Exhibit 10.5
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated effective as of November 21, 2008
by and between
AmREIT
as Borrower
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Lender

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

             
ARTICLE 1.
  DEFINITIONS     1  
Section 1.1
  Definitions     1  
Section 1.2
  Accounting Terms and Determinations; Covenant Calculations     22  
Section 1.3
  Subsidiaries     22  
Section 1.4
  Interpretation Generally; Times     22  
 
           
ARTICLE 2.
  CREDIT FACILITY     22  
Section 2.1
  Making of Revolving Loan     22  
Section 2.2
  Requests for Borrowings     23  
Section 2.3
  Funding     23  
Section 2.4
  Continuation     23  
Section 2.5
  Conversion     24  
Section 2.6
  Interest Rate     24  
Section 2.7
  Special Provisions for LIBOR Loans     24  
Section 2.8
  Capital Adequacy     26  
Section 2.9
  Repayment of Loans     27  
Section 2.10
  Voluntary Reductions of the Commitment     28  
Section 2.11
  Credit Sweep Account     28  
Section 2.12
  Funds Transfer Disbursements     29  
Section 2.13
  Revolving Note     30  
Section 2.14
  Letters of Credit     30  
 
           
ARTICLE 3.
  GENERAL LOAN PROVISIONS     33  
Section 3.1
  Fees     33  
Section 3.2
  Computation of Interest and Fees     34  
Section 3.3
  Limitation of Interest     34  
Section 3.4
  Statements of Account     36  
Section 3.5
  Lender’s Reliance     36  
 
           
ARTICLE 4.
  UNENCUMBERED POOL PROPERTIES     36  
Section 4.1
  Acceptance of Unencumbered Pool Properties     36  
Section 4.2
  Termination of Designation as Unencumbered Pool Property     37  
Section 4.3
  Additional Requirements of Unencumbered Pool Properties     38  
 
           
ARTICLE 5.
  CONDITIONS     38  
Section 5.1
  Conditions Precedent to Effectiveness     38  
Section 5.2
  Conditions Precedent to Loans and Issuance of Letters of Credit     40  
 
           
ARTICLE 6.
  REPRESENTATIONS AND WARRANTIES     40  
Section 6.1
  Existence and Power     40  
Section 6.2
  Ownership Structure     41  
Section 6.3
  Authorization of Agreement, Revolving Notes, Loan Documents and Borrowings    
41  
Section 6.4
  Compliance of Agreement, Revolving Notes, Loan Documents and Borrowing with
Laws, etc.     41  

ii

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(Continued)

             
Section 6.5
  Compliance with Law; Governmental Approvals     41  
Section 6.6
  Indebtedness and Guarantees     42  
Section 6.7
  Property Management Agreements and Other Major Agreements     42  
Section 6.8
  Absence of Defaults     42  
Section 6.9
  Financial Information     42  
Section 6.10
  Litigation     42  
Section 6.11
  ERISA     43  
Section 6.12
  Taxes     43  
Section 6.13
  Investment Company Act; Public Utility Holding Company Act     43  
Section 6.14
  Full Disclosure     43  
Section 6.15
  Insurance     44  
Section 6.16
  Not Plan Assets     44  
Section 6.17
  Title and Liens     44  
Section 6.18
  Unencumbered Pool Properties     44  
Section 6.19
  Margin Stock     44  
Section 6.20
  Solvency     44  
Section 6.21
  Tax Shelter Regulations     44  
 
           
ARTICLE 7.
  COVENANTS     45  
Section 7.1
  Information     45  
Section 7.2
  Payment of Obligations     47  
Section 7.3
  Maintenance of Property; Insurance     48  
Section 7.4
  Conduct of Business; Maintenance of Existence; Qualification; Amendment of
Declaration of Trust     48  
Section 7.5
  Compliance with Laws     49  
Section 7.6
  Inspection of Property, Books and Records     49  
Section 7.7
  Consolidations, Mergers, Acquisitions and Sales of Assets     49  
Section 7.8
  Use of Proceeds and Letters of Credit     49  
Section 7.9
  Major Agreements     50  
Section 7.10
  Major Construction     50  
Section 7.11
  Material Events     50  
Section 7.12
  ERISA     50  
Section 7.13
  ERISA Exemptions     50  
Section 7.14
  Negative Pledge     51  
Section 7.15
  Listing Status and REIT Status     51  
Section 7.16
  Agreements with Affiliates     51  
Section 7.17
  New Subsidiaries     51  
Section 7.18
  Management     52  
Section 7.19
  Concentrations     52  
Section 7.20
  No Further Unsecured Indebtedness     52  
Section 7.21
  Interest Rate Hedge     53  
 
           
ARTICLE 8.
  FINANCIAL COVENANTS     53  
Section 8.1
  Minimum Tangible Net Worth     53  

iii

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(Continued)

             
Section 8.2
  Ratio of Total Liabilities to Gross Asset Value     53  
Section 8.3
  Distributions     53  
Section 8.4
  Ratio of EBITDA to Fixed Charges     53  
Section 8.5
  Permitted Investments     54  
Section 8.6
  Ratio of Unencumbered Net Operating Income to Unsecured Interest Expense    
54  
Section 8.7
  Ratio of Secured Indebtedness to Gross Asset Value     54  
Section 8.8
  Maximum Loan Availability     55  
Section 8.9
  Share Repurchases     55  
Section 8.10
  Dividend Restrictions     55  
 
           
ARTICLE 9.
  DEFAULTS     55  
Section 9.1
  Events of Default     55  
Section 9.2
  Remedies Upon an Event of Default     57  
Section 9.3
  Additional Remedies Upon Certain Default     57  
Section 9.4
  Collateral Account     57  
 
           
ARTICLE 10.
  MISCELLANEOUS     58  
Section 10.1
  Notices     58  
Section 10.2
  No Waivers     59  
Section 10.3
  Expenses     60  
Section 10.4
  Stamp, Intangible and Recording Taxes     61  
Section 10.5
  Loan Sales and Participations; Disclosure of Information     61  
Section 10.6
  Indemnification     61  
Section 10.7
  Successors and Assigns     62  
Section 10.8
  Governing Law     62  
Section 10.9
  Litigation     62  
Section 10.10
  Counterparts; Integration     63  
Section 10.11
  Invalid Provisions     63  
Section 10.12
  Mandatory Disclosures     63  
Section 10.13
  Limitation of Liability of Trustees, Etc.     64  
Section 10.14
  ENTIRE AGREEMENT     64  
Section 10.15
  Confidentiality     64  
Section 10.16
  USA Patriot Act Notice. Compliance     65  
Section 10.17
  Release and Waiver of Claims     65  
Section 10.18
  Legal Opinion     65  

EXHIBITS

         
A
  —   Form of Guaranty
B
  —   Form of Revolving Note
C
  —   Form of Notice of Borrowing
D
  —   Form of Notice of Continuation
E
  —   Form of Notice of Conversion
F
  —   Form of Opinion

iv

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS
(Continued)

         
G
  —   Form of Encumbered Pool Certificate
H
  —   Form of Eligibility Certificate
I
  —   Transfer Authorization Designation

SCHEDULES

         
Schedule 2.14(a)
  —   Outstanding Letters of Credit
Schedule 4.1
  —   Unencumbered Pool Properties as of Agreement Date
Schedule 6.2
  —   Ownership Structure
Schedule 6.6
  —   Indebtedness and Guaranties
Schedule 6.7
  —   Property Management Agreements and Other Major Agreements
Schedule 6.15
  —   Insurance

v

--------------------------------------------------------------------------------

 

AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
     THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this “Agreement”) is
entered into effective as of November 21, 2008, by and between AmREIT, a Texas
Real Estate Investment Trust (“Borrower”) and WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Lender”). This Agreement entirely supercedes, amends, restates and
replaces that certain Revolving Credit Agreement between Lender and Borrower
dated October 30, 2007 (the “Original Agreement”).
     WHEREAS, Borrower desires to borrow from Lender, on an unsecured revolving
credit basis, loans in an aggregate principal sum outstanding from time to time
not exceeding Thirty-Five Million Dollars ($35,000,000.00), the proceeds of
which shall be used only for the purposes specifically permitted under the terms
of this Agreement; and
     WHEREAS, Lender is willing to make loans to Borrower on such basis for such
purposes, subject to the terms and conditions hereof.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1.
DEFINITIONS
     Section 1.1 Definitions.
     The following terms, as used herein, have the following meanings:
     “Adjusted LIBO Rate” means the rate of interest, rounded upward to the
nearest whole multiple of one-hundredth of one percent (.01%), equal to the
lesser of (i) the Maximum Lawful Rate, or (ii) sum of: (a) the Applicable Margin
plus (b) the LIBO Rate, which rate is divided by one (1.00) minus the Reserve
Percentage, as expressed in the following formula:

         
Adjusted LIBO Rate = Applicable Margin
  +   LIBO Rate
 
       
 
      (1 − Reserve Percentage)

     “AFC Inc.” means the retail property so identified on Schedule 4.1, which
is not encumbered by a Lien.
     “Affiliate” means any Person (other than Lender): (a) directly or
indirectly controlling, controlled by, or under common control with, the
Borrower; (b) directly or indirectly owning or holding ten percent (10.0%) or
more of any equity interest in the Borrower; or (c) ten percent (10.0%) or more
of whose voting stock or other equity interest is directly or indirectly owned
or held by the Borrower. For purposes of this definition, “control” (including
with correlative meanings, the terms “controlling,” “controlled by” and “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 the ownership of voting securities or by contract or otherwise.
In no event shall Lender be deemed to be an Affiliate of the Borrower.

 

--------------------------------------------------------------------------------

 

     “Applicable Law” means all applicable provisions of local, state, federal
and foreign constitutions, statutes, rules, regulations, ordinances, decrees,
permits, concessions and orders of all governmental bodies and all orders and
decrees of all courts, tribunals and arbitrators.
     “Applicable Management Fee Percentage” shall mean, four percent (4.0%) with
respect to multi-tenant Properties and one percent (1%) with respect to
single-tenant Properties.
     “Applicable Margin” means the percentage rate set forth in Chart A below
corresponding to the ratio of Total Liabilities to Gross Asset Value as
determined in accordance with Section 7.1(c) in effect at such time:
Chart A

                                  Ratio of Total Liabilities to   Applicable
Margin for   Applicable Margin for Level   Gross Asset Value   LIBOR Loans  
Base Rate Loans   1    
Less than or equal to .55 to 1.00
    2.50 %     2.50 %   2    
Greater than .55 to 1.00 but less than or equal to 0.60 to 1.00
    2.75 %     2.75 %   3    
Greater than 0.60 to 1.00 but less than or equal to 0.64 to 1.00
    3.00 %     3.00 %

The Applicable Margin for Loans shall be determined by Lender based on the ratio
of Total Liabilities to Gross Asset Value as set forth in the Compliance
Certificate most recently delivered by the Borrower pursuant to Section 7.1(c).
Any such adjustment to such Applicable Margin shall be effective as of the first
day of the calendar month immediately following the month during which Borrower
delivers to Lender the applicable Compliance Certificate pursuant to
Section 7.1(c). If the Borrower fails to deliver a Compliance Certificate
pursuant to Section 7.1(c) the Applicable Margin shall equal the percentages
corresponding to Level 3 Chart A from the date the required Compliance
Certificate was due until the date of receipt by Lender of the required
Compliance Certificate; however the application of such Level 3 Chart A under
such circumstances shall not impair Lender’s ability to declare such failure to
deliver the required Compliance Certificate an Event of Default.
     “Base Rate” means a rate of interest equal to the lesser of (a) the Daily
LIBO Rate and (b) the Maximum Lawful Rate, provided, however, if any of the
transactions necessary for the calculation of interest at the Daily LIBO Rate
requested or selected by Borrower, or as otherwise required hereunder, should be
or become prohibited or unavailable to Lender, or, if in Lender’s good faith
judgment, it is not possible or practical for Lender to set the Daily LIBO Rate
for a Base Rate Loan, the Base Rate for such Base Rate Loan shall revert to the
lesser of (i) the Maximum Lawful Rate or (ii) the greater of (a) the Prime Rate
plus one percent (1.00%), and (b) the Federal Funds Rate plus one and one-half
percent (1.50%) plus the Applicable Margin. Each change in the Base Rate shall
become effective without prior notice to Borrower automatically as of the
opening of business on the date of such change in the Base Rate.
     “Base Rate Loan” means any portion of the Revolving Loan with respect to
which the interest rate is calculated by reference to the Base Rate.

2

--------------------------------------------------------------------------------

 

     “Business Day” means (a) any day except a Saturday, Sunday or other day on
which commercial banks in San Francisco, California are authorized or required
to close and (b) with reference to LIBOR Loans, any day (except a Saturday,
Sunday or other day on which commercial banks in San Francisco, California are
authorized or required to close) on which dealings in Dollar deposits are
carried out in the London interbank market.
     “Capital Expenditures Reserve” means, for any period and with respect to
any Property, an amount equal to the greater of (a) the aggregate square footage
of all completed space of such Property times $.25, times a fraction, the
numerator of which is the number of days of such period, and the denominator of
which is 365 and (b) the amount of capital expenditures actually made in respect
of such Property, excluding non-recurring capital expenditures for such period.
     “Capitalized Lease Obligation” means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
     “Carlsons Restaurants (TGI Fridays)” means those retail properties so
identified on Schedule 4.1, which are not encumbered by a Lien.
     “Collateral Account” means Account Number 4945073278 established by
Borrower with Lender as a special, interest-bearing, deposit account under
Lender’s sole dominion and control.
     “Commitment” means, initially, the lesser of (i) Thirty-Five Million and
No/100 Dollars ($35,000,000.00) and (ii) the sum of Thirty-Five Million and
No/100 Dollars ($35,000,000.00) minus proceeds (net of transaction costs)
derived from:
     (a) The sale or issuance by Borrower of Shares, options, warrants or other
Equity Interests of any class or character,
     (b) The sale of Unencumbered Pool Property or any other Property owned by
Borrower or any Subsidiary of Borrower or the sale by Borrower or any Subsidiary
of Borrower of any Equity Interest in a Person owning Unencumbered Pool Property
or any such other Property, net of existing Secured Indebtedness, and
     (c) Indebtedness from the financing of Unencumbered Pool Property or
refinancing or financing of any other Property owned by Borrower or any
Subsidiary of Borrower, net of existing Secured Indebtedness;
provided, however, at such time as the Commitment shall have been reduced to
Twenty-Five Million and No/100 Dollars ($25,000,000.00), then, thereafter, the
Commitment shall remain at Twenty-Five Million and No/100 Dollars
($25,000,000.00).
     “Compliance Certificate” means the certificate described in Section 7.1(c).
     “Consequential Loss” means with respect to (a) Borrower’s payment of all or
any portion of the then-outstanding principal amount of a LIBOR Loan on a day
other than the last day of the Interest Period related thereto or (b) any of the
circumstances specified in Section 2.7(d) and (g)

3

--------------------------------------------------------------------------------

 

upon which a Consequential Loss may be incurred, any loss (excluding loss of
anticipated profits), cost or expense incurred by Lender as a result of the
timing of such payment of the LIBOR Loan or in the redepositing, redeploying or
reinvesting the principal amount so paid or affected by the timing of such LIBOR
Loan or the circumstances described in such Section 2.7(d) and (g), including
without limitation, the sum of (i) the interest which, but for the payment or
timing of the LIBOR Loan, Lender would have earned in respect of such principal
amount, reduced, if Lender is able to redeposit, redeploy, or reinvest such
principal amount by the interest earned by Lender as a result of so
redepositing, redeploying or reinvesting such principal amount and (ii) any
expense or penalty incurred by Lender on redepositing, redeploying or
reinvesting such principal amount. All determinations of Consequential Loss
shall be made by Lender exercising its reasonable judgment.
     “Contingent Obligation” means, for any Person, any commitment, undertaking,
Guarantee or other obligation constituting a contingent liability that must be
accrued under GAAP.
     “Continue,” “Continuation” and “Continued” each refers to the continuation
of a LIBOR Loan from one Interest Period to the next Interest Period pursuant to
Section 2.4.
     “Convert,” “Conversion” and “Converted” each refers to the conversion of a
Base Rate Loan to a LIBOR Loan or a LIBOR Loan to a Base Rate Loan.
     “Courtyard at Post Oak” means those retail properties so identified on
Schedule 4.1, which are not encumbered by a Lien.
     “CVS Pharmacies” means those retail properties so identified on
Schedule 4.1, which are not encumbered by a Lien.
     “Daily LIBO Rate” means the rate of interest, rounded upward to the nearest
whole multiple of one-hundredth of one percent (.01%), equal to the sum of:
(a) the Applicable Margin plus (b) the rate of interest, rounded upward to the
nearest whole multiple of one-sixteenth of one percent (.0625%) that is quoted
by Lender from time to time as the London Inter-Bank Offered Rate for deposits
in Dollars at approximately 9:00 a.m., San Francisco time, for a period of one
(1) month (“Daily Rate”) which Daily Rate is divided by one (1.00) minus the
Reserve Percentage, as expressed in the following formula:

         
Daily LIBO Rate = Applicable Margin
  +   Daily Rate
 
       
 
      (1 − Reserve Percentage)

The Daily LIBO Rate shall be adjusted daily to reflect changes in the Daily LIBO
Rate as determined above. Changes in the Base Rate due to a change in the Daily
LIBO Rate shall become effective on the date each such change occurs.
     “Darden (Smokey Bones)” means the retail property so identified on
Schedule 4.1, which is not encumbered by a Lien.

4

--------------------------------------------------------------------------------

 

     “Default” means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
     “Derivatives Contract” means any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency
rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement. Not in limitation of the
foregoing, the term “Derivatives Contract” includes any and all transactions of
any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement, including any such
obligations or liabilities under any such master agreement.
     “Derivatives Termination Value” means, in respect of any one or more
Derivatives Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Derivatives Contracts, (a) for
any date on or after the date such Derivatives Contracts have been closed out
and termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Derivatives
Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Derivatives
Contracts (which may include Lender).
     “Development Property” means real estate which is then undergoing
development or redevelopment; however, such real property shall cease to be
“Development Property” on the earlier of (i) twelve (12) full months of
operations following completion or (ii) achievement of an Occupancy Rate of 80%.
The term “Development Property” shall include real property of the type
described in the immediately preceding sentence to be (but not yet) acquired by
the Borrower, any Subsidiary or any Unconsolidated Affiliate upon completion of
construction pursuant to a contract in which the seller of such real property is
required to develop or renovate prior to, and as a condition precedent to, such
acquisition.
     “Dollars” or “$” means the lawful currency of the United States of America.
     “EBITDA” means, with respect to any Person and for any period and without
duplication, the sum of (a) net earnings (loss) of such Person for such period
(excluding equity in net earnings or net loss of Unconsolidated Affiliates) plus
(b) depreciation and amortization expense and other non-cash charges of such
Person for such period (but only to the extent deducted in determining net
income (loss) for such period) plus (c) the amortized cash portion of direct
financing leases (as defined by GAAP) but only to the extent deducted in
determining net income (loss) for such period (d) plus interest expense of such
Person for such period (but only

5

--------------------------------------------------------------------------------

 

to the extent deducted in determining net income (loss) for such period) plus
(e) income and franchise tax expense of such Person in respect of such period
(but only to the extent deducted in determining net income (loss) for such
period) minus (with respect to gains) or plus (with respect to losses)
(f) extraordinary gains or losses of such Person, non-recurring items of income
or expense relating to mergers and potential acquisitions acceptable to Lender
in its reasonable discretion, and gains and losses from sales of assets of such
Person for such period plus (g) such Person’s pro rata share of EBITDA of each
of such Person’s Unconsolidated Affiliates (determined in a manner consistent
with the calculation of such Person’s EBITDA) minus (with respect to gains) or
plus (with respect to losses) any net income attributable to partnerships which
hold Property in which partnerships such Person has direct or indirect (through
a Subsidiary of such Person) ownership interest of not greater than fifty
percent (50%).
     “Effective Date” means the date this Agreement becomes effective in
accordance with Section 5.1.
     “Effective Rate” means, for each LIBOR Loan, the lesser of (i) the Maximum
Lawful Rate or (ii) the Adjusted LIBO Rate for the applicable Interest Period
selected by Borrower with respect to such LIBOR Loan and set in accordance with
the provisions hereof, provided, however, if Borrower fails to duly and timely
give Lender any Notice of Continuation or Notice of Conversion with respect to
any maturing LIBOR Loan, the Effective Rate for such LIBOR Loan shall be the
Daily LIBO Rate until Borrower’s due and timely giving of a Notice of
Continuation or Notice of Conversion for such LIBOR Loan; provided further,
however, if any of the transactions necessary for the calculation of interest at
the Adjusted LIBO Rate requested or selected by Borrower should be or become
prohibited or unavailable to Lender, or, if in Lender’s good faith judgment, it
is not possible or practical for Lender to set the Adjusted LIBO Rate or Daily
LIBO Rate for such LIBOR Loan and applicable Interest Period as requested or
selected by Borrower, or as otherwise required hereby, the Effective Rate for
such LIBOR Loan shall revert to the lesser of (i) the Maximum Lawful Rate and
(ii) the greater of (a) Prime Rate plus one percent (1%) and (b) the Federal
Funds Rate plus one and one-half percent (1.50%) plus the Applicable Margin.
     “Eligible Property” means a Property which satisfies all of the following
requirements as determined by Lender: (a) such Property is owned 100% in fee
simple by Borrower or a Wholly Owned Subsidiary of Borrower (however the
foregoing is not intended to exclude real estate which is ground leased by
Borrower or a Wholly Owned Subsidiary of Borrower to a tenant which has
constructed and owns the improvements on such ground leased real estate);
(b) neither such Property, nor any interest of Borrower or such Wholly Owned
Subsidiary therein, is subject to any Lien other than Permitted Liens or to any
agreement (other than this Agreement or any other Loan Document) that prohibits
the creation of any Lien thereon as security for Indebtedness; (c) if such
Property is owned by a Wholly Owned Subsidiary: (i) none of Borrower’s direct or
indirect ownership interest in such Wholly Owned Subsidiary is subject to any
Lien other than Permitted Liens or to any agreement (other than this Agreement
or any other Loan Document) that prohibits the creation of any Lien thereon as
security for Indebtedness and (ii) neither such Wholly Owned Subsidiary, nor any
other Wholly Owned Subsidiary through which Borrower holds any indirect interest
in such Wholly Owned Subsidiary, is subject to any restriction of any kind which
would limit its ability to pay or perform its obligations under the Guaranty
required to be delivered hereunder prior to its obligation to pay dividends or
make any

6

--------------------------------------------------------------------------------

 

other distribution on any of such Wholly Owned Subsidiary’s capital stock or
other securities owned by Borrower or any other Wholly Owned Subsidiary of
Borrower; (d) such Property has an Occupancy Rate of at least 80%; and (e) such
Property is free of all structural defects, title defects, environmental
conditions or other adverse matters except for defects, conditions or matters
individually or collectively which are not material to the profitable operation
of such Property.
     “Eligible Subsidiary” means any Subsidiary of Borrower other than a Special
Purpose Subsidiary.
     “Eligibility Certificate” means the certificate described in
Section 4.1(b)(iv) and in the Form of Exhibit H.
     “Environmental Laws” means any Applicable Law relating to environmental
protection or the manufacture, storage, disposal or clean-up of Hazardous
Materials including, without limitation, the following: Clean Air Act, 42 U.S.C.
§ 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.;
Solid Waste Disposal Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National
Environmental Policy Act, 42 U.S.C. § 4321 et seq.; regulations of the
Environmental Protection Agency and any applicable rule of common law and any
judicial interpretation thereof relating primarily to the environment or
Hazardous Materials.
     “Equity Interest” means, with respect to any Person, any share of capital
stock of (or other ownership or profit interests in) such Person, any warrant,
option or other right for the purchase or other acquisition from such Person of
any share of capital stock of (or other ownership or profit interests in) such
Person, any security convertible into or exchangeable for any share of capital
stock of (or other ownership or profit interests in) such Person or warrant,
right or option for the purchase or other acquisition from such Person of such
shares (or such other interests), and any other ownership or profit interest in
such Person (including, without limitation, partnership, member or trust
interests therein), whether voting or nonvoting, and whether or not such share,
warrant, option, right or other interest is authorized or otherwise existing on
any date of determination.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
     “ERISA Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control that
are treated as a single employer under Section 414 of the Internal Revenue Code.
     “ERISA Plan” means any employee benefit plan subject to Title I of ERISA.
     “Event of Default” means the occurrence of any of the events specified in
Section 9.1, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body; provided that any requirement for notice
or lapse of time or any other condition has been satisfied.

7

--------------------------------------------------------------------------------

 

     “Executive Investment Summary” means, to the extent available, the set of
information provided to the investment committee of the Borrower in connection
with the acquisition of a Property. The Executive Investment Summary shall
include, at a minimum, the following information relating to such Property:
(a) a description of such Property, such description to include the age,
location, site plan, color photographs (to the extent reasonably available to
Borrower) and current occupancy rate of such Property; (b) the purchase price
paid or to be paid for such Property; (c) the capitalization rate for such
Property; (d) a summary of the existing tenants of such Property; (e) either
current operating statements for such Property for the immediately preceding
fiscal year and for current fiscal year through the fiscal quarter most recently
ending (to the extent reasonably available to Borrower) or pro forma operating
statements for such Property (to the extent reasonably available to Borrower);
and (f) other demographics and trade information relating to such Property.
     “Federal Funds Rate” means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) 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 (a) 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 (b) if no such rate is published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Lender on
such day on such transactions as reasonably determined by Lender.
     “FIRREA” means the Financial Institution Recovery Reform and Enforcement
Act of 1989, as amended.
     “Fixed Charges” means, with respect to a Person and for a given period, the
sum of (a) the Interest Expense of such Person for such period, plus (b) the
aggregate of all scheduled principal payments on Indebtedness made by such
Person during such period (excluding balloon, bullet or similar payments of
principal due upon the stated maturity of Indebtedness), plus (c) the aggregate
of all preferred dividends paid or accrued by such Person during such period,
plus (d) the Capital Expenditures Reserve for such period.
     “410 and Blanco — Citibank” means the retail property so identified on
Schedule 4.1, which is not encumbered by a Lien.
     “Funds from Operations” means, as of any period for a Person, net income
(computed in accordance with GAAP), excluding gains (or losses) from sale of
property and debt restructuring, plus depreciation and amortization (except for
amortization of deferred financing cost), and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect funds from
operations on the same basis. “Funds from Operations” shall not include items
which are classified as “extraordinary” in accordance with GAAP.”
     “GAAP” means, as to a particular Person, such accounting practice as, in
the opinion of the independent accountants of recognized national standing
regularly retained by such Person

8

--------------------------------------------------------------------------------

 

and acceptable to Lender, conforms at the time to Generally Accepted Accounting
Principles, consistently applied. “Generally Accepted Accounting Principles”
means those principles and practices (a) which are recognized as such by the
Financial Accounting Standards Board, (b) which are applied for all periods
after the date hereof in a manner consistent with the manner in which such
principles and practices were applied to the most recent audited financial
statements of the relevant Person furnished to Lender or where a change therein
has been concurred in by such Person’s independent auditors, and (c) which are
consistently applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and changes in
financial position, of such Person. If there is a change in such accounting
practice as to Borrower, then Borrower shall, unless otherwise consented to by
Lender, continue to utilize, for the purpose of this Agreement, the accounting
practices applicable to Borrower prior to such change.
     “Golden Corral” means those retail properties so identified on
Schedule 4.1, which are not encumbered by a Lien.
     “Governmental Approvals” means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
     “Governmental Authority” means any government (or any political subdivision
or jurisdiction thereof), court, bureau, agency or other governmental authority
having jurisdiction over Borrower or any Subsidiary, or any of its or their
business, operations or properties.
     “Gross Asset Value” means, at a given time, the sum (without duplication)
of (a) the sum of the Operating Property Values of Borrower and its Subsidiaries
on a consolidated basis at such time, plus (b) all cash and cash equivalents
(excluding tenant deposits) of the Borrower and its Subsidiaries at such time
provided, however, that restricted cash and cash equivalents, including, without
limitation, cash deposited in escrow accounts for taxes and insurance, shall
only be included in Gross Asset Value to the extent a liability corresponding
thereto is included in the determination of Total Liabilities and further
provided that accounts receivable and notes receivable owed to Borrower or any
of its Subsidiaries by an Affiliate of Borrower or any of its Subsidiaries
cannot, in the aggregate, contribute more than the Maximum Intra-Company A/R
Amount; plus (c) the current book value of all unimproved real property (other
than Development Property) of Borrower and its Subsidiaries on a consolidated
basis held for development (provided that the aggregate value of all real
property held for development shall not exceed 5% of the Gross Asset Value) plus
(d) the current book value of all Development Property of Borrower and its
Subsidiaries on a consolidated basis, plus (e) the contractual purchase price of
properties subject to purchase obligations, repurchase obligations, forward
commitments and unfunded obligations to the extent such obligations and
commitments are included in determining Borrower’s Total Liabilities, plus
(f) Borrower’s Ownership Share of the Operating Property Value of Unconsolidated
Affiliates, plus (g) Borrower’s Ownership Share of the current book value of all
unimproved real property (other than Development Property) of Unconsolidated
Affiliates (subject to the percentage limitation set forth in [c] above) plus
(h) Borrower’s Ownership Share of the current book value of all Development
Property of Unconsolidated Affiliates. The “Maximum Intra-Company A/R Amount”
means the following amounts for the respective time periods set forth below:

9

--------------------------------------------------------------------------------

 

              Maximum Intra-Company Time Period   A/R Amount
From the Effective Date through December 31, 2008
  $ 7,500,000.00  
From January 1, 2009 through March 31, 2009
  $ 5,000,000.00  
From April 1, 2009 through June 30, 2009
  $ 2,500,000.00  
From July 1, 2009 to October 30, 2009
  $ 1,000,000.00  

     “Guarantee” by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term “Guarantee”
used as a verb has a corresponding meaning.
     “Guarantor” means all Eligible Subsidiaries of Borrower and each other
Person who has executed and delivered a Guaranty.
     “Guaranty” means the Guaranty executed by each Guarantor in favor of Lender
and substantially in the form of Exhibit A.
     “Hazardous Substances” means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as “hazardous substances,” “hazardous materials,”
“hazardous wastes,” “toxic substances” or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity,
“TCLP” toxicity, or “EP toxicity”; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(c) any flammable substances or explosives or any radioactive materials;
(d) asbestos in any form; and (e) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million. However, de minimus amounts of substances which would
otherwise be classified as Hazardous Substances and are utilized in the ordinary
course of the use of Properties and in accordance with Applicable Laws are not
Hazardous Substances for the purpose of this Agreement.
     “IHOP Topeka” means the retail property so identified on Schedule 4.1,
which is not encumbered by a Lien.

10

--------------------------------------------------------------------------------

 

     “Indebtedness” means, with respect to a Person, at the time of computation
thereof, all of the following (without duplication): (a) all obligations of such
Person in respect of money borrowed; (b) all obligations of such Person (other
than trade debt incurred in the ordinary course of business), whether or not for
money borrowed (i) represented by notes payable, or drafts accepted, in each
case representing extensions of credit, (ii) evidenced by bonds, debentures,
notes or similar instruments, or (iii) constituting purchase money indebtedness,
conditional sales contracts, title retention debt instruments or other similar
instruments, upon which interest charges are customarily paid or that are issued
or assumed as full or partial payment for property; (c) Capitalized Lease
Obligations of such Person; (d) all Letter of Credit Liabilities of such Person;
(e) all Off Balance Sheet Liabilities of such Person; (f) net obligations under
any Derivative Contract in an amount equal to the Derivatives Termination Value
thereof; and (g) all Indebtedness of other Persons to the extent (i) such Person
has Guaranteed or is otherwise recourse to such Person or (ii) is secured by a
Lien on any property of such Person.
     “Intangible Assets” means, with respect to any Person (to the extent
reflected in determining stockholders’ equity of such Person) (a) deferred
charges, (b) the amount of any write-up in the book value of any assets
contained in any balance sheet resulting from revaluation thereof or any
write-up in excess of the cost of such assets acquired, and (c) the aggregate of
all amounts appearing on the assets side of any such balance sheet for
franchises, licenses, permits, patents, patent applications, copyrights,
trademarks, trade names, goodwill, treasury stock, experimental or
organizational expenses and other like intangibles. Notwithstanding the
foregoing, “Intangible Assets” shall not include any adjustments required under
Financial Accounting Standard (FAS) 141.
     “Interest Expense” means, for any Person and for any period, without
redundancy, all paid, accrued or capitalized interest expense of such Person
(other than capitalized interest funded from a Reserved Construction Loan) for
such period and shall include (a) all paid or accrued interest expense in
respect of Indebtedness and other liabilities which such Person has Guaranteed
or is otherwise obligated whether or not on a recourse basis, (b) such Person’s
Ownership Share of all paid or accrued interest expense for such period of
Unconsolidated Affiliates of such Person, (c) costs related to Derivatives
Contracts, and (d) fees and other expenses related to the issuance of letters of
credit.
     “Interest Period” means, with respect to any LIBOR Loan, the period
commencing on the date of the borrowing, Conversion or Continuation of such
LIBOR Loan and ending on the last day of the period selected by Borrower
pursuant to the provisions below. The duration of each Interest Period shall be
one (1), three (3) or six (6) months, which in each case Borrower may, in an
appropriate Notice of Borrowing, Notice of Continuation or Notice of Conversion,
select. In no event shall an Interest Period extend beyond the Maturity Date.
Whenever the last day of any Interest Period would otherwise occur on a day
other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; provided, however, that
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day. In no event shall an Interest Period
have a duration of less than one month, except as specifically provided above.

11

--------------------------------------------------------------------------------

 

     “Interest Rate Hedge” — A Derivatives Contract which is acceptable to
Lender, and pursuant to which Borrower’s Interest Expense relating to the
Indebtedness which is outstanding under the Commitment is controlled within
parameters acceptable to Lender.
     “Internal Revenue Code” means the Internal Revenue Code of 1986, as
amended, or any successor statute.
     “Investment” means, with respect to any Person, any acquisition or
investment (whether or not of a controlling interest) by such Person, whether by
means of (a) the purchase or other acquisition of any Equity Interest in another
Person, (b) a loan, advance or extension of credit to, capital contribution to,
Guaranty of Indebtedness of, or purchase or other acquisition of any
Indebtedness of, another Person, including any partnership or joint venture
interest in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute the business or a division or operating unit of another Person. Any
commitment or option to make an Investment in any other Person shall constitute
an Investment. Except as expressly provided otherwise, for purposes of
determining compliance with any covenant contained in a Loan Document, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.
     “Issuing Bank” means Lender or an affiliate of Lender, as the issuer of
Letters of Credit hereunder.
     “Issuing Bank Fees” means the Fees payable to the Issuing Bank pursuant to
the last sentences of Section 3.1(b) and (c).
     “L/C Commitment Amount” means an amount equal to $5,000,000.00.
     “Lending Office” means Lender’s office identified as: Wells Fargo Bank,
National Association, Disbursement and Operations Center, 733 Marquette Avenue,
10th Floor, Minneapolis, Minnesota 55402, Attention: Jivko Sabev.
     “Letter of Credit” has the meaning set forth in Section 2.13(a).
     “Letter of Credit Documents” means, with respect to any Letter of Credit,
collectively, any application therefor, any certificate or other document
presented in connection with a drawing under such Letter of Credit and any other
agreement, instrument or other document governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations.
     “Letter of Credit Liabilities” shall mean, without duplication, at any time
and in respect of any Letter of Credit, the sum of (a) the Stated Amount of such
Letter of Credit plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of Borrower at such time due and payable in respect of
all drawings made under such Letter of Credit.
     “LIBO Rate” means, with respect to each LIBOR Loan, the rate of interest
per annum, rounded upwards to the nearest whole multiple of 1/16th of 1%
(.0625%), quoted by Lender as the London Inter-Bank Offered Rate for deposits in
Dollars at approximately 9:00 a.m., San

12

--------------------------------------------------------------------------------

 

Francisco time, for an Interest Period for purposes of calculating effective
rates of interest for loans or originations making reference thereto for an
amount approximately equal to the LIBOR Loan and for a period of time
approximately equal to the applicable Interest Period or the time remaining in
an Interest Period after the date of a Consequential Loss, as appropriate. Each
determination of the LIBO Rate by Lender shall, in absence of demonstrable
error, be conclusive and binding.
     “LIBOR Loan” means any portion of the Revolving Loan with respect to which
the interest rate is calculated by reference to the LIBO Rate for a particular
Interest Period.
     “Lien” as applied to the real property of any Person means: (a) any
security interest, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, lien, charge or lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security interest,
security title or encumbrance of any kind in respect of any property of such
Person, or upon the income or profits therefrom; (b) any arrangement, express or
implied, under which any property of such Person is transferred, sequestered or
otherwise identified for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to the payment
of the general, unsecured creditors of such Person; (c) the filing of any
financing statement under the Uniform Commercial Code or its equivalent in any
jurisdiction; and (d) any agreement by any such person to grant, give or
otherwise convey any of the foregoing.
     “Loan” means a LIBOR Loan or a Base Rate Loan.
     “Loan Documents” means this Agreement, the Revolving Note, each Letter of
Credit, each of the Guaranties, any agreement evidencing the fees referred to in
Section 3.1(c) and each other document or instrument executed and delivered by
any Loan Party in connection with this Agreement or any of the other foregoing
documents.
     “Loan Party” means each of Borrower, each Guarantor, and each other Person
who guarantees all or a portion of the Obligations and/or who pledges any
collateral security to secure all or a portion of the Obligations.
     “MacArthur Pads” means those retail pad sites so identified on
Schedule 4.1, which pad sites are not encumbered by a Lien.
     “Major Agreements” means, at any time, (a) each Property Management
Agreement with respect to a Property and (b) any other agreement which in any
way relates to the use, occupancy, operation, maintenance, enjoyment or
ownership of a Property, the breach or loss of which would have a Materially
Adverse Effect.
     “Materially Adverse Effect” means a materially adverse effect on (a) the
business, assets, liabilities, financial condition, or results of operations of
Borrower and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform its obligations under any Loan Document to which it is a party,
(c) the validity or enforceability of any of such Loan Documents, (d) the rights
and remedies of Lender under any of such Loan Documents or (e) the timely
payment of the principal of or interest on the Revolving Loan or other amounts
payable in connection therewith. Except with respect to representations made or
deemed made by Borrower under

13

--------------------------------------------------------------------------------

 

Article 6 or in any of the other Loan Documents to which any Loan Party is a
party, all determinations of materiality shall be made by Lender in its
reasonable judgment unless expressly provided otherwise.
     “Maximum Dividends Per Share” means on a quarterly basis a per share amount
for Class “A” shares of $0.1242, for Class “C” shares of $0.1750, and for Class
“D” shares of $0.1625.
     “Maximum Lawful Rate” has the meaning given to such term in Section 3.2(b)
hereof.
     “Maximum Loan Availability” means the lesser of (a) the amount of the
Commitment and (b) the amount, if any, by which the Unencumbered Pool Value
divided by 1.67 exceeds all Unsecured Indebtedness (other than the Commitment)
of Borrower and its Subsidiaries.
     “Mortgage” means a mortgage, deed of trust or deed to secure debt or
similar security instrument made by a Person owning an interest in real estate
granting a Lien or such interest in real estate as security for the payment of
Indebtedness.
     “Net Operating Income” means, for any Property for the period in question,
but without duplication, the sum of (a) rents and other revenues received in the
ordinary course from such Property (including amounts received from tenants as
reimbursements for common area maintenance, taxes and insurance and proceeds of
rent loss insurance but excluding pre-paid rents and revenues and security
deposits except to the extent applied in satisfaction of tenants’ obligations
for rent) minus (b) all expenses paid or accrued related to the ownership,
operation or maintenance of such property, including but not limited to taxes,
assessments and the like, insurance, utilities, payroll costs, maintenance,
repair and landscaping expenses, marketing expenses, and general and
administrative expenses (including an appropriate allocation for legal,
accounting, advertising, marketing and other expenses incurred in connection
with such property, but specifically excluding general overhead expenses of
Borrower, Interest Expense on Indebtedness and any property management fees)
minus (c) the Capital Expenditures Reserve for such Property as of the end of
such period minus (d) the greater of (i) the actual property management fee paid
during such period and (ii) an imputed management fee determined by multiplying
the Applicable Management Fee Percentage times the gross revenues for such
Property for such period, in each case determined in accordance with GAAP;
however, non-cash GAAP adjustments, including, but not limited to, straight line
rent and over/under market rent, will be excluded.
     “Non-ERISA Plan” means any Plan subject to Section 4975 of the Internal
Revenue Code.
     “Notice of Borrowing” means a notice in the form of Exhibit C to be
delivered to Lender by Borrower pursuant to Section 2.2.
     “Notice of Continuation” means a notice in the form of Exhibit D to be
delivered to Lender by Borrower pursuant to Section 2.4.
     “Notice of Conversion” means a notice in the form of Exhibit E to be
delivered to Lender by Borrower pursuant to Section 2.5.

14

--------------------------------------------------------------------------------

 

     “Obligations” means, individually and collectively: (a) the Loans; (b) all
Reimbursement Obligations and all other Letter of Credit Liabilities; (c) any
and all renewals and extensions of any of the foregoing and (d) all other
indebtedness, liabilities, obligations, covenants and duties of Borrower owing
to Lender and/or the Issuing Bank of every kind, nature and description, under
or in respect of this Agreement or any of the other Loan Documents, whether
direct or indirect, absolute or contingent, due or not due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced by any
promissory note.
     “Occupancy Rate” means, with respect to a Property at any time, the ratio,
expressed as a percentage, of (a) the net rentable square footage of such
Property actually occupied by tenants paying rent pursuant to binding leases as
to which no monetary default has occurred and has been continuing for a period
of 90 or more days to (b) the aggregate net rentable square footage of such
Property.
     “Off Balance Sheet Liabilities” means, with respect to any Person, any
obligation or liability that does not appear as a liability on the balance sheet
of such Person and that constitutes (a) any repurchase obligation or liability,
contingent or otherwise, of such Person with respect to any accounts or notes
receivable sold, transferred or otherwise disposed of by such Person, (b) any
repurchase obligation or liability, contingent or otherwise, of such Person with
respect to property or assets leased by such Person as lessee and (c) all
obligations, contingent or otherwise, of such Person under any synthetic lease,
tax retention operating lease, off balance sheet loan or similar off balance
sheet financing if the transaction giving rise to such obligation (i) is
considered indebtedness for borrowed money for tax purposes but is classified as
an operating lease or (ii) does not (and is not required pursuant to GAAP to)
appear as a liability on the balance sheet of such Person.
     “Operating Property Value” means, as of a given date, the sum of (A) Net
Operating Income for all Properties (excluding Development Properties) on a
trailing twelve month basis for the Borrower and its Subsidiaries, and (B) the
Ownership Share of such Person’s Unconsolidated Affiliates, divided by eight
percent (8%). For purposes of determining Operating Property Value (i) Net
Operating Income from Properties acquired, or disposed of, by the Borrower or
any Subsidiary during the trailing twelve months of the Borrower shall be
excluded; however, acquired Property will be included initially at a value equal
to the purchase price of such Property for the fiscal quarter in which it was
purchased and will subsequently be valued based on Net Operating Income by
annualizing the trailing Net Operating Income starting in the quarter subsequent
to the quarter in which it was purchased until such time as twelve full months
are included, at which time Net Operating Income for such trailing twelve-month
period will be used to determine value (for example, at the end of the third
full operating quarter in which the Property is owned, Net Operating Income for
the preceding nine (9) months would be annualized), (ii) Net Operating Income
from Development Properties shall be excluded, and (iii) with respect to a
Property owned by a Subsidiary that is not a Wholly Owned Subsidiary, only the
Borrower’s Ownership Share of the Net Operating Income of such Property shall be
used when determining Operating Property Value.
     “Ownership Share” means, with respect to any Subsidiary of a Person or any
Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative
nominal direct and indirect ownership interest (expressed as a percentage) in
such Subsidiary or Unconsolidated

15

--------------------------------------------------------------------------------

 

Affiliate or (b) such Person’s relative direct and indirect economic interest
(calculated as a percentage) in such Subsidiary or Unconsolidated Affiliate
determined in accordance with the applicable provisions of the declaration of
trust, articles or certificate of incorporation, articles of organization,
partnership agreement, joint venture agreement or other applicable
organizational document of such Subsidiary or Unconsolidated Affiliate.
     “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
     “Permitted Distributions” means an amount not exceeding the lesser of
(x) the Maximum Dividend Per Share amount and (y) the “Applicable Distribution
Percentage” (set forth below) of Borrower’s Funds from Operations for the
applicable calendar quarter as follows:

      Calendar Quarter   Applicable Distribution Percentage       Quarter ending
December 31, 2008   150%       Quarter ending March 31, 2009   100%      
Quarter ending June 30, 2009   100%       Quarter ending September 30, 2009  
100%

     “Permitted Liens” means (a) Liens granted to Lender to secure the
Obligations, (b) pledges or deposits made to secure payment of worker’s
compensation (or to participate in any fund in connection with worker’s
compensation insurance), unemployment insurance, pensions or social security
programs, (c) encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, provided that such items do not
materially impair the use of such property for the purposes intended and none of
which is violated in any material respect by existing or proposed structures or
land use, (d) the following to the extent no Lien has been filed in any
jurisdiction or agreed to: (i) Liens for taxes not yet due and payable; or
(ii) Liens imposed by mandatory provisions of Applicable Law such as for
materialmen’s, mechanic’s, warehousemen’s and other like Liens arising in the
ordinary course of business, securing payment of Indebtedness the payment of
which is not yet due, (e) Liens for taxes, assessments and governmental charges
or assessments that are being contested in good faith by appropriate proceedings
diligently conducted, and for which reserves acceptable to Lender have been
provided, (f) Liens expressly permitted under the terms of the Loan Documents,
and (g) any extension, renewal or replacement of the foregoing to the extent
such Lien as so extended, renewed or replaced would otherwise be permitted
hereunder.
     “Person” means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
     “Plan” means at any time an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code.

16

--------------------------------------------------------------------------------

 

     “Prime Rate” means a base rate of interest which Lender establishes from
time to time and which serves as the basis upon which the effective rates of
interest are calculated for those loans making reference thereto (which rate of
interest may not be the lowest rate charged by the Lender). Any change in an
Effective Rate due to a change in the Prime Rate shall become effective on the
day each such change is announced within Lender.
     “Property” means real property improved with one or more operating retail
properties.
     “Property Management Agreements” means, collectively, all agreements
entered into by any Person with a Property Manager pursuant to which such Person
engages such Property Manager to advise such Person with respect to the
management of a Property.
     “Property Manager” means any Person engaged under a Property Management
Agreement to advise the owner of a Property with respect to the management of
such Property.
     “Regulations T, U and X” means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
     “Reimbursement Obligation” means the absolute, unconditional and
irrevocable obligation of Borrower to reimburse the Issuing Bank for any drawing
honored by the Issuing Bank under a Letter of Credit.
     “REIT” means a Person qualifying for treatment as a “real estate investment
trust” under the Internal Revenue Code.
     “Reserve Percentage” is at any time the percentage announced within Lender
as the reserve percentage under Regulation D for loans and obligations making
reference to the Daily LIBO Rate or to an Adjusted LIBO Rate for an Interest
Period or time remaining in an Interest Period after the date of a Consequential
Loss, as appropriate. The Reserve Percentage shall be based on Regulation D or
other regulations from time to time in effect concerning reserves for
Eurocurrency Liabilities as defined in Regulation D from related institutions as
though Lender were in a net borrowing position, as promulgated by the Board of
Governors of the Federal Reserve System, or its successor.
     “Reserved Construction Loan” shall mean a construction loan extended to
Borrower or any Subsidiary for the purpose of financing construction of a
Property in respect of which: (a) no default or event of default exists;
(b) interest on such loan has been budgeted to accrue at a rate of not less than
the Base Rate at the time the interest reserve account is established; (c) the
amount of such budgeted interest has been (i) included in the principal amount
of such loan and (ii) segregated into an interest reserve account (which shall
include any arrangement whereby loan proceeds equal to such budgeted interest
are reserved and only disbursed to make interest payments in respect of such
loan); (d) absent an event of default or default, such interest can be paid out
of such interest reserve account only for the purpose of making interest
payments on such loan; and (e) the amount held in such interest reserve account
in respect of such loan, together with the net income, if any, from such
Property projected by Lender will be sufficient, as determined by Lender, to pay
all Interest Expense on such loan until the date that the Net Operating Income
of such Property is anticipated to be sufficient to pay all Interest Expense on
such loan.

17

--------------------------------------------------------------------------------

 

     “Restricted Payment” means cash payments or other distributions on, or in
respect of, any class of stock of, or other equity interest in, a Person, or
other payments or transfers made in respect of the redemption, repurchase or
acquisition of such stock or equity interest, other than any distribution or
other payment payable solely in capital stock of such Person.
     “Revolving Credit Termination Date” means the earlier to occur of
(a) October 30, 2009 or (b) the date on which the Commitment is terminated
pursuant to Section 9.2.
     “Revolving Loan” means the credit facility evidenced by the Revolving Note.
     “Revolving Note” means the promissory note executed by Borrower, payable to
the order of Lender, in the amount of the Commitment and substantially in the
form of Exhibit B.
     “Secured Indebtedness” means, with respect to any Person, any Indebtedness
of such Person that is secured in any manner by any Lien on any real property
and shall include such Person’s Ownership Share of the Secured Indebtedness of
any of such Person’s Unconsolidated Affiliates. The term “Secured Indebtedness”
shall not include Indebtedness secured by partnership interests.
     “Share” means a transferable unit of beneficial interest in Borrower.
     “Solvent” means, when used with respect to any Person, that (a) the fair
value and the fair salable value of its assets (excluding any Indebtedness due
from any Affiliate of such Person) are each in excess of the fair valuation of
its total liabilities (including all contingent liabilities); (b) such Person is
able to pay its debts or other obligations in the ordinary course as they mature
and (c) that the Person has capital not unreasonably small to carry on its
business and all business in which it proposes to be engaged.
     “Special Purpose Subsidiary” means any “single-asset” or “single pool”
Subsidiary of the Borrower that has been or may hereafter be formed by the
Borrower for the exclusive purposes of obtaining permanent financing from a
lender, and owning and operating the assets so financed, and which is prohibited
by such lender from providing any guaranty of other Indebtedness.
     “Stated Amount” means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time, as such amount may be increased or
reduced from time to time in accordance with the terms of such Letter of Credit.
     “Subsidiary” means, for any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (without regard to the occurrence of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person. “Wholly Owned Subsidiary” means any such
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors’ qualifying shares) are so owned or controlled.

18

--------------------------------------------------------------------------------

 

     “Substantial Amount” means, at the time of determination thereof, an amount
greater than or equal to 15% of the sum of (a) total consolidated assets of
Borrower and its Subsidiaries, on a consolidated basis, at such time, plus
(b) accumulated depreciation of Borrower and its Subsidiaries, on a consolidated
basis, at such time.
     “Tangible Net Worth” means, for any Person and as of a given date, such
Person’s total consolidated stockholders’ equity, excluding intangible assets,
plus, in the case of the Borrower, increases in accumulated depreciation and
amortization accrued after the Effective Date, minus (to the extent contained in
determining stockholders’ equity of such Person): (a) the amount of any write-up
in the book value of any assets reflected in any balance sheet resulting from
revaluation thereof or any write-up in excess of the cost of such assets
acquired, and (b) the aggregate of all amounts appearing on the assets side of
any such balance sheet for franchises, licenses, permits, patents, patent
applications, copyrights, trademarks, service marks, trade names, goodwill,
treasury stock, experimental or organizational expenses and other like assets
which would be classified as intangible assets under GAAP, all determined on a
consolidated basis.
     “Total Budgeted Costs” means, with respect to any Development Property, all
amounts budgeted with respect to all of the following: (a) acquisition of land
and any related improvements; (b) a reasonable and appropriate reserve for
construction interest; (c) a reasonable and appropriate operating deficit
reserve; (d) tenant improvements, (e) leasing commissions and (f) other hard and
soft costs associated with the development or redevelopment of such real
property. With respect to any real property to be developed in more than one
phase, the Total Budgeted Cost shall exclude budgeted costs (other than costs
relating to acquisition of land and related improvements) to the extent relating
to any phase for which (i) construction has not yet commenced and (ii) a binding
construction contract has not been entered into by the Borrower, any other
Subsidiary or any Unconsolidated Affiliate, as the case may be. For purposes of
this definition, Total Budgeted Costs shall, with respect to any real property
being developed by an Unconsolidated Affiliate, be equal to the greater of
(x) Borrower’s or any Subsidiary’s Ownership Share of such Unconsolidated
Affiliate times the Total Budgeted Costs determined in accordance with the
foregoing or (y) the total amount of Indebtedness related to such real property
that Borrower or any Subsidiary has Guaranteed or is otherwise obligated on a
recourse basis.
     “Total Liabilities” means, as to any Person as of a given date, all
liabilities which would, in conformity with GAAP, be properly classified as a
liability on a consolidated balance sheet of such Person as of such date, and in
any event shall include (without duplication): (a) all Indebtedness of such
Person, including without limitation, Capitalized Lease Obligations and
reimbursement obligations with respect to any letter of credit, (b) all accounts
payable and accrued expenses of such Person; (c) all purchase and repurchase
obligations and forward commitments of such Person to the extent such
obligations or commitments are evidenced by a binding purchase agreement
(forward commitments shall include without limitation (i) forward equity
commitments and (ii) commitments to purchase any real property under
development, redevelopment or renovation); (d) all unfunded obligations of such
Person; (e) all lease obligations of such Person (including ground leases) to
the extent required under GAAP to be classified as a liability on a balance
sheet of such Person; (f) all contingent obligations of such Person including,
without limitation, all Guarantees of Indebtedness by such Person; (g) all
liabilities of any Unconsolidated Affiliate of such Person, which liabilities
such Person has

19

--------------------------------------------------------------------------------

 

Guaranteed or is otherwise obligated on a recourse basis; and (h) such Person’s
Ownership Share of the Indebtedness of any Unconsolidated Affiliate of such
Person, including Nonrecourse Indebtedness of such Person. For purposes of
clauses (c) and (d) of this definition, the amount of Total Liabilities of a
Person at any given time in respect of (x) a contract to purchase or otherwise
acquire unimproved or fully developed real property shall be equal to (i) the
total purchase price payable by such Person under such contract if, at such
time, the seller of such real property would be entitled to specifically enforce
such contract against such Person, otherwise, (ii) the aggregate amount of due
diligence deposits, earnest money payments and other similar payments made by
such Person under such contract which, at such time, would be subject to
forfeiture upon termination of the contract and (y) a contract relating to the
acquisition of real property which the seller is required to develop or renovate
prior to, and as a condition precedent to, such acquisition, shall be equal to
(i) the maximum amount reasonably estimated to be payable by such Person under
such contract assuming performance by the seller of its obligations under such
contract, which amount shall include, without limitation, any amounts payable
after consummation of such acquisition which may be based on certain performance
levels or other related criteria if, at such time, the seller of such real
property would be entitled to specifically enforce such contract against such
Person, otherwise (ii) the aggregate amount of due diligence deposits, earnest
money payments and other similar payments made by such Person under such
contract which, at such time, would be subject to forfeiture upon termination of
the contract. For purposes of this definition, Total Budgeted Costs shall
include the Total Budgeted Costs of Development Properties being developed by
third parties with related Indebtedness which such Person Guaranteed or is
otherwise obligated.
     “Type” with respect to the Revolving Loan, refers to whether the applicable
portion of the Revolving Loan is a LIBOR Loan or a Base Rate Loan.
     “Unconsolidated Affiliate” shall mean, in respect of any Person, any other
Person in whom such Person holds an Investment, which Investment is accounted
for in the financial statements of such Person on an equity basis of accounting
and whose financial results would not be consolidated under GAAP with the
financial results of such Person on the consolidated financial statements of
such Person.
     “Unencumbered Net Operating Income” means, for any period, the aggregate
Net Operating Income for such period for each Property of Borrower or any
Subsidiary which satisfies all of the following requirements as determined by
Lender: (a) such Property is 100% owned in fee simple by Borrower or a Wholly
Owned Subsidiary of Borrower; (b) neither such Property nor any interest of
Borrower or such Subsidiary therein, is subject to any Lien other than Permitted
Liens or to any agreement (other than this Agreement or any other Loan Document)
that prohibits the creation of any Lien thereon as security for Indebtedness;
(c) if such Property is owned by a Subsidiary: (i) none of Borrower’s Ownership
Share in such Subsidiary is subject to any Lien other than Permitted Liens or to
any agreement (other than this Agreement or any other Loan Document) that
prohibits the creation of any Lien thereon as security for Indebtedness and
(ii) neither such Subsidiary, nor any other Subsidiary through which Borrower
holds any indirect interest in such Subsidiary, is subject to any restriction of
any kind which would limit its ability to pay or perform its obligations under
the Guaranty required to be delivered hereunder prior to its obligation to pay
dividends or make any other distribution

20

--------------------------------------------------------------------------------

 

on any of such Subsidiary’s capital stock or other securities owned by Borrower
or any other Subsidiary of Borrower.
     “Unencumbered Pool Certificate” means a report, certified by the chief
financial officer of Borrower in the manner provided for in Exhibit G, setting
forth the calculations required to establish the Unencumbered Pool Value as of a
specified date, all in form and detail satisfactory to Lender.
     “Unencumbered Pool Properties” means those Eligible Properties that have
been approved pursuant to Article 4 for inclusion when calculating the Maximum
Loan Availability.
     “Unencumbered Pool Value” means, at any time, the sum of the following
amounts as determined for each Unencumbered Pool Property: (a) the Net Operating
Income of such Unencumbered Pool Property for the fiscal quarter most recently
ended times (b) 4 and divided by (c) the Applicable NOI Percent.
     The “Applicable NOI Percent” shall be:
     (x) 8.5% with respect to the MacArthur Pads, CVS Pharmacies, Woodlands
Plaza, Uptown Plaza, Courtyard at Post Oak, and Woodlands Ring Road;
     (y) 9.5% with respect to AFC, Inc., Carlsons Restaurant (TGI Fridays),
Golden Corral, IHOP Topeka, Dardin (Smokey Bones) and 410 and Blanco — Citibank;
and
     (z) with respect to any additional Unencumbered Pool Properties, the
Applicable NOI Percent shall be either 8.5% or 9.5%, as determined by Lender in
its sole discretion.
     “Unsecured Indebtedness” means, with respect to a Person, all Indebtedness
of such Person that is not Secured Indebtedness.
     “Unsecured Interest Expense” means, with respect to a Person and for a
given period, all Interest Expense for such period attributable to the Unsecured
Indebtedness of such Person.
     “Unused Fee” means a fee payable by Borrower to Lender in consideration of
Lender’s having the Commitment available to be loaned to Borrower, which Unused
Fee shall be calculated and paid quarterly based on the portion of the
Commitment, determined on a daily basis, not borrowed and outstanding during
such preceding calendar quarter.
     “Uptown Plaza” means those retail properties so identified on Schedule 4.1
(other than the CVS Site located in Uptown Plaza), which are not encumbered by a
Lien.
     “Woodlands Plaza” means those retail properties so identified on
Schedule 4.1, which are not encumbered by a Lien.
     “Woodlands Ring Road” means those retail properties so identified on
Schedule 4.1, which are not encumbered by a Lien.

21

--------------------------------------------------------------------------------

 

     Section 1.2 Accounting Terms and Determinations; Covenant Calculations.
     Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP.
     Section 1.3 Subsidiaries.
     Unless explicitly set forth to the contrary, a reference to “Subsidiary”
shall mean a Subsidiary of Borrower and a reference to an “Affiliate” shall mean
a reference to an Affiliate of Borrower.
     Section 1.4 Interpretation Generally; Times.
     References in this Agreement to “Sections,” “Articles,” “Exhibits” and
“Schedules” are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement or any other Loan
Document to any document, instrument or agreement (a) shall include all
exhibits, schedules and other attachments thereto, as updated from time to time,
(b) shall include all documents, instruments or agreements issued or executed in
replacement thereof, and (c) shall mean such document, instrument or agreement,
or replacement or predecessor thereto, as amended, modified or supplemented from
time to time in accordance with its terms and in effect at any given time.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Unless otherwise indicated, all references to time are
references to San Francisco, California time.
ARTICLE 2.
CREDIT FACILITY
     Section 2.1 Making of Revolving Loan.
     (a) Subject to the terms and conditions set forth in this Agreement
including, without limitation, Section 2.1(b), Lender agrees to permit Borrower
to make borrowings under the Revolving Loan during the period from and including
the Effective Date to but excluding the Revolving Credit Termination Date, in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
the lesser of (a) the Maximum Loan Availability and (b) the Commitment. Each
borrowing shall be in an aggregate principal amount of (i) with respect to Base
Rate Loans, except with respect to fundings under the Loan for deposits into the
Sweep Account (hereinafter defined) pursuant to Section 2.11 hereof, $100,000.00
and integral multiples of $50,000.00 in excess of that amount (except that any
such borrowing of Base Rate Loans may be in the aggregate amount of the unused
Commitment) and (ii) with respect to LIBOR Loans, $250,000.00 and integral
multiples of $100,000.00 in excess of that amount. Within the foregoing limits
and subject to the other terms of this Agreement, Borrower may borrow, repay and
reborrow the Revolving Loan.
     (b) Notwithstanding any other term of this Agreement or any other Loan
Document, at no time may the aggregate principal amount of all outstanding LIBOR
Loans, Base Rate

22

--------------------------------------------------------------------------------

 

Loans and Letter of Credit Liabilities, exceed the lesser of (a) Maximum Loan
Availability at such time or (b) the Commitment.
     Section 2.2 Requests for Borrowings.
     Not later than 10:00 a.m. at least one Business Day prior to a borrowing of
Base Rate Loans, except with respect to fundings under the Loan for deposit into
the Sweep Account pursuant to Section 2.11 hereof, and not later than 10:00 a.m.
at least three Business Days prior to a borrowing of LIBOR Loans, Borrower shall
deliver to Lender a Notice of Borrowing. Each Notice of Borrowing shall specify
the principal amount of the Revolving Loans to be borrowed, the date such amount
is to be borrowed (which must be a Business Day), the use of the proceeds of
such borrowing, the Type of the requested borrowing and if such borrowing is to
be a LIBOR Loan, the initial Interest Period for such LIBOR Loan. Each Notice of
Borrowing shall be irrevocable once given and binding on Borrower. Prior to
delivering a Notice of Borrowing, Borrower may (without specifying whether the
borrowing will be a Base Rate Loan or a LIBOR Loan) request that Lender provide
Borrower with the most recent LIBO Rate available to Lender. Lender shall
provide such quoted rate to Borrower on the date of such request or as soon as
possible thereafter.
     Section 2.3 Funding.
     Promptly after receipt of a Notice of Borrowing, and upon and subject to
fulfillment of all applicable conditions set forth herein, Lender shall make
available to Borrower at Lender’s Lending Office, not later than 11:00 a.m. on
the date of the requested borrowing, the proceeds of such borrowing.
     Section 2.4 Continuation.
     So long as no Event of Default shall have occurred and be continuing,
Borrower may on any Business Day, with respect to any LIBOR Loan, elect to
maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a
new Interest Period for such LIBOR Loan. Each new Interest Period selected under
this Section shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period shall be made by
Borrower’s giving of a Notice of Continuation not later than 10:00 a.m. on the
third Business Day prior to the date of any such Continuation by Borrower to
Lender. Such notice by Borrower of a Continuation shall be by telephone or
telecopy, confirmed immediately in writing if by telephone, in the form of a
Notice of Continuation, specifying (a) the date of such Continuation, (b) the
LIBOR Loan and portion thereof subject to such Continuation and (c) the duration
of the selected Interest Period, all of which shall be specified in such manner
as is necessary to comply with all limitations on Loans outstanding hereunder.
Each Notice of Continuation shall be irrevocable by and binding on Borrower once
given. If Borrower shall fail to select in a timely manner a new Interest Period
for any LIBOR Loan in accordance with this Section, such Loan will
automatically, on the last day of the current Interest Period therefore, Convert
into a Base Rate Loan notwithstanding failure of Borrower to comply with
Section 2.5.

23

--------------------------------------------------------------------------------

 

     Section 2.5 Conversion.
     So long as no Event of Default shall have occurred and be continuing,
Borrower may on any Business Day, upon Borrower’s giving of a Notice of
Conversion to Lender, Convert the entire amount of all or a portion of a Loan of
one Type into a Loan of another Type. Any Conversion of a LIBOR Loan into a Base
Rate Loan shall be made on, and only on, the last day of an Interest Period for
such LIBOR Loan. Each such Notice of Conversion shall be given not later than
10:00 a.m. on the Business Day prior to the date of any proposed Conversion into
Base Rate Loans and on the third Business Day prior to the date of any proposed
Conversion into LIBOR Loans. Subject to the restrictions specified above, each
Notice of Conversion shall be by telephone or telecopy confirmed immediately in
writing if by telephone in the form of a Notice of Conversion specifying (a) the
requested date of such Conversion, (b) the Type of Loan to be Converted, (c) the
portion of such Type of Loan to be Converted, (d) the Type of Loan such Loan is
to be Converted into and (e) if such Conversion is into a LIBOR Loan, the
requested duration of the Interest Period of such Loan. Each Notice of
Conversion shall be irrevocable by and binding on Borrower once given. Each
Conversion from a Base Rate Loan to a LIBOR Loan shall be in an amount of not
less than $250,000.00 or integral multiples of $100,000.00 in excess of that
amount.
     Section 2.6 Interest Rate.
     (a) All Loans. The unpaid principal of each Base Rate Loan shall bear
interest from the date of the making of such Loan to but not including the date
of repayment thereof at a rate per annum equal to the Base Rate in effect from
day to day. The unpaid principal of each LIBOR Loan shall bear interest from the
date of the making of such Loan to but not including the date of repayment
thereof at a rate per annum equal to the Effective Rate for the Interest Period
therefor.
     (b) Default Rate. Notwithstanding the immediately preceding subsection (a),
or any other provision of this Agreement to the contrary, effective immediately
upon the occurrence and during the continuance of any Event of Default, the
outstanding principal balance of the Loans and all Reimbursement Obligations,
and to the extent permitted by Applicable Law any interest payments on the Loans
not paid when due, shall bear interest payable on demand until paid at the
lesser of the Maximum Rate or the Base Rate from time to time in effect plus
four percent (4.0%).
     Section 2.7 Special Provisions for LIBOR Loans.
     (a) Inadequacy of LIBOR Pricing. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBO Rate for any
Interest Period:
     (i) Lender reasonably determines, which determination shall be conclusive,
absent manifest error, that quotations of interest rates for the relevant
deposits referred to in the definition of LIBO Rate are not being provided in
the relevant amounts or for the relevant maturities for purposes of determining
rates of interest for LIBOR Loans as provided herein; or

24

--------------------------------------------------------------------------------

 

     (ii) Lender reasonably determines, which determination shall be conclusive,
absent manifest error, that the relevant rates of interest referred to in the
definition of LIBO Rate upon the basis of which the rate of interest for LIBOR
Loans for such Interest Period is to be determined are not likely adequately to
cover the cost to Lender of making or maintaining LIBOR Loans for such Interest
Period;
then Lender shall give Borrower prompt notice thereof and, so long as such
condition remains in effect, Lender shall be under no obligation to, and shall
not, make additional LIBOR Loans, Continue LIBOR Loans or Convert Base Rate
Loans into LIBOR Loans and Borrower shall, on the last day of each current
Interest Period for each outstanding LIBOR Loan, either prepay such Loan or
Convert such Loan into a Base Rate Loan in accordance with Section 2.5.
     (b) Number of Interest Periods. Anything herein to the contrary
notwithstanding, there shall not be outstanding at any one time more than six
(6) Interest Periods.
     (c) Illegality of LIBOR Loans. If, after the date of this Agreement, the
adoption of any Applicable Law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for Lender to make,
maintain or fund LIBOR Loans, Lender shall forthwith give notice thereof to
Borrower. Before giving any notice pursuant to this subsection, Lender shall
designate a different LIBOR lending office if such designation will avoid the
need for giving such notice and will not be otherwise materially disadvantageous
to Lender (as determined in the reasonable judgment of Lender). Upon receipt of
such notice, Borrower shall Convert all then existing LIBOR Loans to Base Rate
Loans, on either (i) the last day of the then-current Interest Period applicable
to such LIBOR Loan if Lender may lawfully continue to maintain and fund such
LIBOR Loan to such day or (ii) immediately if Lender may not lawfully continue
to fund and maintain such LIBOR Loan to such day.
     (d) Consequential Losses. Borrower shall indemnify Lender against any
Consequential Loss incurred by Lender as a result of (i) any failure to fulfill,
on or before the date specified for such Loan in the applicable Notice of
Borrowing, the conditions to such Loan set forth herein, or (ii) Borrower’s
requesting that a Base Rate Loan not be Converted into a LIBOR Loan on the date
specified for such Conversion in a Notice of Conversion, (iii) Borrower’s
requesting that a LIBOR Loan not be Continued on the date specified for such
Continuation in a Notice of Continuation or (iv) Borrower’s requesting that a
LIBOR Loan not be made on the date specified for such LIBOR Loan in the Notice
of Borrowing. A certificate of Lender establishing the amount due from Borrower
according to the preceding sentence, together with a description in reasonable
detail of the manner in which such amount has been calculated, shall be prima
facie evidence thereof.
     (e) Increased Costs for LIBOR Loans. If, after the date hereof, any
Governmental Authority, central bank or other comparable authority, shall at any
time impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits

25

--------------------------------------------------------------------------------

 

with or for the account of, or credit extended by Lender or shall impose on
Lender (or its eurodollar lending office) or the interbank eurodollar market any
other condition affecting its LIBOR Loans, the Revolving Note or Lender’s
obligation to make LIBOR Loans; and the result of any of the foregoing is to
increase the cost to Lender of making or maintaining LIBOR Loans, or to reduce
the amount of any sum received or receivable by Lender under this Agreement, or
under the Revolving Note, by an amount reasonably deemed by Lender to be
material, then, within five days after demand by Lender, Borrower shall pay to
Lender such additional amount or amounts as will compensate Lender for such
increased cost or reduction. Lender will (i) notify Borrower of any event
occurring after the date of this Agreement which will entitle Lender to
compensation pursuant to this subsection as promptly as practicable (but in any
event within 120 days) after Lender obtains actual knowledge of such event, and
Borrower shall not be liable for any such increased costs that accrue between
the date such notification is required to be given and the date it was actually
given and (ii) use good faith and reasonable efforts to designate a different
lending office for Lender’s LIBOR Loans if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the reasonable
opinion of Lender, be materially disadvantageous to Lender. A certificate of
Lender claiming compensation under this Section and setting forth in reasonable
detail the calculation of the additional amount or amounts to be paid to it
hereunder shall be prima facie evidence thereof.
     (f) Effect on Base Rate Loans. If notice has been given pursuant to
Section 2.7(a) or (c) requiring LIBOR Loans of Lender to be repaid or Converted,
then unless and until Lender notifies Borrower that the circumstances giving
rise to such repayment no longer apply, all Loans shall be Base Rate Loans. If
Lender notifies Borrower that the circumstances giving rise to such repayment no
longer apply, Borrower may thereafter select LIBOR Loans.
     (g) Payments Not at End of Interest Period. If Borrower makes any payment
of principal with respect to any LIBOR Loan on any day other than the last day
of an Interest Period applicable to such LIBOR Loan, then Borrower shall
reimburse Lender on demand the Consequential Loss incurred by Lender as a result
of the timing of such payment. A certificate of Lender setting forth in
reasonable detail the basis for the determination of the amount of Consequential
Loss shall be delivered to Borrower by Lender and shall, in the absence of
demonstrable error, be conclusive and binding. Any Conversion of a LIBOR Loan to
a Base Rate Loan on any day other than the last day of the Interest Period for
such LIBOR Loan shall be deemed a payment for purposes of this subsection.
     Section 2.8 Capital Adequacy.
     If, after the date hereof, Lender shall have reasonably determined that
either (a) the adoption of any law, rule, regulation or guideline of general
applicability regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or (b) compliance by Lender (or any lending office of
Lender) with any request or directive of general applicability regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Lender’s capital as a consequence of its or Borrower’s obligations
hereunder to a level below that which Lender could have achieved but for such
adoption, change or compliance (taking into consideration Lender’s policies with
respect to

26

--------------------------------------------------------------------------------

 

capital adequacy) by an amount reasonably deemed by Lender to be material, then
from time to time, Lender may notify Borrower, which notice shall include a
calculation and a reference to the law, rule or regulation. Within 120 days
thereafter, Borrower shall either (i) pay to Lender such additional amount or
amounts as will adequately compensate Lender for such reduction effective with
the 121st day, or (ii) payoff the Loans. Lender will notify Borrower of any such
determination which will entitle Lender to compensation pursuant to this
subsection as promptly as practicable (but in any event within 120 days) after
Lender obtains actual knowledge of the event or condition prompting Lender to
make such determination. A certificate of Lender claiming compensation under
this Section and setting forth the additional amount or amounts to be paid to it
hereunder, together with the description of the manner in which such amounts
have been calculated, shall be prima facie evidence thereof. In determining such
amount, Lender may use any reasonable averaging and attribution methods.
     Section 2.9 Repayment of Loans.
     (a) All accrued and unpaid interest on the unpaid principal amount of each
Loan shall be payable (i) monthly in arrears on the first day of each month,
commencing with the first full calendar month occurring after the Effective
Date, (ii) on the Revolving Credit Termination Date and (iii) on any date on
which the principal balance of such Loan is due and payable in full.
     (b) The aggregate outstanding principal balance of Revolving Loan shall be
due and payable in full on the Revolving Credit Termination Date.
     (c) Except with respect to payments under the Sweep Agreement, Borrower
may, upon at least one Business Day’s prior notice to Lender, prepay any Loan in
whole at any time, or from time to time in part in an amount equal to
$100,000.00 or integral multiples of $50,000.00 in excess of that amount, by
paying the principal amount to be prepaid. If Borrower shall prepay the
principal of any LIBOR Loan on any date other than the last day of the Interest
Period applicable thereto, Borrower shall pay the amounts, if any, due under
Section 2.7(d) and (g).
     (d) If at any time the aggregate principal amount of all outstanding
principal balances of LIBOR Loans and Base Rate Loans, together with the
aggregate amount of Letter of Credit Liabilities, exceeds the aggregate amount
of the Commitment, Borrower shall promptly upon demand pay to Lender the amount
of such excess. If at any time the aggregate outstanding principal balances of
LIBOR Loans and Base Rate Loans together with the aggregate amount of all Letter
of Credit Liabilities, exceeds the Maximum Loan Availability, then Borrower
shall, within 10 days of Borrower obtaining actual knowledge of the occurrence
of such excess, deliver to Lender a written plan acceptable to Lender to
eliminate such excess (whether by designation of additional Properties as
Unencumbered Pool Properties, by Borrower repaying an appropriate amount of
Loans, or otherwise). If such excess is not eliminated within 30 days of
Borrower obtaining actual knowledge of the occurrence thereof, then the entire
outstanding principal balance of all Loans and all accrued interest thereon,
together with an amount equal to all Letter of Credit Liabilities for deposit
into the Collateral Account, shall be immediately due and payable in full.

27

--------------------------------------------------------------------------------

 

     (e) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by Borrower under this
Agreement, the Revolving Note or any other Loan Document shall be made in
Dollars, in immediately available funds, without setoff, deduction or
counterclaim, to Lender at its Lending Office, not later than 11:00 a.m. on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). All payments to be made by Borrower to the Issuing Bank under
this Agreement or any other Loan Document shall be made in Dollars, in
immediately available funds, without setoff, deduction or counterclaim, to the
Issuing Bank, not later than 11:00 a.m. on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day). The parties agree that
if Borrower makes any payment due hereunder after 11:00 a.m. but before 5:00
p.m. on the date such payment is due, such late payment shall not constitute a
Default under Section 9.1(a) but shall nevertheless for all other purposes,
including but not limited to, the calculation of interest and any fees payable
pursuant to Section 3.1, be deemed to have been paid as of the next succeeding
Business Day as provided in the applicable parenthetical phrase of the preceding
sentences. If the due date of any payment under this Agreement or any other Loan
Document would otherwise fall on a day which is not a Business Day such date
shall be extended to the next succeeding Business Day and interest shall be
payable for the period of such extension.
     Section 2.10 Voluntary Reductions of the Commitment.
     Borrower may terminate or reduce the aggregate unused amount of the
Commitment (for which purpose use of the Commitment shall be deemed to include
the aggregate amount of all Letter of Credit Liabilities) at any time and from
time to time without penalty or premium upon not less than three Business Days
prior notice to Lender of each such termination or reduction, which notice shall
specify the effective date thereof and the amount of any such reduction (which
in the case of any partial reduction of the Commitment shall not be less than
$100,000.00 and integral multiples of $50,000.00 in excess of that amount) and
shall be irrevocable once given and effective only upon receipt by Lender;
provided, however, that if Borrower seeks to reduce the Commitment below
$5,000,000.00, then the Commitment shall be reduced to zero and except as
otherwise provided herein, the provisions of this Agreement shall terminate. The
Commitment, once reduced pursuant to this Section, may not be increased.
Borrower shall pay all interest and other costs on the Loans accrued to the date
of such reduction or termination of the Commitment of Lender.
     Section 2.11 Credit Sweep Account.
     Borrower wishes to establish an automatic debit/credit sweep between the
Revolving Loan and Account No. 4311786339 (the “Sweep Account”). The Sweep
Account shall be activated at such time as Lender, in Lender’s sole and absolute
discretion, deems appropriate, by notice thereof to Borrower. Upon such
activation, then, subject to the terms of this Section, the terms of the sweep
shall be governed by that certain Master Agreement for Treasury Management
Services Agreement, dated May 18, 2000, by and between Borrower and Lender (the
“Sweep Agreement”). Upon activation of the Sweep Account, Borrower hereby
authorizes Lender, at the close of each business day, to make disbursements from
the Loan for deposit into the Sweep Account (which shall be treated as a Base
Rate Loan) and/or to withdraw funds from

28

--------------------------------------------------------------------------------

 

the Sweep Account to pay, in whole or in part, the outstanding principal balance
on the Revolving Loan. Following such activation, Lender may accept changes to
these instructions only by written request from one of the following persons: H.
Kerr Taylor and Chad Braun. Borrower hereby represents (i) that Lender may rely
and act upon any written request from any such individuals and (ii) that the
sweep specified above has been duly authorized by all necessary entity
approvals. Borrower further hereby irrevocably grants, pledges and assigns to
Lender, as additional security for the Loan, all monies now or hereafter
deposited in the Sweep Account. Finally, notwithstanding anything in the Sweep
Agreement to the contrary, Borrower agrees that Lender may immediately terminate
the sweep relationship upon any Default under the Loan Documents and/or, whether
or not there has been a Default under the Loan Documents, upon seven (7) days
prior written notice to Borrower.
     Section 2.12 Funds Transfer Disbursements.
     If requested by Borrower, Borrower hereby authorizes Lender to disburse the
proceeds of any Loan(s) made by Lender or its affiliate pursuant to the Loan
Documents as requested by an authorized representative of the Borrower to any of
the accounts designated in that certain Exhibit entitled Transfer Authorizer
Designation. Borrower agrees to be bound by any transfer request: (i) authorized
or transmitted by Borrower, or, (ii) made in Borrower’s name and accepted by
Lender in good faith and in compliance with these transfer instruction, even if
not properly authorized by Borrower. Borrower further agrees and acknowledges
that Lender may rely solely on any bank routing number or identifying bank
account number or name provided by Borrower to effect a wire or funds transfer
even if the information provided by Borrower identifies a different bank or
account holder than named by the Borrower. Lender is not obligated or required
in any way to take any actions to detect errors in information provided by
Borrower. If Lender takes any actions in an attempt to detect errors in the
transmission or content of transfer or requests or takes any actions in an
attempt to detect unauthorized funds transfer requests, Borrower agrees that no
matter how many times Lender takes these actions Lender will not in any
situation be liable for failing to take or correctly perform these actions in
the future and such actions shall not become any part of the transfer
disbursement procedures authorized under this provision, the Loan Documents, or
any agreement between Lender and Borrower. Borrower agrees to notify Lender of
any errors in the transfer of any funds or of any unauthorized or improperly
authorized transfer requests within 14 days after Lender’s confirmation to
Borrower of such transfer. Lender will, in its sole discretion, determine the
funds transfer system and the means by which each transfer will be made. Lender
may delay or refuse to accept a funds transfer request if the transfer would:
(i) violate the terms of this authorization; (ii) require use of a bank
unacceptable to Lender or prohibited by governmental authority; (iii) cause
Lender to violate and Federal Reserve or other regulatory risk control program
or guideline, or (iv) otherwise cause Lender to violate any applicable law or
regulation. Lender shall not be liable to Borrower or any other parties for
(i) errors, acts or failures to act of others, including other entities, banks,
communications carriers or clearinghouses, through which Borrower’s transfers
may be made or information received or transmitted, and no such entity shall be
deemed an agent of the Lender, (ii) any loss, liability or delay caused by
fires, earthquakes, wars, civil disturbances, power surges or failures, acts of
government, labor disputes, failures in communications networks, legal
constraints or other events beyond Lender’s control, or (iii) any special,
consequential, indirect or punitive damages, whether or not (a) any claim for
these damages is based on tort or contract or (b) Lender or Borrower knew or
should

29

--------------------------------------------------------------------------------

 

have known the likelihood of these damages in any situation. Lender makes no
representations or warranties other than those expressly made in this Agreement.
     Section 2.13 Revolving Note.
     The obligation of Borrower to repay the Revolving Loan shall, in addition
to this Agreement, be evidenced by the Revolving Note.
     Section 2.14 Letters of Credit.
     (a) Subject to the terms and conditions of this Agreement including,
without limitation, Section 2.1(b), Lender agrees to cause the Issuing Bank to
issue for the account of Borrower during the period from and including the
Effective Date to, but excluding, the Revolving Credit Termination Date one or
more letters of credit (each a “Letter of Credit”) in such form and containing
such terms as may be requested from time to time by Borrower and acceptable to
the Issuing Bank and Lender, up to a maximum aggregate Stated Amount at any one
time outstanding not to exceed the L/C Commitment Amount. Lender and Borrower
agree that those Letters of Credit which are described on Schedule 2.14(a)
attached hereto and made a part hereof are outstanding as of the date of this
Agreement but shall, for all purposes, be deemed Letters of Credit issued under
this Agreement.
     (b) At the time of issuance, the amount, terms and conditions of each
Letter of Credit, and of any drafts or acceptances thereunder, shall be subject
to approval by the Issuing Bank, Lender and Borrower. Notwithstanding the
foregoing, in no event may (i) the expiration date of any Letter of Credit
extend beyond the Revolving Credit Termination Date, (ii) a Letter of Credit
have an initial duration in excess of one year, (iii) a Letter of Credit contain
an automatic renewal clause or (iv) a Letter of Credit be issued within 30 days
of the Revolving Credit Termination Date. The initial Stated Amount of each
Letter of Credit shall be at least $100,000.00.
     (c) In connection with the proposed issuance of a Letter of Credit,
Borrower shall give Lender written notice (or telephonic notice promptly
confirmed in writing) prior to the requested date of issuance of a Letter of
Credit, such notice to describe in reasonable detail the proposed terms of such
Letter of Credit and the nature of the transactions or obligations proposed to
be supported by such Letter of Credit, and in any event shall set forth with
respect to such Letter of Credit (i) the proposed initial Stated Amount,
(ii) the beneficiary, (iii) whether such Letter of Credit is a commercial or
standby letter of credit and (iv) the proposed expiration date. Borrower shall
also execute and deliver such customary applications and agreements for standby
letters of credit, standby letter of credit agreements, applications for
amendment to letter of credit, and other forms as requested from time to time by
Lender or the Issuing Bank. Provided Borrower has given the notice prescribed by
the first sentence of this subsection and Borrower has executed and delivered to
Lender and the Issuing Bank the agreements, applications and other forms as
required by the immediately preceding sentence of this subsection, and subject
to the terms and conditions of this Agreement, including the satisfaction of any
applicable conditions precedent set forth in Article 5., Lender agrees to cause
the Issuing Bank to issue the requested Letter of Credit on the requested date
of issuance for the benefit of the stipulated beneficiary but in no event prior
to the date five (5) Business Days following the date after which

30

--------------------------------------------------------------------------------

 

each of Lender and the Issuing Bank received the items required to be delivered
to it under this subsection. Upon the written request of Borrower, Lender shall
deliver to Borrower a copy of each issued Letter of Credit within a reasonable
time after the date of issuance thereof. To the extent any term of a Letter of
Credit Document is inconsistent with a term of any Loan Document, the term of
the Letter of Credit Document shall control.
     (d) Upon receipt by the Issuing Bank from the beneficiary of a Letter of
Credit of any demand for payment under such Letter of Credit, Lender shall
promptly notify Borrower of the amount to be paid by the Issuing Bank as a
result of such demand and the date on which payment is to be made by the Issuing
Bank to such beneficiary in respect of such demand. Borrower hereby
unconditionally and irrevocably agrees to pay and reimburse the Issuing Bank for
the amount of each demand for payment under such Letter of Credit at or prior to
the date on which payment is to be made by the Issuing Bank to the beneficiary
thereunder, without presentment, demand, protest or other formalities of any
kind.
     (e) Unless Borrower shall elect to otherwise satisfy such Reimbursement
Obligation, such reimbursement shall, subject to satisfaction of the conditions
in Section 5.1 and Section 5.2 hereof and to the Maximum Loan Availability
(after adjustment to reflect elimination of the corresponding Reimbursement
Obligation), automatically be made by a borrowing under the Revolving Loans.
     (f) In examining documents presented in connection with drawings under
Letters of Credit and making payments under such Letters of Credit against such
documents, the Issuing Bank shall only be required to use the same standard of
care as it uses in connection with examining documents presented in connection
with drawings under other letters of credit it has issued and making payments
under such other letters of credit. Borrower assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, neither the Issuing Bank, nor Lender shall be responsible (i) for
the form, validity, sufficiency, accuracy, genuineness or legal effects of any
document submitted by any party in connection with the application for and
issuance of or any drawing honored under any Letter of Credit even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) for
failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to draw upon such Letter of Credit; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telex, telecopy or otherwise, whether or not they be
in cipher; (v) for errors in interpretation of technical terms; (vi) for any
loss or delay in the transmission or otherwise of any document required in order
to make a drawing under any Letter of Credit, or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of any such Letter of Credit, or
the proceeds of any drawing under such Letter of Credit; and (viii) for any
consequences arising from causes beyond the control of the Issuing Bank or
Lender. None of the above shall affect, impair or prevent the vesting of any of
the Issuing Bank’s rights or powers hereunder. Any action taken or omitted to be
taken by the Issuing Bank under or in connection with any Letter of Credit, if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not create against the Issuing Bank any liability to Borrower or Lender. In this
connection,

31

--------------------------------------------------------------------------------

 

the obligation of Borrower to reimburse the Issuing Bank for any drawing made
under any Letter of Credit shall be absolute, unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement or any
other applicable Letter of Credit Document under all circumstances whatsoever,
including without limitation, the following circumstances: (i) any lack of
validity or enforceability of any Letter of Credit Document or any term or
provisions therein; (ii) any amendment or waiver of or any consent to departure
from all or any of the Letter of Credit Documents; (iii) the existence of any
claim, setoff, defense or other right which Borrower may have at any time
against the Issuing Bank, Lender, any beneficiary of a Letter of Credit or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or in the Letter of Credit Documents or any unrelated
transaction; (iv) any breach of contract or dispute between Borrower, the
Issuing Bank, Lender or any other Person; (v) any demand, statement or any other
document presented under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein or made in
connection therewith being untrue or inaccurate in any respect whatsoever;
(vi) any non-application or misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; (vii) payment
by the Issuing Bank under the Letter of Credit against presentation of a draft
or certificate which does not strictly comply with the terms of the Letter of
Credit; and (viii) any other act, omission to act, delay or circumstance
whatsoever that might, but for the provisions of this Section, constitute a
legal or equitable defense to or discharge of Borrower’s Reimbursement
Obligations.
     (g) The issuance by the Issuing Bank of any amendment, supplement or other
modification to any Letter of Credit shall be subject to the same conditions
applicable under this Agreement to the issuance of new Letters of Credit
(including, without limitation, that the request therefor be made through the
Issuing Bank), and no such amendment, supplement or other modification shall be
issued unless either (i) the respective Letter of Credit affected thereby would
have complied with such conditions had it originally been issued hereunder in
such amended, supplemented or modified form or (ii) Lender shall have consented
thereto.
     (h) Upon the issuance by the Issuing Bank of any Letter of Credit and until
such Letter of Credit shall have expired or been terminated, the Commitment
shall be deemed to be utilized for all purposes of this Agreement in an amount
equal to the Stated Amount of such Letter of Credit plus any related
Reimbursement Obligations then outstanding.
     (i) If on the date (the “Facility Termination Date”) this Agreement is
terminated (whether voluntarily, by reason of the occurrence of an Event of
Default or otherwise) any Letters of Credit are outstanding, Borrower shall, on
the Facility Termination Date, pay to Lender an amount of money equal to the
Stated Amount of such Letter(s) of Credit, together with the amount of any fees
which would otherwise be payable by Borrower to Lender or the Issuing Bank in
respect of such Letters of Credit but for the occurrence of the Facility
Termination Date for deposit into the Collateral Account. If at any time the
aggregate Stated Amount of all outstanding Letters of Credit shall exceed the
L/C Commitment Amount then in effect, Borrower shall pay to Lender for deposit
into the Collateral Account an amount equal to such excess. If a drawing
pursuant to any such Letter of Credit occurs on or prior to the expiration date
of such Letter of Credit, Borrower authorizes Lender to disburse to the Issuing
Bank the monies deposited in the Collateral Account to make payment to the
beneficiary with respect to such drawing. If no drawing occurs on or prior to
the expiration date of any such

32

--------------------------------------------------------------------------------

 

Letter of Credit, Lender shall return to Borrower the monies deposited in the
Collateral Account with respect to such outstanding Letter of Credit on or
before the date 10 Business Days after the expiration date with respect to the
Letter of Credit.
     (j) If as a result of the adoption of any Applicable Law or guideline of
general applicability regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or if as a result of any risk-based capital guideline or
other requirement heretofore or hereafter issued by any Governmental Authority,
there shall be imposed, modified or deemed applicable any tax, reserve, special
deposit, capital adequacy or similar requirement against or with respect to or
measured by reference to Letters of Credit and the result shall be to increase
the cost to the Issuing Bank of issuing (or of Lender purchasing participations
in) or maintaining its obligation hereunder to issue (or purchase participations
in) any Letter of Credit or reduce any amount receivable by the Issuing Bank or
Lender hereunder in respect of any Letter of Credit, then, upon demand by the
Issuing Bank or Lender, Borrower shall pay immediately to the Issuing Bank or
Lender, as applicable, from time to time as specified by the Issuing Bank or
Lender, such additional amounts as shall be sufficient to compensate the Issuing
Bank or Lender for such increased costs or reductions in amount.
ARTICLE 3.
GENERAL LOAN PROVISIONS
     Section 3.1 Fees.
     (a) Intentionally Deleted.
     (b) On the first day of each January, April, July and October prior to the
Revolving Credit Termination Date, commencing January 1, 2009, and on the
Revolving Credit Termination Date with respect to the period since the last date
on which the Unused Fee was paid, Borrower shall pay to Lender the Unused Fee.
If the unused portion of the Commitment is equal to or less than fifty percent
(50%) of the Commitment, the Unused Fee rate shall be 12.5/100% (.125%) of the
unused portion of the Commitment. If the unused portion of the Commitment is
greater than fifty percent (50%) of the Commitment, the Unused Fee rate shall be
20/100% (.20%) of the unused portion of the Commitment.
     (c) Borrower agrees to pay to Lender such reasonable fees for services
rendered by Lender as shall be separately agreed upon between Borrower and
Lender. Borrower agrees to pay to the Issuing Bank such reasonable fees for
services rendered by the Issuing Bank as shall be separately agreed upon between
Borrower and the Issuing Bank from time to time.
     (d) Borrower agrees to pay to Lender a letter of credit fee at a rate per
annum equal to the product obtained by multiplying the then Applicable Margin
for LIBOR Loans times the Stated Amount of each Letter of Credit on the date of
issuance of such Letter of Credit and on each anniversary of the date of
issuance thereof until such Letter of Credit has expired. The fee provided for
in the immediately preceding sentence shall be nonrefundable. Borrower shall
also pay directly to the Issuing Bank from time to time on demand all
commissions, charges, costs

33

--------------------------------------------------------------------------------

 

and expenses in the amounts customarily charged by the Issuing Bank from time to
time in like circumstances with respect to the issuance of each Letter of
Credit, drawings, amendments and other transactions relating thereto. Borrower
shall also pay to Lender, solely for its own account and on the date of the
issuance of such Letter of Credit, a fronting fee in respect of each Letter of
Credit at the rate equal to one-eighth of one percent (0.125%) per annum on the
Stated Amount of such Letter of Credit; provided, however, in no event shall the
amount of such fronting fee in respect of any Letter of Credit be less than
$500.00.
     Section 3.2 Computation of Interest and Fees.
     Interest on the Loans and the Letter of Credit Liabilities and all fees
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day of a
period).
     Section 3.3 Limitation of Interest.
     (a) It is expressly stipulated and agreed to be the intent of Borrower and
Lender at all times to comply strictly with the applicable Texas 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 Texas law) governing the maximum rate or amount of interest payable on the
Revolving Note or the Related Indebtedness. If the applicable law is ever
judicially interpreted so as to render usurious any amount (i) contracted for,
charged, taken, reserved or received pursuant to the Revolving Note, any of the
other Loan Documents or any other communication or writing by or between
Borrower and Lender related to the transaction or transactions that are the
subject matter of the Loan Documents, (ii) contracted for, charged or received
by reason of Lender’s exercise of the option to accelerate the maturity of the
Revolving Note and/or the Related Indebtedness, or (iii) Borrower will have paid
or Lender will have received by reason of any voluntary prepayment by Borrower
of the Revolving Note and/or the Related Indebtedness, then it is Borrower’s and
Lender’s express intent that all amounts charged in excess of the Maximum Lawful
Rate shall be automatically canceled, ab initio, and all amounts in excess of
the Maximum Lawful Rate theretofore collected by Lender shall be credited on the
principal balance of the Revolving Note and/or the Related Indebtedness (or, if
the Revolving Note and all Related Indebtedness have been or would thereby be
paid in full, refunded to Borrower), and the provisions of the Revolving Note
and the other Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder; provided, however, if the Revolving Note has been paid
in full before the end of the stated term of the Revolving Note, then Borrower
and Lender agrees that Lender shall, with reasonable promptness after Lender
discovers or is advised by Borrower that interest was received in an amount in
excess of the Maximum Lawful Rate, either refund such excess interest to
Borrower and/or credit such excess interest against the Revolving Note and/or
any Related Indebtedness then owing by Borrower to Lender. Borrower hereby
agrees that as a condition precedent to any claim seeking usury penalties
against Lender, Borrower will provide written notice to Lender, advising Lender
in reasonable detail of the nature and amount of the violation, and Lender shall
have sixty (60) days after receipt of such notice in which to correct such usury
violation, if any, by either refunding such excess interest to Borrower or
crediting

34

--------------------------------------------------------------------------------

 

such excess interest against the Revolving Note and/or the Related Indebtedness
then owing by Borrower to Lender. All sums contracted for, charged or received
by Lender for the use, forbearance or detention of any debt evidenced by the
Revolving Note and/or the Related Indebtedness shall, to the extent permitted by
applicable law, be amortized or spread, using the actuarial method, throughout
the stated term of the Revolving Note and/or the Related Indebtedness (including
any and all renewal and extension periods) until payment in full so that the
rate or amount of interest on account of the Revolving Note and/or the Related
Indebtedness does not exceed the Maximum Lawful Rate from time to time in effect
and applicable to the Revolving Note and/or the Related Indebtedness for so long
as debt is outstanding. In no event shall the provisions of Chapter 346 of the
Texas Finance Code (which regulates certain revolving credit loan accounts and
revolving triparty accounts) apply to the Revolving Note and/or the Related
Indebtedness. Notwithstanding anything to the contrary contained herein or in
any of the other Loan Documents, it is not the intention of Lender to accelerate
the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
Borrower and Lender hereby agree that any and all suits alleging the contracting
for, charging or receiving of usurious interest shall lie in Harris County,
Texas, and each irrevocably waives the right to venue in any other county.
     (b) As used herein, the term “Maximum Lawful Rate” shall mean the maximum
lawful rate of interest which may be contracted for, charged, taken, received or
reserved by Lender in accordance with the applicable laws of the State of Texas
(or applicable United States federal law to the extent that it permits Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all Charges (as herein defined) made in
connection with the transaction evidenced by the Revolving Note and the other
Loan Documents. As used herein, the term “Charges” shall mean all fees, charges
and/or any other things of value, if any, contracted for, charged, received,
taken or reserved by Lender in connection with the transactions relating to the
Revolving Note and the other Loan Documents, which are treated as interest under
applicable law. As used herein, the term “Related Indebtedness” shall mean any
and all debt paid or payable by Borrower to Lender pursuant to the Loan
Documents or any other communication or writing by or between Borrower and
Lender related to the transaction or transactions that are the subject matter of
the Loan Documents, except such debt which has been paid or is payable by
Borrower to Lender under the Revolving Note.
     (c) To the extent that Lender is relying on Chapter 303 of the Texas
Finance Code to determine the Maximum Lawful Rate payable on the Revolving Note
and/or the Related Indebtedness, Lender will utilize the weekly ceiling from
time to time in effect as provided in such Chapter 303, as amended. To the
extent United States federal law permits Lender to contract for, charge, take,
receive or reserve a greater amount of interest than under Texas law, Lender
will rely on United States federal law instead of such Chapter 303 for the
purpose of determining the Maximum Lawful Rate. Additionally, to the extent
permitted by applicable law now or hereafter in effect, Lender may, at its
option and from time to time, utilize any other method of establishing the
Maximum Lawful Rate under such Chapter 303 or under other applicable law by
giving notice, if required, to Borrower as provided by applicable law now or
hereafter in effect.

35

--------------------------------------------------------------------------------

 

     (d) Notwithstanding anything in the Revolving Note to the contrary, if at
any time (i) the interest rate provided for under the Revolving Note or any
other Loan Document (the “Stated Rate”), and (ii) the Charges computed over the
full term of the Revolving Note, exceed the Maximum Lawful Rate, then the rate
of interest payable hereunder, together with all Charges, shall be limited to
the Maximum Lawful Rate; provided, however, that any subsequent reduction in the
Stated Rate shall not cause a reduction of the rate of interest payable
hereunder below the Maximum Lawful Rate until the total amount of interest
earned hereunder, together with all Charges, equals the total amount of interest
which would have accrued at the Stated Rate if such interest rate had at all
times been in effect. Changes in the Stated Rate resulting from a fluctuations
in the rates used to calculate the Stated Rate shall be subject to the
provisions of this paragraph.
     Section 3.4 Statements of Account.
     Lender will account to Borrower monthly with a statement of Loans, charges
and payments made pursuant to this Agreement and the other Loan Documents, and
such account rendered by Lender shall be prima facie evidence thereof. The
failure of Lender to maintain or deliver such a statement of accounts shall not
relieve or discharge Borrower from its obligations hereunder.
     Section 3.5 Lender’s Reliance.
     Neither Lender, nor the Issuing Bank, shall incur any liability to Borrower
for acting upon any telephonic notice permitted under this Agreement which
Lender or the Issuing Bank believes reasonably and in good faith to have been
given by an individual authorized to deliver a Notice of Borrowing, Notice of
Conversion, Notice of Continuation, a request for issuance of a Letter of Credit
or an Extension Request on behalf of Borrower.
ARTICLE 4.
UNENCUMBERED POOL PROPERTIES
     Section 4.1 Acceptance of Unencumbered Pool Properties.
     (a) Existing Unencumbered Pool Properties. Subject to compliance with the
terms and conditions of Section 5.1, Lender has accepted the Properties listed
on Schedule 4.1 as of the date hereof as Unencumbered Pool Properties.
     (b) Submission of Additional Properties. If Borrower desires that Lender
accept an additional Property as an Unencumbered Pool Property, Borrower shall
so notify Lender in writing. No Property will be evaluated by Lender unless it
is an Eligible Property, and unless and until Borrower delivers to Lender the
following, in form and substance satisfactory to Lender:
     (i) An Executive Investment Summary in a form acceptable to the Lender;
     (ii) An Unencumbered Pool Certificate setting forth (A) on a pro forma
basis the Maximum Loan Availability, assuming that such Property is accepted as
an Unencumbered Pool Property; (B) the Occupancy Rate of such Property, and
(C) the

36

--------------------------------------------------------------------------------

 

aggregate Occupancy Rate of all Unencumbered Pool Properties, assuming that such
Property is accepted as an Unencumbered Pool Property; and
     (iii) Copies of most recent environmental report, Borrower’s current title
policy and a current survey applicable to such Property to the extent same are
available to Borrower; and
     (iv) An Eligibility Certificate executed by the chief financial officer or
controller of Borrower (which officer shall be authorized to execute such
certificate) in the form of Exhibit H attached hereto.
Following receipt of the foregoing items (i) through (iii) for such Property,
Lender will, within thirty (30) days after receipt of, review such documents and
information from Borrower (the “Review Period”) take one of the following
actions: (I) notify Borrower of Lender’s approval of the Property as an
Unencumbered Pool Property or (II) request from Borrower further information
relating to such Property in accordance with the following paragraph. If none of
the foregoing actions is taken by Lender prior to the expiration of the Review
Period, Lender shall be deemed to have accepted such Property as an Unencumbered
Pool Property.
     At any time during the Review Period, Lender may request that Borrower
furnish additional information regarding the additional property. If a request
is made for such further information by Lender during the Review Period,
Borrower shall promptly (but in any event within ten (10) days of receipt of
such request) deliver the requested information to Lender. Lender shall then
have twenty (20) days (the “Extended Review Period”) after receipt from Borrower
of the requested information to notify Borrower of its acceptance or rejection
of such Property. If Lender notifies the Borrower of its rejection of such
Property, such Property shall not be accepted as an Unencumbered Pool Property
under this subsection (b). If Lender fails to notify Borrower prior to the
expiration of the Extended Review Period, Lender shall be deemed to have
accepted such Property as Unencumbered Pool Property.
     Section 4.2 Termination of Designation as Unencumbered Pool Property.
     From time to time Borrower may request, upon not less than 30 days prior
written notice to Lender, that an Unencumbered Pool Property cease to be an
Unencumbered Pool Property. Lender shall grant such request if all of the
following conditions are satisfied:
     (a) no Default or Event of Default shall have occurred and be continuing
both at the time of such request and immediately after giving effect to such
request; and
     (b) Borrower shall have delivered to Lender an Unencumbered Pool
Certificate demonstrating on a pro forma basis, and Lender shall have
determined, that the outstanding principal balance of the Loans, together with
the aggregate amount of Letter of Credit Liabilities, will not exceed the
Maximum Loan Availability after giving effect to such request and any prepayment
to be made and/or the acceptance of any Property as an additional or replacement
Unencumbered Pool Property to be given concurrently with such request.

37

--------------------------------------------------------------------------------

 

     Section 4.3 Additional Requirements of Unencumbered Pool Properties.
     (a) The aggregate Occupancy Rate of all Unencumbered Pool Properties, when
determined on a combined basis, shall at all times equal or exceed 90% and no
single Unencumbered Pool Property shall have an Occupancy Rate of less than 80%.
     (b) A Property shall cease to be an Unencumbered Pool Property if it shall
cease to be an Eligible Property.
     (c) If a tenant of an Unencumbered Pool Property, while paying rent, has
not actually occupied the Property for 90 days, such Tenant’s space shall, for
the purpose of determining Occupancy Rate, be deemed unoccupied.
     (d) The annualized contract rents for the most recently completed quarter
from any single-tenant leasing one or more Unencumbered Pool Property shall not
exceed 10% of the total annualized contract rents for the most recently
completed quarter of all the Unencumbered Pool Properties, except that the
foregoing limit shall, as to the CVS Pharmacies, be increased to 20% of the
total annualized contract rents for the most recently completed quarter of all
Unencumbered Pool Properties.
     (e) Any single Unencumbered Pool Property which has an Unencumbered Pool
Value that is greater than 15% of the total value of all Unencumbered Pool
Properties shall, for the purposes of determining Maximum Loan Availability,
only be accorded a value in an amount equal to 15% of the total value of all
Unencumbered Pool Properties, except that the foregoing limit shall, as to the
MacArthur Pads, be increased to 25% of the total value of all Unencumbered Pool
Properties.
     (f) The aggregate Unencumbered Pool Value of all Unencumbered Pool
Properties which are ground leased to retail tenants shall not exceed thirty
percent (30%) of the aggregate Unencumbered Pool Value of all Unencumbered Pool
Properties.
ARTICLE 5.
CONDITIONS
     Section 5.1 Conditions Precedent to Effectiveness.
     The effectiveness of this Agreement and the obligation of Lender to make
any Loans to Borrower or to cause the Issuing Bank to issue any Letters of
Credit in accordance with the terms hereof are subject to the condition
precedent that Borrower deliver to Lender each of the following, each of which
shall be in form and substance reasonably satisfactory to Lender:
     (a) counterparts of this Agreement and all other Loan Documents executed by
the parties hereto;
     (b) the Revolving Note executed by Borrower, payable to Lender and
complying with the terms of Section 2.13;
     (c) the Guaranty executed by each Guarantor;

38

--------------------------------------------------------------------------------

 

     (d) an opinion of counsel (which may be an attorney employed by Borrower)
to the Loan Parties, and addressed to Lender in substantially the form of
Exhibit F;
     (e) a certified copy of the Bylaws of Borrower;
     (f) a certificate of incumbency signed by the Secretary or Assistant
Secretary of Borrower with respect to each of the officers of Borrower
authorized to execute and deliver the Loan Documents to which Borrower is a
party;
     (g) certified copies (certified by the Secretary or Assistant Secretary of
Borrower) of all action taken by Borrower’s Board of Directors to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party;
     (h) certified copy (certified by the Secretary or Assistant Secretary of
Borrower) of the Amended and Restated Declaration of Trust of Borrower as filed
in Harris County, Texas;
     (i) the articles of incorporation, articles of organization, certificate of
limited partnership or other comparable organizational instrument (if any) of
each Guarantor certified as of a recent date by the Secretary of State of the
State of formation of such Guarantor;
     (j) a Certificate of Good Standing or certificate of similar meaning with
respect to each Guarantor issued as of a recent date by the Secretary of State
of the State of formation of each such Guarantor and certificates of
qualification to transact business or other comparable certificates issued by
each Secretary of State (and any state department of taxation, as applicable) of
each state in which each such Guarantor is required to be so qualified;
     (k) a certificate of incumbency signed by the Secretary or Assistant
Secretary (or other individual performing similar functions) of each Guarantor
with respect to each of the officers of such Guarantor authorized to execute and
deliver the Loan Documents to which such Guarantor is a party;
     (l) copies certified by the Secretary or Assistant Secretary of each
Guarantor (or other individual performing similar functions) of (i) the by-laws
of such Guarantor, if a corporation, the operating agreement, if a limited
liability company, the partnership agreement, if a limited or general
partnership, or other comparable document in the case of any other form of legal
entity and (ii) all corporate, partnership, member or other necessary action
taken by such Guarantor to authorize the execution, delivery and performance of
the Loan Documents to which it is a party;
     (m) an Unencumbered Pool Certificate calculated as of the date hereof;
     (n) the fees then due under Section 3.1;
     (o) such other documents and instruments as Lender may reasonably request.

39

--------------------------------------------------------------------------------

 

     Section 5.2 Conditions Precedent to Loans and Issuance of Letters of
Credit.
     The obligation of Lender to make any Loans or to cause the Issuing Bank to
issue Letters of Credit is subject to the condition precedent that the following
conditions be satisfied in the judgment of Lender:
     (a) in the case of Loans, timely receipt by Lender of a Notice of
Borrowing;
     (b) the proposed use of proceeds of such Loans or proposed use of such
Letter of Credit, as the case may be, set forth in the Notice of Borrowing is
consistent with the provisions of Section 7.8.;
     (c) Since the date of the most recent financial statements of Borrower or
Guarantors delivered to Lender, nothing shall have occurred which would or could
have a Materially Adverse Effect on Borrower or any Guarantor;
     (d) immediately before and after the making of such Loans or the issuance
of such Letter of Credit, as applicable, no Default (including without
limitation the existence of the condition described in Section 2.1(b)) or Event
of Default shall have occurred and be continuing; and
     (e) the representations and warranties of Borrower and the other Loan
Parties contained in this Agreement and the other Loan Documents to which any of
them is a party shall be true in all material respects on and as of the date of
the making of such Loans or issuance of such Letter of Credit, as applicable,
except to the extent such representations or warranties specifically relate to
an earlier date or such representations or warranties become untrue by reason of
events or conditions otherwise permitted hereunder and the other Loan Documents.
The delivery of each Notice of Borrowing, the making of each Loan and the
issuance of each Letter of Credit shall constitute a certification by Borrower
to Lender and the Issuing Bank that the statements in the immediately preceding
clauses (b) through (e) are true.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
     Borrower represents and warrants, to the best of its knowledge and belief
(limited to the current actual knowledge, after due inquiry, of H. Kerr Taylor
and Chad Braun, to Lender and the Issuing Bank as follows:
     Section 6.1 Existence and Power.
     Borrower is a Texas Real Estate Investment Trust duly formed and validly
existing under the laws of the State of Texas and is qualified as a real estate
investment trust under Section 856 of the Internal Revenue Code. Each of
Borrower’s Subsidiaries is a corporation or other applicable legal entity, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation. Each of Borrower and its
Subsidiaries has all requisite power and authority and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified and is in good

40

--------------------------------------------------------------------------------

 

standing as a foreign corporation or other applicable legal entity, and
authorized to do business, in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization except where the failure to be so qualified or authorized would
not have a Materially Adverse Effect.
     Section 6.2 Ownership Structure.
     Schedule 6.2. correctly sets forth the corporate structure and ownership
interests of Borrower and all of its Subsidiaries as of the date hereof,
including the correct legal name of Borrower and each such Subsidiary, and
Borrower’s relative equity interest in each such Subsidiary.
     Section 6.3 Authorization of Agreement, Revolving Notes, Loan Documents and
Borrowings.
     Each Loan Party has the right and power, and has taken all necessary action
to authorize it, to borrow hereunder (in the case of Borrower) and to execute,
deliver and perform the Loan Documents to which it is or is to be a party, in
accordance with their respective terms and to consummate the transactions
contemplated. Each of the Loan Documents has been (and when executed and
delivered in connection with this Agreement will be) duly executed and delivered
by the duly authorized officers of each Loan Party a party thereto and each is
(and each other Loan Document when executed and delivered in connection with
this Agreement will be) a legal, valid and binding obligation of such Loan Party
enforceable against such Loan Party in accordance with its respective terms,
except as the same may be limited by bankruptcy, insolvency, and other similar
laws affecting the rights of creditors generally and the availability of
equitable remedies for the enforcement of certain obligations (other than the
payment of principal) contained herein or therein may be limited by equitable
principles generally.
     Section 6.4 Compliance of Agreement, Revolving Notes, Loan Documents and
Borrowing with Laws, etc.
     The execution, delivery and performance of the Loan Documents in accordance
with their respective terms and the borrowing of Loans hereunder do not and will
not, by the passage of time, the giving of notice or otherwise (a) require any
Governmental Approval, or violate any Applicable Law relating to any Loan Party,
the failure to possess or to comply with which would have a Materially Adverse
Effect; (b) conflict with, result in a breach of or constitute a default under
the declaration of trust of Borrower, the articles of incorporation, articles of
organization, partnership agreement or other comparable instrument of any other
Loan Party, or any indenture, agreement or other instrument to which any Loan
Party is a party or by which it or any of its properties may be bound and the
violation of which would have a Materially Adverse Effect; or (c) result in or
require the creation or imposition of any Lien upon or with respect to any
Unencumbered Pool Property other than Permitted Liens.
     Section 6.5 Compliance with Law; Governmental Approvals.
     Each of Borrower and its Subsidiaries is in compliance with each
Governmental Approval applicable to it and in compliance with all other
Applicable Law relating to it, except for noncompliances which, and Governmental
Approvals the failure to possess which, would

41

--------------------------------------------------------------------------------

 

not, singly or in the aggregate, cause a Default or Event of Default or have a
Materially Adverse Effect and in respect of which (if Borrower has actual
knowledge of such Applicable Law or Governmental Approval) adequate reserves
have been established on the books of Borrower or such Subsidiary, as
applicable.
     Section 6.6 Indebtedness and Guarantees.
     Schedule 6.6 is a complete and correct listing of all Indebtedness and
Guarantees of Borrower and the other Loan Parties as of the date hereof. Each
Loan Party has performed and is in compliance with all of the terms of such
Indebtedness and such Guarantees and all instruments and agreements relating
thereto in all material respects, and no default or event of default, or event
or condition which with the giving of notice, the lapse of time or otherwise,
would constitute such a default or event of default, exists with respect to any
such Indebtedness or Guarantees.
     Section 6.7 Property Management Agreements and Other Major Agreements.
     Schedule 6.7 sets forth all Property Management Agreements and other Major
Agreements to which Borrower is a party or otherwise relating to any of the
Unencumbered Pool Properties as of the date hereof. All Property Management
Agreements and other Major Agreements are in full force and effect and to
Borrower’s knowledge no default or event of default exists under any of such
agreements.
     Section 6.8 Absence of Defaults.
     Neither Borrower nor any Guarantor is in default under its declaration of
trust, articles of incorporation, bylaws, operating agreement, partnership
agreement or other organizational or constituent document, and no event has
occurred, which has not been remedied, cured or waived (a) which constitutes a
Default or an Event of Default; or (b) which constitutes, or which with the
passage of time, the giving of notice or otherwise, would constitute, a default
or event of default by Borrower, any Guarantor or any other Loan Party under any
material agreement (other than this Agreement) or judgment, decree or order to
which Borrower, any Guarantor or any other Loan Party is a party or by which
Borrower or any of its properties may be bound.
     Section 6.9 Financial Information.
     The consolidated balance sheets of Borrower as of September 30, 2008 and
the related statements of earnings, stockholders’ equity and cash flows for the
three month period, then ending, copies of which have been delivered to Lender,
fairly present, in conformity with GAAP, the financial position of Borrower and
its Subsidiaries, on a consolidated basis, as of such date and its results of
operations and cash flows for such fiscal period. Since September 30, 2008, and
with reference to such date, no change has occurred which could or would have a
Materially Adverse Effect.
     Section 6.10 Litigation.
     There is no action, suit or proceeding pending against, or to the knowledge
of Borrower threatened against or affecting, Borrower or any of its Subsidiaries
before any court or arbitrator

42

--------------------------------------------------------------------------------

 

or any governmental body, agency or official (a) which would reasonably be
expected to have a Materially Adverse Effect or (b) which in any manner draws
into question the validity of any Loan Document.
     Section 6.11 ERISA.
     No Loan Party maintains, and has at any time maintained, any Plan subject
to the provisions of ERISA and is, and has at any time been, a member of any
ERISA Group with any Person that has at any time maintained any such Plan.
     Section 6.12 Taxes.
     (a) As of the date hereof, no United States Federal income tax returns of
the “affiliated group” (as defined in the Internal Revenue Code) of which
Borrower is a member have been examined and closed. The members of such
affiliated group have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have paid
all taxes due pursuant to such returns or pursuant to any assessment received by
any of them except for taxes being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established. The
charges, accruals and reserves on the books of Borrower in respect of taxes or
other governmental charges are, in the opinion of Borrower, adequate.
     (b) Borrower is in compliance with all conditions imposed under the
Internal Revenue Code to allow Borrower to maintain its status as a REIT.
     Section 6.13 Investment Company Act; Public Utility Holding Company Act.
     Neither Borrower nor any of its Subsidiaries is (a) an “investment company”
or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, (b) a “holding company” or a
“subsidiary company” of a “holding company,” or an “affiliate” of a “holding
company” or of a “subsidiary company” of a “holding company,” within the meaning
of the Public Utility Holding Company Act of 1935, as amended, or (c) subject to
any other Applicable Law which purports to regulate or restrict its ability to
borrow money or to consummate the transactions contemplated by this Agreement or
the other Loan Documents or to perform its obligations hereunder or thereunder.
     Section 6.14 Full Disclosure.
     All written information furnished by or on behalf of Borrower to Lender or
Issuing Bank for purposes of or in connection with this Agreement and the other
Loan Documents or any transaction contemplated hereby is, and all such
information hereafter furnished by or on behalf of Borrower or any Subsidiary to
Lender or Issuing Bank will be, true and accurate in all material respects on
the date as of which such information is stated or certified and does not, and
will not, fail to state any material facts necessary to make the statements
contained therein not misleading. Borrower has disclosed to Lender in writing
any and all facts known to Borrower which, to the extent Borrower can now
reasonably foresee, could or would have a Materially Adverse Effect.

43

--------------------------------------------------------------------------------

 

     Section 6.15 Insurance.
     Schedule 6.15 sets forth a true and correct description of the insurance
coverage maintained by or on behalf of each Loan Party currently in effect.
     Section 6.16 Not Plan Assets.
     The respective assets of Borrower and each other Loan Party do not and will
not constitute “plan assets” within the meaning of ERISA, the Internal Revenue
Code and the respective regulations promulgated thereunder, of any ERISA Plan or
Non-ERISA Plan. The execution, delivery and performance of this Agreement, and
the borrowing and repayment of amounts thereunder, do not and will not
constitute “prohibited transactions” under ERISA or the Internal Revenue Code.
     Section 6.17 Title and Liens.
     Each of Borrower and its Subsidiaries has good, indefeasible and legal
title to, or a valid leasehold interest in, (a) its respective Properties and
(b) its other assets, except in the case of this clause (b) where the failure to
have such title to its other assets could not reasonably be expected to have a
Materially Adverse Effect. Each of the Unencumbered Pool Properties is free and
clear of all Liens except for Permitted Liens.
     Section 6.18 Unencumbered Pool Properties.
     Each of the Unencumbered Pool Properties qualifies as an Eligible Property.
     Section 6.19 Margin Stock.
     Neither Borrower nor any of its Subsidiaries is engaged principally in the
business of extending credit for the purpose of purchasing or carrying “margin
stock” within the meaning of Regulation T, U or X.
     Section 6.20 Solvency.
     Borrower and the other Loan Parties are Solvent and will remain Solvent
after giving effect to the execution and delivery of each Loan Document to which
any is a party, the initial disbursement of Loans hereunder and the payment and
accrual of all fees then payable under this Agreement or any of the other Loan
Documents.
     Section 6.21 Tax Shelter Regulations.
     Neither the Borrower, any Guarantor, any non-borrower trustor, nor any
Subsidiary of any of the foregoing intends to treat the Revolving Loan or the
transactions contemplated by this Agreement and other Loan Documents as being a
“reportable transaction” (within the meaning of Treasury
Regulation Section 1.6011-4). If the Borrower, or any other Loan Party
determines to take any action inconsistent with such intention, the Borrower
will promptly notify the Lender thereof. If the Borrower so notifies the Lender,
the Borrower acknowledges that Lender may treat the Revolving Loan as part of a
transaction that is subject to Treasury Regulation

44

--------------------------------------------------------------------------------

 

Section 301.6112-1, and Lender will maintain the lists and other records,
including the identity of the applicable Loan Party as required by such Treasury
Regulation.
ARTICLE 7.
COVENANTS
     Borrower agrees that, so long as Lender has any Commitment hereunder or any
Obligation remains unpaid:
     Section 7.1 Information.
     Borrower will deliver to Lender:
     (a) as soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, the audited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year and the related
audited consolidated statements of income, retained earnings, and comprehensive
income and cash flows of the Borrower and its Subsidiaries for such fiscal year,
setting forth in comparative form the figures as at the end of and for the
previous fiscal year, all of which shall be certified by (a) the chief financial
officer or controller of the Borrower, in his or her opinion, to present fairly,
in accordance with GAAP, the financial position of the Borrower and its
Subsidiaries as at the date thereof and the result of operations for such period
and (b) KPMG or any other independent certified public accountants of recognized
national standing acceptable to Lender whose certificate shall be unqualified
and in scope and substance satisfactory to Lender;
     (b) as soon as available and in any event within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of Borrower, a
consolidated balance sheet of Borrower as of the end of such quarter and the
related consolidated statements of funds from Operations or earnings,
stockholders’ equity, cash flows for such quarter and for the portion of
Borrower’s fiscal year ended at the end of such quarter, together with forward
looking cash flow projections for the next four fiscal quarters of Borrower,
setting forth in comparative form the figures for the corresponding quarter and
the corresponding portion of Borrower’s previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation, GAAP
(subject to absence of full footnote disclosures and other than the statement of
funds from operations) and consistency by the chief financial officer or
controller of Borrower (which officer shall be authorized to so certify such
statements);
     (c) simultaneously with the delivery of each set of financial statements
referred to in the immediately preceding clauses (a) and (b), a certificate of
the chief financial officer or controller of Borrower (which officer shall be
authorized to execute such certificate) (i) setting forth in reasonable detail
the calculations required to establish whether Borrower was in compliance with
the requirements of Article 8 on the date of such financial statements, (ii)
stating whether any Default or Event of Default is known to Borrower on the date
of such certificate and, if any Default or Event of Default is then known to
Borrower, setting forth the details thereof and the action which Borrower is
taking or proposes to take with respect thereto, and (iii) setting forth a
schedule of all Contingent Obligations of Borrower as of the date of such
financial statements;

45

--------------------------------------------------------------------------------

 

     (d) as soon as available and in any event within 45 days after the end of
each fiscal quarter of Borrower, an Unencumbered Pool Certificate setting forth
the information to be contained therein as of the last day of such fiscal
quarter;
     (e) within 45 days after the end of each fiscal quarter of Borrower, the
Net Operating Income and occupancy rates for each Unencumbered Pool Property;
provided, as to any specific Property, Lender shall have the right to require
Borrower to deliver such information on a monthly basis;
     (f) upon Lender’s request, a current rent roll and detailed operating
statement for any specific Property; provided, however, Lender shall have the
right to require Borrower to provide such information on an ongoing monthly
basis as to any specific Property;
     (g) within 45 days after the beginning of each calendar year, a projected
cash flow statement of Borrower and its Subsidiaries, in a form satisfactory to
Lender, for such calendar year, prepared on a quarterly basis and setting forth
the estimates and assumptions (including without limitation, with respect to
costs, revenues, general economic conditions, seasonal variations, financial and
market conditions and results of operations) on which such projections are
based;
     (h) no later than 30 days before the end of each fiscal year of Borrower, a
property budget for each Unencumbered Pool Property for the coming fiscal year
of Borrower;
     (i) promptly upon receipt thereof, copies of all management reports
relating to the financial condition of Borrower submitted to Borrower or its
Board of Trustees by Borrower’s independent public accountants;
     (j) within ten days after H. Kerr Taylor, Chad Braun, Brett Treadwell, or
other officer of Borrower with the rank of Executive Vice President or higher
obtains knowledge of any Default or Event of Default, a certificate of the chief
financial officer or controller of Borrower setting forth the details thereof
and the action which Borrower is taking or proposes to take with respect
thereto;
     (k) promptly upon the mailing thereof to the shareholders of Borrower
generally, copies of all financial statements, reports, offering memoranda and
proxy statements so mailed;
     (l) promptly upon the filing thereof, notify Lender of the filing of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K
(or their equivalents) and all other periodic reports, if any, which Borrower or
any of its Subsidiaries which it directly or indirectly controls shall file with
the Securities and Exchange Commission (or any Governmental Authority
substituted therefor) or any national securities exchange, and, if Lender
requests same, provide Lender with a copy of any such requested filings;
     (m) if requested by Lender, promptly upon the release thereof, copies of
all press releases of Borrower and any of its Subsidiaries which it directly or
indirectly controls;

46

--------------------------------------------------------------------------------

 

     (n) promptly upon obtaining knowledge thereof, a description in reasonable
detail of (i) any action, suit or proceeding commenced against Borrower, any of
its Subsidiaries or any of the Unencumbered Pool Properties which is reasonably
likely to have a Materially Adverse Effect, and (ii) any change which would or
could have a Materially Adverse Effect on any of the Unencumbered Pool
Properties, including, without limitation, any contract or agreement regarding
the sale, transfer, mortgage or other encumbrance relating thereto or any
default of any major tenant under any lease thereof;
     (o) promptly upon the occurrence of same, written notice of any change in
the composition of Borrower’s board of trustees and of any change in the senior
management personnel of Borrower;
     (p) written notice of the acquisition, incorporation or other creation of
any Subsidiary after the date hereof, such notice to be given within 10 Business
Days of such acquisition, incorporation or other creation; and
     (q) from time to time such additional information regarding the financial
position or business of Borrower and its Subsidiaries or any Property as Lender
may reasonably request.
     Section 7.2 Payment of Obligations.
     (a) Borrower will pay and discharge, and will cause each Subsidiary to pay
and discharge, at or before maturity, all their respective material obligations
and liabilities, including, without limitation, tax liabilities, except where
the same may be contested in good faith by appropriate proceedings unless the
contest thereof would have a Materially Adverse Effect, and will maintain, and
will cause each Subsidiary to maintain, in accordance with GAAP, appropriate
reserves for the accrual of any of the same. Borrower has paid or will pay (or
has caused to be paid or will be caused to be paid) in full (except for such
retainages as may be permitted or required by any Applicable Law to be withheld
pending completion of any improvements) all sums by Borrower or its Subsidiaries
owing or claimed from Borrower or such Subsidiaries for labor, material,
supplies, personal property (whether or not a fixture) and services of every
kind and character used, furnished or installed in or on any Pool Property and
no claim for same exists or will be permitted to be created, except where the
same may be contested in good faith by appropriate proceedings unless the
contest thereof would have a Materially Adverse Effect, and will maintain, and
will cause each Subsidiary to maintain, in accordance with GAAP, appropriate
reserves for the accrual of any of the same.
     (b) Borrower will utilize the proceeds (net of transaction costs) derived
from (i) the sale or issuance by Borrower of Shares, options, warrants or other
Equity Interests of any class or character, (ii) the sale of Unencumbered Pool
Property or any other Property owned by Borrower or any Subsidiary of Borrower
or the sale by Borrower or any Subsidiary of Borrower of any Equity Interest in
a Person owning Unencumbered Pool Property or any such other Property, in each
case net of existing Secured Indebtedness, and (iii) Indebtedness from the
financing of Unencumbered Pool Property or refinancing or financing of any other
Property owned by Borrower or any Subsidiary of Borrower, net of existing
Secured Indebtedness to repay the then outstanding principal balance of the
Revolving Note.

47

--------------------------------------------------------------------------------

 

     Section 7.3 Maintenance of Property; Insurance.
     (a) Borrower will keep, and will cause each Subsidiary to keep, all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear and insured casualty losses excepted.
     (b) Borrower will maintain, and will cause each other Loan Party and each
Subsidiary to maintain insurance coverage with financially sound and reputable
insurance companies in such amounts and with respect to such risks as is
consistent with insurance maintained by businesses of comparable type and size
in the industry or as may be required by Applicable Law, which insurance shall
be acceptable to Lender. Borrower may cause such insurance to be provided by the
tenant of a Property. In addition to the foregoing, Borrower shall maintain
insurance as may be required under the other Loan Documents. Borrower will
deliver to Lender (i) upon request of Lender from time to time full information
as to the insurance carried, (ii) within five days of receipt of notice from any
insurer a copy of any notice of cancellation or material change in coverage from
that existing on the date of this Agreement and (iii) forthwith, notice of any
cancellation or nonrenewal of coverage by Borrower.
     Section 7.4 Conduct of Business; Maintenance of Existence; Qualification;
Amendment of Declaration of Trust.
     (a) Borrower will only engage in the business of acquiring, developing,
owning, managing and operating single-tenant and multi-tenant retail properties,
together with related business activities and investments incidental thereto, as
such related activities and investments are contemplated by the provisions of
Section 8.5 of this Agreement.
     (b) Subject to Section 7.7, Borrower will preserve, renew and keep in full
force and effect, and will cause each Subsidiary to preserve, renew and keep in
full force and effect their respective existence and their respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section shall prohibit (i) the merger of
a Subsidiary into Borrower or the merger or consolidation of a Subsidiary with
or into another Person if the corporation surviving such consolidation or merger
is a Subsidiary and if, in each case, after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing, and (ii) the dissolution
of a Subsidiary if (A) Borrower’s board of trustees has determined that such
dissolution is in the best interest of Borrower, (B) such dissolution will not
be materially disadvantageous to Lender and (C) such dissolution will not have a
Materially Adverse Effect.
     (c) Borrower will, and will cause each Subsidiary to, qualify and remain
qualified and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization and where the failure to be so qualified or
authorized would have a Materially Adverse Effect.
     (d) Borrower shall not amend, supplement, restate or otherwise modify its
declaration of trust without the prior written consent of Lender unless such
amendment, supplement or other modification (i) is required under or as a result
of the Internal Revenue Code or other Applicable Law, (ii) is required or
prudent to maintain Borrower’s status as a REIT, or (iii) does not affect

48

--------------------------------------------------------------------------------

 

the operation or management of Borrower, the rights and obligations of any party
thereto or any other material provision of the document.
     Section 7.5 Compliance with Laws.
     Borrower will comply, and cause each Subsidiary to comply, with all
Applicable Laws, including without limitation, all Environmental Laws and ERISA
and the rules and regulations thereunder, except where compliance therewith is
contested in good faith by appropriate proceedings or the failure to so comply
would not have a Materially Adverse Effect.
     Section 7.6 Inspection of Property, Books and Records.
     Borrower will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives of Lender to
visit and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants in Borrower’s presence prior to an
Event of Default, all at such reasonable times during business hours and as
often as may reasonably be desired and with reasonable notice so long as no
Event of Default shall have occurred and be continuing. All inspections of
Properties are subject to the rights of tenants in possession of the Properties.
     Section 7.7 Consolidations, Mergers, Acquisitions and Sales of Assets.
     Borrower shall not, and shall not permit any Subsidiary to (a) consolidate
or merge with or into, acquire a Substantial Amount of the assets of, or make
any Investment of a Substantial Amount in, any other Person without the prior
written consent of Lender, which consent may be granted or denied in Lender’s
sole and absolute discretion, (b) acquire any Property without prior written
notice to Lender, (c) incur any additional Secured Indebtedness without prior
written notice to Lender or (d) sell, lease or otherwise transfer, directly or
indirectly, and whether by one or a series of related transactions, a
Substantial Amount of its assets (including capital stock or other securities of
Subsidiaries) to any other Person without the prior written consent of Lender,
which consent will not be unreasonably withheld or delayed and (i) after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing; (ii) in the case of a consolidation or merger by Borrower or a
Subsidiary, Borrower or such Subsidiary, as applicable, is the survivor thereof
and (iii) at the time Borrower requests Lender’s consent, Borrower shall have
delivered to Lender a Compliance Certificate, calculated on a pro forma basis,
evidencing Borrower’s continued compliance with the terms and conditions of this
Agreement and the other Loan Documents, including without limitation, the
financial covenants contained in Article 8, after giving effect to such
consolidation, merger, acquisition, Investment, sale, lease or other transfer.
     Section 7.8 Use of Proceeds and Letters of Credit.
     Borrower will only use the proceeds of the Loans made under this Agreement
(a) to finance the repayment of Indebtedness of Borrower, including the making
of scheduled amortization payments on Indebtedness and (b) to provide for
capital expenditure, general

49

--------------------------------------------------------------------------------

 

working capital and corporate needs of Borrower. Borrower will not use any
proceeds of the Loans for the purposes of (x) purchasing any Equity Interest in
any Person or repurchasing any Shares issued by Borrower, (y) acquisition,
development or redevelopment of any Property or (z) purchasing or carrying any
“margin stock” within the meaning of Regulations T, U and X if such use would
result in a violation of any of Regulations T, U and X. Borrower will use the
Letters of Credit only for the same purposes for which it may use the proceeds
of Loans.
     Section 7.9 Major Agreements.
     Borrower shall, and shall cause each other Loan Party to, duly and
punctually perform and comply with any and all material representations,
warranties, covenants and agreements expressed as binding upon Borrower or such
other Loan Party under any Major Agreement. Without Lender’s prior written
consent, Borrower shall not do or knowingly permit to be done anything to impair
materially the value of any of the Major Agreements; provided, Borrower may
terminate a Major Agreement so long as Borrower enters into a materially
comparable replacement agreement.
     Section 7.10 Major Construction.
     Borrower shall give Lender not less than 60-days’ prior written notice
before commencing any construction, remodeling or demolition project or series
of related projects with respect to an Eligible Property of Borrower or any
Subsidiary, the aggregate cost of which will exceed $250,000. If (a) any such
project would reasonably be expected to have a Materially Adverse Effect or
(b) the aggregate cost of such project will exceed $2,000,000, then Borrower or
such Subsidiary, as applicable, shall not commence such project without the
prior written consent of Lender, which approval shall not be unreasonably
withheld, conditioned or delayed, and will be deemed granted if no written
denial is received within 60 days after written notice to Lender of the project
together with an adequate description of the project which is reasonably
acceptable to Lender.
     Section 7.11 Material Events.
     Borrower shall give Lender not less than 30-day’s prior written notice of
any material acquisitions, dispositions, mergers or asset purchases and shall,
with the giving of such notice, deliver a Compliance Certificate evidencing that
Borrower will, after giving effect to such proposed acquisition, disposition,
merger or asset purchase, be in compliance with its covenants under this
Agreement.
     Section 7.12 ERISA.
     Borrower will not and will not permit any Subsidiary to at any time
maintain any Plan subject to the provisions of ERISA and will not at any time be
a member of any ERISA Group with any Person that has at any time maintained any
such Plan.
     Section 7.13 ERISA Exemptions.
     Borrower shall not, and shall not permit any of its Subsidiaries to, permit
any of its assets to become or be deemed to be “plan assets” within the meaning
of ERISA, the Internal Revenue

50

--------------------------------------------------------------------------------

 

Code and the respective regulations promulgated thereunder, of any ERISA Plan or
any Non-ERISA Plan.
     Section 7.14 Negative Pledge.
     Borrower will not, and will not permit any Subsidiary to, (a) create,
assume or suffer to exist any Lien on any asset of Borrower or any Subsidiary,
except for Permitted Liens, without Lender’s prior written approval which may be
granted or withheld in Lender’s sole and absolute discretion; or (b) create or
otherwise cause or suffer to exist or become effective, any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary: (i) if
such Subsidiary is a Loan Party, to pay or perform its obligations under the
Guaranty to which it is a party prior to its obligation to pay dividends or make
any other distribution on any of such Subsidiary’s capital stock or other
securities owned by Borrower or any Subsidiary of Borrower; (ii) to pay any
Indebtedness owed to Borrower or any other Subsidiary; (iii) to make loans or
advances to Borrower or any other Subsidiary; or (iv) to transfer any of its
property or assets to Borrower or any other Subsidiary.
     Section 7.15 Listing Status and REIT Status.
     Borrower will maintain its status as an American Stock Exchange listed
company until delisted in accordance with the rules of such exchange and shall
at all times be qualified as a real estate investment trust pursuant to
Section 856 of the Internal Revenue Code. Borrower will give notice to Lender of
any such delisting and proof of compliance with the requirements of such
exchange as Lender may reasonably request.
     Section 7.16 Agreements with Affiliates.
     Borrower shall not, and shall not permit any of its Subsidiaries to, enter
into any transaction requiring such Person to pay any amounts to or otherwise
transfer property to, or pay any management or other fees to, any Affiliate
other than on terms and conditions (a) substantially as favorable to Borrower or
such Subsidiary as would be obtainable at the time in a comparable arm’s length
transaction with a Person not an Affiliate or (b) which comply with the
requirements of the Statement of Policy for Real Estate Investment Trusts
promulgated by the North American Security Administrators Association, as
amended from time to time.
     Section 7.17 New Subsidiaries.
     Upon any Person becoming an Eligible Subsidiary of Borrower after the date
hereof, Borrower shall cause such Eligible Subsidiary to deliver to Lender
within 15 days of such event each of the following items (if not previously
delivered to Lender):
     (a) an accession agreement in the form of Annex I to the Guaranty duly
executed by such Eligible Subsidiary;
     (b) the articles of incorporation, articles of organization, certificate of
limited partnership or other comparable organizational instrument (if any) of
such Eligible Subsidiary certified as of a recent date by the Secretary of State
of the State of formation of such Eligible Subsidiary;

51

--------------------------------------------------------------------------------

 

     (c) a Certificate of Good Standing or certificate of similar meaning with
respect to such Eligible Subsidiary issued as of a recent date by the Secretary
of State of the State of formation of such Eligible Subsidiary and certificates
of qualification to transact business or other comparable certificates issued by
each Secretary of State (and any state department of taxation, as applicable) of
each state in which such Eligible Subsidiary is required to be so qualified;
     (d) a certificate of incumbency signed by the Secretary or Assistant
Secretary (or other individual performing similar functions) of such Eligible
Subsidiary with respect to each of the officers of such Eligible Subsidiary
authorized to execute and deliver the Loan Documents to which such Guarantor is
a party;
     (e) copies certified by the Secretary or Assistant Secretary of such
Eligible Subsidiary (or other individual performing similar functions) of
(i) the by-laws of such Eligible Subsidiary, if a corporation, the operating
agreement, if a limited liability company, the partnership agreement, if a
limited or general partnership, or other comparable document in the case of any
other form of legal entity and (ii) all corporate, partnership, member or other
necessary action taken by such Eligible Subsidiary to authorize the execution,
delivery and performance of the Loan Documents to which it is a party;
     (f) an opinion of legal counsel to such Eligible Subsidiary, regarding the
due formation and good standing of such Subsidiary, the enforceability of the
Loan Documents to which it is a party, and such other matters as Lender shall
request; and
     (g) such other documents and instruments as Lender may reasonably request.
     Section 7.18 Management.
     Should either Kerr Taylor or Chad Braun cease to be a member of the board
of trustees and/or an executive officer of Borrower, Borrower shall replace such
vacancy with a person reasonably acceptable to Lender within 90 days after the
vacancy shall occur.
     Section 7.19 Concentrations.
     At no time shall Borrower and its Subsidiaries, on a consolidated basis,
derive more than 15% of its aggregate Net Operating Income from any single
tenant. Any tenant entities whose financial reporting is, in accordance with
GAAP, consolidated shall, for the purposes of the foregoing covenant, be deemed
a “single tenant.”
     Section 7.20 No Further Unsecured Indebtedness.
Borrower shall not incur any additional Unsecured Indebtedness without the prior
written consent of Lender, which consent may be granted or withheld in Lender’s
sole discretion.

52

--------------------------------------------------------------------------------

 

     Section 7.21 Interest Rate Hedge.
     At all times when required by Lender Borrower shall have an Interest Rate
Hedge in effect. Any Interest Rate Hedge obtained by Borrower from Lender or any
of Lender’s affiliated entities shall be guaranteed by the Guarantor.
ARTICLE 8.
FINANCIAL COVENANTS
     Borrower agrees that, so long as Lender has any Commitments hereunder or
any Obligation remains unpaid:
     Section 8.1 Minimum Tangible Net Worth.
     Borrower shall not at any time permit the Tangible Net Worth of Borrower
and its Subsidiaries, on a consolidated basis, to be less than (a)
$130,000,000.00, plus (b) 90% of the amount of proceeds in cash or Property (net
of transaction costs) received by Borrower from the sale or issuance by Borrower
of Shares, options, warrants or other Equity Interests of any class or character
after December 31, 2008.
     Section 8.2 Ratio of Total Liabilities to Gross Asset Value.
     Borrower shall not permit the ratio of (a) Total Liabilities of Borrower
and its Subsidiaries, on a consolidated basis, to (b) Gross Asset Value of
Borrower and its Subsidiaries, on a consolidated basis to exceed 0.64 to 1.00 at
anytime during the term hereof.
     Section 8.3 Distributions.
     If an Event of Default under any of Sections 9.1(a), 9.1(h) or 9.1(i) shall
have occurred and be continuing, Borrower shall not directly or indirectly
declare or make, or incur any liability to make, any Restricted Payments. If any
other Event of Default shall have occurred and be continuing, Borrower shall not
directly or indirectly declare or make, or incur any liability to make, any
Restricted Payments except that Borrower may make distributions to its
shareholders in the minimum amount necessary to maintain compliance with
Section 7.15. If no Event of Default, or any Event of Default other than those
specified above, shall have occurred and be continuing, Borrower shall not
directly or indirectly declare or make, or incur any liability to make, any
Restricted Payments other than Permitted Distributions.
     Section 8.4 Ratio of EBITDA to Fixed Charges.
     Borrower shall not permit the ratio of (a) EBITDA of Borrower and its
Subsidiaries, on a Consolidated Basis, to (b) the Fixed Charges of Borrower and
its Subsidiaries, on a consolidated basis, for any fiscal quarter, to be less
than 1.60 to 1.00 for such quarter. Income which is classified as interest
income, other income and interest income derived by Borrower or any of its
Subsidiaries from an Affiliate shall not, for the purposes of this Section 8.4,
contribute more than $250,000.00 to EBITDA.

53

--------------------------------------------------------------------------------

 

     Section 8.5 Permitted Investments.
     Borrower shall not, and shall not permit any Subsidiary to, make any
Investment in or otherwise own the following items which would cause the value
of such holdings of Borrower and its Subsidiaries, on a consolidated basis, to
exceed the following percentages of Gross Asset Value:
     (i) unimproved real estate (excluding Development Property) such that the
aggregate book value of all such unimproved real estate exceeds 5% of Gross
Asset Value;
     (ii) Mortgages in favor of Borrower or such Subsidiary, such that the
aggregate book value of Indebtedness secured by such Mortgages exceeds 5% of
Gross Asset Value;
     (iii) Investments in Equity Interests (other than Equity Interests in
Subsidiaries and Unconsolidated Affiliates), such that the aggregate value of
such Equity Interests exceeds 5% of Gross Asset Value;
     (iv) Development Property, such that the Total Budgeted Costs for all such
Development Properties exceeds 5% of Gross Asset Value;
     (v) Non-retail improved real estate such that the aggregate book value of
all such non-retail improved real estate exceeds 5% of Gross Asset Value;
     (vi) Investments in Subsidiaries (other than Wholly-Owned Subsidiaries) and
Unconsolidated Affiliates such that the aggregate of Borrower’s Ownership Share
in such entities exceeds 5% of Gross Asset Value.
The aggregate of all of the foregoing items shall not exceed 5% of Gross Asset
Value. For the purposes of the determining the value of any of the foregoing
items which are non-income producing (such as unimproved real estate) such items
will be valued at the lower of their acquisition cost or market value (as
determined by Lender in its reasonable discretion); however, the value of
Borrower’s interest in joint ventures and preferred stock subsidiaries shall be
valued at the greater of Borrower’s economic interest or nominal interest in
such entity.
     Section 8.6 Ratio of Unencumbered Net Operating Income to Unsecured
Interest Expense.
     Borrower shall not permit the ratio of (a) Unencumbered Net Operating
Income of Borrower and its Subsidiaries, on a consolidated basis, to
(b) Unsecured Interest Expense of Borrower and its Subsidiaries, on a
consolidated basis, for any fiscal quarter to be less than 2.00:1.00 for such
quarter.
     Section 8.7 Ratio of Secured Indebtedness to Gross Asset Value.
     Borrower will not permit the ratio of (a) Secured Indebtedness of Borrower
and its Subsidiaries, on a consolidated basis, to (b) Gross Asset Value to
exceed 0.50 to 1.00.

54

--------------------------------------------------------------------------------

 

     Section 8.8 Maximum Loan Availability.
     Borrower will not at any time permit the aggregate principal amount of all
outstanding Loans, together with the aggregate amount of all Letter of Credit
Liabilities, to exceed the lesser of (a) Maximum Loan Availability at such time,
or (b) the Commitment.
     Section 8.9 Share Repurchases.
     During the term of this Agreement neither Borrower nor any of its
Subsidiaries shall directly or indirectly purchase, repurchase or otherwise
acquire or reacquire any Shares or other Equity Interest in Borrower or any
Subsidiary of Borrower.
     Section 8.10 Dividend Restrictions.
     During the term of this Agreement neither Borrower nor any Subsidiary of
Borrower shall, directly or indirectly, make, pay, declare any dividend (except
for Permitted Distributions), in excess of the dividend declared on
September 30, 2008.
ARTICLE 9.
DEFAULTS
     Section 9.1 Events of Default.
     If one or more of the following events shall have occurred and be
continuing:
     (a) (i) Borrower shall fail to pay when due any Reimbursement Obligation or
any principal of any Loan or other Obligation, or (ii) Borrower shall fail to
pay when due any interest, fees or other Obligation and such failure under this
clause (ii) shall continue for a period of five days after notice that such
payment is due and payable;
     (b) Borrower shall fail to observe or perform any covenant or agreement
contained in Section 7.7, Sections 7.12 through 7.15, inclusive, or Section 8.8;
     (c) Borrower shall fail to comply with any of the covenants or agreements
contained in Article 8 (other than Section 8.8), and Borrower shall remain in
noncompliance with any such Section after 30 days following the first failure
following the Effective Date to comply with such Section;
     (d) Borrower shall fail to observe or perform any covenant or agreement
contained in this Agreement (other than those covered by the immediately
preceding clauses (a) through (c)) for a period of 30 days after written notice
thereof has been given to Borrower by Lender;
     (e) An Event of Default under and as defined in any Loan Document shall
occur and be continuing or Borrower shall fail to observe or perform any
covenant or agreement contained in any of the Loan Documents and such failure
shall continue beyond any applicable period of grace;

55

--------------------------------------------------------------------------------

 

     (f) any representation, warranty, certification or statement made or deemed
made by or on behalf of any Loan Party in this Agreement or in any certificate,
financial statement or other Loan Document delivered pursuant to this Agreement
shall prove to have been incorrect or misleading in any material respect when
made or deemed made;
     (g) the maturity of any Indebtedness of Borrower or its Subsidiaries in
excess of $500,000.00 in the aggregate shall have been (i) accelerated in
accordance with the provisions of any indenture, contract or instrument
providing for the creation of or concerning such Indebtedness or (ii) required
to be prepaid in full prior to the stated maturity thereof;
     (h) Borrower or any other Loan Party shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
     (i) an involuntary case or other proceeding shall be commenced against
Borrower or any other Loan Party seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against any such Person under the federal bankruptcy
laws as now or hereafter in effect;
     (j) a judgment or order for the payment of money in excess of $250,000.00
shall be rendered against Borrower or any other Loan Party and such judgment or
order shall continue unsatisfied and unstayed for a period of sixty days;
     (k) the assets of Borrower or any other Loan Party at any time constitute
assets, within the meaning of ERISA, the Internal Revenue Code and the
respective regulations promulgated thereunder, of any ERISA Plan or Non-ERISA
Plan;
     (l) any Guarantor shall fail to comply with any term, covenant, condition
or agreement contained in the Guaranty (after giving effect to any applicable
grace or cure periods) or any Guarantor shall disallow, revoke or terminate or
attempt to do any of the foregoing with respect to the Guaranty; or
     (m) the occurrence of any default or event of default under any Interest
Rate Hedge which is obtained by Borrower from Lender or any of Lender’s
affiliated entities and the continuation of such default or event of default
beyond any cure period provided for in such Interest Rate Hedge.

56

--------------------------------------------------------------------------------

 

     Section 9.2 Remedies Upon an Event of Default.
     Upon the occurrence of an Event of Default, and in every such event, Lender
may, (i) by notice to Borrower terminate the Commitments, which shall thereupon
terminate, (ii) by notice to Borrower declare the Loan and all other Obligations
and an amount equal to the Stated Amount of all Letters of Credit then
outstanding due, and the Loan and all other Obligations and an amount equal to
the Stated Amount of all Letters of Credit then outstanding shall thereupon
become, immediately due and payable without presentment, demand, protest or
notice of intention to accelerate, all of which are hereby waived by Borrower;
and (iii) exercise all rights and remedies available under all of the Loan
Documents. Notwithstanding the foregoing, upon the occurrence of any of the
Events of Default specified in clause (h) or (i) above, without any notice to
Borrower or any other act by Lender, the Commitment shall thereupon immediately
and automatically terminate and the Loans and all other Obligations and an
amount equal to the Stated Amount of all Letters of Credit then outstanding
shall become immediately due and payable without presentment, demand, protest,
notice of intention to accelerate or notice of acceleration, or other notice of
any kind, all of which are hereby waived by Borrower.
     Section 9.3 Additional Remedies Upon Certain Default.
     In addition to the other rights and remedies of Lender upon the occurrence
and during the continuance of a Default, upon the occurrence and during the
continuance of a Default under Section 9.1(c), Lender shall not be obligated to
make any Loans or issue any Letters of Credit.
     Section 9.4 Collateral Account.
     (a) As collateral security for the prompt payment in full when due of all
Letter of Credit Liabilities, Borrower hereby pledges and grants to Lender, for
the benefit of the Issuing Bank and Lender as provided herein, a security
interest in all of Borrower’s right, title and interest in and to the Collateral
Account and the balances from time to time in the Collateral Account (including
the investments and reinvestments therein provided for below). The balances from
time to time in the Collateral Account shall not constitute payment of any
Letter of Credit Liabilities until applied by Lender as provided herein.
Anything in this Agreement to the contrary notwithstanding, funds held in the
Collateral Account shall be subject to withdrawal only as provided in this
Section.
     (b) Amounts on deposit in the Collateral Account shall be invested and
reinvested by Lender in such investments as Lender shall determine in its sole
discretion. All such investments and reinvestments shall be held in the name of
and be under the sole dominion and control of Lender. Lender shall exercise
reasonable care in the custody and preservation of any funds held in the
Collateral Account and shall be deemed to have exercised such care if such funds
are accorded treatment substantially equivalent to that which Lender accords
other funds deposited with Lender, it being understood that Lender shall not
have any responsibility for taking any necessary steps to preserve rights
against any parties with respect to any funds held in the Collateral Account.
     (c) If an Event of Default shall have occurred and be continuing, Lender
may (and, if instructed by the Issuing Bank, shall) in its (or their) discretion
at any time and from time to time

57

--------------------------------------------------------------------------------

 

elect to liquidate any such investments and reinvestments and credit the
proceeds thereof to the Collateral Account and apply or cause to be applied such
proceeds and any other balances in the Collateral Account to the payment of any
of the Letter of Credit Liabilities then due and payable.
     (d) When all of the Obligations shall have been indefeasibly paid in full
and no Letters of Credit remain outstanding, Lender shall promptly deliver to
Borrower, against receipt but without any recourse, warranty or representation
whatsoever, the balances remaining in the Collateral Account.
     (e) Borrower shall pay to Lender from time to time such fees as Lender
normally charges for similar services in connection with Lender’s administration
of the Collateral Account and investments and reinvestments of funds therein.
ARTICLE 10.
MISCELLANEOUS
     Section 10.1 Notices.
     All notices, requests and other communications to any party under the Loan
Documents shall be in writing (including facsimile transmission or similar
writing) and shall be given to such party as follows:
If to Borrower:
AmREIT
Eight Greenway Plaza, Suite 1000
Houston, Texas 77046
Attention: Mr. Kerr Taylor
Telecopier: (713) 850-0498
Telephone: (713) 850-1400

58

--------------------------------------------------------------------------------

 

With a copy of any notice of default to:
AmREIT
Eight Greenway Plaza, Suite 1000
Houston, Texas 77046
Attention: Mr. Chad Braun
Telecopier: (713) 850-0498
Telephone: (713) 850-1400
If to Lender:
Wells Fargo Bank, National Association
Disbursement and Operations Center
733 Marquette Avenue, 10th Floor
Minneapolis, Minnesota 55402
Attention: Jivko Sabev
Telecopier: (866) 720-0617
Telephone: (612) 667-4507
with a copy to:
Wells Fargo Bank, National Association
1000 Louisiana, 4th Floor
MAC: T5002-042
Houston, Texas 77002-5093
Attention: Real Estate Loan Administration
Telecopier: (713) 739-1077
Telephone: (713) 319-1416
or as to each party at such other address as such party shall designate in a
written notice to the other parties. Each such notice, request or other
communication shall be effective (a) if given by mail, 72 hours after such
communication is deposited in the United States Mail, certified with return
receipt requested, postage prepaid, addressed as aforesaid or (b) if given by
any other means (including facsimile), when received at the applicable address
provided for in this Section; provided that notices to Lender under Article 2,
and any notice of a change of address for notices, shall not be effective until
received.
     Section 10.2 No Waivers.
     No failure or delay by Lender or the Issuing Bank in exercising any right,
power or privilege under any Loan Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided in the Loan Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.

59

--------------------------------------------------------------------------------

 

     Section 10.3 Expenses.
     Borrower will pay on demand all present and future reasonable expenses
actually incurred by Persons who are not employees of, and other third parties
engaged by:
     (a) Lender in connection with the negotiation, preparation, execution,
delivery and administration of this Agreement, the Revolving Note and each of
the other Loan Documents, whenever the same shall be executed and delivered,
including, without limitation, appraisers’ fees, environment engineers’ fees,
search fees, recording fees, mortgage recording taxes, and the reasonable fees
and disbursements of Winstead Sechrest & Minick P.C., counsel for Lender;
     (b) Lender in connection with the review of Properties for acceptance as
Unencumbered Pool Properties and Lender’s other activities under Section 4.1,
including reasonable fees and disbursements of counsel to Lender;
     (c) Lender in connection with the negotiation, preparation, execution and
delivery of any waiver, amendment or consent by Lender relating to this
Agreement, the Revolving Note or any of the other Loan Documents, including the
reasonable fees and disbursements of counsel to Lender;
     (d) Lender and Issuing Bank in connection with any restructuring,
refinancing or “workout” of the transactions contemplated by this Agreement, the
Revolving Note and the other Loan Documents, including the reasonable fees and
disbursements of counsel to Lender;
     (e) Lender and Issuing Bank, after the occurrence of a Default or Event of
Default, in connection with the collection or enforcement of the obligations of
Borrower under this Agreement, the Revolving Note or any other Loan Document,
including the reasonable fees and disbursements of counsel to Lender and Issuing
Bank;
     (f) Subject to any limitation contained in Section 10.6, Lender and Issuing
Bank in connection with prosecuting or defending any claim in any way arising
out of, related to, or connected with this Agreement, the Revolving Note or any
of the other Loan Documents, including the reasonable fees and disbursements of
counsel to Lender and Issuing Bank and of experts and other consultants retained
by Lender in connection therewith;
     (g) Lender and Issuing Bank, to the extent not already covered by any of
the preceding subsections, in connection with any bankruptcy or other proceeding
of the type described in Sections 9.1(h) or (i), and the reasonable fees and
disbursements of counsel to Lender and Issuing Bank actually incurred in
connection with the representation of Lender and Issuing Bank in any matter
relating to or arising out of any such proceeding, including without limitation
(i) any motion for relief from any stay or similar order, (ii) the negotiation,
preparation, execution and delivery of any document relating to Lender and
Issuing Bank and (iii) the negotiation and preparation of any plan of
reorganization of Borrower, whether proposed by Borrower, Lender or any other
Person, and whether such fees and expenses are incurred prior to, during or
after the commencement of such proceeding or the confirmation or conclusion of
any such proceeding.

60

--------------------------------------------------------------------------------

 

     Section 10.4 Stamp, Intangible and Recording Taxes.
     Borrower will pay any and all stamp, intangible, registration, recordation,
mortgage and similar taxes, fees or charges and shall indemnify Lender and
Issuing Bank against any and all liabilities with respect to or resulting from
any delay in the payment or omission to pay any such taxes, fees or charges,
which may be payable or determined to be payable in connection with the
execution, delivery, recording, performance or enforcement of this Agreement,
the Revolving Note and any of the other Loan Documents or the perfection of any
rights or Liens thereunder.
     Section 10.5 Loan Sales and Participations; Disclosure of Information.
     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 Properties and their operation; (b) any party
connected with the Loan (including, without limitation, the Borrower and any
Guarantor); and/or (c) any lending relationship other than the Loans which
Lender may have with any party connected with the Loans. 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. 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, any 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 such Lender from its obligations thereunder.
     Section 10.6 Indemnification.
     Borrower shall and hereby agrees to indemnify, defend and hold harmless
Lender and Issuing Bank and their respective directors, officers, agents and
employees (each an “Indemnified Party”) from and against (a) any and all losses,
claims, damages, liabilities, deficiencies, judgments or expenses reasonably
incurred by any of them (except to the extent that it results from their own
gross negligence or willful misconduct) arising out of or by reason of any
litigation, investigations, claims or proceedings which arise out of or are in
any way related to: (i) this Agreement or the transactions contemplated thereby;
(ii) the making of Loans; (iii) any actual or proposed use by Borrower of the
proceeds of the Loans or of Letters of Credit; or (iv) Lender’s or Issuing
Bank’s entering into this Agreement, the other Loan Documents or any

61

--------------------------------------------------------------------------------

 

other agreements and documents relating hereto, including, without limitation,
amounts paid in settlement, court costs and the reasonable fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with any
of the foregoing and (b) any such losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred in connection with any remedial or
other similar action taken by Borrower, Lender or Issuing Bank in connection
with the required compliance by Borrower or any of the Subsidiaries, or any of
their respective properties, with any federal, state or local Environmental Laws
or other material environmental rules, regulations, orders, directions,
ordinances, criteria or guidelines. If and to the extent that the obligations of
Borrower hereunder are unenforceable for any reason, Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under Applicable Law. Borrower’s obligations
hereunder shall survive any termination of this Agreement and the other Loan
Documents and the payment in full of the Obligations, and are in addition to,
and not in substitution of, any other of its other obligations set forth in this
Agreement and the other Loan Documents. Borrower shall not be obligated as
provided in this Section to indemnify, defend or hold harmless any Indemnified
Person in respect of any litigation, investigation, claim or proceeding
commenced by any Indemnified Party against another Indemnified Party.
     Section 10.7 Successors and Assigns.
     The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of Lender.
     Section 10.8 Governing Law.
     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS.
     Section 10.9 Litigation.
     (a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN
OR AMONG BORROWER, LENDER OR ISSUING BANK WOULD BE BASED ON DIFFICULT AND
COMPLEX ISSUES OF LAW AND FACT AND THAT A TRIAL BY JURY COULD RESULT IN
SIGNIFICANT DELAY AND EXPENSE. ACCORDINGLY, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, LENDER, ISSUING BANK AND BORROWER HEREBY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH
AN ACTION MAY BE COMMENCED BY OR AGAINST BORROWER ARISING OUT OF THIS AGREEMENT,
THE NOTES OR ANY OTHER LOAN DOCUMENT OR BY REASON OF ANY OTHER CAUSE OR DISPUTE
WHATSOEVER BETWEEN OR AMONG BORROWER, LENDER OR ISSUING BANK OF ANY KIND OR
NATURE.

62

--------------------------------------------------------------------------------

 

     (b) BORROWER, LENDER AND ISSUING BANK EACH HEREBY AGREES THAT THE FEDERAL
DISTRICT COURT OF THE SOUTHERN DISTRICT OF TEXAS OR, AT THE OPTION OF LENDER,
ANY STATE COURT LOCATED IN HARRIS COUNTY, TEXAS SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG
BORROWER, LENDER OR ISSUING BANK PERTAINING DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM
OR THEREFROM. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. THE CHOICE OF
FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF
ANY ACTION BY LENDER OR ISSUING BANK OR THE ENFORCEMENT BY LENDER OR ISSUING
BANK OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE
JURISDICTION. FURTHER, BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
     (c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE
OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS AGREEMENT.
     Section 10.10 Counterparts; Integration.
     This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement, together with the other
Loan Documents, constitutes the entire agreement and understanding among the
parties hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof.
     Section 10.11 Invalid Provisions.
     Any provision of this Agreement or any other Loan Document held by a court
of competent jurisdiction to be illegal, invalid or unenforceable shall not
invalidate the remaining provisions of such Loan Document which shall remain in
full force and effect and the effect thereof shall be confined to the provision
held invalid or illegal.
     Section 10.12 Mandatory Disclosures.
     Notwithstanding anything to the contrary set forth herein or in any other
written or oral understanding or agreement to which the parties hereto are
parties or by which they are bound, the parties hereto acknowledge and agree
that (i) any obligations of confidentiality contained herein and therein do not
apply and have not applied from the commencement of discussions

63

--------------------------------------------------------------------------------

 

between the parties to the tax treatment and tax structure of the transactions
contemplated by the Loan Documents (and any related transactions or
arrangements), and (ii) each party (and each of its employees, representatives,
or other agents) may disclose to any and all parties as required, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by the Loan Documents and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment and tax structure, all within the meaning of Treasury Regulations
Section 1.6011-4; provided, however, that each party recognizes that the
privilege each has to maintain, in its sole discretion, with regard to the
confidentiality of a communication relating to the transactions contemplated by
the Loan Documents, including a confidential communication with its attorney or
a confidential communication with a federally authorized tax practitioner under
Section 7525 of the Internal Revenue Code, is not intended to be affected by the
foregoing.
     Section 10.13 Limitation of Liability of Trustees, Etc.
     LENDER SHALL LOOK SOLELY TO BORROWER FOR THE ENFORCEMENT OF ANY CLAIM
AGAINST BORROWER AND ACCORDINGLY NEITHER THE BORROWER’S BOARD OF TRUSTEES,
OFFICERS, EMPLOYEES, SHAREHOLDERS OF BORROWER NOR THE INVESTMENT MANAGER OR ANY
OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR SHAREHOLDERS SHALL HAVE ANY PERSONAL
LIABILITY FOR OBLIGATIONS ENTERED INTO BY OR ON BEHALF OF BORROWER.
     Section 10.14 ENTIRE AGREEMENT.
     THIS REVOLVING CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS INSTRUMENT MAY BE AMENDED
ONLY BY AN INSTRUMENT IN WRITING EXECUTED BY THE PARTIES HERETO.
     Section 10.15 Confidentiality.
     Notwithstanding anything to the contrary set forth herein or in any other
written or oral understanding or agreement to which the parties hereto are
parties or by which they are bound, the parties hereto acknowledge and agree
that (i) any obligations of confidentiality contained herein and therein do not
apply and have not applied from the commencement of discussions between the
parties to the tax treatment and tax structure of the transactions contemplated
by the Loan Documents (and any related transactions or arrangements), and
(ii) each party (and each of its employees, representatives, or other agents)
may disclose to any and all persons as required, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by the Loan
Documents and all materials of any kind (including opinions or other tax
analyses) that are provided to such party relating to such tax treatment and tax
structure, all within the meaning of Treasury Regulations Section 1.6011-4;
provided, however, that each party recognizes that the privilege each has to
maintain, in its sole discretion, with regard to the confidentiality of a
communication relating to the transactions contemplated by the Loan

64

--------------------------------------------------------------------------------

 

Documents, including a confidential communication with its attorney or a
confidential communication with a federally authorized tax practitioner under
Section 7525 of the Internal Revenue Code, is not intended to be affected by the
foregoing.
     Section 10.16 USA Patriot Act Notice. Compliance.
     The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations
issued with respect thereto require all financial institutions to obtain, verify
and record certain information that identifies individuals or business entities
which open an “account” with such financial institution. Consequently, Lender
may from time-to-time request, and Borrower shall provide to Lender, Borrower’s
name, address, tax identification number and/or such other identification
information as shall be necessary for Lender to comply with federal law. An
“account” for this purpose may include, without limitation, a deposit account,
cash management service, a transaction or asset account, a credit account, a
loan or other extension of credit, and/or other financial services product.
     Section 10.17 Release and Waiver of Claims.
     In consideration of (i) the amendment and restatement of the Original
Agreement, as herein provided, and (ii) the other benefits received by Borrower
hereunder, Borrower and Guarantor, each for themselves, hereby RELEASE,
RELINQUISH and forever DISCHARGE Lender, as well as its predecessors,
successors, assigns, agents, officers, directors, employees and representatives,
of and from any and all claims, demands, actions and causes of action of any and
every kind or character, past or present, which either may have against Lender
and its predecessors, successors, assigns, agents, officers, directors,
employees and representatives arising out of or with respect to (a) any right or
power to bring any claim against Lender for usury or to pursue any cause of
action against Lender based on any claim of usury, and (b) any and all
transactions relating to the Loan Documents occurring prior to the date hereof,
including any loss, cost or damage, of any kind or character, arising out of or
in any way connected with or in any way resulting from the acts, actions or
omissions of Lender, and its predecessors, successors, assigns, agents,
officers, directors, employees and representatives, including any breach of
fiduciary duty, breach of any duty of fair dealing, breach of confidence, breach
of funding commitment, undue influence, duress, economic coercion, conflict of
interest, negligence, bad faith, malpractice, intentional or negligent
infliction of mental distress, tortious interference with contractual relations,
tortious interference with corporate governance or prospective business
advantage, breach of contract, deceptive trade practices, libel, slander or
conspiracy, but in each case only to the extent permitted by applicable law.
     Section 10.18 Legal Opinion.
     Borrower has requested (and Lender has agreed) that the legal opinion
required under Section 5.1(d) (the “Opinion”) be delivered on or before
November 26th, 2008 in lieu of delivery contemporaneously herewith. Lender shall
not be obligated to make any Loans or issue any Letters of Credit until receipt
by Lender of the Opinion. Failure of Borrower to timely deliver the Opinion on
or before November 26th, 2008 shall constitute an Event of Default hereunder
with no further notice or opportunity to cure.

65

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Revolving Credit Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.

            BORROWER:

AmREIT,
a Texas Real Estate Investment Trust
      By:           Name:   Chad C. Braun        Title:   Vice President      
[Signatures Continued on Next Page]   

66

--------------------------------------------------------------------------------

 

         

            GUARANTORS:

AMREIT OPERATING CORPORATION,
a Texas corporation
      By:           Name:   Chad C. Braun        Title:   Vice President       
AMREIT REALTY INVESTMENT CORPORATION, a Texas corporation
      By:           Name:   Chad C. Braun        Title:   Vice President       
AMREIT CONSTRUCTION COMPANY, LLC,
a Texas limited liability company
      By:           Name:   Chad C. Braun        Title:   Vice President       
AMREIT SECURITIES COMPANY,
a Texas corporation
      By:           Name:   Chad C. Braun        Title:   Vice President       
AMREIT CONSTRUCTION MANAGEMENT, LLC, a Delaware limited liability company
      By:           Name:   Chad C. Braun        Title:   Vice President      
[Signatures Continued on Next Page]   

67

--------------------------------------------------------------------------------

 

         

            LENDER:

WELLS FARGO BANK, NATIONAL ASSOCIATION
      By:           Name:   Timothy P. Williamson        Title:   Senior Vice
President     

68

--------------------------------------------------------------------------------

 

FORM OF GUARANTY
     THIS GUARANTY dated as of November 21, 2008, executed and delivered by each
of the undersigned and the other Persons from time to time party hereto pursuant
to the execution and delivery of an Accession Agreement in the form of Annex I
hereto (all of the undersigned, together with such other Persons each a
“Guarantor” and collectively, the “Guarantors”) in favor of WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Lender”) under that certain Amended and Restated
Revolving Credit Agreement dated as of November 21, 2008, by and between AmREIT,
a Texas Real Estate Investment Trust (“Borrower”) (as the same may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with its terms, the “Credit Agreement”).
     WHEREAS, pursuant to the Credit Agreement, Lender has agreed to extend
certain financial accommodations to Borrower;
     WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the extension of financial accommodations under the Credit
Agreement that the Guarantors execute and deliver this Guaranty;
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor
agrees as follows:
     Section 1. Guaranty. Each Guarantor hereby absolutely, irrevocably and
unconditionally guaranties the due and punctual payment and performance when
due, whether at stated maturity, by acceleration or otherwise, of all of the
following (collectively referred to as the “Guaranteed Obligations’’): (a) all
indebtedness and obligations owing by the Borrower to Lender or the Issuing Bank
under or in connection with the Credit Agreement and any other Loan Document to
which the Borrower is a party, including without limitation, the repayment of
all principal of the Revolving Loan, all Reimbursement Obligations and all other
Letter of Credit Liabilities, and the payment of all interest, Fees, charges,
reasonable and actual attorneys fees and other amounts payable to Lender or the
Issuing Bank thereunder or in connection therewith; (b) any and all extensions,
renewals, modifications, amendments or substitutions of the foregoing; (c) all
expenses, including, without limitation, reasonable and actual attorneys’ fees
and disbursements that are incurred by the Lender or the Issuing Bank in the
enforcement of any of the foregoing or any obligation of such Guarantor
hereunder and (d) all other Obligations.
     Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a
guaranty of payment, and not of collection, and a debt of each Guarantor for its
own account. Accordingly, neither Lender nor the Issuing Bank shall be obligated
or required before enforcing this Guaranty against any Guarantor: (a) to pursue
any right or remedy Lender or the Issuing Bank may have against Borrower, any
other Loan Party or any other Person or commence any suit or other proceeding
against Borrower, any other Loan Party or any other Person in any court or other
tribunal, (b) to make any claim in a liquidation or bankruptcy of Borrower, any
other Loan Party or any other Person; or (c) to make demand of Borrower, any
other Loan Party or any other Person or to enforce or seek to enforce or realize
upon any collateral security held by Lender or the Issuing Bank which may secure
any of the Guaranteed Obligations.
Form of Guaranty
Exhibit A
Page A-1

 

--------------------------------------------------------------------------------

 

     Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the documents
evidencing the same, regardless of any Applicable Law now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of Lender or the
Issuing Bank with respect thereto. The liability of each Guarantor under this
Guaranty shall be absolute and unconditional in accordance with its terms and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including without limitation, the
following (whether or not such Guarantor consents thereto or has notice
thereof):
     (a) (i) any change in the amount, interest rate or due date or other term
of any of the Guaranteed Obligations, (ii) any change in the time, place or
manner of payment of all or any portion of the Guaranteed Obligations, (iii) any
amendment or waiver of, or consent to the departure from or other indulgence
with respect to, the Credit Agreement, any other Loan Document, or any other
document or instrument evidencing or relating to any Guaranteed Obligations, or
(iv) any waiver, renewal, extension, addition, or supplement to, or deletion
from, or any other action or inaction under or in respect of, the Credit
Agreement, any of the other Loan Documents, or any other documents, instruments
or agreements relating to the Guaranteed Obligations or any other instrument or
agreement referred to therein or evidencing any Guaranteed Obligations or any
assignment or transfer of any of the foregoing;
     (b) any lack of validity or enforceability of the Credit Agreement, any of
the other Loan Documents, or any other document, instrument or agreement
referred to therein or evidencing any Guaranteed Obligations or any assignment
or transfer of any of the foregoing;
     (c) any furnishing to the Lender or the Issuing Bank of any additional
security for the Guaranteed Obligations, or any sale, exchange, release or
surrender of, or realization on, any collateral securing any of the Obligations;
     (d) any settlement or compromise of any of the Guaranteed Obligations, any
security therefor, or any liability of any other party with respect to the
Guaranteed Obligations, or any subordination of the payment of the Guaranteed
Obligations to the payment of any other liability of the Borrower or any other
Loan Party,
     (e) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to such Guarantor,
the Borrower, any other Loan Party or any other Person, or any action taken with
respect to this Guaranty by any trustee or receiver, or by any court, in any
such proceeding;
     (f) any act or failure to act by the Borrower, any other Loan Party or any
other Person which may adversely affect such Guarantor’s subrogation rights, if
any, against the Borrower to recover payments made under this Guaranty;
     (g) any application of sums paid by the Borrower, any other Loan Party or
any other Person with respect to the liabilities of the Borrower to Lender, or
the Issuing Bank, regardless of what liabilities of the Borrower remain unpaid;
Form of Guaranty
Exhibit A
Page A-2

 

--------------------------------------------------------------------------------

 

     (h) any defect, limitation or insufficiency in the borrowing powers of the
Borrower or in the exercise thereof; or
     (i) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, such Guarantor hereunder
     Section 4. Action with Respect to Guaranteed Obligations. Lender and the
Issuing Bank may, at any time and from time to time, without the consent of, or
notice to, any Guarantor, and without discharging any Guarantor from its
obligations hereunder take any and all actions described in Section 3 and may
otherwise: (a) amend, modify, alter or supplement the terms of any of the
Guaranteed Obligations, including, but not limited to, extending or shortening
the time of payment of any of the Guaranteed Obligations or the interest rate
that may accrue on any of the Guaranteed Obligations; (b) amend, modify, alter
or supplement the Credit Agreement or any other Loan Document; (c) sell,
exchange, release or otherwise deal with all, or any part, of any collateral
securing any of the Obligations; (d) release any Loan Party or other Person
liable in any manner for the payment or collection of the Guaranteed
Obligations; (e) exercise, or refrain from exercising, any rights against the
Borrower, any other Loan Party or any other Person; and (f) apply any sum, by
whomsoever paid or however realized, to the Guaranteed Obligations in such order
as the Lender shall elect.
     Section 5. Representations and Warranties. Each Guarantor hereby makes to
the Lender all of the representations and warranties made by the Borrower with
respect to or in any way relating to such Guarantor in the Credit Agreement and
the other Loan Documents, as if the same were set forth herein in full.
     Section 6. Covenants. Each Guarantor will comply with all covenants which
the Borrower is to cause such Guarantor to comply with under the terms of the
Credit Agreement or any of the other Loan Documents.
     Section 7. Waiver. Each Guarantor, to the fullest extent permitted by
Applicable Law, hereby waives notice or acceptance hereof or any presentment,
demand, protest or notice or any kind, and any other act or thing, or omission
or delay to do any other act or thing, which in any manner or to any extent
might vary the risk of such Guarantor or which otherwise might operate to
discharge such Guarantor from its obligations hereunder.
     Section 8. Inability to Accelerate Loan. If either Lender or the Issuing
Bank is prevented from demanding or accelerating payment of any of the
Guaranteed Obligations by reason of any automatic stay or otherwise, Lender or
the Issuing Bank shall be entitled to receive from such Guarantor, upon demand
therefor, the sums which otherwise would have been due had such demand or
acceleration occurred.
     Section 9. Reinstatement of Guaranteed Obligations. If claim is ever made
on Lender or the Issuing Bank for repayment or recovery of any amount or amounts
received in payment or on account of any of the Guaranteed Obligations, and
Lender or the Issuing Bank repays all or part of said amount by reason of
(a) any judgment, decree or order of any court or administrative body of
competent jurisdiction, or (b) any settlement or compromise of any such claim
effected by Lender or the Issuing Bank with any such claimant (including the
Borrower or
Form of Guaranty
Exhibit A
Page A-3

 

--------------------------------------------------------------------------------

 

a trustee in bankruptcy for the Borrower), then and in such event each Guarantor
agrees that any such judgment, decree, order, settlement or compromise shall be
binding on it, notwithstanding any revocation hereof or the cancellation of the
Credit Agreement, any of the other Loan Documents, or any other instrument
evidencing any liability of the Borrower, and such Guarantor shall be and remain
liable to Lender or the Issuing Bank for the amounts so repaid or recovered to
the same extent as if such amount had never originally been paid to Lender or
the Issuing Bank.
     Section 10. Subrogation. Upon the making by any Guarantor of any payment
hereunder for the account or the Borrower, such Guarantor shall be subrogated to
the rights of the payee against the Borrower; provided, however, that such
Guarantor shall not enforce any right or receive any payment by way of
subrogation or otherwise take any action in respect of any other claim or cause
of action such Guarantor may have against the Borrower arising by reason of any
payment or performance by such Guarantor pursuant to this Guaranty, unless and
until all of the Guaranteed Obligations have been indefeasibly paid and
performed in full. If any amount shall be paid to such Guarantor on account of
or in respect of such subrogation rights or other claims or causes of action,
such Guarantor shall hold such amount in trust for the benefit of Lender and the
Issuing Bank and shall forthwith pay such amount to Lender to be credited and
applied against the Guaranteed Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement or to be held by Lender as
collateral security for any Guaranteed Obligations existing.
     Section 11. Payments Free and Clear. All sums payable by each Guarantor
hereunder, whether of principal, interest, Fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
deduction or withholding whatsoever (including any withholding tax or liability
imposed by any Governmental Authority, or any Applicable Law promulgated
thereby), and if such Guarantor is required by Applicable Law or by any
Governmental Authority to make any such deduction or withholding, such Guarantor
shall pay to Lender and the Issuing Bank such additional amount as will result
in the receipt by Lender and the Issuing Bank of the full amount payable
hereunder had such deduction or withholding not occurred or been required.
     Section 12. Subordination. Each Guarantor hereby expressly covenants and
agrees for the benefit of Lender and the Issuing Bank that all obligations and
liabilities of the Borrower to such Guarantor of whatever description, including
without limitation, all intercompany receivables of such Guarantor from the
Borrower (collectively, the “Junior Claims”) shall be subordinate and junior in
right of payment to all Guaranteed Obligations. If an Event of Default shall
have occurred and be continuing, then no Guarantor shall accept any direct or
indirect payment (in cash, property, securities by set-off or otherwise) from
the Borrower on account of or in any manner in respect of any Junior Claim until
all of the Guaranteed Obligations have been indefeasibly paid in full.
     Section 13. Avoidance Provisions. It is the intent of each Guarantor,
Lender and the Issuing Bank that in any Proceeding, such Guarantor’s maximum
obligation hereunder shall equal, but not exceed, the maximum amount which would
not otherwise cause the obligations of the Guarantor hereunder (or any other
obligations of the Guarantor to Lender and the Issuing Bank) to be avoidable or
unenforceable against the Guarantor in such Proceeding as a result of
Form of Guaranty
Exhibit A
Page A-4

 

--------------------------------------------------------------------------------

 

Applicable Law, including, without limitation, (a) Section 548 of the Bankruptcy
Code of 1978, as amended (the “Bankruptcy Code”) and (b) any state fraudulent
transfer or fraudulent conveyance act or statue applied in such Proceeding,
whether by virtue of Section 544 of the Bankruptcy Code or otherwise. The
Applicable Laws under which the possible avoidance or unenforceability of the
obligations of such Guarantor hereunder (or any other obligations of such
Guarantor to Lender and the Issuing Bank) shall be determined in any such
Proceeding are referred to as the “Avoidance Provisions.” Accordingly, to the
extent that the obligations of any Guarantor hereunder would otherwise be
subject to avoidance under the Avoidance Provisions, the maximum Guaranteed
Obligations for which such Guarantor shall be liable hereunder shall be reduced
to that amount which, as of the time any of the Guaranteed Obligations are
deemed to have been incurred under the Avoidance Provisions, would not cause the
obligations of any Guarantor hereunder (or any other obligations of the
Guarantor to Lender and the Issuing Bank), to be subject to avoidance under the
Avoidance Provisions. This Section is intended solely to preserve the rights of
Lender and the Issuing Bank hereunder to the maximum extent that would not cause
the obligations of any Guarantor hereunder to be subject to avoidance under the
Avoidance Provisions, and no Guarantor or any other Person shall have any right
or claim under this Section as against Lender and the Issuing Bank that would
not otherwise be available to such Person under the Avoidance Provisions.
     Section 14. Information. Each Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition of the Borrower and
the other Loan Parties, and of all other circumstances bearing upon the risk of
nonpayment of any of the Guaranteed Obligations and the nature, scope and extent
of the risks that such Guarantor assumes and incurs hereunder, and agrees that
neither Lender nor the Issuing Bank shall have any duty whatsoever to advise any
Guarantor of information regarding such circumstances or risks.
     Section 15. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
     Section 16. WAIVER OF JURY TRIAL.
     (a) EACH GUARANTOR, LENDER AND THE ISSUING BANK BY ACCEPTING THE BENEFITS
HEREOF, ACKNOWLEDGE THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY
GUARANTOR, LENDER AND THE ISSUING BANK WOULD BE BASED ON DIFFICULT AND COMPLEX
ISSUES OF LAW AND FACT AND THAT A TRIAL BY JURY COULD RESULT IN SIGNIFICANT
DELAY AND EXPENSE. ACCORDINGLY, THE GUARANTOR, AND LENDER AND THE ISSUING BANK
BY ACCEPTING THE BENEFITS HEREOF, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR
NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR
AGAINST SUCH GUARANTOR ARISING OUT OF THIS GUARANTY OR ANY OTHER LOAN DOCUMENT
OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN OR AMONG SUCH
GUARANTOR, LENDER OR THE ISSUING BANK OF ANY KIND OR NATURE.
     (b) EACH GUARANTOR, LENDER AND THE ISSUING BANK EACH HEREBY AGREES THAT THE
FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF
Form of Guaranty
Exhibit A
Page A-5

 

--------------------------------------------------------------------------------

 

TEXAS OR, AT THE OPTION OF LENDER, ANY STATE COURT LOCATED IN HARRIS COUNTY,
TEXAS SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN OR AMONG GUARANTOR, LENDER OR THE ISSUING BANK, PERTAINING
DIRECTLY OR INDIRECTLY TO THIS GUARANTY, THE GUARANTEED OBLIGATIONS OR ANY OTHER
LOAN DOCUMENT OR TO ANY MATTER ARISING HEREFROM OR THEREFROM. GUARANTOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING COMMENCED IN SUCH COURTS. THE CHOICE OF FORUM SET FORTH IN THIS
SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY LENDER OR
THE ISSUING BANK OR THE ENFORCEMENT BY LENDER OR THE ISSUING BANK OF ANY
JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION. FURTHER,
EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
     (c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER
THE OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS GUARANTY.
     Section 17. Loan Accounts. Lender and the Issuing Bank may maintain books
and accounts setting forth the amounts of principal, interest and other sums
paid and payable with respect to the Guaranteed Obligations, and in the case of
any dispute relating to any of the outstanding amount, payment or receipt of any
of the Guaranteed Obligations or otherwise, the entries in such books and
accounts shall constitute prima facie evidence of the outstanding amount of such
Guaranteed Obligations and the amounts paid and payable with respect thereto.
The failure of Lender or the Issuing Bank to maintain such books and accounts
shall not in any way relieve or discharge any Guarantor of any of its
obligations hereunder.
     Section 18. Waiver of Remedies. No delay or failure on the part of Lender
or the Issuing Bank in the exercise of any right or remedy it may have against
any Guarantor hereunder or otherwise shall operate as a waiver thereof, and no
single or partial exercise by Lender or the Issuing Bank of any such right or
remedy shall preclude other or further exercise thereof or the exercise of any
other such right or remedy.
     Section 19. Termination. This Guaranty shall remain in full force and
effect until indefeasible payment in full of the Obligations and the termination
or cancellation of the Credit Agreement.
     Section 20. Successors and Assigns. Each reference herein to Lender or the
Issuing Bank shall be deemed to include such Person’s respective successors and
assigns (including, but not limited to, any holder of the Guaranteed
Obligations) in whose favor the provisions of this Guaranty also shall inure,
and each reference herein to each Guarantor shall be deemed to
Form of Guaranty
Exhibit A
Page A-6

 

--------------------------------------------------------------------------------

 

include such Guarantor’s successors and assigns, upon whom this Guaranty also
shall be binding. Lender and the Issuing Bank may, in accordance with the
applicable provisions of the Credit Agreement, assign, transfer or sell any
Guaranteed Obligations, or grant or sell participation in any Guaranteed
Obligations, to any Person without the consent of, or notice to, any Guarantor
and without releasing, discharging or modifying any Guarantor’s obligations
hereunder. Each Guarantor hereby consents to the delivery by Lender or the
Issuing Bank to any assignee or participant (or any prospective assignee or
participant) of any financial or other information regarding the Borrower or any
Guarantor. No Guarantor may assign or transfer its obligations hereunder to any
Person.
     Section 21. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF EACH
GUARANTOR HEREUNDER SHALL BE JOINT AND SEVERAL AND ACCORDINGLY, EACH GUARANTOR
CONFIRMS THAT IT IS LIABLE FOR THE FULL AMOUNT OF THE “GUARANTEED OBLIGATIONS”
AND ALL OF THE OBLIGATIONS AND LIABILITIES OF EACH OF THE OTHER GUARANTORS
HEREUNDER.
     Section 22. Amendments. This Guaranty may not be amended except in writing
signed by Lender and each Guarantor.
     Section 23. Payments. All payments to be made by any Guarantor pursuant to
this Guaranty shall be made in Dollars, in immediately available funds to Lender
at its Lending Office, not later than 11:00 a.m., on the date one Business Day
after demand therefor.
     Section 24. Notices. All notices, requests and other communications
hereunder shall be in writing (including facsimile transmission or similar
writing) and shall be given (a) to each Guarantor at its address set forth below
its signature hereto, (b) to Lender or the Issuing Bank at its address for
notices provided for in the Credit Agreement, or (c) as to each such party at
such other address as such party shall designate in a written notice to the
other parties. Each such notice, request or other communication shall be
effective (i) if mailed, when received; (ii) if telecopied, when transmitted; or
(iii) if hand delivered, when delivered; provided, however, that any notice of a
change of address for notices shall not be effective until received.
     Section 25. Severability. In case any provision of this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
     Section 26. Headings. Section headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
     Section 27. Definitions.
     (a) For the purposes of this Guaranty:
     “Proceeding” means any of the following: (i) a voluntary or involuntary
case concerning any Guarantor shall be commenced under the Bankruptcy Code of
1978, as amended; (ii) a custodian (as defined in such Bankruptcy Code or any
other applicable bankruptcy laws) is appointed for, or takes charge of, all or
any substantial part of the property of any Guarantor; (iii) any other
proceeding under any Applicable Law, domestic or foreign, relating to
bankruptcy,
Form of Guaranty
Exhibit A
Page A-7

 

--------------------------------------------------------------------------------

 

insolvency, reorganization, winding-up or composition for adjustment of debts,
whether now or hereafter in effect, is commenced relating to any Guarantor;
(iv) any Guarantor is adjudicated insolvent or bankrupt; (v) any order of relief
or other order approving any such case or proceeding is entered by a court of
competent jurisdiction; (vi) any Guarantor makes a general assignment for the
benefit of creditors; (vii) any Guarantor shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts generally as they
become due; (viii) any Guarantor shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts; (ix) any Guarantor
shall by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or (x) any corporate action shall be taken
by any Guarantor for the purpose of effecting any of the foregoing.
     (b) Terms not otherwise defined herein are used herein with the respective
meanings given them in the Credit Agreement.
     Section 28. ENTIRE AGREEMENT. THIS GUARANTY, TOGETHER WITH THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES. THIS INSTRUMENT MAY BE AMENDED ONLY BY AN
INSTRUMENT IN WRITING EXECUTED BY THE PARTIES HERETO.
[Signatures on Next Page]
Form of Guaranty
Exhibit A
Page A-8

 

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this
Guaranty as of the date and year first written above.

            AMREIT OPERATING CORPORATION,
a Texas corporation
      By:           Name:   Chad C. Braun        Title:   Vice President       
Address for Notices:

8 Greenway Plaza, Suite 1000
Houston, Texas 77046
Attention: Chad C. Braun
Telecopier: (713) 860-4924
Telephone: (713) 860-4932

AMREIT REALTY INVESTMENT CORPORATION,
a Texas corporation
      By:           Name:   Chad C. Braun        Title:   Vice President       
Address for Notices:

8 Greenway Plaza, Suite 1000
Houston, Texas 77046
Attention: Chad C. Braun
Telecopier: (713) 860-4924
Telephone: (713) 860-4932
                       

Form of Guaranty
Exhibit A
Page A-9

 

--------------------------------------------------------------------------------

 

ANNEX I
FORM OF ACCESSION AGREEMENT
     THIS ACCESSION AGREEMENT dated as of ________, ________, executed and
delivered by                         , a (the “New Guarantor”) in favor of
(a) WELLS FARGO BANK, NATIONAL ASSOCIATION (“Lender”) under that certain Amended
and Restated Revolving Credit Agreement dated as of November 21, 2008 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time in accordance with its terms, the “Credit Agreement”), by and between
AmREIT, a Texas Real Estate Investment Trust (“Borrower”).
     WHEREAS, pursuant to the Credit Agreement, Lender and the Issuing Bank have
agreed to make available to the Borrower certain financial accommodations on the
terms and conditions set forth in the Credit Agreement;
     WHEREAS, the Borrower owns, directly or indirectly, ___% of the issued and
outstanding capital stock of; or other equity interest in, the New Guarantor;
     WHEREAS, the Borrower, the New Guarantor and the other Subsidiaries of the
Borrower though separate legal entities, are mutually dependent on each other in
the conduct of their respective businesses as an integrated operation and have
determined it to be in their mutual best interests to obtain financing from
Lender and the Issuing Bank through their collective efforts;
     WHEREAS, the New Guarantor acknowledges that it will receive direct and
indirect benefits from Lender and the Issuing Bank making such financial
accommodations available to the Borrower under the Credit Agreement and,
accordingly, the New Guarantor is willing to guarantee the Borrower’s
obligations to Lender and the Issuing Bank on the terms and conditions contained
herein, and
     WHEREAS, the New Guarantor’s execution and delivery of this Agreement is a
condition to Lender and the Issuing Bank continuing to make such financial
accommodations to the Borrower.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the New Guarantor, the New
Guarantor agrees as follows:
     Section 1. Accession to Guaranty. The New Guarantor hereby agrees that it
is a “Guarantor” under that certain Guaranty dated as of November 21, 2008 (the
“Guaranty”), made by each Subsidiary a party thereto in favor of Lender and the
Issuing Bank and assumes all obligations of a “Guarantor” thereunder, all as if
the New Guarantor had been an original signatory to the Guaranty. Without
limiting the generality of the foregoing, the New Guarantor hereby:
     (a) irrevocably and unconditionally guarantees the due and punctual payment
and performance when due, whether at stated maturity, by acceleration or
otherwise, of all Guaranteed Obligations;
Form of Guaranty
Exhibit A
Page A-10

 

--------------------------------------------------------------------------------

 

     (b) makes to Lender and the Issuing Bank as of the date hereof each of the
representations and warranties contained in Section 5 of the Guaranty and agrees
to be bound by each of the covenants contained in Section 6 of the Guaranty; and
     (c) consents and agrees to each provision set forth in the Guaranty.
     Section 2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
     Section 3. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have their respective defined meanings given them in the
Credit Agreement.
     Section 4. ENTIRE AGREEMENT. THIS ACCESSION AGREEMENT, TOGETHER WITH THE
GUARANTY, CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS INSTRUMENT MAY BE AMENDED
ONLY BY AN INSTRUMENT IN WRITING EXECUTED BY THE PARTIES HERETO.
[Signatures on Next Page]
Form of Guaranty
Exhibit A
Page A-11

 

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, the new Guarantor has caused this Accession
Agreement to be duly executed and delivered under seal by its duly authorized
officers as of the date first written above.

            [NEW GUARANTOR]
      By:           Name          Title:           ATTEST:
      By:           Name          Title:           Address for Notices:
                        Attention:        Telecopier:  (___)
 
    Telephone:  (___)
 
   

          Accepted:

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Lender
      By:           Name:           Title:          

Form of Guaranty
Exhibit A
Page A-12

 

--------------------------------------------------------------------------------

 

FORM OF REVOLVING NOTE

$35,000,000.00   Houston, Texas   November 21, 2008

     FOR VALUE RECEIVED, the undersigned, AmREIT, a Texas Real Estate Investment
Trust (“Borrower”), hereby unconditionally promises to pay to the order of Wells
Fargo Bank, National Association (the “Lender”), at its Lending Office at Wells
Fargo Bank, National Association, Disbursement and Operations Center, 733
Marquette Avenue, 10th Floor, Minneapolis, Minnesota 55402 or at such other
address as may be specified by Lender to Borrower, the principal sum of
THIRTY-FIVE MILLION AND NO/100 DOLLARS ($35,000,000.00), or such lesser amount
as may be the then outstanding and unpaid balance of all the Loans made by
Lender to the Borrower pursuant to, and in accordance with the terms of, the
Credit Agreement (hereinafter defined).
     The Borrower further agrees to pay interest at said Lending Office, in like
money, on the unpaid principal amount owing hereunder from time to time on the
dates and at the rates and at the times specified in the Credit Agreement.
     This Revolving Note (the “Revolving Note”) shall constitute the “Revolving
Note” referred to in that certain Amended and Restated Revolving Credit
Agreement dated as of November 21, 2008 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), by and between
the Borrower and Lender, and is subject to, and entitled to, all provisions and
benefits thereof. Capitalized terms used herein and not defined herein shall
have the respective meanings given to such terms in the Credit Agreement. The
Credit Agreement, among other things, (a) provides for the making of Loans by
Lender to Borrower from time to time in an aggregate amount not to exceed at any
time outstanding the Dollar amount first above mentioned, (b) permits the
prepayment of the Loans by the Borrower subject to certain terms and conditions
and (c) provides for the acceleration of the Loans upon the occurrence of
certain specified events.
     It is expressly stipulated and agreed to be the intent of Borrower and
Lender at all times to comply strictly with the applicable Texas 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 Texas law) governing the maximum rate or amount of interest payable on
this Revolving Note or the Related Indebtedness (hereinafter defined). If the
applicable law is ever judicially interpreted so as to render usurious any
amount (i) contracted for, charged, taken, reserved or received pursuant to this
Revolving Note, any of the other Loan Documents or any other communication or
writing by or between Borrower and Lender related to the transaction or
transactions that are the subject matter of the Loan Documents, (ii) contracted
for, charged or received by reason of Lender’s exercise of the option to
accelerate the maturity of this Revolving Note and/or the Related Indebtedness,
or (iii) Borrower will have paid or Lender will have received by reason of any
voluntary prepayment by Borrower of this Revolving Note and/or the Related
Indebtedness, then it is Borrower’s and Lender’s express intent that all amounts
charged in excess of the Maximum Lawful Rate shall be automatically canceled, ab
initio, and all amounts in excess of the Maximum Lawful Rate theretofore
collected by Lender shall be credited on the principal balance of this Revolving
Note and/or the Related Indebtedness (or, if this Revolving Note and all Related
Indebtedness have been or would thereby be paid in full,
Form of Revolving Note
Exhibit B
Page B-1

 

--------------------------------------------------------------------------------

 

refunded to Borrower), and the provisions of this Revolving Note and the other
Loan Documents immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for hereunder
and thereunder; provided, however, if this Revolving Note has been paid in full
before the end of the stated term of this Revolving Note, then Borrower and
Lender agree that Lender shall, with reasonable promptness after Lender
discovers or is advised by Borrower that interest was received in an amount in
excess of the Maximum Lawful Rate, either refund such excess interest to
Borrower and/or credit such excess interest against this Revolving Note and/or
any Related Indebtedness then owing by Borrower to Lender. Borrower hereby
agrees that as a condition precedent to any claim seeking usury penalties
against Lender, Borrower will provide written notice to Lender, advising Lender
in reasonable detail of the nature and amount of the violation, and Lender shall
have sixty (60) days after receipt of such notice in which to correct such usury
violation, if any, by either refunding such excess interest to Borrower or
crediting such excess interest against this Revolving Note and/or the Related
Indebtedness then owing by Borrower to Lender. All sums contracted for, charged
or received by Lender for the use, forbearance or detention of any debt
evidenced by this Revolving Note and/or the Related Indebtedness shall, to the
extent permitted by applicable law, be amortized or spread, using the actuarial
method, throughout the stated term of this Revolving Note and/or the Related
Indebtedness (including any and all renewal and extension periods) until payment
in full so that the rate or amount of interest on account of this Revolving Note
and/or the Related Indebtedness does not exceed the Maximum Lawful Rate from
time to time in effect and applicable to this Revolving Note and/or the Related
Indebtedness for so long as debt is outstanding. In no event shall the
provisions of Chapter 346 of the Texas Finance Code (which regulates certain
revolving credit loan accounts and revolving triparty accounts) apply to this
Revolving Note and/or the Related Indebtedness. Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the
intention of Lender to accelerate the maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the
time of such acceleration. Borrower and Lender hereby agree that any and all
suits alleging the contracting for, charging or receiving of usurious interest
shall lie in Harris County, Texas, and each irrevocably waive the right to venue
in any other county.
     As used herein, the term “Maximum Lawful Rate” shall mean the maximum
lawful rate of interest which may be contracted for, charged, taken, received or
reserved by Lender in accordance with the applicable laws of the State of Texas
(or applicable United States federal law to the extent that it permits Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all Charges (as herein defined) made in
connection with the transaction evidenced by this Revolving Note and the other
Loan Documents. As used herein, the term “Charges” shall mean all fees, charges
and/or any other things of value, if any, contracted for, charged, received,
taken or reserved by Lender in connection with the transactions relating to this
Revolving Note and the other Loan Documents, which are treated as interest under
applicable law. As used herein, the term “Related Indebtedness” shall mean any
and all debt paid or payable by Borrower to Lender pursuant to the Loan
Documents or any other communication or writing by or between Borrower and
Lender related to the transaction or transactions that are the subject matter of
the Loan Documents, except such debt which has been paid or is payable by
Borrower to Lender under the Revolving Note.
Form of Revolving Note
Exhibit B
Page B-2

 

--------------------------------------------------------------------------------

 

     To the extent that Lender is relying on Chapter 303 of the Texas Finance
Code to determine the Maximum Lawful Rate payable on this Revolving Note and/or
the Related Indebtedness, Lender will utilize the weekly ceiling from time to
time in effect as provided in such Chapter 303, as amended. To the extent United
States federal law permits Lender to contract for, charge, take, receive or
reserve a greater amount of interest than under Texas law, Lender will rely on
United States federal law instead of such Chapter 303 for the purpose of
determining the Maximum Lawful Rate. Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lender may, at its option and from
time to time, utilize any other method of establishing the Maximum Lawful Rate
under such Chapter 303 or under other applicable law by giving notice, if
required, to Borrower as provided by applicable law now or hereafter in effect.
     Notwithstanding anything in this Revolving Note to the contrary, if at any
time (i) the interest rate provided for under this Revolving Note or any other
Loan Document (the “Stated Rate”), and (ii) the Charges computed over the full
term of this Revolving Note, exceed the Maximum Lawful Rate, then the rate of
interest payable hereunder, together with all Charges, shall be limited to the
Maximum Lawful Rate; provided, however, that any subsequent reduction in the
Stated Rate shall not cause a reduction of the rate of interest payable
hereunder below the Maximum Lawful Rate until the total amount of interest
earned hereunder, together with all Charges, equals the total amount of interest
which would have accrued at the Stated Rate if such interest rate had at all
times been in effect. Changes in the Stated Rate resulting from a fluctuations
in the rates used to calculate the Stated Rate shall be subject to the
provisions of this paragraph.
     The holder hereof shall be entitled to the benefits of the other Loan
Documents (to the extent and with the effect as therein provided).
     The Borrower hereby waives presentment, demand, protest and notice of any
kind, including without limitation notice of interest to accelerate and notice
of acceleration. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
     Time is of the essence of this Revolving Note.
     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS.
     IN WITNESS WHEREOF, the undersigned has executed and delivered this
Revolving Note as of the date written above.

            AmREIT,
a Texas Real Estate Investment Trust
      By:           Name:   Chad C. Braun        Title:   Vice President   

Form of Revolving Note
Exhibit B
Page B-3

 

--------------------------------------------------------------------------------

 

FORM OF NOTICE OF BORROWING
_____________________, 200___
Wells Fargo Bank, National Association
Disbursement and Operations Center
733 Marquette Avenue, 10th Floor
Minneapolis, Minnesota 55402
Attention: Jivko Sabev
Facsimile: (866) 720-0617
Ladies and Gentlemen:
     Reference is made to that certain Amended and Restated Revolving Credit
Agreement dated as of November 21, 2008, as amended (the “Credit Agreement”), by
and between AmREIT, a Texas Real Estate Investment Trust (“Borrower”), and Wells
Fargo Bank, National Association (‘Lender’). Capitalized terms used herein and
not otherwise defined herein, have their respective meanings given them in the
Credit Agreement.

  1.   Pursuant to Section 2.2 of the Credit Agreement, the Borrower hereby
requests that the Lender makes a Loan to the Borrower in an amount equal to
$_____________________.     2.   The Borrower requests that the Loan be made
available to the Borrower on _____________________, 200___.     3.   The
Borrower hereby requests that the requested Loan be of the following Type:      
  [Check one box only]         o Base Rate Loan
o LIBOR Loan, with an initial Interest Period for a duration of:

  [Check one box only]    o one month
o three months
o six months

  4.   The proceeds of the Loan will be used for the following:        
 
     
 
     
 

     The Borrower hereby certifies to Lender that as of the date hereof, as of
the date of the making of the requested Loan, and after making such Loan, (a) no
Default or Event of Default shall have occurred and be continuing and (b) the
representations and warranties of the Borrower contained in the Credit Agreement
and the other Loan Documents are and shall be true and correct in all material
respects, except to the extent such representations or warranties
Form of Notice of Borrowing
Exhibit C
Page C-1

 

--------------------------------------------------------------------------------

 

specifically relate to an earlier date or such representations or warranties
have become untrue by reason of events or conditions otherwise permitted under
the Credit Agreement or the other Loan Documents.

                    AmREIT,       a Texas Real Estate Investment Trust  
 
             
 
  By:          
 
             
 
      Name:      
 
           
 
      Title:    
 
           

Form of Notice of Borrowing
Exhibit C
Page C-2

 

--------------------------------------------------------------------------------

 

FORM OF NOTICE OF CONTINUATION
_____________________, 200___
Wells Fargo Bank, National Association
Disbursement and Operations Center
733 Marquette Avenue, 10th Floor
Minneapolis, Minnesota 55402
Attention: Jivko Sabev
Facsimile: (866) 720-0617
Ladies and Gentlemen:
     Reference is made to that certain Amended and Restated Revolving Credit
Agreement dated as of November 21, 2008, as amended (the “Credit Agreement”), by
and between AmREIT, a Texas Real Estate Investment Trust (“Borrower”), and Wells
Fargo Bank, National Association (the “Lender”). Capitalized terms used herein,
and not otherwise defined herein, have their respective meanings given them in
the Credit Agreement.
     Pursuant to Section 2.4 of the Credit Agreement, the Borrower hereby
requests a Continuation of a LIBOR Loan under the Credit Agreement, and in that
connection sets forth below the information relating to such Continuation as
required by such Section of the Credit Agreement:

  1.   The requested date of such Continuation is _____________________, 200___.
    2.   The aggregate principal amount of the LIBOR Loan subject to the
requested Continuation is $________________ and the portion of such principal
amount subject to such Continuation is $_____________________.     3.   The
current Interest Period of the Loan subject to such Continuation ends on
_____________________, 200___.     4.   The duration of the Interest Period for
the Loan or portion thereof subject to such Continuation is:

  [Check one box only]    o one month
o three months
o six months

     The Borrower hereby certifies to Lender and the Issuing Bank that as of the
date hereof, as of the proposed date of the requested Continuation, and after
giving effect to such Continuation, no Event of Default shall have occurred and
be continuing.
     If notice of the requested Continuation was given previously by telephone,
this notice is to be considered the written confirmation of such telephone
notice required by Section 2.4 of the Credit Agreement.
Form of Notice of Continuation
Exhibit D
Page D-1

 

--------------------------------------------------------------------------------

 

                    AmREIT,       a Texas Real Estate Investment Trust  
 
             
 
  By:          
 
             
 
      Name:      
 
             
 
      Title:      
 
           

Form of Notice of Continuation
Exhibit D
Page D-2

 

--------------------------------------------------------------------------------

 

FORM OF NOTICE OF CONVERSION
_____________________, 200___
Wells Fargo Bank, National Association
Disbursement and Operations Center
733 Marquette Avenue, 10th Floor
Minneapolis, Minnesota 55402
Attention: Jivko Sabev
Facsimile: (866) 720-0617
Ladies and Gentlemen:
     Reference is made to that certain Amended and Restated Revolving Credit
Agreement dated as of November 21, 2008, as amended (the “Credit Agreement”), by
and between AmREIT, a Texas Real Estate Investment Trust (“Borrower”), and Wells
Fargo Bank, National Association (“Lender”). Capitalized terms used herein, and
not otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
     Pursuant to Section 2.5 of the Credit Agreement, the Borrower hereby
requests a Conversion of a Loan of one Type into a Loan of another Type under
the Credit Agreement, and in that connection sets forth below the information
relating to such Conversion as required by such Section of the Credit Agreement:

  1.   The requested date of such Conversion is _____________________, 200___.  
  2.   The Type of Loan to be Converted pursuant hereto is currently:

  [Check one box only]    o Base Rate Loan
o LIBOR Loan

  3.   The aggregate principal amount of the Loan subject to the requested
Conversion is $__________________ and the portion of such principal amount
subject to such Conversion is $_____________________.     4.   The amount of
such Loan to be so Converted is to be converted into a Loan of the following
Type:

  [Check one box only]     o Base Rate Loan
o LIBOR Loan, with an initial Interest
Period for a duration of:
    [Check one box only]     o one month
o three months
o six months

Form of Notice of Conversion
Exhibit E
Page E-1

 

--------------------------------------------------------------------------------

 

     The Borrower hereby certifies to Lender and the Issuing Bank that as of the
date hereof, as of the proposed date of the requested Conversion, and after
giving effect to such Conversion, no Event of Default shall have occurred and be
continuing.
     If notice of the requested Conversion was given previously by telephone,
this notice is to be considered the written confirmation of such telephone
notice required by Section 2.5 of the Credit Agreement.

                    AmREIT,       a Texas Real Estate Investment Trust    
 
             
 
  By:          
 
             
 
      Name:      
 
             
 
      Title:      
 
           

Form of Notice of Conversion
Exhibit E
Page E-2

 

--------------------------------------------------------------------------------

 

FORM OF OPINION
_____________________, 2008
Wells Fargo Bank, National Association
1000 Louisiana, 4th Floor
Houston, Texas 77002-5093

  Re:    $35,000,000.00 Revolving Credit Facility

Ladies and Gentlemen:
     We have acted as counsel to AmREIT, a Texas Real Estate Investment Trust
(the “REIT”), and AmREIT Operating Corporation, a Texas corporation and AmREIT
Realty Investment Corporation, a Texas corporation (collectively, “Guarantors”)
in connection with the $35,000,000.00 revolving credit facility provided
pursuant to that certain Amended and Restated Revolving Credit Agreement dated
as of October 30, 2007 (the “Agreement”) by and between REIT and Wells Fargo
Bank, National Association (“Lender”). This Opinion Letter (herein so called) is
furnished to you as required by Section 5.1(d) of the Agreement. Capitalized
terms used in this Opinion Letter and not defined herein are defined as set
forth in the Agreement.
     Our opinions are limited in all respects to the substantive law of the
State of Texas and the federal law of the United States and we assume no
responsibility as to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction.
I. Documents Reviewed
     A. Documents Reviewed—Loan Documents. As counsel to REIT, we have reviewed
the following documents and instruments (collectively, the “Transaction
Documents”):

  1.   Agreement;     2.   Promissory Note, dated as of November 21, 2008,
executed by Borrower and payable to the order of Lender in the maximum principal
amount of $35,000,000.00; and     3.   Guaranty executed by Guarantors dated as
of November 21, 2008.

     B. Documents Reviewed—Other Documents Examined: In addition to the
Transaction Documents, other documents we have examined in rendering this
opinion, and upon which we have relied, include the following:

  1.   [LIST ALL ORGANIZATIONAL DOCUMENTS, CERTIFICATES AND RESOLUTIONS]

Form of Opinion
Exhibit F
Page F-1

 

--------------------------------------------------------------------------------

 

II. Qualifications to Factual Examination;
Reliance on Local Counsel
     We have been furnished with and examined originals or copies, certified or
otherwise identified to our satisfaction, of all such records of REIT,
agreements and other instruments, certificates of officers and representatives
of REIT, certificates of public officials, and other documents, and we have had
such discussions with appropriate officers of REIT as we have deemed necessary
or desirable as a basis for the opinions hereinafter expressed. As to questions
of fact material to such opinions, we have, where relevant facts were not
independently verified or established, relied upon certificates of and
discussions with officers of REIT.
III. Assumptions
     For purposes of this opinion, we have assumed: (i) the genuineness of all
signatures on all documents (other than REIT and the Guarantors on the
Transaction Documents); (ii) the authenticity of all documents submitted to us
as originals; (iii) the conformity to the originals of all documents submitted
to us as copies; (iv) the correctness and accuracy of all facts set forth in all
certificates and reports identified in this opinion; and (v) the due
authorization, execution, and delivery of and the validity and binding effect of
the Transaction Documents with regard to the parties to the Transaction
Documents other than REIT.
IV. Opinions
     Based upon and subject to the foregoing and the other qualifications and
limitations stated in this Opinion Letter, we are of the opinion that:
     1. REIT is duly organized and validly existing under the laws of the State
of Texas and is a real estate investment trust under Section 856 of the Internal
Revenue Code.
     2. [RECITE ORGANIZATION, EXISTENCE AND GOOD STANDING OPINIONS FOR EACH
GUARANTOR]
     3. REIT and the Guarantors have the corporate power and authority to
execute, deliver, and perform their respective obligations under the Transaction
Documents to which they are a party. The Transaction Documents to which either
REIT or the Guarantors are a party have been duly authorized by all necessary
corporate action on the part of such Person and have been duly executed and
delivered by such Person.
     4. The Transaction Documents to which REIT or the Guarantors are a party
are enforceable against such Person.
     5. The execution and delivery by REIT and the Guarantors, as applicable,
of, and performance of their agreements in, the Transaction Documents to which
either Person is a party do not (i) violate the trust declaration, articles of
incorporation or bylaws of such Person, breach, or result in a default under,
any existing obligation of such Person under any agreement binding on such
Person, or (ii) breach or otherwise violate any existing obligation of such
Person.
Form of Opinion
Exhibit F
Page F-2

 

--------------------------------------------------------------------------------

 

     6. The execution and delivery of the Transaction Documents to which either
REIT or the Guarantors are a party, the consummation of the transactions
contemplated thereby, and compliance by such Person with the provisions thereof
will not violate any Texas or federal statute or regulation.
     7. No consent, approval, waiver, license or authorization or other action
by or filing with any governmental authority is required under Texas or federal
statutes or regulations in connection with the execution and delivery by REIT or
the Guarantors of the Transaction Documents to which such Person is a party,
except for those already obtained or completed.
     8. The Transaction Documents are not usurious contracts.
V. Enforceability Limitations
     The opinions expressed in paragraph 3 are qualified and may be limited as
follows:
     A. The enforceability of the Transaction Documents is subject to the effect
of bankruptcy, insolvency, reorganization, receivership, moratorium, or other
similar laws affecting the rights and remedies of creditors generally.
     B. The enforceability of the Transaction Documents is subject to the effect
of general principles of equity.
     The qualification of any opinion or statement herein by the use of the
words “to our knowledge” or “known to us” means that during the course of
representation as described in this Opinion Letter, no information has come to
the attention of the attorneys in this Firm which would give such attorneys
current actual knowledge of the existence of the facts so qualified. Except as
set forth herein, we have not undertaken any investigation to determine the
existence of such facts, and no inference as to our knowledge thereof shall be
drawn from the fact of our representation of any party or otherwise.
     This Opinion Letter (i) has been furnished to Lender at its request, and we
consider it to be a confidential communication which may not be furnished,
reproduced, distributed or disclosed to anyone without our prior written
consent, (ii) is rendered solely for Lender’s use in connection with the above
transaction, and may not be relied upon by any other person (other than an
assignee of Lender) or for any other purpose without our prior written consent,
(iii) is rendered as of the date hereof, and we undertake no, and hereby
disclaim any, obligation to advise you of any changes or any new developments
which might affect any matters or opinions set forth herein; and (iv) is limited
to the matters stated herein and no opinions may be inferred or implied beyond
the matters expressly stated herein.

            Very truly yours,
      By:                        

Form of Opinion
Exhibit F
Page F-3

 

--------------------------------------------------------------------------------

 

FORM OF UNENCUMBERED POOL CERTIFICATE
     Reference is made to that certain Amended and Restated Revolving Credit
Agreement dated as of November 21, 2008 (the “Credit Agreement”), by and between
AmREIT, a Texas Real Estate Investment Trust (“Borrower”) and Wells Fargo Bank,
National Association (“Lender”). Capitalized terms used herein, and not
otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
     1. Pursuant to Section 4.l(b)(ii) or Section 7.1(d), as applicable, of the
Credit Agreement, the undersigned hereby certifies to Lender that Schedule I
attached hereto accurately and completely sets forth, as of the date hereof:
(i) the identity of each Eligible Property as to which Borrower seeks Lender’s
approval as a Pool Property, (ii) assuming the approval of each such Eligible
Property as a Pool Property, (A) on a pro forma basis the Maximum Loan
Availability, (B) the Occupancy Rate of such Property, and (C) the aggregate
Occupancy Rate of all Unencumbered Pool Properties, assuming the approval of
each such Eligible Property as a Pool Property.
     The undersigned further certifies to Lender that as of the date hereof
(a) no Default or Event of Default has occurred and is continuing, and (b) the
representations and warranties of the Borrower contained in the Credit Agreement
and the other Loan Documents are true and correct in all material respects,
except to the extent such representations or warranties specifically relate to
an earlier date or such representations or warranties become untrue by reason of
events or conditions otherwise permitted under the Credit Agreement or the other
Loan Documents.
     IN WITNESS WHEREOF, the undersigned has signed this Unencumbered Pool
Certificate on and as of _____________________, 200___.

           
 
         
 
         
 
  Name:      
 
         
 
  Title:   Chief Financial Officer of AmREIT,
a Texas Real Estate Investment Trust  

Form Of Unencumbered Pool Certificate
Exhibit G
Page G-1

 

--------------------------------------------------------------------------------

 

FORM OF ELIGIBILITY CERTIFICATE
     Reference is made to that certain Amended and Restated Revolving Credit
Agreement dated as of November 21, 2008 (the “Credit Agreement”), by and between
AmREIT, a Texas Real Estate Investment Trust (“Borrower”) and Wells Fargo Bank,
National Association (“Lender”). Capitalized terms used herein, and not
otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
     Pursuant to Section 4.1 (b)(iv) of the Credit Agreement, the undersigned
hereby certifies to Lender, with respect to each of the properties listed on
Schedule 1 attached hereto, that:
     (a) such property is improved with one or more operating retail properties.
     (b) such property is 100% owned in fee simple by Borrower or by a Wholly
Owned Subsidiary designated as the owner of such property on Schedule 1.
Schedule 1 sets forth the capital structure of each such Wholly Owned
Subsidiary.
     (c) (i) neither such property, nor any interest of Borrower or such Wholly
Owned Subsidiary therein, is subject to any Lien other than Permitted Liens or
to any agreement (other than the Credit Agreement or any other Loan Document)
that prohibits the creation of any Lien thereon as security for Indebtedness;
(ii) if such property is owned by a Wholly Owned Subsidiary: (A) none of
Borrower’s direct or indirect ownership interest in such Wholly Owned Subsidiary
is subject to any Lien other than Permitted Liens or to any agreement (other
than the Credit Agreement or any other Loan Document) that prohibits the
creation of any Lien thereon as security for Indebtedness and (B) neither such
Wholly Owned Subsidiary, nor any other Wholly Owned Subsidiary through which
Borrower holds any indirect interest in such Wholly Owned Subsidiary, is subject
to any restriction of any kind which would limit its ability to pay or perform
its obligations under the Guaranty required to be delivered under the Credit
Agreement prior to its obligation to pay dividends or make any other
distribution on any of such Wholly Owned Subsidiary’s capital stock or other
securities owned by Borrower or any other Wholly Owned Subsidiary of Borrower;
(iii) such property has an Occupancy Rate of at least 80%, and (iv) such
property is free of all structural defects, title defects, environmental
conditions or other adverse matters except for defects, conditions or matters
individually or collectively which are not material to the profitable operation
of such property.
     (d) if such property were an Unencumbered Pool Property, the aggregate
Occupancy Rate of all Unencumbered Pool Properties as of the date hereof
(including all properties listed on Schedule 1), would not be less than ninety
percent (90%).
     (e) (i) Borrower has obtained, with respect to such property, a “Phase I”
environmental assessment
          (ii) Borrower has reviewed such assessments and believes it reasonable
to rely upon such assessments; and
          (iii) such assessments do not (1) identify any contamination or
potential contamination that has resulted in, or that could reasonably be
anticipated to result in a materially adverse effect upon the condition, market
value, Net Operating Income or prospects of such
Form of Eligibility Certificate
Exhibit H
Page H-1

 

--------------------------------------------------------------------------------

 

property, (2) recommend that any further material investigation be undertaken,
or (3) identify any potential or actual recognized environmental condition.
     IN WITNESS WHEREOF, the undersigned has signed this Eligibility Certificate
on and as of                                         , 200___.

                                Name:           Printed:           Title:  Chief
Financial Officer of AmREIT,
a Texas Real Estate Investment Trust     

Form of Eligibility Certificate
Exhibit H
Page H-2

 

--------------------------------------------------------------------------------

 

Schedule 1
TO ELIGIBILITY CERTIFICATE

(A)   Property Description [For each Property]   1.   Property Name:   2.  
Owner: [If not Borrower, set forth capital structure of the owner]   3.  
Location: [Including City, State, County and address]   4.   Environmental
Information:

  a.   Date Phase I prepared:

    b.   The Phase I was prepared by:

5.   Summary of Existing Tenants: [Including Rent Rolls in detail satisfactory
to Lender]

Form of Eligibility Certificate
Exhibit H
Page H-3

 

--------------------------------------------------------------------------------

 

TRANSFER AUTHORIZER DESIGNATION
(For Disbursement of Loan Proceeds by Funds Transfer)

         
o NEW
  o REPLACE PREVIOUS DESIGNATION   o ADD
o CHANGE
  o DELETE LINE NUMBER                         

The following representatives of AmREIT, a Texas Real Estate Investment Trust
(“Borrower”) are authorized to request the disbursement of Loan Proceeds and
initiate funds transfers for Loan Number 5448 dated November 21, 2008 between
Wells Fargo Bank, National Association (“Lender”) and Borrower. Lender is
authorized to rely on this Transfer Authorizer Designation until it has received
a new Transfer Authorizer Designation signed by Borrower, even in the event that
any or all of the foregoing information may have changed.

                          Maximum Wire     Name   Title   Amount1
1.
  H. Kerr Taylor       $35,000,000.00
2.
  Chad Braun       $35,000,000.00
3.
           
4.
           
5.
           

Beneficiary Bank and Account Holder Information

     
1.
   
Transfer Funds to (Receiving Party Account Name):
   
 
   
Receiving Party Account Number:
   
 
   
Receiving Bank Name, City and State:
  Receiving Bank Routing (ABA) Number
 
   
Maximum Transfer Amount:
   
 
   
Further Credit Information/Instructions:
   
 
   
2.
   
Transfer Funds to (Receiving Party Account Name):
   
 
   
Receiving Party Account Number:
   
 
   
Receiving Bank Name, City and State:
  Receiving Bank Routing (ABA) Number
 
   
Maximum Transfer Amount:
   

 

1   Maximum Wire Amount may not exceed the Loan Amount.

Form of Transfer Authorizer Designation
Exhibit I
Page I-1

 

--------------------------------------------------------------------------------

 

     
Further Credit Information/Instructions:
   
 
   
3
   
Transfer Funds to (Receiving Party Account Name):
   
 
   
Receiving Party Account Number:
   
 
   
Receiving Bank Name, City and State:
  Receiving Bank Routing (ABA) Number
 
   
Maximum Transfer Amount:
   
 
   
Further Credit Information/Instructions:
   

Date: DATE OF DOCUMENTS
“BORROWER”
AMREIT
a Texas Real Estate Investment Trust

     
By:
   
 
Name:  
 
Title:  

Form of Transfer Authorizer Designation
Exhibit I
Page I-2

 

--------------------------------------------------------------------------------

 

OUTSTANDING LETTERS OF CREDIT
Irrevocable Letter of Credit No. NZS435795 as amended issued April 8, 2002 for
the benefit of General Electric Capital Business Asset Funding Corporation.
Schedule 2.14(a)
Outstanding Letters of Credit
Page 1

 

--------------------------------------------------------------------------------

 

UNENCUMBERED POOL PROPERTIES AS OF AGREEMENT DATE

                                                      Date   Square   Lease    
    Property   City   State   Acquired   Footage   Expiration          
 
                               
Fee
                          1    
MacArthur Pads — Eye masters
  Irving   TX   Dec-05     4,000     Dec-09   1    
MacArthur Pads — Deli Management
  Irving   TX   Dec-05     4,540     Dec-09   1    
MacArthur Pads — Mattress Giant
  Irving   TX   Dec-05     5,000     Feb-10   1    
MacArthur Pads — Mens Warehouse
  Irving   TX   Dec-05     6,660     Feb-10   1    
MacArthur Pads — Nextel
  Irving   TX   Dec-05     4,213     Feb-10   1    
MacArthur Pads — Pier One
  Irving   TX   Dec-05     9,028     Feb-10   1    
MacArthur Pads — Signature Nails
  Irving   TX   Dec-05     1,604     Mar-11   1    
MacArthur Pads — Smoothie King
  Irving   TX   Dec-05     1,422     Dec-13   1    
MacArthur Pads — Sports Clips
  Irving   TX   Dec-05     1,275     Nov-09   1    
MacArthur Pads — Up in Smoke
  Irving   TX   Dec-05     1,273     Dec-09   2    
AFC, Inc.
  Atlanta   GA   Jul-02     2,583     Jul-14   3    
Carlson Restaurants — TGI Friday’s
  Houston   TX   Dec-03     8,500     Jan-13   4    
Golden Corral #1
  Houston   TX   Aug-92     12,000     Nov-12   5    
Golden Corral #2
  Humble   TX   Mar-93     12,000     Mar-13   6    
IHOP Corporation
  Topeka   KS   Sep-99     4,500     Jul-24   7    
CVS — Uptown Plaza
  Houston   TX   Sep-02     12,000     Aug-25   8    
Woodlands Plaza — Kinko’s
  The Woodlands   TX   Jan-03     2,750     Mar-13   8    
Woodlands Plaza — DiMassi’s
  The Woodlands   TX   Nov-02     4,329     Jan-13   8    
Woodlands Plaza — Rug Gallery
  The Woodlands   TX   Feb-04     9,977     Feb-11   9    
Uptown Plaza — The Grotto
  Houston   TX   Dec-03     8,000     Sep-12   9    
Uptown Plaza — Nextel
  Houston   TX   Dec-03     1,600     Mar-09   9    
Uptown Plaza — Vanessa Riley
  Houston   TX   Dec-03     1,600     Sep-08

Schedule 4.1
Unencumbered Pool Properties as of Agreement Date
Page 1

 

--------------------------------------------------------------------------------

 

                                                      Date   Square   Lease    
    Property   City   State   Acquired   Footage   Expiration     9    
Uptown Plaza — EG Geller
  Houston   TX   Dec-03     1,600     Nov-14   9    
Uptown Plaza — Omaha Steaks
  Houston   TX   Nov-04     1,600     Nov-14   9    
Uptown Plaza — Judith Anne Jewels
  Houston   TX   Mar-07     1,600     Jun-12   10    
Courtyard at Post Oak — Verizon/Washington Mutual
  Houston   TX   Jun-04     4,013     Nov-09   10    
Courtyard at Post Oak — Ninfa’s
  Houston   TX   Jun-04     7,606     Nov-09   10    
Courtyard at Post Oak — Desert Gallery
  Houston   TX   Jun-04     1,978     Aug-13        
 
                               
Ground
                          11    
CVS — Westheimer & Yorktown
  Houston   TX   Jan-03     13,824     Dec-23   12    
Dardin (Smokey Bones)
  Peach Tree City   GA   Dec-98     6,867     Dec-l3   13    
410 and Blanco — Citibank
  San Antonio   TX   Dec-04     4,439     Jan-21   14    
Woodlands Ring Road — Bank of America
  The Woodlands   TX   Feb-07     4,251     Jul-15   14    
Woodlands Ring Road — Circuit City
  The Woodlands   TX   Feb-07     34,233     Dec-17   14    
Woodlands Ring Road — Landry’s
  Tbe Woodlands   TX   Feb-07     13,497     Sep-25   14    
Woodlands Ring Road — Brinker (Macaroni Grill)
  The Woodlands   TX   Feb-07     7,825     Oct-09   14    
Woodlands Ring Road — TGI Friday’s
  The Woodlands   TX   Feb-07     6,543     Oct-09   15    
Carlson Restaurant — TGI Friday’s
  Hanover   MD   Sep-03     8,500     Sep-23

Schedule 4.1
Unencumbered Pool Properties as of Agreement Date
Page 2

 

--------------------------------------------------------------------------------

 

OWNERSHIP STRUCTURE
Attached is a complete corporate structure and ownership interests of Borrower
and all of its Subsidiaries as of the date hereto, including the correct legal
name of Borrower and each such Subsidiary, and Borrower’s relative equity
interest in each Subsidiary:
Schedule 6.2
Ownership Structure
Page 1

 

--------------------------------------------------------------------------------

 

(GRAPHIC) [h66152h6615201.gif]
Schedule 6.2
Ownership Structure
Page 2

 

--------------------------------------------------------------------------------

 

AmREIT Organizational Chart with Related Subsidiaries
(GRAPHIC) [h66152h6615202.gif]
Schedule 6.2
Ownership Structure
Page 3

 

--------------------------------------------------------------------------------

 

(GRAPHIC) [h66152h6615203.gif]
Schedule 6.2
Ownership Structure
Page 4

 

--------------------------------------------------------------------------------

 

INDEBTEDNESS AND GUARANTEES
AmREIT
Debt Information

                                              Amount   Amount                  
  Outstanding   Outstanding           Annual Debt     Description   9-30-2008  
12-31-2007   Interest Rate   Service   Maturity Date  
MacArthur Park
  $ 13,410     $ 13,410       6.17 %   $ 827       12/1/2008                    
           
2008 Maturities
  $ 13,410     $ 13,410                          
 
                                       
Credit Facility
  $ 27,880     $ 30,439       4.29 %   $ 1,195       10/30/2009  
Commerce & Zarzamora
  $ 2,644     $ —       5.50 %   $ 145       9/4/2009                          
     
2009 Maturities
    30,524       30.439                          
 
                                       
Sugarland IHOP
  $ 1,075     $ 1,110       8.25 %   $ 138       3/1/2011  
Sugar Land Plaza
    2,236       2,258       7.60 %     203       11/1/2011                      
         
2011 Maturities
  $ 3,311     $ 3.368                          
 
                                       
AAA CTL Notes (3)
  $ 12,447     $ 12,811       7.72% - 7.89 %   $ 1,110       04/2012-08/2012  
5115 Buffalo Spdwy.
    2,674       2,699       7.58 %     241       5/11/2012                      
         
2012 Maturities
  $ 15,121     $ 15,510                          
 
                                       
Cinco Ranch
  $ 8,048     $ 8,158       5.60 %   $ 601       7/10/2013  
Plaza in the Park
    17,010       17,243       5.60 %     1,270       7/10/2013                  
             
2013 Maturities
  $ 25,058     $ 25,401                          
 
                                       
Uptown Park
  $ 49,000     $ 49,000       5.37 %   $ 2,631       6/1/2015                  
             
2015 Maturities
  $ 49,000     $ 49.000                          
 
                                       
Southbank — Riverwalk
  $ 20,000     $ 20,000       5.91 %   $ 1,182       6/1/2016                  
             
2016 Maturities
  $ 20,000     $ 20,000                          
 
                                       
Bakery Square
  $ 3,492     $ 3,704       8.00 %   $ 571       2/10/2017  
Uptown Plaza Dallas
  $ 19,900     $ 19,900       5.64 %   $ 783       4/1/2017                    
           
2017 Maturities
  $ 23,392     $ 23,604                          
 
                                                                     
Total Maturities (2)
  $ 179,816     $ 180,732                                                      
 

 

(1)   Our revolving credit facility is a variable-rate debt instrument, and its
outstanding balance fluctuates throughout the year based on our liquidity needs.
Annual Debt Service on this debt instrument assumes that the amount outstanding
and the interest rate as of September 30, 2008 remain constant through maturity.
  (2)   Total maturities above are $460 thousand and $639 thousand less than
total debt as reported in our consolidated financial statements as of September
30, 2008 and December 31, 2007, respectively, due to the premium recorded on
above-market debt assumed in conjunction with certain of our property
acquisitions.   (3)   The associated assets are held for sale as of
September 30, 2008 and December 31, 2007.

Schedule 6.6
Indebtedness & Guaranties
Page 1

 

--------------------------------------------------------------------------------

 

PROPERTY MANAGEMENT AGREEMENTS
AND OTHER MAJOR AGREEMENTS
AmREIT Realty Investment Corporation, as Agent:

1.   Uptown Plaza — Houston, TX — April 1, 2004 — AmREIT   2.   Lake Woodlands
Plaza — April 1, 2004 — AmREIT   3.   The Courtyard — June 15, 2004 — AmREIT  
4.   MacArthur Pad Sites — April 12, 2006 — AmREIT MacArthur Pad Sites, LP   5.
  All AmREIT Properties — April 19, 2006 — AmREIT

Schedule 6.7
Property Management Agreements
and Other Major Agreements
Page 1

 

--------------------------------------------------------------------------------

 

INSURANCE
AmREIT
2008/2009 INSURANCE SUMMARY

                              COVER NOTE/                   COVERAGE   POLICY
NO.   INSURING COMPANY   LIMIT/VALUE   POLICY TERM   Premiums  
General Liability
  61 UENTW5600   Hartford Fire Insurance Co.  
$     1,000,000   Each Occurrence
  4/19/2008 - 4/19/2009   $ 130,144  
 
         
$     2,000,000   General Aggregate
           
 
         
$        300,100   Fire Damage Liability
           
 
         
$            10,00   Medical Expense Limit (Any one person)
             
 
          Employee Benefits Liability:            
 
         
$     1,000,000   Each Claim
           
 
         
$     1,000,000   Aggregate
           
Business Auto Coverage (Non-Owned & Hired Only)
  61 UEN TW6600   Twin City Fire Insurance Co.  
$     1,000,000   Each Accident
  4/19/2008 - 4/19/2009   $ 658  

         
$             ACV   Physical Damage
           
 
         
Physical Damage Deductible:            
 
         
$            1,000   Comp. /Coll.
           
Workers’ Compensation
  61WERW6451   Hartford Underwriters Ins. Co.   Statutory WC  
4/19/2008 - 4/19/2009   $ 20,602  
 
       
$      1,000,000   Bodily Injury by Accident — Each Accident
           
 
         
$      1,000,000   Bodily Injury by Disease — Policy Limit
           
 
         
$      1,000,000   Bodily Injury by Disease — Each Employee
           
Umbrella Liability
  UUO (09) 53273162   Ohio Casuality Insurance Co.  
$    26,000,000   Each occurrence Limit, except:
  4/19/2008 - 4/19/2009   $ 33,897  
 
         
$    26,000,000   General Aggregate Limit
           
Excess Liability (25 x 25)
  Q104200284   St. Paul Fire & Marine Ins Co.  
$    26,000,000   Each Occurrence Limit, except:
  4/19/2008 - 4/19/2009   $ 25,250  
 
         
$    25,000,000   General Aggregate Limit
           
Excess Liability (25 x 50)
  L2099905018   St. Paul fire & Marine Ins Co.  
$    25,000,000   Each Occurrence Limit, except:
  4/19/2008 - 4/19/2009   $ 25,250  
 
       
$    25,000,000   General Aggregate Limit
           
Property
  MAUD37129938   ACE   $200,0000,000   Loss Limit   4/19/2008 - 4/19/2009   $
297,764  
 
         
Equipment Breakdown:            
 
         
$    75,000,000   Combined Property Damage, Loss of Income and Additional
Expense
           
 
         
$         250,000   Expediting Expense
           
 
         
$         250,000   Hazardous Substance
           
 
         
$         250,000   Perishable Goods
           
 
         
SUBLIMITS:            
 
         
$    25,000,000   Per Occurrence in the aggregate for Earthquake (excl.
California)
           
 
         
$    25,000,000   Per Occurrence in the aggregate for Flood (excl. zone A & B)
           
 
         
$      2,500,000   Flood zone A & B
           
 
         
$         500,000   Expediting Expense
           
 
         
$      1,000,000   Accounts Receivable
           
 
         
$         300,000   Valuable Papers and Records
           

      This summary is merely descriptive in nature and should be used for
reference purposes only. This summary does not amend, extend or after the
coverage afforded by the referenced polices.

1
Schedule 6.15
Insurance
Page 1

 

--------------------------------------------------------------------------------

 

AmREIT
2008/2009 INSURANCE SUMMARY

                              COVER NOTE/                   COVERAGE   POLICY
NO.   INSURING COMPANY   LIMIT/VALUE   POLICY TERM   Premiums  
Property continued
         
$    7,000,000   Demolition/Increased Cost of Construction
           
 
       
$      500,000   Contingent Loss of Business Income or Extra Expense
           
 
       
$      100,000   Personal Property In Transit
           
 
         
$      100,000   Professional Fees
           
 
         
$   1,000,000   Unintentional Errors & Omissions
           
 
         
$   2,000,000   Newly Acquired Property (90 days)
           
 
         
$   1,000,000   Ingress/Egress - not to exceed 30 days
           
 
         
$ 75,000,000   Boiler & Machinery
           
 
         
Standard Extensions:            
 
         
$      100,000   Plants, Trees, or Shrubs
           
 
         
$        25,000   Inventory & Appraisal
           
 
         
$      100,000   Expediting Expense
           
 
         
$      100,000   Pollution Clean-Up (Aggregate)
           
 
         
$        25,000   Computer Virus & Denial of Access Extension
           
 
         
$        50,000   Fungus Cleanup Expense
           
 
         
Deductibles:            
 
         
$        10,000   Policy Deductible, COMBINED except
           
 
         
$        50,000   Flood & Earthquake (excl. California)
             
 
          Named Windstorm:            
 
         
2% TIV at Each Location - minimum of $100K - if property is within 30 miles of
the coast
           
 
         
1% TIV at Each Location - minimum of $100K - if property is greater than 30
miles of the coast
             
 
          Equipment Breakdown:            
 
         
$        10,000   Property Damage
           
 
         
24 hours    Time Element
           
 
         
24 hours    Service Interruption
             
Pollution Legal Liability
  37312388   Chubb Custom  
$    5,000,000   per occurrence limit
  12/19/07 - 12/19/12   $ 168,977         Insurance Co/Chubb  
$    5,000,000   aggregate limit
                  & Son Inc.                  
Fiduciary Liability
  68025770   Federal Insurance  
$    1,000,000   Each Loss
  4/19/08 - 4/19/09   $ 2,500  
 
    Company/Chubb & Son  
$    1,000,000   Policy Limit
           
 
    Inc.   $           1,000   Deductible              
Commercial Crime
  81911327   Federal Insurance  
$    1,000,000   Employee Dishonesty
  4/19/08 - 4/19/09   $ 7,631  
 
    Company/Chubb &  
$    1,000,000   Each - Other Crime Coverages
           
 
      Son Inc.  
$        25,000   Deductible
           

      This summary is merely descriptive in nature and should be used for
reference purposes only. This summary does not amend, extend or after the
coverage afforded by the referenced polices.

2
Schedule 6.15
Insurance
Page 2

 

--------------------------------------------------------------------------------

 

AmREIT
2008/2009 INSURANCE SUMMARY

                              COVER NOTE/                   COVERAGE   POLICY
NO.   INSURING COMPANY   LIMIT/VALUE   POLICY TERM   Premiums  
Employment Practices Liability
  EPG0006677   RLI Insurance Company  
$    1,000,000   Policy Aggregate
  4/19/08 - 4/18/09   $ 7,600        
$         25,000   Deductible — Indemnifiable Claims
                   
$                  0   Deductible — Non-lndemnifiable Claims
             
Directors & Officers Liability - REITPlus
  9626948   Illinois National Ins. Co./ AIG  
$    2,000,000   Policy Aggregate Limit
  12/10/07 - 12/20/08   $ 46,211  

 
$       250,000   Deductible
               
Excess Directors & Officers Liability — Side A - REITPIus
  1415382   Illinois National Ins. Co./ AIG  
$    5,000,000   Excess of
  12/10/07 - 12/10/08   $ 81,931        
$    2,000,000   Primary
               

      This summary is merely descriptive in nature and should be used for
reference purposes only. This summary does not amend, extend or after the
coverage afforded by the referenced polices.

3
Schedule 6.15
Insurance
Page 3