this
Agreement, Borrower shall deposit with Lender an amount in cash equal to
$140,000 (the “Escrow Deposit”), which Escrow Deposit is equal to 150% of the
estimated costs to be incurred by or on behalf of Borrower to complete the
process for obtaining a VCP Certificate of Completion for the Property. The
Escrow Deposit shall be deposited into a segregated, Lender-controlled demand
deposit account (the “Escrow Account”) established by Borrower with Lender as a
reserve for the purpose of paying estimated costs of completing the MSD
application process and issuance of the VCP Certificate of Completion. The
Escrow Account shall be a “bank directed” account and, until the

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Obligations have been repaid in full, Borrower shall have no right to withdraw
any monies held in the Escrow Account and Lender shall have no obligation to
release funds on deposit in the Escrow Account to Borrower or any other Person
for any reason, except as provided herein. Funds on deposit in the Escrow
Account shall be disbursed by Lender, no more frequently than once each calendar
month, to Borrower to pay costs and expenses incurred by Borrower in connection
with the completion of the MSD application process and the process for obtaining
a VCP Certificate of Completion and approved by Lender and for no other purpose
(herein, the “Permitted Costs”). Funds will be disbursed by Lender to Borrower
only after receipt by Lender of a written request from Borrower for disbursement
of funds in the Escrow Account, which request shall be accompanied by, if
required by Lender, copies of invoices and other paid receipts reflecting the
Permitted Costs incurred by Borrower. Once Borrower has obtained a VCP
Certificate of Completion for the Property or the Property has been transferred
into the DCR Program and Borrower has no further obligations under applicable
law to monitor or report the scope or extent of any existing contamination
resulting from the use of the Property for a dry cleaner plant, then so long as
no Event of Default exists, all funds then on deposit in the Escrow Account will
be disbursed by Lender to Borrower. If funds on deposit in the Escrow Account
are insufficient to pay all Permitted Costs, Borrower shall pay all such
Permitted Costs from its own source of funds. Upon the occurrence of an Event of
Default under the Loan Documents, Lender may, without notice to Borrower, apply
funds in the Escrow Account to pay any amounts owed to Lender under the Loan
Documents. As additional security for any and all obligations of Borrower under
the Loan Documents, Borrower does hereby irrevocably and unconditionally grant a
security interest in, and assign and transfer to Lender, all of its rights,
titles and interests in and to the Escrow Account, together with any and all
funds on deposit therein, all interest thereon and all proceeds thereof, and any
general intangibles and choses in action arising therefrom or related thereto.

          Section 4.2     Deadlines Regarding Environmental Issues; Cash Reserve
Account. Borrower covenants with Lender that on or before December 31, 2013,
Borrower shall cause (i) TCEQ to issue a VCP Certificate of Completion for the
Property, or (ii) the Property to be transferred from the VCP into the DCR
Program and Borrower will provide Lender with documents reasonably acceptable to
Lender evidencing the issuance of a VCP Certificate of Completion or the
Property’s acceptance into the DCR Program, as applicable. As used herein, the
term “Environmental Trigger Event” means the occurrence of either or both of the
following: (i) any Water Authority takes action, at any time on or before
February 1, 2012, to indicate its disapproval of Borrower’s application for a
MSD, or (ii) Borrower fails to cause the Property to obtain a VCP Certificate of
Completion (or, alternatively, cause the Property to be transferred from the VCP
into the DCR Program) on or before December 31, 2013 and Borrower fails to
deliver to Lender documents reasonably acceptable to Lender evidencing the
issuance of a VCP Certificate of Completion or the Property’s acceptance into
the DCR Program. Lender acknowledges that neither an Environmental Trigger Event
nor a Lease Trigger Event (as defined in Section 4.3 below) shall constitute an
Event of Default under the Loan Documents, however, upon the occurrence of an
Environmental Trigger Event or a Lease Trigger Event Borrower shall immediately
establish (and hereby directs Lender to establish) with Lender an account (which
account may, at the discretion of Lender, be a subaccount of the Escrow Account)
(herein, the “Cash Reserve Account”), which Cash Reserve Account shall be a
“bank directed” account and, until the Obligations has been repaid in full,
Borrower shall have no right

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to withdraw any monies held in the Cash Reserve Account and Lender shall have no
obligation to release funds on deposit in the Cash Reserve Account to Borrower
or any other Person for any reason, except as provided herein. Borrower agrees
that, commencing on the fifteenth (15th) day of the first calendar month
following the Environmental Trigger Event or Lease Trigger Event, as applicable,
and on continuing or before the fifteenth (15th) day of each calendar month
thereafter, Borrower shall deposit into the Cash Reserve Account all excess cash
flow generated by the Property after payment of actual operating expenses
incurred for the Property, as approved by Lender, and payment of all scheduled
installments of principal and interest of the Loan (“Excess Cash Flow”) for the
proceeding calendar month. All funds on deposit in the Cash Reserve Account
shall be held by Lender as provided herein as additional collateral for the
payment of the Obligations. Borrower’s obligation to deposit Excess Cash Flow
into the Cash Reserve Account shall continue until (A) as to an Environmental
Trigger Event, the earliest to occur of (i) repayment of the Loan in full, (ii)
receipt by Lender of a copy of the VCP Certificate of Completion issued by TCEQ
for the Property, or (iii) receipt by Lender of evidence that the Property has
been accepted by TCEQ into the DCR Program, or (B) as to a Lease Trigger Event,
(i) if the CVS Lease has been terminated, the execution by Borrower of a one or
more replacement Lease(s) acceptable to Lender for the entirety of the premises
covered by the CVS Lease with Tenant(s) approved by Lender, the acceptance of
such Tenant(s) of its/their premises under such replacement Lease(s), and
commencement of the payment of base rent by such Tenant(s) under such
replacement Lease(s) (the foregoing being referred to herein as the “CVS
Reletting Requirement”), or (ii) if Borrower has failed to timely deliver an
SNDA for the Rice Lease to Lender, upon delivery of an SNDA signed by Rice
reasonably acceptable to Lender. Once Borrower’s obligation to deposit Excess
Cash Flow into the Cash Reserve Account terminates as provided above, then so
long as no Event of Default exists, all funds then on deposit in the Cash
Reserve Account will be disbursed by Lender to Borrower. If Borrower shall fail
to pay any principal or interest on the Loan when due or any other amount due to
Lender under the Loan Documents, Lender shall be entitled to withdraw, without
prior notice to Borrower, available funds then on deposit in the Cash Reserve
Account and apply the such funds towards the payment of such principal, interest
or other amounts. Nothing contained in this Agreement shall be construed to
permit Borrower to defer payment of principal, interest or other amounts payable
to Lender under the Loan Documents beyond the date(s) due or to relieve Borrower
from its absolute obligation to pay the same in accordance with the Loan
Documents. Upon the occurrence of an Event of Default under the Loan Documents,
Lender may, without notice to Borrower, apply funds in the Cash Reserve Account
to pay any amounts owed to Lender under the Loan Documents. As additional
security for any and all obligations of Borrower under the Loan Documents,
Borrower does hereby irrevocably and unconditionally grant a security interest
in, and assign and transfer to Lender, all of its rights, titles and interests
in and to the Cash Reserve Account, together with any and all funds on deposit
therein, all interest thereon and all proceeds thereof, and any general
intangibles and choses in action arising therefrom or related thereto.

          Section 4.3     CVS Lease; Lease Trigger Event. Borrower acknowledges
that the CVS Lease provides that CVS will have a period of time within which to
conduct due diligence with respect to the Property and its intended use by CVS
and to obtain all permits and approvals required for CVS to construct
improvements to the leased premises described in the CVS Lease and to operate
its business therefrom. As used in this Agreement, the term “Lease Trigger

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Event” means the occurrence of either or both of the following events: (i) CVS
elects to terminate the CVS Lease pursuant to the provisions of Part II, Section
2 of the CVS Lease (in which Borrower shall promptly notify Lender of such
termination), or (ii) Borrower fails to deliver to Lender, on or before November
7, 2011, an original SNDA from Rice, in form reasonably acceptable to Lender.
Upon the occurrence of a Lease Trigger Event and Borrower shall establish the
Cash Reserve Account (if not already established) and commence depositing into
the Cash Reserve Account all Excess Cash Flow as required by Section 4.2 above.

          Section 4.4     Property Condition Report; Repair Reserve. Borrower
acknowledges that Section V of the Property Condition Report identifies deferred
maintenance and repairs recommended to be made to the Property (the “Required
Repairs”). Borrower agrees that Borrower will, within 120 days after the date of
this Agreement, complete all Required Repairs and deliver evidence to Lender of
completion by Borrower of all such Required Repairs. Simultaneously with the
execution of this Agreement, Borrower shall deposit with Lender an amount in
cash equal to $50,000 (the “Repair Reserve”), which Repair Reserve represents an
estimate of the costs to be incurred by or on behalf of Borrower to complete all
Required Repairs. The Repair Reserve shall be deposited into a segregated,
Lender-controlled demand deposit account (the “Repair Reserve Account”)
established by Borrower with Lender as a reserve for the purpose of paying
estimated costs of completing such application process. The Repair Reserve
Account shall be a “bank directed” account and, until the Obligations have been
repaid in full, Borrower shall have no right to withdraw any monies held in the
Repair Reserve Account and Lender shall have no obligation to release funds on
deposit in the Repair Reserve Account to Borrower or any other Person for any
reason, except as provided herein. Funds on deposit in the Repair Reserve
Account shall be disbursed by Lender to Borrower only upon completion of all of
the Required Repairs to pay or reimburse Borrower for costs and expenses
incurred by Borrower in connection with the completion of the Required Repairs
and for no other purpose. Repair Reserve funds will be disbursed by Lender to
Borrower only after receipt by Lender of a written request from Borrower for
disbursement of funds in the Repair Reserve Account, which request shall be
accompanied by, if required by Lender, copies of invoices and other paid
receipts reflecting the costs and expenses incurred by Borrower in completing
the Required Repairs. If funds on deposit in the Repair Reserve Account are
insufficient to pay all such costs and expenses, Borrower shall pay all such
costs and expenses from its own source of funds. Upon the occurrence of an Event
of Default under the Loan Documents, Lender may, without notice to Borrower,
apply funds in the Repair Reserve Account to pay any amounts owed to Lender
under the Loan Documents. As additional security for any and all obligations of
Borrower under the Loan Documents, Borrower does hereby irrevocably and
unconditionally grant a security interest in, and assign and transfer to Lender,
all of its rights, titles and interests in and to the Repair Reserve Account,
together with any and all funds on deposit therein, all interest thereon and all
proceeds thereof, and any general intangibles and choses in action arising
therefrom or related thereto.

          Section 4.5     Rice Lease; Lease Reserve. Borrower acknowledges that
the Rice Lease, as amended to date and by that certain Second Lease Amendment
dated as of October 6, 2011, requires Borrower to pay to Rice an amount equal to
$350,000 (the “Lease Payment”) within five (5) days after the CVS Contingency
Satisfaction Date (as defined in said Second Lease Amendment) occurs.
Simultaneously with the execution of this Agreement, Borrower shall

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deposit with Lender an amount in cash equal to $350,000 (the “Lease Reserve”) to
secure Borrower’s obligation to make the Lease Payment. The Lease Reserve shall
be deposited into a segregated, Lender-controlled demand deposit account (the
“Lease Reserve Account”) established by Borrower with Lender. The Lease Reserve
Account shall be a “bank directed” account and, until the Obligations have been
repaid in full, Borrower shall have no right to withdraw any monies held in the
Lease Reserve Account and Lender shall have no obligation to release funds on
deposit in the Lease Reserve Account to Borrower or any other Person for any
reason, except as provided herein. Funds on deposit in the Lease Reserve Account
shall be disbursed by Lender only if and when the Lease Payment is due and
payable to Rice (and Lender reserves the right to [and Borrower hereby consents
to having Lender] wire transfer the Lease Payment directly to Rice if Lender
deems it appropriate to do so to satisfy any obligation or liability of Lender
arising under the SNDA hereafter executed by Lender and Rice). If, for any
reason, Rice waives its right to receive the Lease Payment or Borrower has no
further obligation to make the Lease Payment and CVS terminates the CVS Lease,
then Lender shall continue to hold the Lease Reserve until the CVS Reletting
Requirement has been satisfied (at which time, so long as no Event of Default
exists, Lender will return the funds on deposit in the Lease Reserve Account to
Borrower). Upon the occurrence of an Event of Default under the Loan Documents,
Lender may, without notice to Borrower, apply funds in the Lease Reserve Account
to pay any amounts owed to Lender under the Loan Documents. As additional
security for any and all obligations of Borrower under the Loan Documents,
Borrower does hereby irrevocably and unconditionally grant a security interest
in, and assign and transfer to Lender, all of its rights, titles and interests
in and to the Lease Reserve Account, together with any and all funds on deposit
therein, all interest thereon and all proceeds thereof, and any general
intangibles and choses in action arising therefrom or related thereto.

ARTICLE 5
LOAN DOCUMENTS

          Section 5.1     Security Documents. The Loan shall be secured by the
Property and the Property and such other collateral as described in the Loan
Documents. In consideration of Lender’s execution of this Agreement and as
security for (i) the payment of all amounts owing by Borrower to Lender under
the Loan Documents, together with all extensions, renewals, supplements and
modifications of any of them (including extensions and renewals at different
rates of interest and/or evidenced by new or additional promissory notes
reciting that such notes are so secured); (ii) the performance of all other
Obligations, covenants and agreements of Borrower in the Loan Documents; and
(iii) the payment and performance of all other obligations now or hereafter
owing to Lender by Borrower, Borrower shall, at its sole expense, deliver to
Lender (and cause to be recorded or filed in applicable County and State
records, where appropriate) the following documents, each in such form and
substance, and executed by such Persons, as Lender in its sole discretion
requires: (a) the Deed of Trust; (b) the Assignment of Leases, (c) the Security
Agreement, (d) the Financing Statement; and (e) all other documents reasonably
required by Lender, necessary to confirm or perfect the rights of Lender under
the Loan Documents. Borrower hereby authorizes Lender to record any and all
financing statements as Lender may deem necessary to protect or perfect the
security interests granted to Lender herein and in the other Loan Documents.

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          Section 5.2     Guaranty. In consideration of Lender’s execution of
this Agreement, Guarantor shall deliver to Lender the Payment Guaranty.

          Section 5.3     Environmental Indemnity; Environmental Insurance. In
consideration of Lender’s execution of this Agreement, Borrower and Guarantor
shall execute and deliver to Lender the Environmental Indemnity. Borrower also
shall cause to be delivered to Lender a environmental contamination insurance
policy covering the Property, in form and substance satisfactory to Lender (the
“Environmental Insurance Policy”).

          Section 5.4      Assignment and Subordination of Management Agreement.
In consideration of Lender’s execution of this Agreement, Borrower shall deliver
to Lender the Management Agreement and the Assignment and Subordination of
Management Agreement.

ARTICLE 6
RESERVED

ARTICLE 7
RESERVED

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

          As a material inducement to Lender’s execution of this Agreement,
Borrower represents and warrants to Lender that:

          Section 8.1     Formation, Qualification and Compliance. Borrower (a)
is validly existing and in good standing under the Laws of the State of its
organization; (b) has all requisite authority to conduct its business and own
and lease its properties; and (c) is qualified and in good standing in every
jurisdiction in which the nature of its business makes qualification necessary
or where failure to qualify could have a Material Adverse Effect on its
financial condition or the performance of its Obligations under the Loan
Documents. Borrower is in compliance in all respects with all Laws and
requirements applicable to its business, the violation of which might materially
affect its Obligations hereunder, and has obtained all approvals, licenses,
exemptions and other authorizations from, and has accomplished all filings,
registrations and qualifications with, any Governmental Agency that are
necessary for the transaction of its business.

          Section 8.2     Execution and Performance of Loan Documents. (a)
Borrower and General Partner each has all requisite power and authority to
execute and perform its respective Obligations under the Loan Documents, and (b)
the execution by Borrower and General Partner and the performance by Borrower
and General Partner of their respective Obligations under each Loan Document
have been authorized by all necessary action and do not and will not: (i)
require any consent or approval not heretofore obtained of any Person having any
interest in Borrower or General Partner; (ii) violate any provision of, or
require any consent or approval not heretofore obtained under, the operating
agreement, articles of organization, bylaws or other governing documents
applicable to Borrower or General Partner; (iii) result in or require the
creation or imposition of any lien, claim, charge or other right of others of
any kind (other than under the Loan Documents) on or with respect to any
property or assets owned or leased by Borrower or

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General Partner; (iv) violate any provision of any Law, order, writ, judgment,
injunction, decree, determination or award presently in effect; or (v) conflict
with or constitute a breach or default under, or permit the acceleration of
obligations owed pursuant to, any contract, loan agreement, lease or other
document to which Borrower or General Partner is a party or by which either
Borrower or General Partner or any of their respective property is bound; (c)
neither Borrower nor General Partner is in default beyond any applicable notice
and cure period in any respect under any Law, order, writ, judgment, injunction,
decree, determination, award, contract or lease; (d) no approval, license,
exemption or other authorization from, or filing, registration or qualification
with, any Governmental Agency is required in connection with: (i) the execution
by Borrower and General Partner of, and the performance by Borrower and General
Partner of their respective obligations under the Loan Documents; and (ii) the
creation and perfection of the liens described in the Loan Documents; (e) the
Loan Documents, when executed and delivered, will constitute legal, valid and
binding obligations of Borrower enforceable in accordance with their respective
terms; and (f) the signatories of Borrower and General Partner are fully
authorized to execute the Loan Documents to which they are a party.

          Section 8.3     Sole Assets. Borrower’s sole asset is the Property.
Borrower has no liabilities other than those attributable to the Property.

          Section 8.4     Tax Liability. Borrower and General Partner have filed
all required federal, state and local tax returns. Borrower and General Partner
have paid all federal, state and local taxes due (including any interest and
penalties) other than taxes being promptly and actively contested by Borrower or
a Manager (as applicable) in good faith and by appropriate proceedings and which
have been disclosed to Lender in writing.

          Section 8.5     Government Requirements. To Borrower’s knowledge, no
violation of any Laws exists with respect to the Property (except with respect
to violations of Environmental Laws disclosed by the Environmental Reports).
Borrower has obtained and will thereafter comply with the conditions of, all
licenses, exemptions, approvals and other authorizations of Governmental
Agencies required in connection with the Property, including, without
limitation, each of the following as applicable: (a) zoning (if any), land use
and planning requirements, including requirements arising from, or relating to
the adoption or amendment of, any applicable general plan; (b) subdivision and
parcel map requirements; (c) environmental requirements, including requirements
of the National Environmental Policy Act and the preparation and approval of all
required environmental impact statements and reports; (d) requirements in
connection with use, occupancy and building permits; (e) requirements of public
utilities; (f) all restrictive covenants and all obligations created by private
contracts and leases which affect ownership, construction, equipping, fixturing,
use, occupancy, sale or leasing of the Property (or any portion thereof), and
(g) Accessibility Regulations. Borrower shall be solely responsible for all
compliance costs associated with any Accessibility Regulations with respect to
the Property, including, without limitation, attorneys’ fees and litigation
costs, which responsibility with respect to matters occurring before repayment
of the Obligations or foreclosure of the Property shall survive the repayment of
the Loan and foreclosure of the Property. Borrower will comply and, to the
extent it is able, will cause others to comply with all laws and requirements of
Governmental Agencies having jurisdiction over the processing, approving and
recording of any subdivision map, the Land or construction or sale of the
Improvements (or any of them) and will

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furnish Lender with reports of any official searches for violation of any
requirements established by such Governmental Agencies.

          Section 8.6     No Adverse Conditions. Borrower does not know of any
defects, facts or conditions affecting the Land that would make it unsuitable
for the use contemplated hereunder or of any abnormal hazards (including earth
movement or slippage) affecting the Land.

          Section 8.7     Rights of Others. To Borrower’s knowledge, the
Property is in compliance with, all covenants, conditions, restrictions,
easements, rights of way and other rights of third parties relating to the
Property.

          Section 8.8     Reserved.

          Section 8.9     Litigation. There are no actions or proceedings
(excluding for this purpose the VCP) pending or, to the best of Borrower’s
knowledge, threatened against or affecting Borrower or the Property before any
Governmental Agency.

          Section 8.10     Reserved.

          Section 8.11     Condemnation. No condemnation proceeding or
moratorium is pending or, to the best of Borrower’s knowledge, threatened
against the Land which would impair the construction, use, sale or occupancy of
the Property.

          Section 8.12     Name and Principal Place of Business. Borrower
presently uses no trade name other than its actual name. Borrower shall
immediately notify Lender in writing of any change in the jurisdiction of
organization, or the change in the legal, trade or fictitious business names
used by, Borrower, any of its constituent partners, or Guarantor, and Lender is
hereby authorized to file or record any additional financing statements,
amendments and other certificates necessary to reflect any such changes.

          Section 8.13     ERISA. Borrower maintains no pension, retirement or
profit sharing employee benefit plan that is subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended from time to time.
If applicable, Borrower has satisfied the minimum funding standards under the
Employee Retirement Income Security Act of 1974 (“ERISA”) and is in compliance
in all respects with the other presently applicable provisions of ERISA. The
making of the Loan by Lender to Borrower will not violate ERISA, nor constitute
a prohibited transaction under ERISA.

          Section 8.14     Brokers. Borrower shall indemnify and hold Lender
harmless, in accordance with Section 15.4, against any claim or claims by any
broker or agent or any other person that claims they are or may be entitled to a
commission or other form of compensation in connection with the securing of or
making of the Loan.

          Section 8.15     Anti-Terrorism Regulations.

                       (a)     General. None of Borrower, Guarantor or any
Affiliate of Borrower or Guarantor is in violation of any Anti-Terrorism Law or
engages in or conspires to engage in any

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transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.

                     (b)     Executive Order No. 13224. None of Borrower,
Guarantor, any Affiliate of Borrower or, to the best of Borrower’s knowledge,
any Affiliate of Guarantor, or, to the best of Borrower’s knowledge, their
respective agents acting or benefiting in any capacity in connection with the
Loan or other transactions hereunder, is any of the following (each a “Blocked
Person”):

 

 

 

                    (i)     a Person that is listed in the annex to, or is
otherwise subject to the provisions of, Executive Order No. 13224;

 

 

 

                    (ii)     a Person owned or controlled by, or acting for or
on behalf of, any Person that is listed in the annex to, or is otherwise subject
to the provisions of, Executive Order No. 13224;

 

 

 

                    (iii)     a Person with which Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

 

 

 

                    (iv)     a Person that commits, threatens or conspires to
commit or supports “terrorism” as defined in Executive Order No. 13224;

 

 

 

 

                     (v)     a Person that is named as a “specially designated
national” on the most current list published by the U.S. Treasury Department
Office of Foreign Asset Control at its official website or any replacement
website or other replacement official publication of such list; or

 

 

 

 

                    (vi)     a Person who is affiliated or associated with a
Person listed above.

                       (c)     None of Borrower, Guarantor or any Affiliate of
Borrower or Guarantor, nor any of their agents acting in any capacity in
connection with the Loan, any letters of credit or other transactions hereunder
(i) conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Blocked Person, or (ii)
deals in, or otherwise engages in any transaction relating to, any property or
interests in property blocked pursuant to Executive Order No. 13224.

                       (d)     Neither Borrower nor any Affiliate of Borrower,
nor any Person owning an interest therein, are a “Special Designated National”
or “Blocked Person” as those terms are defined in the office of Foreign Asset
Control Regulations (31 C.F.R. § 500 et. seq.).

          Section 8.16     Financial Statements. All financial statements and
other financial information regarding Borrower or Guarantor furnished by or on
behalf of Borrower or Guarantor to Lender are true, correct, and complete as of
the dates specified therein and fully and accurately present the financial
condition of Borrower or Guarantor as of the dates specified. No change has
occurred in Borrower’s or Guarantor’s financial condition reflected therein
since the respective dates of the financial statements for such Person delivered
to Lender. Borrower and Guarantor are solvent and will remain solvent after
giving effect to all borrowings and guaranties

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contemplated in the Loan Documents. Borrower will keep accurate books and
records in accordance with generally accepted accounting principles,
consistently applied, in which full, true and correct entries shall be promptly
made with respect to the Property and the operation thereof. Borrower shall
permit Lender, at all reasonable times, to examine and copy the books and
records of Borrower pertaining to the Property.

          Section 8.17   Title to the Property. Borrower owns and holds full
legal and equitable title to the Land, in fee simple absolute, subject to no
encumbrances other than the Permitted Encumbrances. No construction work shall
be supplied, purchased, or installed pursuant to agreements whereby a security
interest or title is retained or any right is reserved or accrues to remove or
repossess any construction work. Borrower shall deliver to Lender on request
true and correct copies of any contracts, bills of sale, statements, receipted
vouchers or agreements under which Borrower claims title to any construction
work. Borrower will be the sole owner of all Personal Property acquired by
Borrower after the date hereof, free from any adverse lien, security interest or
adverse claim of any kind whatsoever, except for security interests and liens in
favor of Lender and liens being contested by Borrower in compliance with the
provisions of Section 11.11.

          Section 8.18   Governmental Regulations. Borrower is not subject to
regulation under the Investment Company Act of 1940, the Federal Power Act, the
Public Utility Holding Company Act of 1935, the Interstate Commerce Act or any
federal or state statute or regulation limiting its ability to incur
indebtedness for money borrowed.

          Section 8.19   Utilities. All utility and municipal services required
for the construction, occupancy, use and operation of the Improvements are
available for use and tap in at the boundaries of the Land and will be available
in sufficient amounts for the intended use of the Improvements. All binding
agreements, allocations or commitment letters required to ensure the provision
of such services have been obtained or will be available from the applicable
utility companies and/or Governmental Agencies providing such services. All
necessary or required utility, private roadway, parking, access (including curb
cuts), easements, covenants and permits have been granted or issued.

          Section 8.20   Other Lands. The Land is not part of a larger tract of
land owned by Borrower, Guarantor, or any affiliate of Borrower or Guarantor,
and is not otherwise included under any unity of title or similar covenant with
other lands not encumbered by the Deed of Trust, except to the extent set forth
in a Permitted Encumbrance consented to by Lender. The Land constitutes a
separate tax lot or lots with a separate tax assessment or assessments for the
Land and Improvements, independent of any other lands or improvements. The Land
and Improvements comply with all subdivision and platting Laws and would so
comply if the Land and Improvements were conveyed as a separate parcel. No
portion of the Property is (or will be) dependent on any other property not
subject to the lien of the Deed of Trust to fulfill any Laws, and no other
property not subject to the lien of the Deed of Trust is (or will be) dependent
on any portion of the Property to fulfill any Laws.

          Section 8.21   Permits. Borrower has obtained all permits which are
necessary for the ownership and operation of the Property.

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          Section 8.22   Representations and Warranties. Until repayment in full
of the Loan and all other Obligations, Borrower shall ensure that the
representations and warranties remain true and complete.

ARTICLE 9
AFFIRMATIVE COVENANTS

          While any Obligation of Borrower under the Loan Documents remains
outstanding, Borrower agrees that:

          Section 9.1     Protection of Liens. Borrower will maintain the lien
of the Deed of Trust as a first priority lien on the Property and take all
actions, and execute and deliver to Lender all documents reasonably required by
Lender from time to time in connection therewith; and maintain the security
interest created by the Deed of Trust on the Personal Property as a first
priority security interest and take all actions, and execute and deliver to
Lender all documents, reasonably required by Lender from time to time in
connection therewith, including supplemental security agreements, and other
documents extending or perfecting Lender’s security interest in the Personal
Property as it exists from time to time.

          Section 9.2     Payment of Taxes, Assessments, Costs and Expenses.
Borrower will pay all costs and expenses required to satisfy the conditions of
this Agreement. Without limitation of the generality of the foregoing, Borrower
shall pay and discharge all taxes, assessments and other governmental charges
upon the Property or Improvements when required pursuant to the Deed of Trust
and, except as permitted by Section 11.11 of this Agreement, all claims for
work, services, labor and materials which, if unpaid, might become a lien or
charge upon the Property or Improvements. Borrower shall pay all costs and
expenses of Lender and Borrower in connection with the Property and this Loan,
including, but not limited to, all expenses of hazard and liability insurance
premiums, reasonable fees for the examination of the status of title,
preparation and review of Loan Documents, title insurance premiums and closing
and servicing fees, loan fees, surveys, architect and engineer fees, inspection
fees, and out-of-pocket expenses incurred by Lender in connection with
committing for, documenting, closing, making, disbursing and transferring the
Loan, including, but not limited to, recording and filing fees and all mortgage
taxes, documentary taxes and intangible taxes, costs of Title Company
disbursements, if any, as well as all costs related to the repayment of this
Loan, any fees and costs of outside and/or special counsel and fees and
commissions due to brokers in connection with this transaction. Such costs shall
be so paid by Borrower whether or not the Loan is actually closed and/or fully
disbursed. In the event the Note is not paid at maturity, howsoever said
maturity is brought about, and the same is placed in the hands of an attorney
for collection or if collection by suit or through the probate court or
bankruptcy court or by any other legal proceeding is sought, Borrower agrees to
pay all reasonable expenses incurred by Lender, including attorneys fees in
accordance with terms and provisions of the Note.

          Section 9.3     Reserved.

          Section 9.4     Continued Compliance. Borrower will comply with all
Laws and requirements of Governmental Agencies, and all rights of third parties,
relating to the Property or

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Borrower’s business or other properties, all as described more fully in Section
8.5, and deliver to Lender from time to time, within ten (10) days of Lender’s
request therefor, evidence reasonably satisfactory to Lender that Borrower has
complied with any such Law, requirement or right.

          Section 9.5     Books and Records. Borrower will maintain complete
books of account and other records reflecting its operations (in conjunction
with any other businesses as well as with respect to the Property), including
all contributions of equity investment capital, in accordance with sound
accounting practices consistently applied, and permit Lender and its agents, at
reasonable times, to inspect and copy any such document.

          Section 9.6        Maintenance and Security of Property. Borrower will
maintain the Property in good condition and repair, ordinary wear and tear
accepted, take all measures reasonably required by Lender to protect the
physical security of the Property, and not permit any waste or damage with
respect to the Property and comply with the terms and conditions of all leases
of any portion of the Property.

             Section 9.7     Financial Statements. Borrower will deliver to
Lender, or cause to be delivered:

                       (a)     As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year, annual financial
statements for Borrower. Such financial statements shall include, without
limitation, a balance sheet as of the end of such fiscal year, a list of
contingent liabilities, the related statements of income and cash flow for such
fiscal year, and, operating statements for the Property covering the applicable
period.

                       (b)     Financial statements for Guarantor as required by
the terms of the Guaranty.

                       (c)     As soon as available and in any event within
sixty (60) days after filing a copy of (i) Borrower’s federal and state tax
returns with all exhibits and schedules, and (ii) Guarantor’s federal and state
tax returns with all exhibits and schedules;

                       (d)     As soon as available and in any event within
thirty (30) days after the end of each month, (i) an operating statement for the
Property setting forth the income and expenses for the Property; and (ii) a
report of the leasing for the Property (including rent rolls and delinquencies)
for the immediately preceding month. All such reports shall be in such form and
in reasonable detail as Lender may request. Additionally, Borrower shall deliver
a certificate executed by Borrower certifying that each such operating statement
has been prepared in accordance with generally accepted accounting principles,
applied on a consistent basis and fairly presents the results of the Property’s
operations and that the Property leasing reports are true and correct in all
material respects.

                       (e)     As soon as available and in any event within
forty-five (45) days prior to the end of each calendar year, a pro forma
operating budget for the Property.

                       (f)     On or before the last day of each calendar
quarter, a written progress report, prepared by Borrower, describing the status
of Borrower’s efforts to obtain acceptance of

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its application for a MSD (and issuance of a VCP Certificate of Completion) or
to transfer the Property to the DCR Program, together with such documents and
information regarding the same as Lender may reasonably require.

                       (g)     Simultaneously with the delivery of each set of
financial statements referred to in Sections 9.7(a) and (b), a certificate of an
authorized officer or signatory of Borrower and Guarantor respectively, in form
and substance satisfactory to Lender, attesting to compliance with the terms of
the Loan Documents, and stating, to the best of such authorized officer’s
knowledge and belief, whether or not such financial statements are true and
correct as of the date of the delivery of such financial statements.

                       (h)     Annually or semi-annually, as applicable,
evidence of payment of all real estate taxes and assessments affecting the
Property and payment and renewal of insurance policies required to be obtained
and maintained by Borrower pursuant to the Loan Documents.

                       (i)     Borrower will use commercially reasonable efforts
to obtain and deliver to Lender financial statements for Tenants and other
information regarding Tenants and prospective tenants or other leasing
information as Lender may reasonably request from time to time.

                       (j)     Such other documents and information as Lender
may reasonably request.

          Section 9.8     Notice of Certain Matters. Borrower will give notice
to Lender, of each of the following to the extent that Borrower has actual
knowledge of same:

 

 

 

                       (i)     any action or proceeding instituted by or against
it, any of its constituent partners, or Guarantor in any federal or state court
or other regulatory body; or (ii) any such proceedings that are threatened
against it, any of its constituent partners or Guarantor which, if adversely
determined, could have a material and adverse effect upon any of their
businesses, or conditions (financial or otherwise) or which would constitute an
event of default or a default under any other contract, or agreement to which
any of them is a party; or (iii) any actions, proceedings or notices adversely
affecting the Property or Lender’s interest therein;

 

 

 

                       (ii)     any dispute between Borrower and any
Governmental Agency relating to the Property, the adverse determination of which
might materially affect the Property;

 

 

 

                       (iii)     any commencement of proceedings in condemnation
or eminent domain relating to the Property;

 

 

 

                       (iv)     any trade name hereafter used by Borrower and
any change in Borrower’s principal place of business;

 

 

 

                       (v)     any Event of Default or event which, with the
giving of notice or the passage of time or both, would constitute an Event of
Default;

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                       (vi)     any other event or condition causing a Material
Adverse Effect in the financial condition of Borrower, General Partner or
Guarantor; and

 

 

 

                       (vii)    any failure by any party to perform any material
obligation under any Lease, any event or condition which would permit a Tenant
to terminate or cancel a Lease, or any notice given by a Tenant with respect to
the foregoing, specifying in each case the action Borrower has taken or will
take with respect thereto.

          Section 9.9     Notice of Junior Liens. Borrower will give notice to
Lender of the creation of any lien on any portion of the Property or the
Personal Property within five (5) days after Borrower receives notice of its
creation.

          Section 9.10     Additional Reports and Information. Borrower will
deliver to Lender, in form and substance reasonably satisfactory to Lender and
within ten (10) days of Lender’s request therefor, (a) copies of all regular or
periodic reports which are available for public inspection or which Borrower is
required to file with any Governmental Agency; (b) a certificate stating that to
Borrower’s actual knowledge no Event of Default remains uncured or setting forth
all existing Events of Default in reasonable detail; and (c) all other
information relating to Borrower, General Partner, Guarantor, the Property or
the Loan reasonably required by Lender from time to time.

          Section 9.11     Further Assurances. Borrower will execute and
acknowledge (or cause to be executed and acknowledged) and deliver to Lender all
documents, and take all actions, reasonably required by Lender from time to time
to confirm the rights created or now or hereafter intended to be created under
the Loan Documents, to protect and further the validity, priority and
enforceability of the Security Documents, to subject to the Security Documents
any property intended by the terms of any Loan Document to be covered by the
Security Documents, to maintain, perfect or insure Lender’s security provided
for herein and in the other Loan Documents, including, without limitation, the
filing or recording of UCC renewal statements or amendments, the execution of
such amendments to the Deed of Trust and the other Loan Documents and the
delivery of such endorsements to the Title Policy, all as Lender reasonably
requires to carry out the purposes of the Loan Documents and the transactions
contemplated thereunder, and Borrower shall pay all fees and expenses (including
reasonable attorneys’ fees) related thereto or incurred by Lender in connection
therewith.

          Section 9.12     Reserved.

          Section 9.13     Continued Existence. Borrower, Guarantor, and each
constituent partner thereof shall maintain and preserve its respective existence
and all rights and franchises material to its respective business.

          Section 9.14     Guarantor Covenants. Borrower shall cause Guarantor
to comply with all financial covenants and conditions contained in the Guaranty.

          Section 9.15     Leases. Borrower shall provide to Lender a correct
and complete copy of each Lease, including any exhibits, and each guarantee
thereof, if any, prior to execution unless the Lease in question is deemed to be
an Approved Lease (in which event Borrower shall deliver

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to Lender such Lease, exhibits and guarantee, if any, promptly after execution
of the same by Borrower and Tenant). No approval of any Lease by Lender shall be
for any purpose other than to protect Lender’s security and to preserve Lender’s
rights under the Loan Documents. No approval by Lender shall result in a waiver
of any default of Borrower. In no event shall any approval by Lender of a Lease
be a representation of any kind, with regard to the Lease or its adequacy or
enforceability, or the financial capacity of any tenant or guarantor. The term
“Approved Lease Form” means the form of lease agreement hereafter approved in
writing by Lender. Unless disclosed by the terms of such Lease, prior to the
review and approval of any such Lease, Borrower shall deliver to Lender a
schedule of all tenant improvements to be paid for by Borrower and all leasing
commissions to be paid by Borrower in connection with such Lease. The term
“Approved Lease” means any Lease covering space in the Improvements which has
either been approved in writing by Lender or satisfies leasing guidelines, if
any, agreed to by Borrower and Lender after the date of this Agreement.

          Section 9.16     Operating Income. Borrower shall first apply all
income from Leases, and all other income derived from the Property, to pay costs
and expenses associated with the ownership, maintenance, development, operating,
and marketing of the Improvements, including all amounts then required to be
paid under the Loan Documents, before using or applying such income for any
other purpose.

          Section 9.17     Single Purpose Entity. Borrower covenants and agrees
that it has not and shall not: (a) engage in any business or activity other than
the acquisition, ownership, operation and maintenance of the Property, and
activities incidental thereto; (b) acquire or own any material asset other than
(i) the Property, and (ii) such incidental Personal Property as may be necessary
for the operation of the Property; (c) merge into or consolidate with any person
or entity or dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change its legal
structure, without in each case Lender’s consent; (d) fail to preserve its
existence as an entity duly organized, validly existing and in good standing (if
applicable) under the laws of the jurisdiction of its organization or formation,
or except as expressly permitted by this Agreement or without the prior written
consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower’s organizational documents; (e) own any subsidiary or
make any investment in or acquire the obligations or securities of any other
person or entity without the consent of Lender; (f) commingle its assets with
the assets of any of its partner(s), members, shareholders, affiliates, or of
any other person or entity or transfer any assets to any such person or entity
other than distributions on account of equity interests in Borrower permitted
hereunder and properly account for; (g) incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Loan, except unsecured trade and operational debt incurred with trade creditors
in the ordinary course of its business of owning and operating the Property in
such amounts as are normal and reasonable under the circumstances, provided that
such debt is paid when due and provided in any event the outstanding principal
balance of such debt shall not exceed at any one time one percent (1%) of the
outstanding Loan; (h) allow any person or entity to pay its debts and
liabilities (except Guarantor) or fail to pay its debts and liabilities solely
from its own assets; (i) fail to maintain its records, books of account and bank
accounts separate and apart from those of the shareholders, partners, members,
principals and affiliates of Borrower, the affiliates of a shareholder, partner
or member of Borrower, and any other person or entity fail to prepare and

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maintain its own financial statements in accordance with generally accepted
accounting principles and susceptible to audit, or if such financial statements
are consolidated, fail to cause such financial statements to contain footnotes
disclosing that the Property is actually owned by Borrower; (j) enter into any
contract or agreement with any shareholder, partner, member, principal or
affiliate of Borrower, Guarantor or any shareholder, partner, member, principal
or affiliate thereof, except as expressly permitted by the Loan Documents and
except upon terms and conditions that are intrinsically fair and substantially
similar to those that would be available on an arms-length basis with third
parties other than any shareholder, partner, member, principal or affiliate of
Borrower or Guarantor, or any shareholder, partner, member, principal or
affiliate thereof; (k) seek dissolution or winding up, in whole or in part; (l)
fail to correct any known misunderstandings regarding the separate identity of
Borrower; (m) guarantee or become obligated for debts of any other entity or
person, or hold itself out to be responsible or pledge its assets or credit
worthiness for the debts of another person or entity or allow any person or
entity to hold itself out to be responsible or pledge its assets or credit
worthiness for the debts of the Borrower (except for a Guarantor); (n) make any
loans or advances to any third party, including any shareholder, partner member,
principal or affiliate of Borrower, or any shareholder, partner, member,
principal or affiliate thereof; (o) fail to file its own tax returns or to use
separate contracts, purchase orders, stationery, invoices and checks; (p) fail
either to hold itself out to the public as a legal entity separate and distinct
from any other entity or person or to conduct its business solely in its own
name in order not (i) to mislead others as to the entity with which such other
party is transacting business, or (ii) to suggest that Borrower is responsible
for the debts of any third party (including any shareholder, partner, member,
principal or affiliate of Borrower, or any shareholder, partner, member,
principal or affiliate thereof); (q) fail to allocate fairly and reasonably
among Borrower and any third party (including, without limitation, any
Guarantor) any overhead for common employees, shared office space or other
overhead and administrative expenses; (r) allow any person or entity to pay the
salaries of its own employees or fail to maintain a sufficient number of
employees for its contemplated business operations; (s) fail to maintain
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated business operations;
(t) file a voluntary petition or otherwise initiate proceedings to have Borrower
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against Borrower or file a petition seeking or
consenting to reorganization or relief of Borrower as debtor under any
applicable federal or state law relating to bankruptcy, insolvency, or other
relief for debtors with respect to Borrower; or seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequester,
custodian, liquidator (or other similar official) of Borrower or of all or any
substantial part of the properties and assets of Borrower, or make any general
assignment for the benefit of creditors of Borrower, or admit in writing the
inability of Borrower to pay its debts generally as they become due or declare
or effect a moratorium on Borrower debt or take any action in furtherance of any
such action; (u) hold itself out as or be considered as a department or division
of (i) any shareholder, partner, principal, member or affiliate of Borrower,
(ii) any affiliate of a shareholder, partner, principal, member or affiliate of
Borrower, or (iii) any other person or entity or allow any person or entity to
identify Borrower as a department or division of that person or entity; (v)
conceal assets from any creditor, or enter into any transaction with the intent
to hinder, delay or defraud creditors of Borrower or the creditors of any other
personal or entity; (w) fail to provide in its (i) articles of organization,
certificate of formation and/or operating agreement, as applicable, if it is a
limited liability company, (ii) limited partnership

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agreement, if it is a limited partnership or (iii) certificate or articles of
incorporation, if it is a corporation; (x) fail to hold its assets in its own
name; (y) if Borrower is a corporation, fail to consider the interests of its
creditors in connection with all corporate actions to the extent permitted by
applicable Law; (z) have any of its obligations guaranteed by an affiliate
except Guarantor in connection with the Loan.

          Section 9.18   Interest Rate Protection.

                         (a)     Borrower may enter into and/or obtain Interest
Rate Protection with Lender or its Affiliate (referred to herein as “IRP
Counterparty”). If Borrower obtains Interest Rate Protection from another source
other than Lender or its affiliate, then the obligations of Borrower arising
under the Interest Rate Protection owing to any IRP Counterparty other than
Lender or an Affiliate of Lender shall not be secured by the Deed of Trust.
Borrower acknowledges and agrees that if Borrower defaults in its obligations
under the Interest Rate Protection to make payments when due thereunder, Lender
may advance funds to be paid, on Borrower’s behalf, to cure Borrower’s default
under any Interest Rate Protection. All amounts advanced by Lender to the IRP
Counterparty, Borrower or others in respect of Borrower’s obligations in respect
of any Interest Rate Protection shall be deemed a part of the Obligations
secured by the Deed of Trust and the other Loan Documents. All amounts received
by Borrower pursuant to any Interest Rate Protection shall be paid by Borrower
to Lender and applied by Lender to the payment of interest on the Loan or other
costs of the Property. Borrower acknowledges and agrees that, notwithstanding
the terms of any Interest Rate Protection, Borrower shall not modify or
terminate any Interest Rate Protection without the prior written consent of
Lender.

                         (b)     As additional security for the obligations of
Borrower under the Loan Documents, Borrower hereby transfers, assigns, and
conveys to Lender, subject to the terms and conditions contained herein, all of
Borrower’s rights, titles and interests, but not its obligations, duties or
liabilities for any breach, in, under and to any Interest Rate Protection, any
and all amounts received by Borrower in connection therewith or to which
Borrower is entitled thereunder, and all proceeds of the foregoing. Lender shall
have the right at any time (but shall have no obligation) to take in its name or
in the name of Borrower such action as Lender may at any time determine to be
necessary or advisable to cure any default under or with respect to any Interest
Rate Protection or to protect the rights of Borrower thereunder; provided,
however, that prior to the occurrence of an Event of Default, Lender shall give
prior written notice to Borrower before taking any such action. Lender shall
incur no liability if any action so taken by Lender or on its behalf shall prove
to be inadequate or invalid, and Borrower agrees to hold Lender free and
harmless against and from any loss, cost, liability or expense (including, but
not limited to, attorneys’ fees and expenses) incurred in connection with any
such action, as provided in this Agreement. It is agreed and understood that, in
addition to any and all other remedies to which Lender is entitled at law or in
equity, Lender shall have all rights and benefits to which a secured party is
entitled at law or in equity, including, without limitation under the Uniform
Commercial Code as adopted and in effect in the State of Texas and upon any
foreclosure by Lender of its lien under the Deed of Trust, all rights, titles
and interests of Borrower in and to any Interest Rate Protection and any and all
amounts received by Borrower in connection therewith or to which

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Borrower is entitled thereunder, and all proceeds of the foregoing, shall, at
the election of Lender, be conveyed in connection therewith.

                         (c)     Borrower hereby constitutes and appoints Lender
as Borrower’s true and lawful attorney-in-fact, with the full power of
substitution, for it and in its name, place and stead, or otherwise, on behalf
and for the benefit of Lender, to exercise, at the election of Lender, any and
all rights and remedies of Borrower under any Interest Rate Protection,
including, without limitation, making any payments thereunder and consummating
any transactions contemplated thereby, from time to time to institute and
prosecute in the name and at the expense of Borrower, or otherwise, but for the
benefit of Lender, any and all proceedings at law, in equity, or otherwise, that
Lender may deem proper in order to collect, assert or enforce any claim, right
or title, of any kind, in and to any Interest Rate Protection hereby assigned
and conveyed, or intended so to be, and to defend and compromise, at the
election of Lender, any and all actions, suits or proceedings with respect to
any Interest Rate Protection, and generally to do all and any such action in
relation thereto as Lender shall deem advisable; and Borrower hereby declares
that the appointment hereby made and powers hereby granted are coupled with an
interest and are and shall be irrevocable by Borrower in any manner, or for any
reason.

          Section 9.19    Appraisals. Borrower agrees that Lender shall have the
right to obtain, at Borrower’s expense, an Appraisal of the Property, at any
time that (a) an Event of Default has occurred hereunder, (b) any material
Casualty or event of Condemnation occurs with respect to the Property, (c)
Lender determines in its good faith business judgment that the security for the
Loan has been impaired in any material manner, (d) Borrower exercises its option
to extend the Maturity Date of the Loan, or (e) such Appraisal is required by
then current banking laws or regulations. If Lender elects to obtain such an
Appraisal, Lender may immediately commission an appraiser acceptable to Lender,
at Borrower’s cost and expense, to prepare the Appraisal and Borrower shall
fully cooperate with Lender and the appraiser in obtaining the necessary
information to prepare such Appraisal.

ARTICLE 10
NEGATIVE COVENANTS

          While any Obligation of Borrower under the Loan Documents remains
outstanding, unless Lender otherwise consents in writing:

          Section 10.1    Liens on Property. Borrower will not cause or suffer
to become effective any lien, restriction or other title limitation affecting
any part of the Property other than (i) the Deed of Trust and the Permitted
Encumbrances; (ii) taxes and assessments which are not delinquent; (iii) liens
being contested by Borrower in compliance with the provisions of Section 11.11;
and (iv) rights of tenants under Approved Leases.

          Section 10.2    Liens on Personal Property. Borrower will not install
in, or use in connection with, the Property any personal property which any
Person other than Lender has the right to remove or repossess under any
circumstances, or on which any Person other than Lender

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has a lien other than personal property which is leased by Borrower and not
included in the Budget as part of construction costs and personal property owned
by Tenants on the Property.

          Section 10.3    Reserved.

          Section 10.4    Sale or Lease of Property. Except as expressly
permitted by this Agreement, without the prior consent of Lender, Borrower will
not sell, transfer, convey, pledge, assign, mortgage, or otherwise dispose of
all or any portion of the Property (unless the Loan is repaid in full
simultaneously with such sale or transfer) or enter into any Leases for any
portion of the Property except as permitted under Section 9.15, or sell, lease
or otherwise transfer any interest in the Property or the Personal Property
other than as permitted under Section 9.15 and other than dispositions of
Personal Property permitted by Section 10.6. No sale, lease or other transfer
shall relieve Borrower from primary liability for its Obligations under the Loan
Documents or relieve Guarantor from any liability under the Guaranty. If Lender
approves any transfer or sale (without implying any obligation on the part of
Lender to approve any such transfer or sale), Borrower shall remain primarily
liable for the payment and performance of all Obligations in the Loan Documents
to the same extent as if no transfer had occurred, and Borrower shall deliver to
Lender all documents reasonably required by Lender to evidence such continuing
primary liability. In connection with the covenants contained in this Section
10.4, Borrower acknowledges that Borrower’s particular expertise was an
important element in Lender’s decision to enter into this Agreement and that
Lender continues to rely on such expertise to ensure the satisfactory leasing,
operation and management of the Property.

          Section 10.5    Assignments of Obligations. Borrower will not assign
any right or delegate any Obligation under the Loan Documents other than
pursuant to the Management Agreement.

          Section 10.6    Removal of Personal Property. Borrower will not remove
or permit the removal from the Property of any items of Personal Property (other
than tools and construction equipment used in the construction of the Property
and personal property which is leased by Borrower in the ordinary course of
business), unless (i) no Event of Default has occurred and is continuing; and
(ii) Borrower promptly either: (1) substitutes and installs on the Property
other items of equal or greater value in the operation of the Property, all of
which items shall be free of liens and shall be subject to the liens of the Deed
of Trust, and executes and delivers to Lender all documents required by Lender
in connection with the attachment of such liens to such items; or (2) in the
case of the sale or scrapping of any items, pays to Lender the sale proceeds or
scrap value, as applicable; or (3) in the case of the trade-in of any items for
other items of Personal Property not installed on the Property, pays to Lender
the amount of the credit received; and (4) in the case of any other disposition,
pays to Lender an amount equal to the original cost of the items less
depreciation. Upon Borrower’s written request, Lender shall deliver to Borrower
all documents reasonably necessary to confirm the release of items removed from
the lien of the Deed of Trust in accordance with the foregoing requirements,
provided that such request is accompanied by a certificate executed by Borrower
to the effect that the removal of such items complies in all respects with this
Section 10.6. Borrower shall keep detailed records of each such removal and
shall make such records available to Lender upon request from time to time.

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          Section 10.7    Transfer of Equity Interests. Except for Permitted
Transfers, Borrower will not permit any sale, pledge, encumbrance, assignment,
transfer or other disposition, voluntarily or involuntarily, by operation of law
or otherwise, of any equity interest in Borrower or General Partner or any
constituent partners, members and shareholders in General Partner, as the case
may be, without the prior written consent of Lender. As used herein, the term
“Permitted Transfer” shall mean the transfer, pledge, assignment, or sale
(herein, a “Transfer”) of: (i) membership interests in the General Partner of
Borrower, (ii) limited partnership interests in Borrower, in each case, so long
as (A) such Transfer is to an AmREIT Affiliate and Borrower is in compliance
with Section 9.17 of this Agreement, (B) Borrower notifies Lender of such
Transfer at least ten (10) days prior to the proposed Transfer and (C) Borrower
delivers or causes to be delivered to Lender, (i) true and correct copies of all
documentation evidencing the Transfer and, if requested by Lender, true and
correct copies of the formation and organizational documents for the transferee,
certified by an authorized officer, partner or member, as applicable, of such
transferee, and (ii) such other information as may be required by Lender in
order to comply any Anti-Terrorism Laws applicable to Lender. As used herein,
“AmREIT Affiliate” means each of the Guarantor and AmREIT Realty Investment
Corporation or another Affiliate of one or more of the Guarantor or AmREIT
Realty Investment Corporation.

          Section 10.8    ERISA. Borrower will not permit any employee benefit
plan maintained by Borrower which is subject to Part 3 of Title I of ERISA to
have an accumulated funding deficiency, as such term is defined in Section 302
of ERISA, and Borrower will not incur any liability to the PBGC.

          Section 10.9    Debt. Borrower will not create, assume, incur, suffer
to exist, or in any manner become liable, directly, indirectly, or contingently
in respect to, any Debt other than the following: (a) Debt owed to Lender,
including Debt under this Agreement; (b) Debt listed in the current financial
statements of Borrower and any rearrangements, extensions or refinancings
thereof which do not increase the amount thereof; and (c) Debt in the form of
accounts payable to trade creditors for goods or services which are not aged
more than 60 days from the billing date and current operating liabilities (other
than for borrowed money) which are not more than 60 days past due, in each case
incurred in the ordinary course of business, as presently conducted, and paid
within the specified time, unless contested in good faith and by appropriate
proceedings.

          Section 10.10    Distributions. During the continuance of an Event of
Default, Borrower will not, without the prior written consent of Lender in its
sole discretion, make any distribution of assets to any partner of Borrower,
whether or not such a distribution is permitted under the terms of Borrower’s
limited partnership agreement, including repayment of any loans made by a
partner of Borrower to Borrower, return of capital contributions, distributions
upon termination, liquidation or dissolution of Borrower or any development,
property management, accounting or other fees payable to a partner in Borrower
(unless any such fee has been approved by Lender, in Lender’s sole discretion).

          Section 10.11   Management Agreement. Borrower agrees that it will not
enter into any Management Agreement until such time as (i) Lender has approved
the Property Manager, which approval will not be unreasonably withheld, (ii)
Borrower has delivered the proposed form of

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Management Agreement to Lender, and received the written approval of such form
by Lender, which approval will not be unreasonably withheld, and (iii) as to any
Management Agreement, it has obtained and delivered to Lender an Assignment and
Subordination of Management Agreement executed by the Property Manager in the
form acceptable to Lender. The Management Agreement shall be subordinate to the
Deed of Trust and must be terminable on thirty (30) days prior written notice
after an Event of Default. Except to the extent provided by Law, upon obtaining
title to the Property or any portion thereof pursuant to the remedies in the
Deed of Trust, Lender will not be liable for unpaid management fees accrued
before the acquisition of title by Lender or a Person owned in whole or in part
by Lender.

ARTICLE 11
RESERVED

ARTICLE 12
INSURANCE

          Section 12.1   Policies Required. While any Obligation of Borrower or
Guarantor under any Loan Document remains outstanding, Borrower shall procure
and maintain or shall cause to be procured and maintained continuously in effect
policies of insurance as set forth on Exhibit C in form and amounts and issued
by companies, associations or organizations licensed to do business in the state
the Property is located, satisfactory to Lender covering such casualties, risks,
perils, liabilities and other hazards required by Lender. All original policies,
or certificates thereof, and endorsements and renewals thereof shall be
delivered to and retained by Lender unless Lender waives this requirement in
writing. All policies shall expressly protect or recognize Lender’s interest as
required by Lender. Without limiting the generality of the foregoing, Borrower
shall provide or cause to be provided the following types of insurance coverage:
(a) (i) property insurance on a replacement cost basis as set forth on Exhibit
C, including flood, hurricane and sinkhole coverages in an amount equal to the
replacement cost of the Improvements and rent loss, and (ii) Comprehensive
General Liability Insurance as set forth on Exhibit C; and (b) such additional
insurance as may be reasonably required by Lender from time to time in the event
that the Property is exposed to hazards and risks with respect to which Lender
deems the existing insurance inadequate to properly protect its interests.
Borrower shall furnish Lender with a certified copy of an original or a
certificate of insurance of all policies of insurance required. All policies or
certificates, as the case may be, of insurance shall set forth the coverage, the
limits of liability, the name of the carrier, the policy number, the Best’s
Rating of the carrier and the period of coverage. In addition, all policies of
insurance required under the terms hereof shall contain an endorsement or
agreement by the insurer that any loss shall be payable in accordance with the
terms of such policy notwithstanding any act or negligence of Borrower or any
party holding under Borrower which might otherwise result in a forfeiture of
said insurance and the further agreement of the insurer waiving all rights of
setoff, counterclaim or deductions against Borrower. At least fifteen (15) days
prior to the expiration of each required policy, Borrower shall deliver to
Lender evidence of the renewal or replacement of such policy, continuing such
insurance in the form as required by this Agreement. All such policies shall
contain a provision that notwithstanding any contrary agreement between Borrower
and the applicable insurance company, such policies will not be canceled,
allowed to lapse without

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renewal, surrendered or amended (which provision shall include any reduction in
the scope or limits of coverage) without at least 30 days’ prior written notice
to Lender.

          Section 12.2   Adjustment of Condemnation and Insurance Claims.
Borrower shall give prompt notice to Lender of any Casualty or any Condemnation
or threatened Condemnation. Lender is authorized, at its sole and absolute
option, to commence, appear in and prosecute, in its own or Borrower’s name, any
action or proceeding relating to any Condemnation or Casualty, and to make proof
of loss for and to settle or compromise any Claim in connection therewith.
Lender shall have the right to receive all Compensation and Proceeds, and may
deduct therefrom any payment all of its related costs and expenses. However, so
long as no Event of Default has occurred and Borrower is diligently pursuing its
rights and remedies with respect to a Claim, Lender will obtain Borrower’s
written consent (which consent shall not be unreasonably withheld or delayed)
before making proof of loss for or settling or compromising such Claim. Borrower
agrees to diligently assert its rights and remedies with respect to each Claim
and to promptly pursue the settlement and compromise of each Claim subject to
Lender’s approval, which approval shall not be unreasonably withheld or delayed.
If, prior to the receipt by Lender of any Compensation and Proceeds, the
Property shall have been sold pursuant to the provisions of the Deed of Trust,
Lender shall have the right to receive such funds (a) to the extent of any
deficiency found to be due upon such sale with interest thereon (whether or not
a deficiency judgment on the Deed of Trust shall have been sought or recovered
or denied), and (b) to the extent necessary to reimburse Lender for its related
costs and expenses. If any Compensation and Proceeds are paid to Borrower,
Borrower shall receive the same in trust for Lender. Within ten (10) days after
Borrower’s receipt of any Compensation and Proceeds, Borrower shall deliver such
awards or proceeds to Lender in the form in which they were received, together
with any endorsements or documents that may be necessary to effectively
negotiate or transfer the same to Lender. Borrower agrees to execute and deliver
from time to time, upon the request of Lender, such further instruments or
documents as may be requested by Lender to confirm the grant and assignment to
Lender of any Compensation and Proceeds.

          Section 12.3   Delivery of Proceeds to Lender. In the event that,
notwithstanding the “mortgagee clause” or “lender’s loss payable endorsement”
requirements of Exhibit C, the proceeds (the “Proceeds”) of any insurance policy
described therein are paid to Borrower, Borrower shall deliver such proceeds to
Lender immediately upon receipt and applied as set forth in Section 12.2 above.

          Section 12.4   Utilization of Compensation and Proceeds.

                         (a)     Compensation and Proceeds must be utilized
either for payment of the Obligations or for the restoration of the Property.
Compensation and Proceeds may be utilized for the restoration of the Property
only if no Event of Default exists and only if in the reasonable judgment of
Lender (i) there has been no material adverse change in the financial viability
of the construction or operation of the Improvements, (ii) the Compensation and
Proceeds, together with other funds deposited with Lender for that purpose, are
sufficient to pay the cost of the restoration pursuant to a budget and plans and
specifications approved by Lender, and (iii) the restoration can be completed
prior to the Maturity Date of the Loan. Otherwise, Compensation and Proceeds
shall be utilized for payment of the Obligations.

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                       (b)     If Compensation and Proceeds are to be utilized
for the restoration of the Property, the Compensation and Proceeds, together
with any other funds deposited with Lender for that purpose, must be deposited
in an interest-bearing account with Lender, which account will be assigned to
Lender as additional security for the Loan. The account will be opened, managed
and controlled by Lender. Advances of funds from the account will be made in a
manner consistent with, and subject to, Lender’s customary requirements for the
funding of a construction loan.

ARTICLE 13
CONDEMNATION

          Borrower hereby assigns to Lender, as security for Borrower’s
Obligations under the Loan Documents, all compensation, awards and other amounts
payable to Borrower in connection with any taking of any portion of the Property
for public use, and any proceeds of any related settlement regardless of whether
eminent domain proceedings are instituted in connection therewith (collectively,
“Compensation”). Borrower shall deliver all Compensation to Lender immediately
upon receipt and applied as set forth in Section 12.2 above. Any Compensation
received by Lender shall be applied by Lender in accordance with the rights,
procedures and other provisions set forth in Section 12.4.

ARTICLE 14
DEFAULTS AND REMEDIES

          Section 14.1   Events of Default. The occurrence of any of the
following, whatever the reason therefor, shall constitute an Event of Default:

                       (a)     Borrower fails to (i) make any regularly
scheduled payments of principal or interest under the Note when due and such
failure continues for five (5) days after such payment was due, or (ii) repay
the Loan in full at maturity; or

                       (b)     Borrower or any Guarantor fails to pay any amount
owing to Lender under any Loan Document (which is not otherwise addressed
elsewhere in this Section 14.1) and such failure continues for five (5) days
after such payment was due; or

                       (c)     Borrower fails to perform any covenant or
agreement or any other non-monetary Obligation under any Loan Document within
twenty (20) days after receipt of notice thereof; provided that, if cure cannot
reasonably be effected within such 20-day period, such failure shall not be an
Event of Default hereunder so long as Borrower promptly (in any event, within
ten (10) days after receipt of such notice) commences cure, and thereafter
diligently (in any event, within forty-five (45) days after receipt of such
notice) prosecutes such cure to completion; and provided further, however, that
notwithstanding the 20-day cure period or extended cure period described above
in this subparagraph (c), if a different notice or cure period is specified
under any Loan Document or under any provision of the Loan Documents as to any
such failure or breach, the specific Loan Document or provision shall control,
and Borrower shall have no more time to cure the failure or breach than is
allowed under the specific Loan Document or provision as to such failure or
breach;

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                       (d)     Any representation, warranty or statement made in
any Loan Document or in any other document delivered by Borrower or General
Partner in connection with any Loan Document proves to have been incorrect in
any material respect when made or becomes so at any time prior to repayment in
full of the Note; or

                       (e)     [RESERVED]; or

                       (f)     [RESERVED]; or

                       (g)     [RESERVED]; or

                       (h)     Borrower, any Guarantor or General Partner is
dissolved, liquidated or terminated, or all or substantially all of the assets
of Borrower, any Guarantor or General Partner are sold or otherwise transferred
without Lender’s prior written consent; or

                       (i)     If Borrower, General Partner or Guarantor shall
(1) be adjudicated as bankrupt or insolvent; (2) make a general assignment for
the benefit of its creditors; (3) file a petition, answer or consent seeking, or
have entered against it (or fail reasonably to contest the material allegations
of any petition for) an order for relief (or any similar remedy) under any
provision of Title 11 of the United States Code or any other federal, state or
foreign Law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, or consent to the institution of any proceedings thereunder; (4)
convene a meeting of its creditors, or any class thereof, for the purpose of
effecting a moratorium upon or extension or composition of its or his debts; (5)
fail to pay its debts as they mature; (6) admit in writing that it is generally
not able to pay its debts as they mature or generally not pay its debts as they
mature; (7) apply for a consent to the appointment of a receiver, trustee,
custodian, liquidator or other similar official of all or a portion of its
assets; or (8) become insolvent; or

                       (j)     If (1) a petition is filed or any case or
proceeding described in Section 14.1(i) above is commenced against Borrower,
General Partner or Guarantor, or against the assets of any such Persons or
entities, unless such petition and the case or proceeding initiated thereby is
dismissed within 30 days from the date of the filing; (2) an answer is filed by
Borrower, General Partner or Guarantor admitting the allegations of any such
petition; or (3) a court of competent jurisdiction enters an order, judgment or
decree appointing, without the consent of Borrower, General Partner or
Guarantor, a custodian, trustee, agent or receiver of it, or for all or any part
of its property, or authorizing the taking possession by a custodian, trustee,
agent or receiver of it, or all or any part of its property unless such
appointment is vacated or dismissed or such possession is terminated within 30
days from the date of such appointment or commencement of such possession, but
not later than five (5) days before the proposed sale of any assets of Borrower,
General Partner or such Guarantor by such custodian, trustee, agent or receiver,
other than in the ordinary course of the business of Borrower, General Partner
or Guarantor; or

                       (k)     With respect to Guarantor: (1) any failure to pay
any amount owing to Lender under the Guaranty which continues for five days
after notice from Lender to Guarantor that such payment was not made when due,
(2) Guarantor fails to comply with the minimum Net

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Worth and Liquid Assets covenants set forth in the Guaranty; (3) the occurrence
of any of the events described in Section 14.1(h), (i) or (j) above as
Guarantor; (4) the Guaranty is revoked or terminated without Lender’s prior
written consent, or Guarantor claims that the Guaranty is for any reason
ineffective or unenforceable, in whole or in part and with respect to amounts
then outstanding or amounts that might in the future be outstanding; or (5) the
falsity in any material respect of, or any material omission in, any
representation made to Lender by Guarantor; or

                        (l)      Borrower shall be in default under the terms of
any of the other Loan Documents beyond any applicable cure period or Borrower or
Guarantor shall be in default under any other loan documents or guaranty
executed by Borrower or Guarantor in connection with any extension of financial
accommodations by Lender to Borrower or Guarantor; or

                       (m)     The Environmental Indemnity, at any time and for
any reason ceases to be in full force and effect; or

                       (n)      Borrower shall fail to maintain insurance as
required by this Agreement or shall fail to furnish to Lender proof of payment
of all premiums for such insurance.

          Section 14.2   Remedies Upon Default. Upon the occurrence of any Event
of Default, Lender may, at its option and without further notice to Borrower or
Guarantor, do any or all of the following:

                         (a)     Declare the principal of all amounts
outstanding under the Loan Documents together with all accrued interest thereon
and all other amounts owing in connection therewith, to be immediately due and
payable, regardless of any other specified maturity or due date, and without
written notice of default, presentment or demand for payment, protest or notice
of nonpayment or dishonor, notice of intent to accelerate or notice of
acceleration, or other notice or demand of any kind, and without the necessity
of prior recourse to any security; provided that any Event of Default described
in Section 14.1(h), (i) or (j) shall automatically, without declaration or other
action on Lender’s part, cause all such amounts to be immediately due and
payable without notice or demand;

                         (b)     Take possession of the Property and let
contracts for, or otherwise proceed with all actions necessary or desirable, in
Lender’s opinion, for the operation, management, leasing of the Property;

                         (c)     Lender may cure the Event of Default on behalf
of Borrower, and, in doing so, may enter upon the Property, and may expend such
sums as it may deem desirable, including attorneys’ fees, all of which shall be
deemed to be advances hereunder, even though causing the Loan to exceed the face
amount of the Note;

                         (d)     Exercise any of its rights under the Loan
Documents and any rights provided by Law, including the right to foreclose on
any security and exercise any other rights with respect to any security, all in
such order and manner as Lender in its sole discretion may determine.

TERM LOAN AGREEMENT - Page 39

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          Section 14.3   Cumulative Remedies; No Waiver. Lender’s rights and
remedies under the Loan Documents are cumulative and shall be in addition to all
rights and remedies provided by Law or in equity from time to time, including
any banker’s lien or right of offset. The exercise by Lender of any right or
remedy shall not constitute a cure or waiver of any default, nor invalidate any
notice of default or any act done pursuant to any such notice, nor prejudice
Lender in the exercise of any other right or remedy, until Lender realizes all
amounts owed to it under the Loan Documents and all Events of Default are cured.
No waiver by Lender of any default shall be implied from any omission by Lender
to take action on account of such default if such default persists or is
repeated. No waiver by Lender of any default shall affect any default other than
the default expressly waived, and any such waiver shall be operative only for
the time and to the extent stated. No waiver of any covenant or condition of any
Loan Document shall be construed as a waiver of any subsequent breach of the
same covenant or condition. Lender’s consent to or approval of any act by
Borrower requiring further consent or approval shall not be deemed to waive or
render unnecessary Lender’s consent to or approval of any subsequent act.

          Section 14.4   Setoff. Upon the occurrence and during the continuance
of any Event of Default, Lender is hereby authorized at any time and from time
to time to the fullest extent permitted by Law, without notice to Borrower (any
such notice being expressly waived by Borrower) to set off and to apply any and
all balances, credits, deposits (general or special, time or demand, provisional
or final), accounts or monies at any time held and other indebtedness at any
time owing by Lender or any affiliate of Lender to or for the account of
Borrower against any and all of the Obligations of Borrower now or hereafter
existing under this Agreement or any other agreement or instrument delivered by
Borrower to Lender in connection therewith, whether or not Lender shall have
made any demand hereunder or thereunder and although such Obligations may be
contingent or unmatured. Subject to the foregoing provisions of this Section,
the rights of Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which Lender
may have.

ARTICLE 15
MISCELLANEOUS

          Section 15.1    Actions. Lender shall have the right to commence,
appear in and defend any action or proceeding purporting to affect the rights or
obligations of the parties to any Loan Document.

          Section 15.2    Nonliability of Lender. Borrower acknowledges and
agrees that:

                       (a)     the relationship between Borrower and Lender is
and shall remain solely that of borrower and lender, and Lender neither
undertakes nor assumes any responsibility to select, review, inspect, supervise,
pass judgment upon or inform Borrower of any matter in connection with the
Property;

                       (b)     notwithstanding any other provision of any Loan
Document: (i) Lender is not a partner, joint venturer, alter-ego, manager,
controlling person or other business associate or participant of any kind of
Borrower and Lender does not intend to ever assume any such status;

TERM LOAN AGREEMENT - Page 40

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and (ii) Lender shall not be deemed responsible for or a participant in any
acts, omissions or decisions of Borrower; and

                       (c)     Lender shall not be directly or indirectly liable
or responsible for any loss or injury of any kind to any Person or property
resulting from any construction on, or occupancy or use of, the Property,
whether arising from: (i) any defect in any building, grading, landscaping or
other onsite or offsite improvement; (ii) any act or omission of Borrower or any
of Borrower’s agents, employees, independent contractors, licensees or invitees;
(iii) any accident on the Property or any fire, flood or other casualty or
hazard thereon; (iv) the failure of Borrower or any of Borrower’s licensees,
employees, invitees, agents, independent contractors or other representatives to
maintain the Property in a safe condition; and (v) any nuisance made or suffered
on the Property; unless any of the foregoing arises from or results from the
active gross negligence or willful misconduct of Lender, its employees or
agents.

          Section 15.3    No Representations by Lender. By accepting or
approving anything required to be performed or given to Lender under the Loan
Documents, including any certificate, financial statement, survey, appraisal or
insurance policy, Lender shall not be deemed to have warranted or represented
the sufficiency or legal effect of the same, and no such acceptance or approval
shall constitute a warranty or representation by Lender to anyone.

          Section 15.4     Indemnity. Borrower hereby indemnifies and holds
harmless Lender and its directors, officers, agents and employees (collectively
the “Indemnitees”) from and against:

                       (a)     all claims, demands and causes of action asserted
against any Indemnitee by any Person if the claim, demand or cause of action
directly or indirectly relates to (i) a claim, demand or cause of action that
the Person has or asserts against the Property, Borrower or General Partner;
(ii) the payment of any commission, charge or brokerage fee incurred in
connection with the Loan; (iii) any act or omission of Borrower, any contractor,
subcontractor or material supplier, engineer, architect or other Person with
respect to the Property; or (iv) any claim or cause of action of any kind by any
Person which would have the effect of denying Lender the full benefit or
protection of any provision of any Loan Document (excluding charges and
assessments by Governmental Agencies imposed upon Lender in the normal course of
Lender’s business); and

                       (b)     all liabilities, losses and other costs
(including court costs and attorneys’ fees) incurred by any Indemnitee as a
result of any claim, demand or cause of action described in subparagraph (a).

INDEMNITEES’ RIGHTS OF INDEMNITY SHALL NOT BE DIRECTLY OR INDIRECTLY LIMITED,
PREJUDICED, IMPAIRED OR ELIMINATED IN ANY WAY BY AN INDEMNITEE’S STRICT
LIABILITY, OR SOLE, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OR ANY FINDING OR
ALLEGATION THAT AN INDEMNITEE’S CONDUCT IS ACTIVE, PASSIVE OR SUBJECT TO ANY
OTHER CLASSIFICATION OR THAT AN INDEMNITEE IS DIRECTLY OR INDIRECTLY RESPONSIBLE
UNDER ANY THEORY OF ANY KIND FOR ANY ACT OR OMISSION BY BORROWER OR ANY OTHER
PERSON. NOTWITHSTANDING THE

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FOREGOING, BORROWER SHALL NOT BE OBLIGATED TO INDEMNIFY ANY INDEMNITEE WITH
RESPECT TO ANY INTENTIONAL TORT, WILLFUL MISCONDUCT OR ACT OF GROSS NEGLIGENCE
WHICH SUCH INDEMNITEE IS PERSONALLY DETERMINED BY THE JUDGMENT OF A COURT OF
COMPETENT JURISDICTION (SUSTAINED ON APPEAL, IF ANY) TO HAVE COMMITTED.
BORROWER’S OBLIGATIONS UNDER THIS SECTION SHALL SURVIVE THE CANCELLATION OF THE
NOTE AND THE RELEASE AND RECONVEYANCE OF THE SECURITY DOCUMENTS.

          Section 15.5   Easements. Borrower shall not, without the prior
written consent of Lender, (a) initiate, join in or consent to any private
restrictive covenant or other public or private restrictions as to the use of
the Property or any zoning reclassification of the Property (or any part
thereof); or (b) seek any variance under (or deviation from) any existing zoning
Laws or ordinances applicable to the Property (or any part thereof); or (c)
voluntarily grant any easement; right of way, privilege, license, franchise or
other property right affecting the Property.

          Section 15.6   Joint and Several; Relationship with Lender. If
Borrower consists of more than one (1) individual and/or entity, each of said
individuals and/or entities shall be jointly and severally liable for each
covenant, agreement, representation and warranty of Borrower hereunder. The
relationship between Borrower, Lender created hereby and by the other Loan
Documents shall be that of a borrower and a lender only, and not be deemed to be
a partner of, or a joint venturer with, Borrower.

          Section 15.7   Survival. All representations and warranties of
Borrower in the Loan Documents shall survive the making of the Loan and the
execution and delivery of the Note, are material, and have been or will be
relied on by Lender notwithstanding any investigation made by or on behalf of
Lender. All agreements, made in this Agreement shall survive and shall continue
until Lender receives payment in full of all Obligations of Borrower incurred
under this Agreement and under the other Loan Documents.

          Section 15.8   Reserved.

          Section 15.9  Notices. All notices required shall be in writing and
shall be sent delivered by (a) registered or certified mail, postage prepaid,
return receipt requested, (b) Federal Express, Airborne or another reputable
overnight courier, or (c) delivered by hand by commercial courier service,
addressed to the party to be so notified at its address. Any Notice shall be
deemed to have been received: (i) three (3) days after the date such Notice is
mailed, (ii) on the date of delivery by hand (or refusal to accept such
delivery) if delivered during business hours on a Business Day (otherwise on the
next Business Day), and/or (iii) on the next Business Day if sent by an
overnight commercial courier. Notices shall be deemed effective if delivered by
counsel to either party, as if given directly by such party. Any party may
change the address to which any such Notice is to be delivered by furnishing ten
(10) days prior written notice of such change to the other parties. Notices
shall be deemed to have been given on the date as set forth above, even if there
is an inability to actually deliver any such Notice because of a changed address
of which no Notice was given, or there is a rejection or refusal to accept any
Notice offered for delivery.

TERM LOAN AGREEMENT - Page 42

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If to Borrower or Guarantor:

 

AmREIT Lantern Lane, LP

 

 

8 Greenway Plaza, Suite 1000

 

 

Houston, Texas 77046

 

 

Attn: Chad C. Braun

 

 

 

With a copy to:

 

Bass, Berry & Sims PLC

 

 

The Tower at Peabody Place

 

 

100 Peabody Place

 

 

Memphis, Tennessee 38103

 

 

Attention: T. Gaillard Uhlhorn

 

 

 

If to Lender:

 

US. Bank National Association

 

 

14241 Dallas Parkway, Suite 490

 

 

Dallas, Texas 75254

 

 

Attn: Gregory Kaye

 

 

 

With a copy to:

 

U.S. Bank National Association

 

 

14241 Dallas Parkway, Suite 490

 

 

Dallas TX 75254

 

 

Attn: Becky Aduddell

 

 

 

With a copy to:

 

Greenberg Traurig, LLP

 

 

2200 Ross Avenue, Suite 5200

 

 

Dallas, Texas 75201

 

 

Attn: Tina M. Ross

Addresses for notice may be changed from time to time by written notice to all
other parties. Any communication given by mail will be effective upon the
earlier of (a) three Business Days following deposit in a post office or other
official depository under the care and custody of the United States Postal
Service; or (b) actual receipt, as indicated by the return receipt; if given by
telephonic facsimile, when sent; and if given by personal delivery or by
overnight air courier, when delivered to the appropriate address set forth
above.

          Section 15.10   No Third Parties Benefited. Except as expressly
provided in Section 15.19 hereof, this Agreement is made for the purpose of
setting forth certain rights and Obligations of Borrower and Lender in
connection with the Loan. It is made for the sole protection of Borrower, Lender
and Lender’s successors and assigns, and no other Person shall have any rights
hereunder or by reason hereof. No third party shall be entitled to rely upon
this Agreement unless such third party is an express assignee of the interest of
Lender hereunder.

          Section 15.11   Binding Effect. This Agreement shall bind, and shall
inure to the benefit of, Borrower and Lender and their respective successors and
assigns, subject to the provisions of Section 10.5 hereof; provided, however,
that neither this Agreement nor the proceeds of the Loan may be assigned by
Borrower, without the prior written consent of Lender.

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          Section 15.12 Counterparts. Any Loan Document other than the Note may
be executed in any number of counterparts and any party thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be an
original and all of which, taken together, will be deemed to be but one and the
same document. The execution of any Loan Document by any party will not become
effective until counterparts have been executed by all of the parties thereto.

          Section 15.13 Prior Agreements; Amendments; Consents. This Agreement
contains the entire agreement between Lender and Borrower with respect to the
Loan and all prior negotiations, understandings and agreements are superseded by
this Agreement. No supplement, extension, termination or other modification of
any provision of any Loan Document, and no consent to any departure by Borrower
therefrom, shall be effective unless in writing and signed by Lender, and then
only in the specific instance and for the specific purpose given. Pursuant to
Section 26.02 of the Texas Business & Commerce Code, Borrower is hereby given
the following notice:

                    (a)          A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED
IN THE LOAN AGREEMENT EXCEEDS $50,000.00 IN VALUE IS NOT ENFORCEABLE UNLESS THE
AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY THAT PARTY’S
AUTHORIZED REPRESENTATIVE.

                    (b)          THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN
AGREEMENT SUBJECT TO SUBSECTION (i) ABOVE SHALL BE DETERMINED SOLELY FROM THE
WRITTEN LOAN AGREEMENT, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE
SUPERSEDED AND MERGED INTO THE LOAN AGREEMENT.

                    (c)          THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

                    (d)          THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

                    (e)          As used in Subsections (a)-(d) above the term
“Loan Agreement” shall mean and refer to all the Loan Documents.

          Section 15.14 Governing Law. All of the Loan Documents shall be
governed by, and construed and enforced in accordance with, the Laws of the
State of Texas. Without limiting the right of Lender to bring any action or
proceeding against Borrower or the Property arising out of or relating to its
Obligation under the Loan Documents (an “Action”) in the courts of other
jurisdictions, Borrower hereby irrevocably submits to the jurisdiction of the
courts of the County of Dallas, State of Texas, or any federal court in the
Northern District of Texas, Dallas Division, and Borrower hereby irrevocably
agrees that any Action may be heard and determined in such state or federal
court. Borrower hereby irrevocably waives, to the fullest extent that it may

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effectively do so, the defense of an inconvenient forum to the maintenance of
any Action in the jurisdiction. Borrower hereby irrevocably agrees that the
summons and complaint or any other process in any Action in any jurisdiction may
be served by mailing to any of the addresses set forth herein or by hand
delivery to a person of suitable age and discretion at any such address. Such
service shall be complete on the date such process is so mailed or delivered.

          Section 15.15 Maximum Rate. As used herein, the term “Maximum Rate”
shall mean and refer to the maximum rate of nonusurious interest, if any, that
Lender may from time to time charge Borrower and in regard to which Borrower
would be prevented successfully from raising the claim or defense of usury under
applicable Law as now, or to the extent permitted by Law, as may hereafter be,
in effect (said Law permitting the highest rate being herein referred to as the
“Interest Law”). Unless changed in accordance with Law, the applicable rate
ceiling under Texas Law shall be the “weekly ceiling”, from time to time in
effect, as provided in Chapter 303 of the Texas Finance Code, as amended. It is
the intention of Borrower and Lender to conform strictly to the Interest Law
applicable to this loan transaction. Accordingly, it is agreed that
notwithstanding any provision to the contrary in this Agreement, the Note or in
any of the Loan Documents or instruments relating thereto, the aggregate of all
interest and any other charges or consideration constituting interest under
applicable Interest Law that is taken, reserved, contracted for, charged or
received under this Agreement, the Note or under any of the other aforesaid
agreements or otherwise in connection with this loan transaction shall under no
circumstances exceed the maximum amount of interest allowed by the Interest Law
applicable to this loan transaction. If any excess of interest in such respect
is provided for, or shall be adjudicated to be so provided for, in this
Agreement, the Note or in any of the Loan Documents or other instruments
relating thereto, then in such event (a) the provisions of this Section shall
govern and control, (b) neither Borrower nor Borrower’s heirs, legal
representatives, successors or assigns or any other party liable for the payment
of the Note shall be obligated to pay the amount of such interest to the extent
that it is in excess of the maximum amount of interest allowed by the Interest
Law applicable to this loan transaction, (c) any excess shall be deemed a
mistake and canceled automatically and, if theretofore paid, shall be credited
on the Note by Lender (or if the Note shall have been paid in full, refunded to
Borrower) and (d) the effective rate of interest shall be automatically subject
to reduction to the Maximum Rate as now or hereafter construed by courts of
appropriate jurisdiction. All sums paid or agreed to be paid Lender for the use,
forbearance or detention of the indebtedness evidenced by the Note shall, to the
extent permitted by the Interest Law applicable to this loan transaction, be
amortized, prorated, allocated and spread throughout the full term of the Note.

          Section 15.16 Waivers. Each of the parties hereto recognizes that in
matters related to this Agreement, it may be entitled to a trial in which
matters of fact are determined by a jury (as opposed to a trial in which such
matters are determined by a federal or state judge). Each of the undersigned
also recognizes that one of the remedies available to it in any trial may, under
certain circumstances, be the right to receive damages in excess of those
actually sustained by it. In the past, in some instances, such damages have
equaled or exceeded the amount of actual damages.

          EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF

TERM LOAN AGREEMENT - Page 45

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ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

          EACH OF THE UNDERSIGNED HEREBY CERTIFIES THAT NEITHER ANY
REPRESENTATIVE OR AGENT OF LENDER NOR LENDER’S COUNSEL, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH OF THE UNDERSIGNED
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO OR BECOME A SURETY WITH
RESPECT TO THIS TRANSACTION BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS HEREIN.

          The waiver of rights related to damages shall not apply to any
transaction subject to the Texas Deceptive Trade Practices Act, except as
provided in Section 15.19 hereof, or to Chapter 6, 6A or 7 of the Texas Consumer
Credit Code.

          Section 15.17 Severability of Provisions. No provision of any Loan
Document that is held to be inoperative, unenforceable or invalid shall affect
the remaining provisions, and to this end all provisions of the Loan Documents
are hereby declared to be severable.

          Section 15.18 Time of the Essence. Time is of the essence hereof with
respect to the dates, terms and conditions of this Agreement and all of the
other Loan Documents.

          Section 15.19 Assignments and Participations. Borrower agrees that
Lender may elect, at any time, to sell, assign or grant participations in all or
any portion of its rights and obligations under the Loan Documents, and that any
such sale, assignment or participation may be to one or more financial
institutions, private investors, and/or other entities, at Lender’s sole
discretion (“Participant”). Borrower further agrees that Lender may disseminate
to any such actual or potential purchaser(s), assignee(s) or participant(s) all
documents and information (including, without limitation, all financial
information) which has been or is hereafter provided to or known to Lender with
respect to: (a) the Property and Improvements and its operation; (b) any party
connected with the Loan (including, without limitation, Borrower, any member of
Borrower, any constituent partner or member of any partner of Borrower and/or
Guarantor);

TERM LOAN AGREEMENT - Page 46

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and/or (c) any lending relationship other than the Loan which Lender may have
with any party connected with the Loan. In the event of any such sale,
assignment or participation, Lender and the parties to such transaction shall
share in the rights and obligations of Lender as set forth in the Loan Documents
only as and to the extent they agree among themselves. In connection with any
such sale, assignment or participation, Borrower further agrees that the Loan
Documents shall be sufficient evidence of the obligations of Borrower to each
purchaser, assignee, or participant, and upon written request by Lender,
Borrower shall enter into such amendments or modifications to the Loan Documents
as may be reasonably required in order to evidence any such sale, assignment or
participation; provided that Borrower’s rights hereunder shall not be decreased
and Borrower’s obligations hereunder shall not be increased as a result of any
such amendments or modifications. The indemnity obligations of Borrower under
the Loan Documents shall also apply with respect to any purchaser, assignee or
participant. Anything in this Agreement to the contrary notwithstanding, and
without the need to comply with any of the formal or procedural requirements of
this Agreement, including this Section, Lender may at any time and from time to
time pledge and assign all or any portion of its rights under all or any of the
Loan Documents to a Federal Reserve Bank; provided that no such pledge or
assignment shall release Lender from its obligations thereunder.

          Section 15.20 No Consequential Damages. NOTWITHSTANDING ANYTHING
CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, EACH PERSON
PARTY HERETO FOR ITSELF AND ON BEHALF OF ITS AFFILIATES AGREES THAT THE RECOVERY
OF ANY DAMAGES SUFFERED OR INCURRED AS A RESULT OF ANY BREACH BY ANY PERSON OF
ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR
INCURRED AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ITS
REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT AND IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE TO ANY
NON-BREACHING PARTY FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR
PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST
PROFITS OR OPPORTUNITIES OR LOST OR DELAYED PRODUCTION) SUFFERED OR INCURRED BY
THE NON-BREACHING PARTY AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ANY
OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
LOAN DOCUMENT.

          Section 15.21 Lender Not in Control. None of the covenants or other
provisions contained in the Loan Documents shall or shall be deemed to, give
Lender the rights or power to exercise control over the affairs and/or
management of Borrower, Guarantor, the power of Lender being limited to the
right to exercise the remedies provided in the Loan Documents; provided,
however, that if Lender becomes the owner of any ownership interests in any
Person, whether through foreclosure or otherwise, Lender shall be entitled
(subject to requirements of Law) to exercise such legal rights as it may have by
being owner of such Ownership Interests in such Person.

TERM LOAN AGREEMENT - Page 47

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          Section 15.22 USA 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, which
information includes the name and address of Borrower and other information that
will allow Lender to identify Borrower in accordance with the USA Patriot Act.

          Section 15.23 DTPA Waiver. Borrower hereby waives the provisions of
the Texas Deceptive Trade Practices Act, Chapter 17, Subchapter E,
Sections 17.41 through 17.63, inclusive (other than Section 17.555, which is not
waived), of the Texas Business & Commerce Code. To evidence its ability to grant
such waiver, Borrower hereby represents and warrants to Lender that it (a) is in
the business of seeking or acquiring, by purchase or lease, goods or services
for commercial or business use, and is represented by legal counsel in
connection therewith and in connection with this Agreement, (b) has knowledge
and experience in financial and business matters that enable it to evaluate the
merits and risks of the transaction contemplated hereby and (c) is not in a
significantly disparate bargaining position.

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TERM LOAN AGREEMENT - Page 48

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

 

 

 

 

 

 

 

BORROWER:

 

 

 

 

AmREIT LANTERN LANE, LP, a Texas limited partnership

 

 

 

 

By:

AmREIT Lantern Lane GP, LLC, a Texas limited liability company, its general
partner

 

 

 

 

 

By:

     /s/ Chad C. Braun

 

 

 

Name:             Chad C. Braun

 

 

Title:               Vice President

 

 

 

 

 

 

 

LENDER:

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION, a national banking association

 

 

 

 

By:

     /s/ Gregory N. Kaye

 

 

Name:             Gregory N. Kaye

 

Title:               Senior Vice President

TERM LOAN AGREEMENT - Signature Page

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EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

A tract of parcel of land containing 6.7624 acres or 294,570 square feet of
land, situated in the George Bellows Survey, Abstract No. 3, Harris County,
Texas being out of and a part of Lot 20 of Benignus Acres, map or plat thereof
recorded in Vol. 15, Pg. 8 of the Harris County Map Records said 6.7624 acre
tract being that same tract of land conveyed to AmREIT Lantern Lane, LP in that
certain Warranty Deed filed under Harris County Clerk’s File No 20060084602 and
being more particularly described by metes and bounds as follows:

Beginning at a 5/8 inch iron rod found on the westerly right of way line of
Benignus Road (based on width of 60 feet) marking the southeast corner of
Memorial Pines, Section Two, map or plat thereof recorded in Vol. 68, Pg. 1,
H.C.M.R. for the northeast corner of the herein described tract;

Thence South, along and with the said westerly right of way line of Benignus
Road, a distance of 350.90 feet to a 3/4 inch iron pipe found marking the
northwest corner of the intersection of the said westerly right of way line of
Benignus Road, with the northerly right of way line of Memorial Drive (based on
a width of 100 feet) for the southeast corner of the herein described tract;

Thence West, along and with the said northerly right of way line of Memorial
Drive, a distance of 839.32 feet to a 5/8 inch iron rod found marking the
northeast corner at the intersection of the said northerly right of way line of
Memorial Drive with the easterly right of way line of Tallowwood Road (based on
a width of 60 feet) for the southwest corner of the herein described tract;

Thence North 00 deg. 17 min. 0 sec. East, along and with the said easterly right
of way line of Tallowwood Road, a distance of 351.76 feet to a 5/8 inch iron rod
found marking the southwest corner of said Memorial Pines, Section Two for the
northwest corner of the herein described tract, from which a 5/8 inch iron rod
found for reference bears South 22 deg. 13 min. East 1.6 feet;

Thence South 89 deg. 56 min. 30 sec. East, along and with the southerly line of
said Memorial Pines, Section Two, a distance of 837.58 feet to THE POINT OF
BEGINNING AND CONTAINING 6.7624 ACRES OR 294,570 FEET OF LAND.

EXHIBIT A - Page 1 of 1

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EXHIBIT B

SITE PLAN OF SHOPPING CENTER

EXHIBIT B

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(MAP) [a114812001_v1.jpg]

EXHIBIT B

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EXHIBIT C

CLOSING CONDITIONS

As conditions precedent to the closing of the Loan and to the extent required by
Lender, Lender shall have received and approved the following (which receipt and
approval shall be deemed to have occurred upon the execution of this Agreement
by Lender, unless noted below):

          1.          Fees and Expenses. Any and all required commitment and
other fees payable to Lender herein or in any separate agreement, and evidence
satisfactory to Lender that Borrower has paid all other fees, costs and expenses
(including the fees and costs of Lender’s counsel) then required to be paid
pursuant to this Agreement and all other Loan Documents, including, without
limitation, all fees, costs and expenses that Borrower is required to pay
pursuant to any loan application or commitment.

          2.          Financial Statements. The Financial Statements of Borrower
and Guarantor or any other party required by any loan application or commitment
or otherwise required by Lender including, without limitation, a proposed
operating budget for the Property for its first year of operation and the most
current available financial statements of Borrower and Guarantor, together with
financial statements of each of said parties for each of the three (3) previous
fiscal years.

          3.          Appraisal. A current Appraisal of the Property acceptable
to Lender, prepared by an appraiser acceptable to Lender, at Borrower’s expense,
and satisfactory to Lender in all respects, as reviewed, adjusted and approved
by Lender in accordance with its customary internal appraisal requirements. The
Appraisal must reflect that the Commitment amount is not greater than 70% of the
“as-stabilized” Appraised Value of the Property.

          4.          Loan Documents. Borrower, Guarantor and each other Person
required by Lender shall have duly executed, acknowledged, sworn to, recorded,
filed, and delivered to Lender all Loan Documents then required by Lender, dated
the Closing Date, and in form and content satisfactory to Lender.

          5.          Authorization. Evidence Lender requires of the existence,
good standing, authority and capacity of Borrower, Guarantor, and their
respective constituent partners, members, managers and owners (however remote)
to execute, deliver and perform their respective obligations to Lender under the
Loan Documents, including:

 

 

 

             (a)          For each partnership (including a joint venture or
limited partnership): (i) a true and complete copy of an executed partnership
agreement or limited partnership agreement, and all amendments thereto; (ii) for
each limited partnership, a copy of the certificate of limited partnership and
all amendments thereto accompanied by a certificate issued by the appropriate
governmental official of the jurisdiction of formation that the copy is true and
complete, and evidence Lender requires of registration or qualification to do
business in the state where Borrower’s principal place of business is located
and the state where the Property is located, and (iii) a partnership affidavit
certifying who will be authorized to execute or attest any of the Loan
Documents, and a true and complete copy

EXHIBIT C - Page 1

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of the partnership resolutions approving the Loan Documents and authorizing the
transactions contemplated in this Agreement and the other Loan Documents.

 

 

 

             (b)          For each corporation: (i) a true and complete copy of
its articles of incorporation and by laws, and all amendments thereto, a
certificate of incumbency of all of its officers who are authorized to execute
or attest to any of the Loan Documents, and a true and complete copy of
resolutions approving the Loan Documents and authorizing the transactions
contemplated in this Agreement and the other Loan Documents; and (ii)
certificates of existence, good standing and qualification to do business issued
by the appropriate governmental officials in the state of its formation and, if
different, the state in which the Property is located.

 

 

 

             (c)          For each limited liability company or limited
liability partnership: (i) a true and complete copy of the articles of
organization and operating agreement, and all amendments thereto, a certificate
of incumbency of all of its partners who are authorized to execute or attest to
any of the Loan Documents, and a true and complete copy of resolutions approving
the Loan Documents and authorizing the transactions contemplated in this
Agreement and the other Loan Documents; and (ii) certificates of existence, good
standing and qualification to do business issued by appropriate governmental
officials in the state of its formation and, if different, the state in which
the Property is located.

 

 

 

             (d)          For each entity or organization that is not a
corporation, partnership, limited partnership, joint venture, limited liability
company or limited liability partnership, a copy of each document creating it or
governing the existence, operation, power or authority of it or its
representatives.

 

 

 

             (e)          All certificates, resolutions, and consents required
by Lender applicable to the foregoing.

          6.          Opinions. The written opinion(s) of counsel satisfactory
to Lender for Borrower, each Guarantor, and any other persons or entities
addressed to Lender and dated the date of this Agreement.

          7.          Survey; No Special Flood Hazard. Three (3) prints of an
original survey of the Property and existing improvements thereon, if any,
complying with the requirements of Exhibit E attached hereto or otherwise in
form satisfactory to Lender and the Title Company and a flood insurance policy
in an amount equal to the lesser of the maximum Loan amount or the maximum
amount of flood insurance available under the Flood Disaster Protection Act of
1973 (“FDPA”), as amended, and otherwise in compliance with the requirements of
the Loan Documents, or evidence satisfactory to Lender that none of the Property
is or will be located in a flood hazard area (or if any portion of the Property
will be located in the flood hazard area such documents as may be deemed
necessary by Lender to comply with the FDPA and the regulations promulgated
thereunder).

          8.          Title Insurance. An ALTA title insurance policy (or a
title insurance policy promulgated by the laws of the state in which the
Property is located if an ALTA insurance

EXHIBIT C - Page 2

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policy is not available), issued by the Title Company in the maximum amount of
the Loan plus any other amount secured by the Deed of Trust, on a coinsurance
and/or reinsurance basis if and as required by Lender, insuring without
exclusion or exception for creditors’ rights that the Deed of Trust constitutes
a valid lien covering the Property, having the priority required by Lender and
subject only to those exceptions and encumbrances (regardless of rank or
priority) Lender approves, in a form acceptable to Lender, and with all
“standard” exceptions which can be deleted, including the exception for matters
which a current survey would show, deleted to the fullest extent authorized
under applicable title insurance rules, and Borrower shall satisfy all
requirements therefor permitted; containing no exception for standby fees or
real estate taxes or assessments other than those for the year in which the
closing occurs to the extent the same are not then due and payable and endorsed
“not yet due and payable” and no exception for subsequent assessments for prior
years; providing full coverage against mechanics’ and materialmens’ liens to the
extent authorized under applicable title insurance rules, and Borrower shall
satisfy all requirements therefor; insuring that no restrictive covenants shown
in the Title Policy have been violated, and that no violation of the
restrictions will result in a reversion or forfeiture of title; insuring all
appurtenant easements; insuring that marketable fee simple title to the Property
is vested in Borrower; containing such affirmative coverage and endorsements as
Lender may require and are available under applicable title insurance rules, and
Borrower shall satisfy all requirements therefor; insuring any easements,
leasehold estates or other matters appurtenant to or benefiting the Property
and/or the Improvements as part of the insured estate; insuring the right of
access to the Property to the extent authorized under applicable title insurance
rules, and Borrower shall satisfy all requirements therefor. Borrower and
Borrower’s counsel shall not have any interest, direct or indirect, in the Title
Company (or its agent) or any portion of the premium paid for the Title Policy.

          9.          Insurance. The insurance policies required by Lender
pursuant to this Agreement, together with evidence satisfactory to Lender that
all premiums therefor have been paid for a period of not less than one (1) year
from the date of this Agreement and that the policies are in full force and
effect.

          10.        Project Agreements. Each of the following:

 

 

 

               (a)          true and correct copies of all executed letters of
intent and Leases and such evidence confirming the validity thereof, absence of
defaults thereunder, good standing and financial ability of the parties thereto
to perform, together with the standard lease form for the Property;

 

 

 

               (b)          true and correct copies of the Management Agreement
and any other noncancellable agreement relating to the management, operation or
maintenance of the Property and of each such agreement which cannot be cancelled
by thirty (30) days’ or less notice, together with a subordination and consent,
in form acceptable to Lender, executed by the applicable party thereto.

          11.          Environmental Compliance/Report. Evidence satisfactory to
Lender that, except as it relates to the Dry Cleaner Contamination (as defined
in the Environmental Indemnity) the Property does not contain and is not within
or near any area designated as a

EXHIBIT C - Page 3

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hazardous waste site by any Governmental Agency, that neither the Property nor
any adjoining property contains or has ever contained any substance classified
as hazardous or toxic (or otherwise regulated, such as, without limitation,
asbestos, radon and/or petroleum products) under applicable Laws pertaining to
health or the environment, and that neither the Property nor any use or activity
thereon violates or is or could be subject to any response, remediation, clean
up or other obligation under applicable Laws pertaining to health or the
environment including without limitation, a written report of an environmental
assessment of the Property, by an engineering firm, and of a scope and in form
and content satisfactory to Lender, complying with Lender’s established
guidelines, showing that there is no evidence of any such substance which has
been generated, treated, stored, released or disposed of in the Property, and
such additional evidence as may be required by Lender.

          12.          Environmental Insurance. The Environmental Insurance
Policy.

          13.          Tax Certificates. Evidence satisfactory to Lender (a) of
the identity of all taxing authorities and utility districts (or similar
authorities) having jurisdiction over the Property or any portion thereof; (b)
that all taxes, standby fees and any other similar charges have been paid,
including copies of receipts or statements marked “paid” by the appropriate
authority; and (c) that the Property is a separate tax lot or lots with separate
assessment or assessments of the Property and Improvements, independent of any
other land or improvements.

          14.          Access. Satisfactory evidence that the Property abuts and
has fully adequate direct and free access to one or more public streets and that
all of the streets providing access to the Property have been dedicated to
public use and have been fully installed and accepted by the appropriate
Governmental Agencies.

          15.          Priority. Lender shall have received and approved the
following:

 

 

 

               (i)          evidence satisfactory to Lender that prior to and as
of the time the Deed of Trust was filed for record no activity or circumstance
was visible on or near the Property which would constitute inception of a
mechanic’s or materialman’s lien against the Property; and

 

 

 

               (ii)          certificates of a reporting service acceptable to
Lender, reflecting the results of a search of the central and local Uniform
Commercial Code records made not earlier than ten (10) days prior to the Closing
Date, showing no filings against Borrower or any of the collateral for the Loan
except those, if any, approved by Lender.

          18.          Other Documents. Borrower, Guarantor and their
constituent Persons and representatives shall have delivered to Lender, in form
and content satisfactory to Lender, such other documents and certificates as
Lender may reasonably request in connection with the transactions contemplated
in this Agreement.

EXHIBIT C - Page 4

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EXHIBIT C-1

POST-CLOSING CONDITIONS

Borrower agrees that Borrower will deliver to Lender, or satisfy or cause to be
satisfied, the following on or before the dates specified below:

1.          Rice SNDA. On or before November 7, 2011, Borrower will cause to be
delivered to Lender an original SNDA from Rice, in form reasonably acceptable to
Lender.

2.          SNDAs and Tenant Estoppels. On or before January 15, 2012, Borrower
will cause to be delivered to Lender original SNDAs from CVS and Fidelity
Brokerage Services, LLC (and such other tenants as Lender may require), each in
form reasonably acceptable to Lender. Alternatively, if requested by Lender with
respect to certain Tenants, Borrower shall deliver to Lender tenant estoppel
certificates from such Tenants, in form reasonably acceptable to Lender.

3.          Required Repairs. Within 120 days after the date of this Agreement,
Borrower shall complete all Required Repairs pursuant to Section 4.4 of this
Agreement.

4.          Notice Regarding MSD Approval. Within 120 days after the date of
this Agreement, Borrower shall notify Lender whether an Environmental Trigger
has occurred, as described in Section 4.1 of this Agreement.

EXHIBIT C-1 - Page 1

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EXHIBIT D

INSURANCE REQUIREMENTS

 

 

I.

PROPERTY INSURANCE

 

 

A.

DURING CONSTRUCTION. An ORIGINAL (or certified copy) Builder’s All-Risk,
Completed Value, Non-Reporting Form Policy or ORIGINAL Acord 28 (2003/10)
Certificate of Insurance naming the borrowing entity as an insured, reflecting
coverage of 100% of the replacement cost, and written by a carrier approved by
Lender with a current A.M. Best’s Insurance Guide Rating of at least A- IX
(which is authorized to do business in the state in which the property is
located) that affirmatively includes the following:

 

 

1.

Mortgagee Clause naming U.S. Bank National Association, as mortgagee, with a
30-day notice to Lender in the event of cancellation, non-renewal or material
change

 

 

2.

Lender’s Loss Payable Endorsement (ISO 1218 or similar) with a Severability of
Interest Clause with a 30-day notice to Lender in the event of cancellation,
non-renewal or material change

 

 

3.

Replacement Cost Endorsement

 

 

4.

No Exclusion for Acts of Terrorism

 

 

5.

No Coinsurance Clause

 

 

6.

Flood Insurance

 

 

7.

Coastal and Other Wind Coverage

 

 

8.

Collapse and Earthquake Coverage

 

 

9.

Vandalism and Malicious Mischief Coverage

 

 

10.

Boiler and Machinery Coverage (aka Electrical and Mechanical Breakdown)

 

 

11.

Demolition, Increased Cost of Construction Coverage

 

 

12.

In-Transit Coverage

 

 

13.

Partial Occupancy Permitted

 

 

14.

Borrower’s coverage is primary and non-contributory with any insurance or
self-insurance carried by Lender.

 

 

15.

Waiver of Subrogation against any party whose interest are covered in the policy

 

 

16.

Delay in Completion or Delay in Rents/Startup Coverage

EXHIBIT D - Page 1

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17.

Coverage to be effective upon the date of the Notice to Proceed, the date of
site mobilization or the start of any shipment of materials, machinery or
equipment to the site, whichever is earlier, and to remain in effect until
replaced by permanent All Risk Property Insurance described below, or until such
other time as may be mutually agreed upon by Lender and Borrower. Coverage
should be non-cancellable through term of Loan with automatic extension
provision of at least 60 days.

 

 

B.

UPON COMPLETION. An ORIGINAL (or certified copy) All-Risk Hazard Insurance
Policy or ORIGINAL Acord 28 (2003/10) Certificate of Insurance naming the
borrowing entity as an insured, reflecting coverage of 100% of the replacement
cost, and written by a carrier approved by Lender with a current A.M. Best’s
Insurance Guide Rating of at least A- IX (which is authorized to do business in
the state in which the property is located) that affirmatively includes the
following:

 

 

1.

Mortgagee Clause naming U.S. Bank National Association, as mortgagee, with a
30-day notice to Lender in the event of cancellation, non-renewal or material
change.

 

 

2.

Lender’s Loss Payable Endorsement with a Severability of Interest Clause with a
30-day notice to Lender in the event of cancellation, non-renewal or material
change

 

 

3.

Replacement Cost Endorsement

 

 

4.

No Exclusion for Acts of Terrorism

 

 

5.

No Coinsurance Clause

 

 

6.

Boiler and Machinery Coverage (aka Electrical and Mechanical Breakdown)

 

 

7.

Sprinkler Leakage Coverage

 

 

8.

Vandalism and Malicious Mischief Coverage

 

 

9.

Flood Insurance

 

 

10.

Loss of Rents Insurance in an amount of not less than 100% of one year’s Rental
Value of the Property. “Rental Value” shall include: (a) the total projected
gross rental income from tenant occupancy of the Property as set forth in the
Budget, (b) the amount of all charges which are the legal obligation of tenants
and which would otherwise be the obligation of Borrower, and (c) the fair rental
value of any portion of the Property which is occupied by Borrower.

 

 

11.

One year’s business interruption insurance in an amount acceptable to Lender.

 

 

12.

Collapse and Earthquake Coverage

 

 

13.

Coastal & Other Wind Coverage

EXHIBIT D - Page 2

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14.

Extra Expense Coverage

 

 

15.

Borrower’s coverage is primary and non-contributory with any insurance or
self-insurance carried by Lender.

 

 

16.

Waiver of Subrogation against any party whose interest are covered in the policy

 

 

17.

Demolition and Increased Cost of Construction

 

 

 

 

II.

LIABILITY INSURANCE. An ORIGINAL Acord 25-S Certificate of General Comprehensive
Liability Insurance naming the borrowing entity as an insured, providing
coverage on an “occurrence” rather than a “claims made” basis and written by a
carrier approved by the Lender, with a current A.M.Best’s Insurance Guide Rating
of at least A- IX. (which is authorized to do business in the state in which the
property is located) that affirmatively includes the following:

 

 

1.

Combined general liability policy limit of at least $5,000,000.00 each
occurrence and aggregate applying liability for Bodily Injury, Personal Injury,
Property Damage, Contractual, Products and Completed Operations which combined
limit may be satisfied by the limit afforded under the Commercial General
Liability Policy, or by such Policy in combination with the limits afforded by
an Umbrella or Excess Liability Policy (or policies); provided, the coverage
afforded under any such Umbrella or Excess Liability Policy is at least as broad
in all material respects as that afforded by the underlying Commercial General
Liability Policy. Such policies must contain a Separations of Insureds /
Severability of Interest clause.

 

 

2.

No Exclusion for Acts of Terrorism

 

 

3.

Aggregate limit to apply per location

 

 

4.

Borrower’s coverage is primary and non-contributory with any insurance or
self-insurance carried by Lender.

 

 

5.

Waiver of Subrogation against any party whose interest are covered in the policy

 

 

6.

Additional Insured Endorsement naming Lender as an additional insured with a
30-day notice to Lender in the event of cancellation, non-renewal or material
change. A Severability of Interests provision should be included.

 

 

III.

WORKER’S COMPENSATION. An ORIGINAL Certificate indicating Worker’s Compensation
coverage in the statutory amount and Employer’s Liability Coverage with minimum
limits of $500,000 / $500,000 / $500,000 naming the General Contractor and
written by a carrier approved by Lender.

EXHIBIT D - Page 3

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EXHIBIT E

SURVEY REQUIREMENTS

 

 

A.

Boundary Survey and Foundation Survey Requirements

 

 

These items are to be included and shown on the Boundary/Foundation Survey:

 

1.

The complete and correct legal description of the Land as shown on the title
insurance commitment or preliminary title report. (Note: It must be possible to
trace the legal description of the Land on the survey by following the bearings
and dimensions around the boundaries of the Land).

 

 

2.

The location of all recorded easements and of all unrecorded easements
ascertainable by an inspection of the Land, which benefit or burden the Land.
(Note: All recorded easements are to be identified by a document recording
number or other document reference).

 

 

3.

All areas affected by any recorded restrictions or access limitations. (Note:
All such areas are to be identified by a document recording number or other
document reference).

 

 

4.

The location of all adjoining streets, roads, highways and alleys, with names,
rights-of-way widths and distances from the Land noted. If none adjoin the Land,
then the location of the nearest public street, road or highway and its distance
from the Land.

 

 

5.

The location of public access to the Land and of all appurtenant access
easements, entrance drives and curb cuts.

 

 

6.

A directional indicator showing North.

 

 

7.

The street address of any existing improvements.

 

 

8.

The dimensions of the Land and the locations of existing improvements as
measured in both directions from property lines.

 

 

9.

The perimeter dimensions of existing improvements and the proposed locations of
contemplated improvements.

 

 

10.

Interior lot lines, if any.

 

 

11.

All applicable municipal building setback lines.

 

 

12.

The location of existing connections and onsite utility and service lines for
natural gas, electricity, water, and sanitary and storm sewers.

 

 

13.

The area of the Land.

EXHIBIT E - Page 1

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14.

Any portion of the Land which is located in a flood plain or in any other flood
hazard or flood danger area as designated by any Governmental Agency claiming
jurisdiction over the Land.

 

 

15.

The following certification of surveyor (land only).

 

 

 

“I hereby certify to [insert names of Borrower, Lender and Title Company] and to
their heirs, successors and assigns, that this map or plat and the survey on
which it is based were made in accordance with the “Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys” jointly established and adopted
by ALTA and NSPS in 2005, and include optional items 1, 2, 4 (in square feet or
acres), 6, 8, 10, 11(b), 16, 17, 18 and if buildings are located on the land,
optional items 7(a), 7(b)(1), and 7(b)(2) and 9 of Table A thereof. Pursuant to
the Accuracy Standards as adopted by ALTA and NSPS and in effect on the date of
this certification, the undersigned further certifies that in my professional
opinion, as a land surveyor registered in the State/Commonwealth of
______________, the maximum Relative Positional Accuracy resulting from the
measurements made on the survey does not exceed the Allowable Relative
Positional Accuracy for Measurements Controlling Land Boundaries on ALTA/ACSM
Land Title Surveys (0.07 feet or 20 mm + 50 ppm).

 

 

 

Dated this ___ day of _______________, 200__.

 

[LICENSED SURVEYOR’S SIGNATURE]

 

 

 

(Seal)        [NAME OF SURVEYOR]

 

Registration Number:

 

 

16.

The following certification of surveyor (land and existing buildings).

 

 

 

“I hereby certify to [insert names of Borrower, Lender and Title Company] and to
their heirs, successors and assigns, that this map or plat and the survey on
which it is based were made in accordance with “Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys”, jointly established and adopted
by ALTA and NSPS in 2005, and includes Items of Table A thereof. Pursuant to the
Accuracy Standards as adopted by ALTA and NSPS and in effect on the date of this
certification, the undersigned further certifies that in my professional
opinion, as a land surveyor registered in the State of __________, the Relative
Positional Accuracy of this survey does not exceed that which is specified
therein the allowable Positional Tolerance.

 

 

 

Dated this ___ day of _______________, 200__.

 

 

 

[LICENSED SURVEYOR’S SIGNATURE] (Seal)           [NAME OF SURVEYOR]

 

Registration Number:

 

 

B.

As-Built Survey Requirements. In addition to the requirements listed above,
include these items:

 

 

1.

Location and size of internal driveways and paved parking areas and the location
and number of individual parking spaces contained therein.

EXHIBIT E - Page 2

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2.

Location of walkways.

 

 

3.

Location of ingress and egress (curb cuts and driveways).

 

 

4.

Location of all buildings and improvements, as built, including the distances
from each building to the two nearest property boundary lines, and the exterior
dimensions of each building.

 

 

5.

Street address of each building.

 

 

6.

Square foot area of each building.

 

 

7.

All entrances to and exits from each building.

 

 

8.

All utility lines, as built, from each building to their points of connection
with trunk lines in public rights of way.

 

 

9.

All water retention areas and drainage water receptacles.

EXHIBIT E - Page 3

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EXHIBIT F

EXTENSION OPTION

Borrower shall have the option to extend the Maturity Date of the Loan for one
period of twelve (12) months (such 12 month period, herein, the “Extension
Period”), at which time the term “Maturity Date” shall mean the Maturity Date,
as extended pursuant to this Exhibit F. The exercise of such extension option
shall be effective only if all of the following conditions have been satisfied
on the initial Maturity Date:

 

 

 

          (a)          No Event of Default shall have occurred which has not
been cured or waived in writing by Lender as of the date of such extension.

 

 

 

          (b)          The representations and warranties of Borrower and
Guarantor in the Loan Documents shall be true and correct in all material
respects as of the first day of the Extension Period, as changed based upon
events or activities not prohibited by the Loan Documents.

 

 

 

          (c)          No later than forty-five (45) days and no earlier than
ninety (90) days prior to the date of the proposed extension, Lender shall have
received written notice from Borrower that Borrower desires to exercise its
option to extend the Maturity Date.

 

 

 

          (e)          As a condition to such extension, Borrower shall pay to
Lender, on or prior to the first day of the Extension Period, an extension fee
equal to the product of (A) 0.25 percent times (B) the outstanding principal
balance of the Loan on the first day of the Extension Period.

 

 

 

          (f)          The balance of the Loan, plus any other amounts owed to
Lender under the Loan Documents with respect to the Property, shall not be
greater than seventy percent (70%) of the “as-stabilized” Appraised Value of the
Property, as determined by Lender pursuant to a current Appraisal of the
Property. Borrower may satisfy the foregoing condition prior to the first day of
the Extension Period by making a principal payment on the Loan in an amount
sufficient to cause the Property to comply with the foregoing condition.

 

 

 

          (g)          The Adjusted Net Operating Income from the Property,
verified by Lender (based upon the Adjusted Net Operating Income from the
Property for each of the three (3) calendar months immediately preceding the
first day of the Extension Period, multiplied by four) is not less than 130% of
the monthly payments of principal and interest on the Loan which would be
required for a period of twelve (12) calendar months if the outstanding
principal balance of the Loan (as of the date of calculation by Lender
hereunder) was to be fully amortized in consecutive level payments of principal
and interest over a period of 30 years at an interest rate per annum equivalent
to the greater of (A) 7.00% or (B) 2.50% plus the Treasury Rate which, as of the
date that is 30 days prior to the date of any such determination by Lender
hereunder, has been most recently published (or, if for any reason that
published rate is not available as of such date, another rate determined by
Lender to be comparable, in its discretion reasonably exercised, shall

EXHIBIT H - Page 1

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be used for this purpose). Borrower may satisfy the foregoing condition prior to
the first day of the Extension Period by making a principal payment on the Loan
in an amount sufficient to cause the Property to comply with the foregoing
condition.

 

 

 

          (h)          Lender shall have received all financial statements and
other information as may be required to be submitted to Lender under the Loan
Documents regarding Borrower, Guarantor and the Property and Lender shall have
determined, in its judgment, that no Material Adverse Effect has occurred with
respect to the Property or the financial condition or creditworthiness of
Borrower or Guarantor.

 

 

 

          (i)          Borrower shall cause to be delivered to Lender at
Borrower’s expense an endorsement to the Title Policy as required by Lender,
reflecting that title to the Property is subject only to the Permitted
Encumbrances, current ad valorem taxes to the extent not yet due and payable,
and such other exceptions as Lender has approved in writing.

 

 

 

          (j)          Either Borrower shall have received a VCP Certificate of
Completion for the Property from TCEQ or Borrower shall have submitted evidence
reasonably satisfactory to Lender that the Property has been transferred into
the DCR Program.

 

 

 

          (k)          Whether or not any extension becomes effective, Borrower
shall pay all out-of-pocket costs and expenses incurred by Lender in connection
with the proposed extension (pre- and post-closing), including, without
limitation, appraisal fees and reasonable legal fees; all such costs and
expenses incurred up to the time of Lender’s written agreement to the extension
shall be due and payable prior to Lender’s execution of that agreement (or if
the proposed extension does not become effective, then upon demand by Lender),
and any future failure to pay such amounts shall constitute a default under the
Loan Documents.

 

 

 

          (l)          Borrower and Guarantor shall have executed and delivered
to Lender a modification and extension agreement, providing for, among other
things (1) the extension of the Maturity Date, (2) the reaffirmation by Borrower
of its representations, warranties, duties and obligations under the Loan
Documents and Guarantor’s representations, warranties, duties and obligations
under the Guaranty, and (3) the waiver and release by Borrower and Guarantor of
any defenses, claims, counterclaims, and rights of offset, if any, which
Borrower may then have in respect of Lender and the Obligations, together with
such other agreements, documents or amendments to the Loan Documents as are
reasonably requested by Lender to properly document the extension, all in form
and content satisfactory to Lender.

EXHIBIT H - Page 2

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