EXHIBIT 10.7

 

Promissory Note

 

IREIT OLIVE BRANCH WEDGEWOOD, L.L.C.

Wedgewood Commons Shopping Center

 

$16,900,000.00
                                                                                                                                                                   December
23, 2013

 

FOR VALUE RECEIVED, IREIT OLIVE BRANCH WEDGEWOOD, L.L.C., a Delaware limited
liability company (“Borrower”), whose address is c/o Inland Real Estate Income
Trust, Inc., 2901 Butterfield Road, Oak Brook, IL 60523, Attn: President, hereby
promises to pay to the order of Bank of America, N.A., a national banking
association (together with any and all of its successors and assigns and/or any
other holder of this Note, “Lender”), without offset, in immediately available
funds in lawful money of the United States of America, at Bank of America, N.A.,
Commercial Real Estate Banking, 100 North Tryon Street, NC1-007-11-15,
Charlotte, NC 28255 (Attn: Real Estate Loan Administration), the principal sum
of Sixteen Million Nine Hundred Thousand and No/100 Dollars ($16,900,000.00) (or
the unpaid balance of all principal advanced against this Note, if that amount
is less), together with interest on the unpaid principal balance of this Note
from day to day outstanding as hereinafter provided.

 

Section 1 Payment Schedule and Maturity Date.

 

(a) Interest Payments. Installments of interest for each calendar month shall be
due and payable in arrears on the fifteenth (15th) day of each month beginning
with the interest installment due on February 15, 2014 (which such payment
shall, if applicable, also include any interest accrued for periods prior to the
applicable month for which such payment is being made), and continuing on the
fifteenth (15th) day of each month thereafter until all principal and accrued
interest owing on this Note shall have been fully paid and satisfied. The entire
principal balance of this Note then unpaid, together with all accrued and unpaid
interest and all other amounts payable hereunder and under the other Loan
Documents (as hereinafter defined), shall be due and payable in full on the
Maturity Date (as defined below).

 

(b) Principal Payments; Maturity Date. No scheduled principal payments are due
with respect to the Loan during the term hereof. Notwithstanding anything to the
contrary contained herein, the entire principal balance of this Note then unpaid
and all accrued interest then unpaid shall (unless accelerated sooner pursuant
to the terms of the Loan Documents) be finally due and payable on December 23,
2018 (the “Maturity Date”).

 

Section 2 Security; Loan Documents. The security for this Note includes a Deed
of Trust, Assignment, Security Agreement and Fixture Filing (as the same may
from time to time be amended, restated, modified or supplemented, the “Deed of
Trust”) of even date herewith from Borrower to Lender, conveying and encumbering
certain real and personal property more particularly described therein (the
“Property”). This Note, the Deed of Trust, the Term Loan Agreement between
Borrower and Lender of even date herewith (as the same may from time to time be
amended, restated, modified or supplemented, the “Loan Agreement”) and all other
documents (including, without limitation, the “Loan Documents,” as defined in
the Loan Agreement) now or hereafter securing, guaranteeing or executed in
connection with the loan evidenced by this Note (the “Loan”), as the same may
from time to time be amended, restated, modified or supplemented, are herein
sometimes called individually a “Loan Document” and together the “Loan
Documents.”

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Section 3 Interest Rate.

 

(a) LIBOR Daily Floating Rate. The unpaid principal balance of this Note from
day to day outstanding which is not past due, shall bear interest at a
fluctuating rate of interest per annum equal to the LIBOR Daily Floating Rate
for that day plus one hundred ninety (190) basis points per annum (the “Floating
Rate”). The “LIBOR Daily Floating Rate” shall mean a fluctuating rate of
interest per annum equal to (i) the British Bankers Association LIBOR Rate or
the successor thereto if the British Bankers Association is no longer making a
LIBOR rate available (“LIBOR”), as published by Reuters (or other commercially
available source providing quotations of LIBOR as selected by Lender from time
to time) at approximately 11:00 a.m., London time determined two (2) London
Banking Days prior to the date in question, for U.S. Dollar deposits being
delivered in the London interbank eurodollar market for a term of one (1) month
commencing that day, or (ii) if such published rate is not available at such
time for any reason, the rate per annum determined by Lender to be the rate at
which deposits in U.S. Dollars for delivery on the date of determination in same
day funds in the approximate outstanding amount of the Loan and with a term
equal to one (1) month would be offered by Bank of America, N.A.’s London Branch
to major banks in the London interbank eurodollar market at their request at the
date and time of determination. “London Banking Day” means any day on which
dealings in U.S. Dollar deposits are conducted by and between banks in the
London interbank eurodollar market. Interest shall be computed for the actual
number of days which have elapsed, on the basis of a 360-day year.

(b) Illegality. If Lender determines that for any reason, any Law has made it
unlawful, or that any Governmental Authority (as defined in Section 7) has
asserted that it is unlawful, for Lender to make, maintain or fund loans whose
interest is determined by reference to the LIBOR Daily Floating Rate, or to
determine or charge interest rates based upon the LIBOR Daily Floating Rate, or
any Governmental Authority has imposed material restrictions on the authority of
Lender to purchase or sell, or to take deposits of, U.S. Dollars in the London
interbank eurodollar market, then, on notice thereof by Lender to Borrower, any
obligation of Lender to provide the Floating Rate shall be suspended, until
Lender notifies Borrower that the circumstances giving rise to such
determination no longer exist. During the period of any such suspension, the
unpaid principal balance of this Note from day to day outstanding which is not
past due, shall bear interest at a fluctuating rate of interest per annum equal
to the Alternative Rate for that day plus one hundred twenty-five (125) basis
points per annum. As used herein:

“Alternative Rate” means, for any day, a fluctuating rate per annum equal to the
higher of (i) the Federal Funds Rate less fifty (50) basis points, and (ii) the
rate of interest in effect for such day as publicly announced from time to time
by Lender as its “Prime Rate.”

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (i) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (ii) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/10,000 of 1%) charged to Bank of
America, N.A. on such day on such transactions as determined by Lender.

 

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

 

The “Prime Rate” means a rate set by Lender based upon various factors including
Lender’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate. Any change in such Prime Rate
announced by Lender shall take effect at the opening of business on the day
specified in the public announcement of such change.

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(c) Inability to Determine Rate. If Lender determines that for any reason, (i)
U.S. Dollar deposits are not being offered to banks in the London interbank
eurodollar market in the outstanding amount of the Loan for terms equal to one
(1) month, (ii) adequate and reasonable means do not exist for determining the
LIBOR Daily Floating Rate with respect to the Loan, or (iii) the Floating Rate
does not adequately and fairly reflect the cost to Lender of funding the Loan,
Lender will promptly so notify Borrower. Thereafter, the obligation of Lender to
provide the Floating Rate shall be suspended until Lender revokes such notice.
During the period of any such suspension, the unpaid principal balance of this
Note from day to day outstanding which is not past due, shall bear interest at a
fluctuating rate of interest per annum equal to the Alternative Rate for that
day plus one hundred twenty-five (125) basis points per annum.

Section 4 Prepayment. Borrower may prepay the principal balance of this Note, in
full at any time or in part from time to time, without fee, premium or penalty,
provided that: (a) no prepayment may be made which in Lender’s judgment would
contravene or prejudice funding under any applicable permanent loan commitment
or tri-party agreement or the like; (b) Lender shall have actually received from
Borrower prior written notice of (i) Borrower’s intent to prepay, (ii) the
amount of principal which will be prepaid (the “Prepaid Principal”), and (iii)
the date on which the prepayment will be made; (c) each prepayment shall be in
the amount of $1,000 or a larger integral multiple of $1,000 (unless the
prepayment retires the outstanding balance of this Note in full); and (d) each
prepayment shall be in the amount of 100% of the Prepaid Principal, plus accrued
unpaid interest thereon to the date of prepayment, plus any other sums which
have become due to Lender under the Loan Documents on or before the date of
prepayment but have not been paid. If this Note is prepaid in full, any
commitment of Lender for further advances shall automatically terminate.

 

Section 5 Late Charges. If Borrower shall fail to make any payment under the
terms of this Note (other than the payment due at maturity) within fifteen (15)
days after the date such payment is due, Borrower shall pay to Lender on demand
a late charge equal to four percent (4%) of the amount of such payment. Such
fifteen (15) day period shall not be construed as in any way extending the due
date of any payment. The late charge is imposed for the purpose of defraying the
expenses of Lender incident to handling such delinquent payment. This charge
shall be in addition to, and not in lieu of, any other amount that Lender may be
entitled to receive or action that Lender may be authorized to take as a result
of such late payment.

 

Section 6 Default Rate. After the occurrence of an Event of Default (including
the expiration of any applicable cure period), the Lender, in the Lender’s sole
discretion and without notice or demand, may raise the rate of interest accruing
on the outstanding principal balance of this Note by three hundred (300) basis
points above the rate of interest otherwise applicable (“Default Rate”),
independent of whether the Lender elects to accelerate the outstanding principal
balance of this Note.

 

Section 7 Increased Costs. If any Change in Law shall:

 

(a) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended by, Lender (which shall include, for
purposes of this Section, any corporation Controlling Lender) (excluding any
reserve requirement already reflected in the calculation of the interest rate in
this Note);

 

(b) subject Lender to any taxes (other than taxes imposed on or measured by net
income, however denominated, franchise taxes or branch profit taxes) on its
loans, loan principal, letters of credit, commitments, or other obligations, or
its deposits, reserves, other liabilities or capital attributable thereto; or

 

(c) impose on Lender or the London interbank eurodollar market any other
condition, cost or expense affecting this Note or any outstanding amount of the
Loan;

 

and the result of any of the foregoing shall be to increase the cost to Lender,
of providing, continuing or maintaining the Loan, or to reduce the amount of any
sum received or receivable by Lender hereunder (whether of principal, interest
or any other amount) then, upon request of Lender, Borrower will pay to Lender
such additional amount or amounts as will compensate Lender for such additional
costs incurred or reduction suffered. Such additional costs and/or reduction
shall be allocated to this Note or any outstanding amount of the Loan as
determined by Lender, using any reasonable method. No failure by Lender to
immediately demand payment of any amounts hereunder shall constitute a waiver of
Lender’s right to demand payment of such amounts at any subsequent time. Nothing
herein contained shall be construed or shall operate to require Borrower to pay
any interest, fees, costs or charges greater than is permitted by applicable
Law. As used herein:

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“Change in Law” means the occurrence, after the date of this Note, of any of the
following: (a) the adoption or taking effect of any Law, (b) any change in any
Law or in the administration, interpretation, implementation or application
thereof by any Governmental Authority, or the making or issuance of any request,
rule, guideline, or directive (whether or not having the force of Law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
(y) all requests, rules, guidelines, or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority), or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “Change in Law,” regardless of the date enacted, adopted, or issued.

Section 8 Capital Requirements. If Lender (which shall include, for purposes of
this Section, any corporation Controlling Lender) determines that any Change in
Law affecting Lender, regarding capital or liquidity requirements has or would
have the effect of reducing the rate of return on Lender’s capital, as allocated
to this Note or the Loan, or to Lender’s commitments under this Note or the
Loan, to a level below that which Lender could have achieved but for such Change
in Law (taking into consideration Lender’s policies with respect to capital
adequacy), then from time to time Borrower will pay to Lender, within thirty
(30) days after request by Lender, such additional amount or amounts as will
compensate Lender for any such reduction suffered. The allocation shall be made
as determined by Lender, in good faith and not in an arbitrary or capricious
basis, using any reasonable method. No failure by Lender to immediately demand
payment of any amounts hereunder shall constitute a waiver of Lender’s right to
demand payment of such amounts at any subsequent time. Nothing herein contained
shall be construed or shall operate to require Borrower to pay any interest,
fees, costs or charges greater than is permitted by applicable Law.

Section 9 Certain Provisions Regarding Payments. All payments made under this
Note shall be applied, to the extent thereof, to late charges, to accrued but
unpaid interest, to unpaid principal, and to any other sums due and unpaid to
Lender under the Loan Documents, in such manner and order as Lender may elect in
its sole discretion, any instructions from Borrower or anyone else to the
contrary notwithstanding. Remittances shall be made without offset, demand,
counterclaim, deduction, or recoupment (each of which is hereby waived) and
shall be accepted subject to the condition that any check or draft may be
handled for collection in accordance with the practice of the collecting bank or
banks. Acceptance by Lender of any payment in an amount less than the amount
then due on any indebtedness shall be deemed an acceptance on account only,
notwithstanding any notation on or accompanying such partial payment to the
contrary, and shall not in any way (a) waive or excuse the existence of an Event
of Default (as hereinafter defined), (b) waive, impair or extinguish any right
or remedy available to Lender hereunder or under the other Loan Documents, or
(c) waive the requirement of punctual payment and performance or constitute a
novation in any respect. Payments received after 3:00 p.m. shall be deemed to be
received on, and shall be posted as of, the following Business Day. Whenever any
payment under this Note or any other Loan Document falls due on a day which is
not a Business Day, such payment may be made on the next succeeding Business
Day.

 

Section 10 Events of Default. The occurrence of any one or more of the following
shall constitute an “Event of Default” under this Note:

 

(a) Borrower fails to pay when and as due and payable any amounts payable by
Borrower to Lender under the terms of this Note within five (5) days of the date
when such payment is due and owing pursuant to the terms hereof (provided, that
such grace period shall not apply more than twice during any calendar year and
shall not apply to any payment of principal due hereunder, whether at maturity
or otherwise).

 

(b) Any covenant, agreement or condition in this Note is not fully and timely
performed, observed or kept, subject to any applicable grace or cure period.

 

(c) An Event of Default (as therein defined) occurs under any of the Loan
Documents other than this Note (subject to any applicable grace or cure period).

 

Section 11 Remedies. Upon the occurrence and during the continuance of an Event
of Default, Lender may at any time thereafter exercise any one or more of the
following rights, powers and remedies:

 

(a) Lender may accelerate the Maturity Date and declare the unpaid principal
balance and accrued but unpaid interest on this Note, and all other amounts
payable hereunder and under the other Loan Documents, at once due and payable,
and upon such declaration the same shall at once be due and payable.

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(b) Lender may set off the amount due against any and all accounts, credits,
money, securities or other property now or hereafter on deposit with, held by or
in the possession of Lender to the credit or for the account of Borrower,
without notice to or the consent of Borrower.

 

(c) Lender may exercise any of its other rights, powers and remedies under the
Loan Documents or at law or in equity.

 

Without limitation of the foregoing, upon the occurrence of an actual or deemed
entry of an order for relief with respect to Borrower under the Bankruptcy Code
(Title 11 of the United States Code, as in effect from time to time), any
obligation of Lender to make advances shall automatically terminate, and the
unpaid principal amount of the Loan outstanding and all interest and other
amounts payable hereunder and under the other Loan Documents shall automatically
become due and payable, in each case without further act of Lender.

 

Section 12 Remedies Cumulative. All of the rights and remedies of Lender under
this Note and the other Loan Documents are cumulative of each other and of any
and all other rights at law or in equity, and the exercise by Lender of any one
or more of such rights and remedies shall not preclude the simultaneous or later
exercise by Lender of any or all such other rights and remedies. No single or
partial exercise of any right or remedy shall exhaust it or preclude any other
or further exercise thereof, and every right and remedy may be exercised at any
time and from time to time. No failure by Lender to exercise, nor delay in
exercising, any right or remedy, including but not limited to the right to
accelerate the maturity of this Note, shall operate as a waiver of such right or
remedy or as a waiver of any Event of Default. Without limiting the generality
of the foregoing provisions, the acceptance by Lender from time to time of any
payment under this Note which is past due or which is less than the payment in
full of all amounts due and payable at the time of such payment, shall not (i)
constitute a waiver of or impair or extinguish the right of Lender to accelerate
the maturity of this Note or to exercise any other right or remedy under this
Note and/or any other Loan Document at the time or at any subsequent time, or
nullify any prior exercise of any such right or remedy, or (ii) constitute a
waiver of the requirement of punctual payment and performance or a novation in
any respect.

 

Section 13 Costs and Expenses of Enforcement. Borrower agrees to pay to Lender
on demand all costs and expenses incurred by Lender in seeking to collect this
Note or to enforce any of Lender’s rights and remedies under the Loan Documents,
including court costs and reasonable attorneys’ fees and expenses, whether or
not suit is filed hereon, or whether in connection with bankruptcy, insolvency
or appeal.

 

Section 14 Service of Process. Borrower hereby irrevocably designates and
appoints CT Corp. as Borrower’s authorized agent to accept and acknowledge on
Borrower’s behalf service of any and all process that may be served in any suit,
action, or proceeding instituted in connection with this Note in any state or
federal court sitting in the State of North Carolina. If such agent shall cease
so to act, Borrower shall irrevocably designate and appoint without delay
another such agent in the State of North Carolina satisfactory to Lender and
shall promptly deliver to Lender evidence in writing of such agent’s acceptance
of such appointment and its agreement that such appointment shall be
irrevocable.

 

Borrower hereby consents to process being served in any suit, action, or
proceeding instituted in connection with this Note by (a) the mailing of a copy
thereof by certified mail, postage prepaid, return receipt requested, to
Borrower and (b) serving a copy thereof upon the agent, if any, hereinabove
designated and appointed by Borrower as Borrower’s agent for service of process.
Borrower irrevocably agrees that such service shall be deemed to be service of
process upon Borrower in any such suit, action, or proceeding. Nothing in this
Note shall affect the right of Lender to serve process in any manner otherwise
permitted by law and nothing in this Note will limit the right of Lender
otherwise to bring proceedings against Borrower in the courts of any
jurisdiction or jurisdictions, subject to any provision or agreement for
arbitration or dispute resolution set forth in the Loan Agreement.

 

Section 15 Heirs, Successors and Assigns. The terms of this Note and of the
other Loan Documents shall bind and inure to the benefit of the heirs, devisees,
representatives, successors and assigns of the parties. The foregoing sentence
shall not be construed to permit Borrower to assign the Loan except as otherwise
permitted under the Loan Documents.

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Section 16 General Provisions. Time is of the essence with respect to Borrower’s
obligations under this Note. If more than one person or entity executes this
Note as Borrower, all of said parties shall be jointly and severally liable for
payment of the indebtedness evidenced hereby. Borrower and each party executing
this Note as Borrower hereby severally (a) waive demand, presentment for
payment, notice of dishonor and of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all other notices
(except any notices which are specifically required by this Note or any other
Loan Document), filing of suit and diligence in collecting this Note or
enforcing any of the security herefor; (b) agree to any substitution,
subordination, exchange or release of any such security or the release of any
party primarily or secondarily liable hereon; (c) agree that Lender shall not be
required first to institute suit or exhaust its remedies hereon against Borrower
or others liable or to become liable hereon or to perfect or enforce its rights
against them or any security herefor; (d) consent to any extensions or
postponements of time of payment of this Note for any period or periods of time
and to any partial payments, before or after maturity, and to any other
indulgences with respect hereto, without notice thereof to any of them; and (e)
submit (and waive all rights to object) to non-exclusive personal jurisdiction
of any state or federal court sitting in the state and county in which payment
of this Note is to be made for the enforcement of any and all obligations under
this Note and the other Loan Documents; (f) waive the benefit of all homestead
and similar exemptions as to this Note; (g) agree that their liability under
this Note shall not be affected or impaired by any determination that any title,
security interest or lien taken by Lender to secure this Note is invalid or
unperfected; and (h) hereby subordinate to the Loan and the Loan Documents any
and all rights against Borrower and any security for the payment of this Note,
whether by subrogation, agreement or otherwise, until this Note is paid in full.
A determination that any provision of this Note is unenforceable or invalid
shall not affect the enforceability or validity of any other provision and the
determination that the application of any provision of this Note to any person
or circumstance is illegal or unenforceable shall not affect the enforceability
or validity of such provision as it may apply to other persons or circumstances.
This Note may not be amended except in a writing specifically intended for such
purpose and executed by the party against whom enforcement of the amendment is
sought. Captions and headings in this Note are for convenience only and shall be
disregarded in construing it. This Note and its validity, enforcement and
interpretation shall be governed by the laws of the State of North Carolina
(without regard to any principles of conflicts of laws) and applicable United
States federal law. Whenever a time of day is referred to herein, unless
otherwise specified such time shall be the local time of the place where payment
of this Note is to be made. The term “Business Day” shall mean a day on which
Lender is open for the conduct of substantially all of its banking business at
its office in the city in which this Note is payable (excluding Saturdays and
Sundays). Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Loan Agreement. The words “include” and
“including” shall be interpreted as if followed by the words “without
limitation.”

 

Section 17 Notices. Any notice, request, or demand to or upon Borrower or Lender
shall be deemed to have been properly given or made when delivered in accordance
with the terms of the Loan Agreement regarding notices.

 

Section 18 No Usury. It is expressly stipulated and agreed to be the intent of
Borrower and Lender at all times to comply with applicable state Law or
applicable United States federal Law (to the extent that it permits Lender to
contract for, charge, take, reserve, or receive a greater amount of interest
than under state Law) and that this Section shall control every other covenant
and agreement in this Note and the other Loan Documents. If applicable state or
federal Law should at any time be judicially interpreted so as to render
usurious any amount called for under this Note or under any of the other Loan
Documents, or contracted for, charged, taken, reserved, or received with respect
to the Loan, or if Lender’s exercise of the option to accelerate the maturity of
the Loan, or if any prepayment by Borrower results in Borrower having paid any
interest in excess of that permitted by applicable Law, then it is Lender’s
express intent that all excess amounts theretofore collected by Lender shall be
credited on the principal balance of this Note and all other indebtedness
secured by the Mortgage, and the provisions of this Note and the other Loan
Documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new documents, so as to comply with the applicable Law, but so
as to permit the recovery of the fullest amount otherwise called for hereunder
or thereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Loan shall, to the extent permitted by
applicable Law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the maximum lawful rate from
time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.

 

Section 19 Arbitration. This Note is subject to arbitration as provided in the
Loan Agreement.

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IN WITNESS WHEREOF, Borrower has duly executed this Note under seal as of the
date first above written.

 

BORROWER:

IREIT OLIVE BRANCH WEDGEWOOD, L.L.C., a Delaware limited liability company

 

By:       Inland Real Estate Income Trust, Inc., a Maryland corporation,
             its sole member

 

 

By:        /s/ David Z. Lichterman

Name:   David Z. Lichterman

Its:        Treasurer and Chief Accounting Officer

 

 

 

 

 

 

 

 

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