ex10-1.htm


    
      

    

    Exhibit
10.1

     

    PPM
Loan No. 08-05402 


    FLOATING
RATE PROMISSORY NOTE

     

    Date:  October  3 , 2008

     

    The
following terms or provisions are used in this Note and are incorporated by
reference herein.

     

    Maker:  WHITESTONE INDUSTRIAL-OFFICE LLC,
a Texas
limited liability

    company

     

    
      	Maker's Mailing
      Address:	2600 South
      Gessner
	 	Suite
  500
	 	Houston, Texas
      77063


    

     

    Noteholder: JACKSON NATIONAL LIFE
INSURANCE COMPANY, a Michigan corporation, its
successors or assigns

     

    Place
for Payment: the office of Noteholder's correspondent, PPM Finance, Inc.,
at 225 West Wacker Drive, Suite 1200, Chicago, IL 60606, or at such other place
as from time to time may be designated in writing by Noteholder.

     

    Principal
Amount:    $26,900,000.00

     

    Interest
Rate (adjustable):  initially at six and fifty
three hundredths percent (6.53%) per annum;
thereafter, floating at 260 basis points over the Index

     

    Index:
The term "Index" shall mean,
as of the date of the applicable interest rate adjustment, the one month London
Interbank Offered Rates (LIBOR) as shown in the "Money and Investing" section of
the Wall Street Journal as published on the business day prior to the applicable
interest rate adjustment, or if the index is no longer published daily, the one
month LIBOR as available through the Bloomberg L.P. or similar
service designated by Noteholder.

     

    Prepaid
Interest Period: the period commencing on the date of this Note through
and including October 31, 2008

     

    First Monthly Payment
Date:  December 1,
2008

     

    Monthly
Payments: Monthly payments consisting of principal and interest based
upon an amortization schedule of 25 years, which is subject to change as set
forth in Section 2
below

     

    Lockout
Period Expiration Date:  December 1, 2009

     

    Maturity
Date:  November 1, 2013

     

    1.    Promise to Pay. FOR
VALUE
RECEIVED, the Maker hereby promises to pay to the Noteholder the
Principal Amount (the "Loan") with interest
on the outstanding principal balance thereof from the date hereof until the
Maturity Date with initial interest at the Interest

    Rate or
the Default Rate (as applicable), both principal and interest being payable as
hereinafter provided in lawful money of the United States of America at the
Place for Payment or at such other place as from time to time may be designated
by Noteholder. Interest shall be calculated and paid on the basis of a 30-day
month and 360-day year, unless otherwise noted herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.            Interest Rate. The
Interest Rate, initially set by Noteholder approximately three (3) days prior to
the date hereof, shall be adjusted by Noteholder on a monthly basis. The
adjustment shall be made on the last business day of each calendar month and
will be effective the first day of the immediately following month. To determine
the new monthly payment, the remaining principal balance of the Loan will be
re-amortized based on the new interest rate and the then remaining amortization
term. Since interest is paid in arrears, the monthly payment will not adjust
until the first of the next following month. For example, for an interest rate
to be adjusted on March 31, the new adjusted rate will be effective April 1. The
interest rate change will affect the payment due on May 1 which covers April
interest.

     

    3.            Payments. A payment
of interest only, based on a 365-day year, on the outstanding principal balance
of this Note shall be due and payable in advance on the date hereof in an amount
equal to interest accrued during the Prepaid Interest Period. Maker agrees to
pay Noteholder the Monthly Payments commencing on the First Monthly Payment Date
and continuing thereafter on the same day of each succeeding month through and
including the Maturity Date, on which date all unpaid principal and interest,
together with any other sums due under the terms of this Note, shall be due and
payable.

     

    4.            Treatment of Payments.
All payments of principal, interest, late charges (as described below),
and prepayment premium (as described below), if any, due under this Note shall
be paid to Noteholder by wire transfer pursuant to Noteholder's written wire
transfer instructions or by check of immediately available funds delivered to
the place for payment set forth in the Terms section above and in such other
manner, as Noteholder may from time to time designate in writing. If such
payment is received by 2:00 p.m., Eastern Time, such payment will be credited to
Maker's account as of the date on which received. If such payment is received
after 2:00 p.m., eastern time, such payment will be credited to Maker's account
on the business day next following the date on which received. Each installment
payment under this Note shall be applied first to the payment of any cost or
expense for which Maker is liable hereunder or under the other Loan Documents,
including any unpaid late charge, then to accrued interest and the remainder to
the reduction of unpaid principal. Time is of the essence as to all payments
hereunder.

    5.            Late Charges. If any
monthly installment of principal and/or interest is not paid in full on or
before the tenth day of the month in which such payment is due, then a charge
for late payment ("Late Charge") in
the amount of five percent (5 %) of the amount of such installment shall be
immediately assessed and shall be immediately due and payable by Maker. The
parties hereby recognize that the Late Charge is a reasonable approximation of
an actual loss difficult to estimate. Noteholder's failure to collect such Late
Charge shall not constitute a waiver of Noteholder's right to require such
payment of such Late Charge for past or future defaults. The Late Charge shall
be in addition to all other rights and remedies available to Noteholder upon the
occurrence of an Event of Default, as hereinafter defined.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.            Default Interest.
Upon the occurrence of (a) an Event of Default or (b) the Maturity Date,
interest shall accrue hereunder at an annual rate (the "Default Rate") equal
to the lesser of (i) eighteen percent (18%) and (ii) the maximum rate allowed by
law. The Default Rate shall accrue on the entire outstanding balance hereof,
including, without limitation, delinquent interest and any and all costs and
expenses incurred by Noteholder in connection therewith.

     

    7.            Security;
Definitions.

     

    (a)   This Note
is made pursuant to a Loan Agreement of even date herewith between Noteholder
and Maker (the "Loan
Agreement") and secured by, among other things, the Security Instrument
of even date herewith in favor of Noteholder granting a first lien on certain
real property described therein, and granting a security interest in certain
personal property, fixtures and equipment described therein.

     

    (b)   Capitalized
terms not otherwise defined in the preamble or in other provisions of this Note
shall have the meanings ascribed to such terms in the Loan
Agreement.

     

    (c)           The
terms and provisions of the Loan Agreement are incorporated herein by
reference (as if such terms and provisions were set forth in this
Note).

     

    8.            Event of Default.
Upon the occurrence of an Event of Default, Noteholder shall have the
option of declaring the indebtedness evidenced hereby to be immediately due and
payable (the "Loan
Acceleration"). After the Loan Acceleration, Noteholder shall have the
option of applying any payments received to principal or interest or any other
costs due pursuant to the terms of this Note or the other Loan Documents.
Interest at the Default Rate shall continue to accrue on any judgment Noteholder
may obtain against Maker on this Note or the Security Instrument until
Noteholder acquires record title to the Project or the judgment and interest and
costs have been paid in full. Noteholder may include any applicable prepayment
premium, attorney's fees and costs of suit in any complaint, judgment or
assessment of damages filed or entered pursuant to this Note and/or the Security
Instrument.

     

    9.            Prepayment. The Loan
may not be prepaid prior to the Lockout Period Expiration Date. Calculation of
the prepayment open date shall begin with the first day of the first month in
which monthly payments are made. Thereafter, prepayment is permitted at any
time, in full but not in part, upon 30 days' written notice, with payment to
Noteholder of a prepayment premium as follows: 2 % of the outstanding loan
balance during months thirteen (13) through twenty-four (24); 1% of the
outstanding loan balance during the months twenty-five (25) through thirty-six
(36); 0.5 % of the outstanding loan balance during the months thirty-seven (37)
through forty-eight (48); and at par thereafter.

     

    No
Prepayment Premium shall apply to a payment in full due to taking through
condemnation or a casualty where Noteholder applies proceeds to pay down the
Loan. No involuntary partial prepayment shall suspend or reduce any required
installment payments. If the Loan has been accelerated and Maker wishes to pay
the Loan in full, the payment tendered must include either (i) the applicable
prepayment premium, if the payment is tendered during a period when prepayment
is permitted under this Note, or (ii) the greater of such prepayment premium or
10% of
the principal amount owed on the date of default, if the payment is tendered
during a period when prepayment is prohibited under this Note.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.           Limitation on Personal
Liability. The provisions of Section 9.18 of the
Loan Agreement are hereby incorporated by reference.

     

    11.           Savings Clause. It is
expressly stipulated and agreed to be the intent of Maker and Noteholder at all
times to comply strictly with the applicable Texas law governing the maximum
nonusurious rate or amount of interest payable on this Note or the indebtedness
evidenced by the other Loan Documents (or applicable United States federal law
to the extent that it permits Noteholder to contract for, charge, take, reserve
or receive a greater amount of interest than under Texas law). 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 Note, any
of the other Loan Documents or any other communication or writing by or between
Maker and Noteholder related to the transaction or transactions that are the
subject matter of the Loan Documents, (ii) contracted for, charged, taken,
reserved or received by reason of Noteholder's exercise of the option to
accelerate the maturity of this Note and/or the indebtedness, or (iii) Maker
will have paid or Noteholder will have received by reason of any prepayment by
Maker of this Note and/or the indebtedness, then it is Maker's and Noteholder's
express intent that all amounts charged in excess of the maximum nonusurious
rate shall be automatically canceled, ab initio, and all amounts in excess of
the maximum nonusurious rate theretofore collected by Noteholder shall be
credited on the principal balance of this Note and/or the indebtedness (or, if
this Note and all indebtedness have been or would thereby be paid in full,
refunded to Maker), and the provisions of this Note and the other Loan Documents
shall immediately be deemed reformed and the amounts thereafter collectible
hereunder and thereunder reduced, without the necessity of the execution of any
new 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 Note has been paid in full before the end of the
stated term of this Note, then Maker and Noteholder agree that Noteholder shall,
with reasonable promptness after Noteholder discovers or is advised by Maker
that interest was received in an amount in excess of the maximum nonusurious
rate, either refund such excess interest to Maker and/or credit such excess
interest against this Note and/or any indebtedness then owing by Maker to
Noteholder. Maker hereby agrees that as a condition precedent to any claim or
counterclaim (in which event such proceeding shall be abated for such time
period) seeking usury penalties against Noteholder, Maker will provide written
notice to Noteholder, advising Noteholder in reasonable detail of the nature and
amount of the violation, and Noteholder 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 Maker or crediting such excess interest
against this Note and/or the indebtedness then owing by Maker to Noteholder. All
sums contracted for, charged, taken, reserved or received by Noteholder for the
use, forbearance or detention of any debt evidenced by this Note and/or the
indebtedness evidenced by the other Loan Documents shall, to the extent
permitted by applicable law, be amortized or spread, using the actuarial method,
throughout the stated term of this Note and/or the 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 Note and/or the indebtedness does not
exceed the maximum nonusurious rate from time to time in effect and applicable
to this Note and/or the indebtedness for so long as debt is outstanding. To the
extent that Noteholder is relying on Chapter 303, as amended,
of the Texas Finance Code to determine the maximum amount of Interest permitted
by applicable law on the principal of this Note, Noteholder will utilize the
weekly rate ceiling from time to time in effect as provided in such Chapter 303,
as amended. To the extent United States federal law permits a greater amount of
interest than is permitted under Texas law, Noteholder will rely on United
States federal law instead of such Chapter 303, as amended, for the purpose of
determining the maximum amount permitted by applicable law. Additionally, to the
extent permitted by applicable law now or hereafter in effect, Noteholder may,
at its option and from time to time, implement any other method of computing the
maximum lawful rate under such Chapter 303, as amended, or under other
applicable law by giving notice, if required, to Maker as provided by applicable
law now or hereafter in effect. 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 Note and/or any of the
indebtedness evidenced by the other Loan Documents. Notwithstanding anything to
the contrary contained herein or in any of the other Loan Documents, it is not
the intention of Noteholder 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.            Noteholder's Attorney Fees.
Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity or through any bankruptcy, receivership, probate
or other court proceedings or if this Note is placed in the hands of attorneys
for collection after an Event of Default, or if the lien or priority of the lien
represented by the Security Instrument or the other Loan Documents is the
subject of any court proceeding, Maker and all endorsers, guarantors and
sureties of this Note jointly and severally agree to pay to Noteholder in
addition to the principal and interest due and payable hereon reasonable
attorneys' and collection fees including those incurred by Noteholder for any
appeal.

     

    13.            Maker's Waivers.
Maker and all endorsers, guarantors and sureties of this Note and all
other persons liable or to become liable on this Note severally waive
presentment for payment, demand, notice of demand and of dishonor and nonpayment
of this Note, notice of intention to accelerate the maturity of this Note,
notice of acceleration, protest and notice of protest, diligence in collecting,
and the bringing of suit against any other party, and agree to all renewals,
extensions, modifications, partial payments, releases or substitutions of
security, in whole or in part, with or without notice, before or after
maturity.

     

    14.            Payment of Taxes and Fees.
Maker agrees to pay the cost of any revenue, tax or other documentary fee
or stamps now or hereafter required by law to be affixed to this Note or the
Security Instrument.

     

    15.            Governing Law. This
Note and the rights, duties and liabilities of the parties hereunder and/or
arising from or relating in any way to the indebtedness evidenced by this Note
or the transaction of which such indebtedness is a part shall be governed and
construed for all purposes by the law of the State of Illinois.

     

    16.    Replacement or Bifurcation
of Note. If this Note is lost or destroyed, the Maker shall, at the
Noteholder's request, execute and return to the Noteholder a replacement
promissory note identical to this Note, provided the Noteholder delivers to the
Maker an affidavit to the foregoing effect. Upon delivery of the executed
replacement Note, the Noteholder shall

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    indemnify
the Maker from and against its actual damages suffered as a result of the
existence of two Notes evidencing the same obligation. No replacement of this
Note under this Section shall result in a novation of the Maker's obligations
under this Note. In addition, the Noteholder may at its sole and absolute
discretion require that the Maker execute and deliver two separate promissory
notes, which shall replace this Note as evidence of the Maker's obligations. The
two replacement notes shall, taken together, evidence the exact obligations set
forth in this Note. The replacement notes shall be independently transferable.
If this Note is so replaced, the Noteholder shall return this Note to the Maker
marked to evidence its cancellation. Noteholder shall pay all costs incurred by
it with respect to documenting such replacement notes. Maker acknowledges the
need to act promptly upon its receipt of the documentation evidencing any
request by Noteholder that the Note be replaced pursuant to this Section and
agrees that Maker will meet the reasonable deadlines of Noteholder provided that
Maker has received the applicable documents at least ten (10) business days
prior to such deadline. Furthermore, Maker agrees to reasonably cooperate with
Noteholder to effectuate the obtainment of such title policy endorsements, or
new title evidence and other assurances and documents as Noteholder shall
reasonably require.

     

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    IN WITNESS WHEREOF,
Maker has caused this Note to be duly executed as of the day and year
first above written.

     

    
      	 	MAKER:
	 	 	 	 	 
	 	WHITESTONE INDUSTRIAL-OFFICE
      LLC,
	 	a Texas limited
      liability company
	 	 	 	 	 
	 	By:
      WHITESTONE REIT OPERATING 
	 	 	PARTNERSHIP,
      L.P.,
	 	 	a Delaware limited
      partnership,
	 	 	its Sole
      Member
	 	 	 	 	 
	 	 	By: WHITESTONE
      REIT,
	 	 	 	a Maryland real
      estate investment trust,
	 	 	 	its General
      Partner
	 	 	 	 	 
	 	 	 	By:  	/s/ John J.
      Dee      
                
	 	 	 	 	John
      J. Dee, Executive Vice President