Exhibit 10.1 to AmREIT, Inc. Form 8-K dated Dec. 30, 2009






Exhibit 10.1  





REVOLVING LINE OF CREDIT AGREEMENT


          THIS
REVOLVING LINE OF CREDIT AGREEMENT is made and entered into effective as of
December 23, 2009 (the “Effective Date”), by and between 410 BLANCO, LP, a Texas limited
partnership, AMREIT UPTOWN HOUSTON, LP, a
Texas limited partnership, AMREIT COURTYARD,
LP, a Texas limited partnership, AMREIT
5402 WESTHEIMER, LP, a Texas limited partnership, AMREIT GC HOUSTON, LP, a Texas limited
partnership, and AMREIT I-45 SOUTHPOINT, LP, a
Texas limited partnership (collectively “Borrower” and individually
“Co-Borrower”), and AMEGY MORTGAGE COMPANY, L.L.C. d/b/a Q10 Amegy Mortgage
Capital (“Lender”). In consideration of the mutual covenants and agreements
contained herein, Borrower and Lender hereby agree as follows: 


Article I.         – DEFINITIONS


          As used in
this Agreement, the following terms shall have the following meanings, unless
the context otherwise requires: 


          “Addendum
to Loan Agreement” shall mean the document in the form of Exhibit “A” attached
hereto. 


          “Adjusted
Appraised Value” shall mean the fair market value as determined by an appraisal
prepared by an appraiser reasonably acceptable to Lender, prior to Lender’s
determination to increase the Borrowing Base with respect to a Property submitted
by Borrower for approval as a Primary Pledged Property. 


          “Adjusted
Net Worth” shall mean the consolidated Net Worth of Borrower in accordance with
GAAP, less any goodwill or other non-property related intangible assets of the
Borrower. 


          “Advance”
shall mean a sum of money under the Note made available by Lender for the use
of Borrower upon fulfillment by Borrower of conditions precedent to its
entitlement to such sum. 


          “Agreement”
shall mean this Revolving Line of Credit Agreement, as the same may from time
to time be amended, supplemented or extended. 


          “Approved
Primary Property” shall mean a Property located in the State of Texas (or in
another state approved by Lender) owned or to be purchased by Borrower, with respect
to which Lender has established a Loan Value for such Property. Lender shall
have the right to review the location, design, plans, appraisal, survey and
other information and data relative to the Property, the improvements thereon,
the Financial Statements, and such other information as Lender shall deem
relevant, and shall have the right to determine, subject to the terms of the
Agreement, that a Property for which Borrower has requested funding under the
terms of this Agreement, shall become an Approved Primary Property. By
execution hereof, Lender acknowledges that the Properties described on Exhibit
“B” attached hereto and made a part hereof are Approved Primary Properties in
the initial Borrowing Base (the “Initial Primary Pledged Properties”), subject
to Borrower satisfying all conditions set forth under Sections 2.09 and 2.10 of
this Agreement.


1






          “Borrower’s
Extension Option” shall mean the right and option of Borrower to extend the
Maturity Date for an additional thirty-six (36) month period, as provided under
the terms of the Note. 


          “Borrowing
Base” shall mean, subject to Borrower’s compliance with the financial covenants
contained in Subsections 5.01(k) and 5.01(l), the aggregate of the Loan Value
for all Primary Pledged Properties. The Borrowing Base may be increased by the
inclusion of additional Primary Pledged Properties in the Collateral Base in
accordance with Section 2.09 hereof or may be decreased by releasing one or
more of the Primary Pledged Properties in accordance with Section 2.08 hereof,
with the determination of the Borrowing Base amount in accordance with Section
2.10 hereof. 


          “Borrowing
Base Certificate” shall mean a certificate executed by Borrower and provided to
Lender in the form of Exhibit “C” attached hereto and made a part hereof for
all purposes. 


          “Business
Day” shall mean a day other than a Saturday, Sunday or a public or bank holiday
or the equivalent for commercial banks under the laws of the State of Texas. 


          “Collateral”
shall mean any real or personal property pledged, transferred, hypothecated,
mortgaged, assigned or otherwise given to Lender as security for the loan or
loans hereunder. The Collateral shall include the Primary Pledged Properties
and any Supporting Pledged Properties. 


          “Collateral
Base” shall include, at any time, all Primary Pledged Properties and the
Supporting Pledged Properties. 


          “Debt”
shall mean, for any Person, without duplication: (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services for which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or in respect of which such Person otherwise
assures a creditor against loss; and (ii) all obligations under leases which
have been, or should have been, in accordance with GAAP in effect on the date
of this Agreement, recorded as capital leases in respect of which such Person
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person otherwise assures a creditor against
loss. 


          “Default”
shall mean the occurrence of any of the events specified in Article VI hereof,
whether or not any requirement for notice or lapse of time or other condition
precedent has been satisfied, subject to any rights to cure. 


          “Depository
Bank” shall mean Amegy Bank National Association and its successors or assigns.



2






          “Event of
Default” shall mean the occurrence of any of the events specified in Article VI
hereof, and after the expiration of any applicable notice and opportunity to
cure period provided for in Section 6.03 of this Agreement. 


          “Financial
Statements” shall mean the financial statement or statements of Borrower and
Guarantor on a consolidated or non-consolidated basis as required by Lender,
prepared in accordance with GAAP. 


          “Funding
Termination Date” shall mean ten Business Days prior to the Maturity Date or
any extension thereof. 


          “GAAP”
shall mean principles that are (a) consistent with the principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors, as
in effect from time to time and (b) consistently applied with past financial
statements of the Borrower adopting the same principles; provided that a
certified public accountant would, insofar as the use of such accounting
principles is pertinent, be in a position to deliver an unqualified opinion
(other than a qualification regarding changes in general accepted accounting
principles) as to financial statements in which such principles have been
properly applied. 


          “Governmental
Authority” shall mean the United States of America, the State, the County, the
Municipality, the utility district, or any other political subdivision in which
the Property is located, and any other political subdivision, agency, district,
department, commission, board, bureau, court or instrumentality which now or
hereafter has jurisdiction or extra territorial jurisdiction over Lender, the
applicable Co-Borrower or any part of the applicable Property. 


          “Governmental
Requirement” shall mean any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other direction or requirement now or hereafter in
effect (including, without limitation, any of the foregoing which relate to
environmental standards or controls, energy regulations and occupational,
safety and health standards or controls) of any (domestic or foreign) federal,
state, county, municipal or other government, department, commission, board,
court, agency or any other instrumentality of any of them, or of any property
owners’ association or municipal utility district, which at any time during the
term of this Agreement exercises jurisdiction over each Co-Borrower or any of
its property or Guarantor, or any of its property. 


          “Guarantor”
shall mean AMREIT INC., a Maryland corporation. 


          “Guaranty”
shall mean any guaranty or amendments thereto executed by the Guarantor from
time to time, to guarantee payment of the Indebtedness. 


          “Indebtedness”
shall mean any and all amounts owing or to be owing by the Borrower and any
Co-Borrower to the Lender in connection with the Note or any of the Security
Instruments, including this Agreement. 


3







          “Letters of
Credit” shall mean one or more standby letters of credit issued by Depository
Bank in the name of a Co-Borrower or Guarantor. 


          “Lien”
shall mean any interest in property securing an obligation owed to, or a claim
by, a Person other than the owner of the property, whether such interest is
based on common law, statute or contract, and including but not limited to, the
lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes. The term “Lien” shall include reservations,
exceptions, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting a Property or Properties. For the
purposes of this Agreement, the Co-Borrower shall be deemed to be the owner of
any property which it has acquired or holds subject to an arrangement pursuant
to which title to the property has been retained by or vested in some other
Person for security purposes. 


          “Loan
Documents” shall mean all documents executed by any Person including any
Co-Borrower or the Guarantor in connection with this and inclusive of this
Agreement, the Note and the Security Instruments. 


          “Loan
Value” for any particular Primary Pledged Property shall mean the value given
to a specific Property pledged or to be pledged to secure the Note as such
value is calculated in accordance with Section 2.10 of this Agreement.
Notwithstanding the foregoing, as to the Initial Primary Pledged Properties,
“Loan Value” shall mean the amounts shown on Exhibit “B” attached hereto and
made a part hereof for all purposes. Such Loan Value for a specific Property
shall be designated on the Addendum to Loan Agreement (Exhibit “A”), and shall
remain constant, subject to adjustment upward or downward by Lender, in its
reasonable discretion in accordance with Section 2.10 of this Agreement, or
subject to adjustment downward in the event of releases of Property in
accordance with Section 2.08 of this Agreement. 


          “Material
Adverse Effect” shall mean any material and adverse effect on (i) the ability
of each Borrower to make payment under the Note, or perform its material
obligations under this Agreement or the other Security Instruments on a timely
basis, or (ii) the ability of Guarantor to perform its material obligations as
Guarantor under the Guaranty. 


          “Maturity
Date” shall mean three hundred sixty-four (364) days from the Effective Date,
as such date may be extended from time to time by written agreement of Borrower
and Lender, and subject to exercise by Borrower of Borrower’s Extension Option.



          “Maximum Loan
Amount” shall mean the lesser of: (i) $25,000,000.00, or (ii) the Borrowing
Base as calculated from time to time in accordance with the terms of this
Agreement. 


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          “Mortgage”
shall mean, collectively, each deed of trust, security deed or mortgage
executed by any Co-Borrower securing the payment of the Note, the payment of
the Indebtedness, and the payment and performance of all obligations specified
in the Mortgage, and evidencing a valid and enforceable first lien on a Primary
Pledged Property or a Supporting Pledged Property and the improvements thereon
and covering all personal property and any intangibles now or hereafter used
with or related to such Property and improvements. The form and substance of
each Mortgage shall be as approved by Lender. 


          “Net Worth”
shall mean, with respect to any Person, and as to any applicable date of
determination, the excess of (i) the net book value of all assets of such
Person after all appropriate deductions in accordance with GAAP (including, without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization), over (ii) all Debt of such Person at such time. 


          “Note”
shall mean the revolving line of credit promissory note executed by Borrower
described in Section 2.01 hereof and being in the form and substance as
approved by Lender, together with any and all renewals, extensions for any
period, increases or rearrangements thereof. 


          “Person”
shall mean any individual, corporation, partnership (general or limited), joint
venture, association, limited liability company, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof, or any other form of entity. 


          “Primary
Pledged Property” shall include each Approved Primary Property for which an
Addendum to Loan Agreement has been executed by Borrower and Lender prior to
the Qualification Date, and as to which: (a) a Lien has been granted in favor
of Lender in accordance with Section 2.09 of this Agreement; and (b) Borrower
has not received a release or partial release from Lender pursuant to Section
2.08 of this Agreement. 


          “Property”
or “Properties” shall mean the real property, parcel or tract and the
improvements and personalty thereon which have been submitted by Borrower for
approval by Lender to become Approved Primary Property or an approved
Supporting Pledged Property. 


          “Qualification
Date” shall mean ten Business Days prior to the Maturity Date. 


          “Request
for Advance” shall mean a request made in writing by Borrower for an Advance in
form as shown on Exhibit “D”. 


          “Security
Instruments” shall mean this Agreement, the Mortgages, assignment of rents and
leases, and the agreements or instruments described or referred to in Section
2.08 hereof and any and all other agreements or instruments (other than
participation or similar agreements between the Lender and any other bank or
creditor with respect to any Indebtedness pursuant to this Agreement) now or
hereafter executed and delivered by the Borrower or any other Person in
connection with, or as security for the payment or performance of, the Note,
the Indebtedness or this Agreement, as such agreements may be amended or
supplemented from time to time. 


5






          “Supporting
Pledged Properties” shall mean other investment real estate properties owned by
a Co-Borrower free and clear of any liens or mortgages, which are pledged or
mortgaged to Lender at Co-Borrower’s sole discretion, which properties are not
to become Primary Pledged Properties but are pledged or mortgaged as an
abundance of caution in order to provide additional cash flow support to
satisfy the Interest Coverage Determination requirements set forth in
Subsection 2.10(c) of this Agreement. Any Supporting Pledged Properties shall
not be part of the Borrowing Base but shall be part of the Collateral Base. The
Supporting Pledged Properties shall be pledged by recording a first lien deed
of trust and security agreement along with an absolute assignment of rents and
leases; and acceptance by Lender for support purposes shall be conditioned upon
meeting the requirements set forth in Subsection 2.09(b). 


          “Title
Insurer” shall mean any title company selected by Borrower, and its underwriter,
both of which must be approved by Lender in its sole discretion, which approval
shall not be unreasonably withheld. Fidelity National Title Insurance Company
and Chicago Title are deemed approved. 


Article II.         - AMOUNT AND TERMS OF THE
REVOLVING LINE OF CREDIT


          Section
2.01 Commitment. Subject to the terms and conditions and relying on the
representations and warranties contained in this Agreement, Lender agrees to
make a revolving line of credit (the “Line of Credit”) available to Borrower in
the Maximum Loan Amount as applicable from time to time, (the “Line of Credit
Amount”). During the period commencing with the Effective Date to and including
the Funding Termination Date, and subject to the conditions set forth in this
Agreement, the Lender will make Advances under the Line of Credit (the “Loans”)
to Borrower from time to time on any Business Day in such amounts as the
Borrower may request up to and including the Line of Credit Amount, and
Borrower may borrow, prepay and reborrow under this Line of Credit; provided,
however, that the aggregate principal amount at any one time outstanding under
the Line of Credit plus any Advances reserved for Letters of Credit shall not
exceed the Maximum Loan Amount. To evidence the Loans to be made by Lender
under this Line of Credit pursuant to this Section, Borrower will issue,
execute and deliver the Note in the original principal amount of
$25,000,000.00. It is expressly contemplated that by reason of prepayments
there may be times when no Indebtedness is owing under the Note, but
notwithstanding such occurrences, the Note and the Loan Documents shall remain
in full force and effect as to such Loans or Advances made subsequent to such
occurrence. Each Co-Borrower shall have joint and several liability for all
Advances made under the Line of Credit and for all obligations under the Loan
Agreement. In the event the outstanding aggregate principal amount ever exceeds
the Maximum Loan Amount, Borrower shall immediately, upon written notice from
Lender, reduce said aggregate principal balance by making a principal reduction
payment in an amount necessary to reduce the aggregate principal amount equal
to or below the Maximum Loan Amount. 


          Section
2.02 Initial Borrowing Base. As of the Effective Date hereof, Borrower
has pledged the Initial Primary Properties and has established an initial
Borrowing Base of $24.7 million. The Initial Primary Properties may, at
Borrower’s election, be subject to the release provisions of Section 2.08 of
this Agreement (thereby lowering the Borrowing Base). 


6






          Section
2.03 Advances. The requirements of Sections 3.01 hereof are a condition
precedent for each Advance on the Note. From time to time, not less than three
(3) Business Days prior to the date on which an Advance is desired, Borrower
shall submit to Lender a Request for Advance in the form of the Request for
Advance attached hereto as Exhibit “D” and made a part hereof for all purposes.



          Section
2.04 Letters of Credit. One or more Co-Borrowers or the Guarantor may
apply for and obtain one or more Letters of Credit from Depository Bank. In the
event that any such party applies for a Letter of Credit with Depository Bank,
Lender shall approve Borrower’s request within five Business Days of such
application and Lender shall reserve an amount of Line of Credit proceeds to
cover any advancements that are made under the Letter of Credit to the payee
thereunder. The aggregate of Advances reserved for Letters of Credit will not
exceed $5,000,000.00 at any one time under this Line of Credit. Borrower agrees
to execute any and all documents deemed reasonably necessary by Lender in
connection with Letter of Credit transactions, including amendments to this
Agreement, additional security agreements and other collateral documents, and
agrees to pay all fees due to Depository Bank for issuance of the Letters of
Credit including a 1% issuance fee. In the event a Letter of Credit is issued
by Depository Bank on behalf of Co-Borrower or the Guarantor, Line of Credit
funds are reserved, and the Letter of Credit is presented to Depository Bank
and drafted upon, Borrower agrees that Lender shall, without consent of
Borrower, make Advances of the Line of Credit proceeds to repay the Depository
Bank for advancements on the Letter of Credit. Lender will not be required to
release its collateral securing the Line of Credit until such time as all
obligations of the Depository Bank under any Letters of Credit have expired or
been terminated, and until the Note is paid in full. The expiration dates of
any such Letters of Credit shall not extend past the Funding Termination Date,
as may be extended from time to time. 


          Section
2.05 Interest Payments. The Borrower shall pay interest on the Note at
the rate and on such dates as provided in the Note. 


          Section
2.06 Term of this Agreement. Notwithstanding anything contained herein
to the contrary, this Agreement shall not terminate except upon full and final
payment of the Note and termination of Lender’s commitment to advance funds
under the Note, whether prior or subsequent to the maturity of the Note, and
shall continue in full force and effect throughout the term of any renewals,
extensions, increases or rearrangements of the Note. If Lender does not elect to
extend the Maturity Date of the Note, Borrower may elect to exercise Borrower’s
Extension Option in accordance with the terms of the Note; in such case, the
terms of this Agreement and of the Loan Documents will be extended accordingly;
provided no additional Advances shall be made by Lender during the extension
period and any obligations under Letters of Credit shall be terminated. 


7






          Section
2.07 Fees. Borrower shall pay to Lender on the date hereof, a one time
facility fee in the amount of $163,000.00. In the event that the Maturity Date
is extended as the result of a mutual agreement between Borrower and Lender,
Borrower shall pay to Lender a renewal fee in the amount of $93,750.00 for each
future extension. In the event that the Maturity Date is extended as the result
of Borrower electing to exercise the Borrower’s Extension Option, Borrower
shall pay to Lender a renewal fee of equal to 0.375% of the outstanding
principal balance of the Line of credit plus any Line of Credit proceeds reserved
for Letters of Credit issued by Depository Bank. As an incentive to Borrower
and Guarantor to utilized Lender’s mortgage banking services, Lender agrees to
credit 25% of all mortgage banking fees paid by Borrower, Guarantor and/or any
affiliated entities to Lender or affiliates of Lender towards the renewal fees
outlined above. Lender agrees to provide mortgage banking services to Borrower
and Guarantor for a transaction fee of 0.80% of the loan amount for
transactions less than $2,000,000.00, 0.70% of the loan amount for transactions
over $2,000,000.00 but less than $10,000,000.00, and 0.50% for transactions
greater than $10,000,000.00. 


          Section
2.08 Releases (Decreases to Borrowing Base). Borrower shall be entitled
to receive from Lender full releases as to any respective Primary Pledged
Properties or Supporting Pledged Properties in the Collateral Base (the
“Release”), upon the following terms and conditions with respect to such
release sought: 


	
  

 	
  

 
	
 (a)

 	
 Borrower shall not be in Default in the payment of any or all of the
 Indebtedness. 

 
	
  

 	
  

 
	
 (b)

 	
 Borrower or Guarantor shall not be in Default in the performance or
 observance of any of the covenants, agreements, terms, conditions or
 stipulations contained in the Note, this Agreement or the Security Instruments.
 

 
	
  

 	
  

 
	
 (c)

 	
 Borrower shall have given Lender ten (10) Business Days prior written
 notice of Borrower’s intent to exercise such right of release, and shall
 specify with particularity the extent of such exercise of right and the
 specific Property to the released. 

 
	
  

 	
  

 
	
 (d)

 	
 Borrower shall pay all reasonable expenses connected with or arising
 from any such requested Release, including but not limited to, all reasonable
 expenses and costs of Lender, all attorneys’ fees and costs of Borrower and
 Lender, all survey costs, appraisal costs, title insurance costs, and
 recording costs. 

 
	
  

 	
  

 
	
 (e)

 	
 Borrower shall pay to Lender in cash, certified funds, official bank
 check or other immediately available funds for application on the
 Indebtedness an amount necessary to reduce the amount outstanding on the Line
 of Credit to the Borrowing Base as calculated by Lender to reflect the
 reduction of the Collateral Base after the Release. The execution and
 delivery of the Release by Lender shall not in any way impair the liens upon
 the Primary Pledged Properties or Supporting Pledged Properties then
 remaining and representing the adjusted Collateral Base after such Release.
 The Borrowing Base is reduced by each Primary Pledged Property that is
 released in the same amount that was originally established for said Primary
 Pledged Property (unless later adjustments have been made by Lender, in
 accordance with the terms of this Agreement). 

 
	
  

 	
  

 
	
 (f)

 	
 All sums received as Release amounts shall be exclusive of release
 fees, costs, updated appraisal fees, expenses and accrued interest. 

 


8






          Section
2.09 (a) Conditions to Inclusion as a Primary Pledged Property (Increases to
Borrowing Base). The Borrowing Base may be increased by the inclusion of
additional Primary Pledged Properties to the Collateral Base in accordance with
this Section 2.09 and with Section 2.10. In order for a Property to be included
as a Primary Pledged Property, in addition to the other requirements contained
in this Agreement, the following conditions must be satisfied: 


	
  

 	
  

 
	
 (1.)

 	
 Appraisal & Financial Reporting. Lender
 shall order an appraisal of the Property to be included as a Primary Pledged
 Property. Borrower shall provide, if the Property is to be purchased, a copy
 of the signed purchase contract and any amendments thereto. Borrower shall
 also provide Lender a copy of the operating statements certified by the
 Borrower as true and correct in all material respects, to the extent
 available, for the Property for the preceding three year period and a current
 rent roll certified by the Borrower as true and correct in all material
 respects. For a Property that has not yet reached lease stabilization,
 Borrower may request that the appraisal be prepared on both an “as is” and on
 an “as stabilized” basis. The Adjusted Appraised Value of the Property shall
 be determined by Lender and the Loan Value shall be established in writing in
 accordance with Exhibit “A”, as adjusted in accordance with Section 2.10 of
 this Agreement. 

 
	
  

 	
  

 
	
 (2.)

 	
 Title Policy. Lender shall receive, at
 Borrower’s option, either a Loan Title Policy or Master Loan Title Policy (a
 “Policy”), issued by the Title Insurer, with respect to each Primary Pledged
 Property. Each such Policy shall show Lender to be the proposed insured,
 shall be in an amount no less than the original principal amount of the Loan
 Value secured by the Primary Pledged Property, shall be in form and substance
 satisfactory to Lender, shall show no liens against the Primary Pledged
 Property other than the Mortgage and shall be free and clear of all defects,
 encumbrances and survey exceptions except such as Lender and its attorney
 shall approve, such approval not to be unreasonably withheld, conditioned or
 delayed. Lender shall also receive copies of all documents evidencing
 exceptions to title, together with correct and legible copies of the recorded
 plat for the subdivision section in which such Primary Pledged Property is
 located (if applicable) as available. 

 
	
  

 	
  

 
	
 (3.)

 	
 Survey. Borrower shall provide to Lender a
 survey by a registered surveyor reasonably acceptable to Lender and to the
 Title Insurer, certified to a date not more than ninety (90) days prior to
 the date the Property becomes a Primary Pledged Property, which survey shall
 show the scale, the north direction, the beginning point and the dimensions
 of the Property by metes and bounds, the distance to the nearest intersecting
 street and the point of reference from which the survey commences, the land
 area of the Property, the enclosed slab area and dimensions of the
 improvements thereon, parking areas, the width and name or names of the
 street or streets on which the Property abuts, means of ingress thereto and
 egress therefrom from public ways, and all recorded easements, rights-of-way,
 whether or not visible and all building set-back lines, and shall contain a
 certificate that the survey correctly shows the location of all buildings,
 structures and other improvements, including the foundations of buildings in
 the course of construction, situated on the Property and that, except as
 shown, there are no visible easements or rights-of-way across the Property,
 no party walls, no encroachments on adjoining premises, streets or alleys and
 no encroachments on the Property by improvements on adjoining premises and
 such other details as Lender may request; provided, however, that any such
 survey showing all of the above will be satisfactory for all future Advances
 thereafter if, at the time of each such Advance, the Borrower furnishes a
 current affidavit or certificate that there have been no subsequent changes
 in any exterior line of the improvements thereon which would place any such
 line nearer to any property line. The survey must meet the then current
 ALTA-ACMS Survey Standards. 

 


9










	
  

 	
  

 
	
 (4.)

 	
 Phase I Environmental. A Phase I
 Environmental Report ordered by Lender and addressed to Lender or subject to
 a reliance letter in favor of Lender, in form and substance and prepared by
 an engineer reasonably acceptable to Lender for each proposed Primary Pledged
 Property. 

 
	
  

 	
  

 
	
 (5.)

 	
 Property Condition Assessment. At Lender’s
 discretion if determined that deferred maintenance at the Property exists, a
 property condition assessment for each proposed Primary Pledged Property in
 form and substance and prepared by an engineer reasonably acceptable to
 Lender, which has been ordered by Lender and is addressed to Lender. 

 
	
  

 	
  

 
	
 (6.)

 	
 Affidavit of No Construction Activity.
 Borrower shall have provided Lender an affidavit in form and content
 acceptable to Lender confirming that there is no ongoing construction of improvements
 on the Property, which will be unpaid or result in a lien on the Property. 

 
	
  

 	
  

 
	
 (7.)

 	
 Leases. Copy of all occupancy leases (the
 “Leases”) applicable to the proposed Primary Pledged Property. “Major Leases”
 shall mean together, every tenant lease which occupies more than twenty
 percent of the net rentable area contained on a Property. Lender reserves the
 right to approve the financial condition of any tenants who are subject to
 Major Leases. 

 
	
  

 	
  

 
	
 (8.)

 	
 Zoning. Evidence of appropriate zoning for
 the Property and compliance with applicable deed restrictions, which can be
 met with the standard municipal zoning letter or letter from the property
 owners association. 

 
	
  

 	
  

 
	
 (9.)

 	
 Flood Determination. Evidence acceptable to
 Lender that no portion of the buildings on the Property is in a flood plain
 or flood way. 

 
	
  

 	
  

 
	
 (10.)

 	
 UCC Lien Search. Evidence acceptable to
 Lender that the personal property comprising a portion of the Property is
 unencumbered except for liens permitted in the Mortgage. 

 
	
  

 	
  

 
	
 (11.)

 	
 Insurance. Hazard and liability insurance
 and such other insurance coverages and endorsements as are reasonably
 required by Lender in amounts and with insurers reasonably acceptable to
 Lender. 

 
	
  

 	
  

 
	
 (12.)

 	
 SNDA’s. Executed subordination
 nondisturbance and attornment agreements from tenants under Major Leases on
 the Property, in form and substance reasonably acceptable to Lender. 

 
	
  

 	
  

 
	
 (13.)

 	
 Management Agreement. Borrower shall provide
 Lender with a management agreement for the Property in form and substance
 acceptable to Lender. 

 


10










	
  

 	
  

 
	
 (14.)

 	
 Other. The Lender shall have received such
 other documents as it may reasonably have requested at any time or at the
 time of execution of the Mortgage, including but not limited to certificates
 of corporate resolution of Co-Borrower and an opinion of counsel for
 Borrower, in form and substance reasonably acceptable to Lender. 

 
	
  

 	
  

 
	
 (15.)

 	
 Lender’s Acceptance. Lender shall have
 accepted the Property as a Primary Pledged Property, as evidenced by Lender’s
 execution of an Addendum to Loan Agreement, in the form of Exhibit “A”
 attached hereto. By Borrower’s execution of such Addendum, Borrower is
 representing and warranting to Lender that such Primary Pledged Property is
 qualified in all respects to be included in the Collateral Base as required
 hereunder, however, Lender’s execution of such Addendum does not waive any
 requirement or condition as contained in this Agreement for maintaining the
 eligibility of such Property as a Primary Pledged Property. No additional
 Property shall be submitted or approved as a Primary Pledged Property at any
 time after the Qualification Date. Borrower shall have also executed and
 delivered the Mortgage and such other Loan Documents as reasonably required
 by Lender to evidence and secure Advances to be made under the Collateral
 Base relating to the Primary Pledged Property, and shall have delivered the
 original Loan Documents to Lender. 

 


     (b) Conditions of Inclusion as a
Supporting Pledged Property. Borrower may submit a Supporting Pledged
Property for inclusion in the Collateral Base but not the Borrowing Base for
the purpose of providing additional cash flow support to satisfy the Interest
Coverage Determination requirements set forth in Subsection 2.10(c) of
this Agreement. In order for a Supporting Pledged Property to be included in
the Collateral Base, in addition to the other requirements contained in this
Agreement, the following conditions must be satisfied. 


	
  

 	
  

 
	
 (1.)

 	
 Third Party Reports. Borrower shall provide
 Lender with copies of any existing third party reports for the Supporting
 Pledged Property which are currently in Borrower’s possession, including
 appraisal reports, environmental reports, and property condition assessments.
 No updates to these reports will be required. 

 
	
  

 	
  

 
	
 (2.)

 	
 Financial Reporting. Borrower shall provide
 Lender with copies of the operating statements certified by Borrower as true
 and correct in all material respects, to the extent available, for the
 Supporting Pledged Property for the preceding three year period, plus a copy
 of the current rent roll certified by Borrower as true and correct in all
 material respects for the Supporting Pledged Property. 

 
	
  

 	
  

 
	
 (3.)

 	
 Title Report. Borrower shall provide a title
 report acceptable to Lender which provides evidence that there are no liens
 against the Supporting Pledged Property other than the Mortgage and liens
 reasonably acceptable to Lender or which have been bonded over by the Title
 Insurer. 

 
	
  

 	
  

 
	
 (4.)

 	
 Insurance. Hazard and liability insurance
 and such other insurance coverages and endorsements as are reasonably
 required by Lender in amounts and with insurers reasonably acceptable to
 Lender. 

 


11









	
  

 	
  

 
	
 (5.)

 	
 Lender’s Acceptance. Borrower shall execute
 and deliver the Mortgage and such other Loan Documents as reasonably required
 by Lender to evidence the pledge of the Supporting Pledged Property. Borrower
 shall have delivered the original Loan Documents to Lender. 

 


          Section
2.10 Determination of Loan Value and the Borrowing Base. The Loan Value
and Borrowing Base as to the Initial Primary Pledged Properties shall be as
stated in Section 2.02 of this Agreement, subject to full compliance by Borrower
of the financial covenants set forth in Subsections 5.01(k) and 5.01(l). As to
additional requests to have Approved Primary Properties added to the Borrowing
Base, once a Property has been approved by Lender and the Addendum to Loan
Agreement has been executed, the Loan Value shall be determined and the
Borrowing Base increased, subject to full compliance with the financial
covenants set forth in Subsections 5.01(k) and 5.01(l), in accordance with this
Section 2.10. The amount of the Borrowing Base will be reviewed and
re-determined each quarter and will be the lesser of the amount of the Loan
Value Determination, the Debt Service Coverage Determination or the Interest
Coverage Determination, resulting from the following calculations: 


	
  

 	
  

 	
  

 	
  

 
	
 (a)

 	
 Loan Value Determination - a calculation
 which uses the Primary Pledged Property’s Adjusted Appraised Value and
 capital investment (for new acquisitions only) in determining the Borrowing
 Base capacity depending on the Primary Pledged Property type and occupancy rate
 as follows: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (1.)

 	
 Improved Properties (i.e. retail buildings)
 - the Loan Value percentages will depend on the Primary Pledged Property’s
 occupancy as follows: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (i) 90% or Greater Occupied - the lesser of 65% of the
 Adjusted Appraised Value or 65% of the total capital investment (for new
 acquisitions only) for the Primary Pledged Property. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (ii) 60% - 89% Occupied - the lesser of 60% of the Adjusted
 Appraised Value or 60% of the total capital investment (for new acquisitions
 only) for the Primary Pledged Property. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (2.)

 	
 Unsubordinated Ground Leases owned in fee simple
 - the lesser of 65% of the Adjusted Appraised Value or 65% of the total
 capital investment (for new acquisitions only) for the Primary Pledged
 Property; or 

 
	
  

 	
  

 	
  

 	
  

 
	
 (b)

 	
 Debt Service Coverage Determination - a
 calculation which uses the existing, in place, Property Cash Flow (as such
 term is defined in Subsection 2.10(d) to determine the maximum amount
 of debt the Primary Pledged Property could carry in order to maintain a 1.30
 to 1.00 debt service coverage ratio. The calculation for this test is equal
 to Property Cash Flow, divided by 1.30, divided by the Loan Constant Rate (as
 such term is defined in Subsection 2.10(d)) as applied to all Primary
 Pledged Properties; or

 
	
  

 	
  

 	
  

 	
  

 
	
 (c)

 	
 Interest Coverage Determination - a
 calculation which uses cumulative cash flow from both the Primary Pledged
 Properties and Supporting Pledged Properties to determine the maximum amount
 of debt the Primary Pledged Properties and Supporting Pledged Properties
 could support for the Line of Credit as determined below:

 


12










	
  

 	
  

 	
  

 
	
  

 	
 (1.)

 	
 Interest Coverage Before Reserves – Net
 Operating Income (as such term is defined in Subsection 2.10 (d))
 divided by (i) 1.60 for the Primary Pledged Properties and (ii) 2.00 for the
 Primary Pledged Properties and Supporting Pledged Properties combined,
 divided by the then current interest rate on the Note; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (2.)

 	
 Interest Coverage After Reserves - Property
 Cash Flow (as such term is defined in Subsection 2.10(d)) divided by (i) 1.50
 for the Primary Pledged Properties and (ii) 1.75 for the Primary Pledged
 Properties and Supporting Pledged Properties combined, divided by the then
 current interest rate on the Note. 

 


          The
Borrowing Base shall be equal to the lesser of the amounts derived from the
Loan Value Determination, the Debt Service Coverage Determination and the
Interest Coverage Determination calculations as certified to by the Borrowers
at the end of each calendar quarter and verified by Lender. The Borrowing Base
shall be reduced by each Primary Pledged Property that is released from the
Borrowing Base pursuant to the terms of Section 2.08. At no time may the
outstanding balance of the Line of Credit plus any unfunded Letter of Credit
commitments be greater than the Borrowing Base. 


	
  

 	
  

 	
  

 	
  

 
	
 (d)

 	
 Borrowing Base Definitions for purposes of
 this Agreement will have the following meanings:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (1.)

 	
  “Net Operating Income” - equal to Gross
 Operating Income less Operating Expenses. Gross Operating Income is based
 upon tenants in occupancy. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (2.)

 	
  “Property Cash Flow” - equal to Net
 Operating Income less reserves for replacement, tenant improvements and
 leasing commissions of $0.75 per rentable square foot of building area for
 multi-tenant properties only (absolute-net, single-tenant, ground leases and
 land do not require reserves). 

 
	
  

 	
  

 	
  

 
	
  

 	
 (3.)

 	
  “Loan Constant Rate”
 - calculated using the formula below with the variables defined as: 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 x = Loan Constant Rate. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 i = Interest Rate expressed on a monthly basis, will be the greater
 of (a) the current rate per annum charged for the Line of Credit, or (b) a
 spread of 175 basis points plus the greater of (i) 5.0% per annum or (ii) the
 ten year treasury in effect on the last day of the quarter for which the
 updated Borrowing Base report is being prepared (i.e. Borrowing Base report
 using financial information through the end of the third quarter of the year
 would use the ten year treasury in effect on September 30th). 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
 N = Amortization Term, which is equal to 300 months.

 


13














	
  

 	
  

 	
  

 
	
  

 	
 (4.)

 	
  “Gross Operating Income” - shall mean all
 income, revenues, and consideration received or paid to or for the account or
 benefit of the Co-Borrower resulting from or attributable to the operation or
 leasing of the Primary Pledged Property or Supporting Pledged Property
 determined in accordance with GAAP for the 12 month period preceding the
 Effective Date for which the cash flow is calculated, including, without
 limitation (a) rents from tenants, assignees, subtenants, ground lessees, or
 parties to walkway agreements; (b) amounts (to the extent included in
 Operating Expenses) payable by tenants to Co-Borrower on account of
 maintenance or service charges, taxes, assessments, utilities, and maintenance
 of the Primary Pledged Property or Supporting Pledged Property (c) receipts
 from licenses, concessions, vending machines and similar items located at or
 operated from the Primary Pledged Property or Supporting Pledged Property but
 excluding any income or revenues from a sale, refinancing, casualty or
 condemnation, lease termination payments, or payments from any other events
 not related to the ordinary course of operations of the Primary Pledged
 Property or Supporting Pledged Property. Gross Operating Income shall be
 determined by the current annualized rent roll plus other income included in
 total revenues on the operating statement including, but not limited to, (a)
 late fees, (b) escalation, (c) building services, (d) utility income, (e) NSF
 fees, (f) vending income and (g) parking income. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (5.)

 	
  “Operating Expenses” - shall mean the total
 actual operating expenses incurred during the 12 month period preceding the
 effective date for which the Primary Pledged Property or Supporting Pledged
 Property cash flow is calculated. Operating Expenses will include all costs
 relating to the payment of (a) personal property taxes and real estate taxes;
 (b) general administrative costs (c) wages, salaries, payroll taxes and
 employee benefits, (d) maintenance, repair and custodial costs, (e) costs of
 utility services, (f) costs associated with services relating to the daily
 operations of the Primary Pledged Property or Supporting Pledged Property
 contracted to outside parties, (g) management fees and (h) premiums payable
 for insurance carried on or with respect to the Primary Pledged Property or
 Supporting Pledged Property. Costs not to be included in Operating Expenses
 include, but are not limited to, (a) leasing and marketing costs, (b)
 depreciation and amortization, (c) partnership administration expenses, (d)
 debt service payable to Lender, (e) debt service payable on the advances from
 a partner and (f) costs associated with capital items and tenant
 improvements. 

 


Article III.         - ADVANCES


          Section 3.01
Conditions Precedent to All Advances. The obligation of the Lender to
make each Advance (including the initial Advance) shall be subject to the
further conditions precedent that on the date of such Advance, the following
statements shall be true or the appropriate document shall have been furnished
to Lender: 


14










	
  

 	
  

 
	
 (a)

 	
 Borrowing Base Certificate. Borrower and
 Guarantor shall provide to Lender a Borrowing Base Certificate in form and
 content satisfactory to Lender as provided in Exhibit “C” and which sets
 forth the Loan Value for each Primary Pledged Property and the aggregate Loan
 Value for all Primary Pledged Properties; 

 
	
  

 	
  

 
	
 (b)

 	
 Representations and Warranties. The
 representations and warranties of the Borrower and Guarantor contained in
 Article IV and otherwise made in writing by or on behalf of the Borrower and
 Guarantor pursuant to this Agreement were true and correct in all material
 respects when made and are true and correct in all material respects on and
 as of the date of such Advance; 

 
	
  

 	
  

 
	
 (c)

 	
 No Default. No event has occurred and is
 continuing, or would result from such Advance, which constitutes a Default or
 which would constitute a Default but for the requirement that notice be given
 or time elapse or both, hereunder or under the Note, or any Security
 Instrument; 

 
	
  

 	
  

 
	
 (d)

 	
 Performance and Compliance. The Borrower has
 performed and complied with all agreements, terms and conditions contained in
 this Agreement in all material respects; 

 
	
  

 	
  

 
	
 (e)

 	
 No Material Adverse Effect. No circumstance
 exists, either in any instance or in the aggregate, which would have a
 Material Adverse Effect; 

 
	
  

 	
  

 
	
 (f)

 	
 Inspection. Lender shall have the right to
 inspect any Property securing the Note either by its personnel or independent
 inspectors acceptable to Lender, at all reasonable times upon reasonable
 notice of not less than two Business Days to Borrower and shall make best
 efforts not to disturb the tenants at such Property, and upon submission of a
 request for an Advance to verify, among other matters, that no construction
 of improvements is in progress on said Property. Borrower shall not be
 charged for the cost of inspections in excess of $500.00 annually; 

 
	
  

 	
  

 
	
 (g)

 	
 Nothing Further Certificates. On subsequent
 Advances, at Lender’s option, and at Borrower’s expense, nothing further
 certificates from the Title Insurer shall be delivered to Lender, showing
 that since the date of issuance of each Policy, no lien, affidavit claiming a
 lien, or other encumbrance has been claimed, granted or otherwise created
 with respect to or covering any of the subject Properties securing the Note
 for which an Advance is being requested except as has been approved in
 writing by Lender; and 

 
	
  

 	
  

 
	
 (h)

 	
 Further Assurances. The Lender shall have
 received such other approvals, opinions or documents as the Lender may
 reasonably request. 

 


          Section
3.02 No Waiver. No Advance shall constitute a waiver of any condition
precedent to the obligation of Lender to make any further Advance or preclude
Lender from thereafter declaring the failure of Borrower or Guarantor to
satisfy such condition precedent to be a Default. 


15






          Section
3.03 Requirements Only for the Benefit of Lender. All conditions of any
Advance imposed hereby are solely for the benefit of Lender and Lender’s
successors and assigns, and no other party may rely upon Lender’s actions or be
entitled to assume that Lender will make any Advance. Any requirements or
conditions of this Agreement may be waived by Lender, with or without notice to
Borrower or any other party, in whole or in part, at any time, without
prejudice as to subsequent reinstatement of such waived or partially waived
requirements or conditions. 


Article IV.         - REPRESENTATIONS AND WARRANTIES


          In order to
induce the Lender to enter into this Agreement, Borrower represents and
warrants to the Lender (which representations and warranties will survive the
delivery of the Note and the making of the loans hereunder) as follows: 


          Section
4.01 Corporate Existence and Authority in Texas. Each Co-Borrower is a
duly organized legal entity, validly existing under the laws of the
jurisdiction in which it was formed. Each Co-Borrower’s sole general partner
(as applicable) is a limited liability company, duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it
was formed. 


          Section
4.02 Corporate Power and Authorizations. The execution, delivery and
performance by each Co-Borrower or Guarantor of this Agreement, the Note, the
Security Instruments, and the other Loan Documents to which they are a party,
are within their respective corporate powers, have been duly authorized by all
necessary corporate action, and does not contravene (i) its corporate charter
or bylaws, if applicable, (ii) its partnership agreement, if applicable, or
(iii) any law, Governmental Requirement, or any material contractual
restriction binding on or affecting them. 


          Section
4.03 Governmental Approvals. To the best of its knowledge, except for
the recording of the Mortgages and other applicable Loan Documents, no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the due
execution, delivery and performance by Co-Borrower as to the terms of this
Agreement and the other Loan Documents. 


          Section
4.04 Binding Obligations. To the best of their knowledge, this Agreement
is, and the Note, Security Instruments and the Loan Documents to which it is a
party when delivered hereunder will be, except for bankruptcy laws and similar
laws, legal, valid, binding and enforceable obligations of the Borrower or
Guarantor, as applicable, in accordance with their respective terms. 


          Section
4.05 Exchange Act Compliance. No proceeds of any Advance will be used to
acquire any security in any transaction which is subject to Sections 13 and 14
of the Securities Exchange Act of 1934, as amended. 


          Section
4.06 Use of Proceeds: No Credit For Margin Stock. The proceeds of the
Note will be used by the Borrower to provide funds for the operation of its
businesses. Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock. 


16






          Section
4.07 Pending or Threatened Proceedings. There is no pending or to
Borrower’s current actual knowledge, threatened action or proceeding before any
court, governmental agency or arbitrator, affecting any Co-Borrower, or any
Guarantor or any Property securing the Note, which may have a Material Adverse
Effect or which has not been previously disclosed to Lender. 


          Section
4.08 No Additional Consent or Approval. The Borrower’s execution,
delivery, and performance of the Note, this Agreement, and the other Loan
Documents does not require any consent or approval that has not already been
obtained, including, without limitation, the consent or approval of any
regulatory authority, governmental body, or political subdivision of the United
States of America or any state thereof. 


          Section
4.09 Financial Condition. To the best of their knowledge, the Financial
Statements of each Co-Borrower, and the Guarantor (including any related
schedules or notes) which have been delivered to the Lender have been prepared
in accordance with GAAP (or such other form as has been approved by Lender in
writing), and present fairly the financial condition and changes in financial
position of each Co-Borrower, and the Guarantor, respectively, at the date or
dates and for the period or periods stated in accordance with historical
practices. No change, either in any instance or in the aggregate, has since
occurred in the consolidated condition, financial or otherwise, of any
Co-Borrower, or the Guarantor which would have a Material Adverse Effect, nor
has any Co-Borrower or the Guarantor incurred any material liabilities, except
as disclosed by Borrower in writing to the Lender. 


          Section
4.10 Taxes; Governmental Charges. Upon information and belief after due
inquiry, each Co-Borrower, and the Guarantor have filed all tax returns and
reports required to be filed and have paid all taxes, assessments, fees and
other governmental charges levied upon it or upon its properties or income
which are due and payable, including interest and penalties, or have provided
adequate reserves for the payment thereof. 


          Section
4.11 Titles, Etc. With respect to any property pledged, transferred, or
assigned hereunder or under the Security Instruments as security for the loan,
or under the other Loan Documents, the Co-Borrower has, or simultaneous with
the execution of any Mortgage will have, good title to such property, whether
real, personal or mixed, tangible or intangible, free and clear of all liens,
encumbrances and security interests, other than those granted to or approved by
Lender hereunder or to Co-Borrower under the Loan Documents. 


          Section
4.12 Commencement of Construction. With respect to each applicable
Property securing the Note, for the duration of Lender’s obligation to make Advances
on such Note, and except for tenant improvements required under the Leases,
repair and maintenance, or capital projects, no ongoing work of any kind
(including the destruction or removal of any existing improvements, site work,
clearing, grubbing, draining, or fencing of the Property) has been commenced or
has been performed on the Property that would create a lien having priority
over the liens securing the Note; provided Co-Borrower shall have the right to
bond around any such lien. 


17






          Section
4.13 Omissions and Misrepresentations. No instrument, certificate, or
any other document delivered or to be delivered by any Co-Borrower or the
contains or will contain any untrue statement of a material fact or omits any
material fact necessary to make such statements in light of circumstances under
which they were made not misleading. 


          Section
4.14 Flood Plain. Except as otherwise disclosed in writing by any
Co-Borrower to Lender, no portion of any floor surface of any Property securing
the Note lies within the 100-year flood plain or any area that has been
designated by the Federal Emergency Management Agency as an area having special
flood hazards or if it does, the community in which said Property is located
has been approved for flood insurance under the National Flood Insurance
Program and flood insurance is available for said Property under said program. 


Article V.         - COVENANTS OF THE BORROWER


          Section
5.01 Affirmative Covenants. So long as the Note shall remain unpaid or the
Borrower shall be indebted to the Lender, Borrower and Guarantor (as
applicable) will, unless the Lender shall otherwise consent in writing: 


	
  

 	
  

 
	
 (a)

 	
 Compliance with Laws, Etc. Comply in all
 material respects with all applicable Governmental Requirements, such
 compliance to include, without limitation, paying before the same become
 delinquent all taxes, assessments and governmental charges imposed upon it or
 upon its property except to the extent contested in good faith. 

 
	
  

 	
  

 
	
 (b)

 	
 Notice of Certain Events. Within ten (10)
 Business Days notify the Lender in writing if the Borrower learns of the
 occurrence of (i) any event which constitutes a Default, together with a
 detailed statement by a responsible officer of the applicable Co-Borrower of
 the steps being taken to cure such Default; or (ii) any legal, judicial or
 regulatory proceedings affecting Borrower, any Guarantor, or any of their
 properties in which the amount involved exceeds $50,000 and is not covered by
 insurance or which, if adversely determined, would have a Material Adverse
 Effect; or (iii) any event or condition having a Material Adverse Effect; or
 (iv) any material change in the structure, operation, management, ownership,
 accounting procedures, business activity, or business location of Borrower or
 Guarantor. 

 
	
  

 	
  

 
	
 (c)

 	
 Reimbursement of Expenses. Pay all
 reasonable legal fees incurred by the Lender in connection with the
 preparation of this Agreement and any and all other Loan Documents
 contemplated hereby (including any amendments hereto or thereto or consents
 or waivers hereunder or thereunder) and pay all fees, charges or taxes for
 the recording or filing of Loan Documents. Borrower will, upon request,
 reimburse the Lender within ten (10) Business Days of written notice from
 Lender for amounts reasonably expended by Lender to satisfy any obligation of
 Borrower under this Agreement or any other Loan Documents, or to collect the
 Note, or to enforce the rights of the Lender under this Agreement or any
 other Loan Documents, which amounts will include all court costs, reasonable
 attorneys’ fees (including, without limitation, fees for trial, appeal or
 other proceedings), fees of auditors and accountants, and investigation
 expenses reasonably incurred by the Lender in connection with any such matters
 exclusive of all expenses resulting from the gross negligence or willful
 misconduct of Lender, and after ten (10) Business Days together with interest
 at eighteen percent (18%) on each such amount from the date of written demand
 or request by the Lender for reimbursement until the date of reimbursement to
 the Lender. 

 


18










	
  

 	
  

 	
  

 
	
 (d)

 	
 Further Assurance. Promptly cure or cause to
 be cured any defects in the creation and issuance of the Note and the
 execution and delivery of the Loan Documents, and this Agreement or under any
 other Loan Document. Borrower, at its expense, and Guarantor will promptly
 execute and deliver to Lender upon request all such other and further
 documents, agreements and instruments reasonably necessary for Borrower to
 comply with or accomplish the covenants and agreements of Borrower under the
 Loan Documents, including this Agreement, or to further evidence and more
 fully describe the Collateral intended as security for the Note, or to
 correct any omissions in the Loan Documents or to more fully state the
 security obligations set out herein, or in any of the Security Instruments,
 or to perfect, protect or preserve any Liens created pursuant to any of the
 Loan Documents, or to make any recordings, file any notices, or obtain any
 consents, all as may be reasonably necessary or appropriate in connection
 therewith. 

 
	
  

 	
  

 	
  

 
	
 (e)

 	
 Direct Disbursement and Application by Lender.
 Lender shall have the right, but not the obligation, to disburse and directly
 apply proceeds of the Loan to the satisfaction of any of Borrower’s
 obligations under the Note (which are delinquent or in Default), including
 the payment of interest as accrued on the Note. Any Advance under the Line of
 Credit by Lender for such purpose, shall be part of the Indebtedness and
 shall be secured by the Security Instruments. After the occurrence of an
 Event of Default, Borrower hereby authorizes Lender to hold, use, disburse,
 and apply Advances under the Line of Credit to expenses incident to this
 Agreement and the Loan Documents, including accrued interest, and the payment
 or performance of any obligation of Borrower hereunder. Borrower hereby
 assigns and pledges the proceeds of the Line of Credit to Lender for such
 purposes. Lender may advance and incur such expenses as Lender deems necessary,
 and such expenses, even though in excess of the amount of the Line of Credit
 Amount, shall be secured by the Security Instruments, and payable to Lender
 upon demand. Lender may disburse any portion of any Advance under the Line of
 Credit at any time after an Event of Default, to persons other than Borrower
 for the purposes specified in this Section. 

 
	
  

 	
  

 	
  

 
	
 (f)

 	
 Costs and Expenses. Pay when due all
 reasonable costs and expenses required by the terms of this Agreement, the
 Note, or the Security Instruments, and including, without limitation: 

 
	
  

 	
  

 	
  

 
	
  

 	
    (1.)

 	
    All taxes and assessments applicable to the Properties in the
 Collateral Base before delinquency; 

 
	
  

 	
  

 	
  

 
	
  

 	
    (2.)

 	
    All fees for filing or recording the Security Instruments; 

 


19










	
  

 	
  

 	
  

 
	
  

 	
 (3.)

 	
 All reasonable fees and expenses for the drawing of Loan Documents
 and of counsel to Lender, and for Lender’s additional legal services rendered
 in connection with this Agreement, now or in the future; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (4.)

 	
 All title insurance and title examination charges, including the
 premiums for the Policies; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (5.)

 	
 All survey costs and expenses, including the cost of the surveys
 required by Section 2.09 of this Agreement; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (6.)

 	
 All other reasonable costs and expenses payable to third parties
 incurred by Lender in connection with the consummation and administration of
 the transactions contemplated by this Agreement. 

 
	
  

 	
  

 	
  

 
	
 (g)

 	
 Inspection of Books and Records. Permit
 Lender, at all reasonable times upon reasonable notice, to examine and copy
 the books and records of Borrower and Guarantor pertaining to the Loans and
 the Properties securing the Note. 

 
	
  

 	
  

 	
  

 
	
 (h)

 	
 Defense of Actions. Lender may (but shall
 not be obligated to) commence, appear in, or defend any action or proceeding
 related to this Agreement, the Line of Credit, the other Loan Documents, or
 the respective rights and obligations of Lender and Borrower pursuant to this
 Agreement. Lender may (but shall not be obligated to) pay all necessary
 expenses, including reasonable attorney’s fees and expenses incurred in connection
 with such proceedings or actions, which Borrower hereby agrees to repay to
 Lender upon demand except for expenses resulting from the gross negligence or
 willful misconduct of Lender. 

 
	
  

 	
  

 	
  

 
	
 (i)

 	
 Payment of Claims. Borrower shall promptly
 pay or cause to be paid when due all costs and expenses incurred in
 connection with the Properties securing the Note and the construction of the
 improvements thereon, and Borrower shall keep all Properties free and clear
 of any filed mechanic’s liens, other liens, charges, or claims, other than
 the lien of the Mortgage and other liens approved in writing by Lender,
 whether inferior or superior to the Mortgage. A discharge of the Mortgage and
 taking of a new Mortgage in substitution thereof shall not release or diminish
 this obligation. Notwithstanding anything to the contrary contained in this
 Agreement, Borrower may contest (i) the validity or amount of any claim of
 any contractor, consultant, architect, or other person providing labor,
 materials, or services with respect to any Property and improvements or (ii)
 any tax or special assessment levied by any Governmental Authority, or (iii)
 the enforcement of or compliance with any Governmental Requirements; any such
 contest on the part of Borrower shall not be a Default hereunder provided,
 that during the pendency of any such contest, if requested by Lender for any
 contest in excess of $50,000.00, Borrower shall furnish to Lender and Title
 Insurer an indemnity bond with corporate surety satisfactory to Lender and
 Title Insurer or other security acceptable to them in an amount equal to the
 amount in contest plus a reasonable additional sum to cover possible costs,
 interest, and penalties, and provided further that Borrower shall pay any
 amount adjudged by a court of competent jurisdiction to be due, with all
 costs, interest, and penalties thereon, before such judgment creates a lien
 on any such Properties. 

 


20










	
  

 	
  

 
	
 (j)

 	
 Restrictions and Annexation. Borrower shall
 not impose, permit or suffer to exist any restrictive covenants or
 encumbrances upon any Property securing the Note, execute or file any
 subdivision plat affecting any such Property, or consent to the annexation of
 any such Property to any city or other political unit without the prior
 written consent of Lender which consent shall not be unreasonably withheld,
 conditioned or delayed. 

 
	
  

 	
  

 
	
 (k)

 	
 Adjusted Net Worth. Borrower shall
 continuously maintain a combined minimum Adjusted Net Worth of at least Five
 Million and No/100 Dollars ($5,000,000.00), as stated on Borrower’s financial
 statements from time to time, based on financial statements prepared in
 accordance with the terms of this Agreement. Compliance with the requirements
 of this subsection shall be determined quarterly in conjunction with updating
 and approving the Borrowing Base Certificate. 

 


          Section
5.02 Negative Covenants. So long as the Note shall remain unpaid or so
long as the Borrower shall be, or may thereafter become, indebted to the Lender
hereunder, Borrower and the Guarantor (as applicable) will not, without the
prior written consent of the Lender which shall not be unreasonably withheld,
conditioned or delayed: 


	
  

 	
  

 
	
 (a)

 	
 Liens. Incur, create, assume, or suffer to
 exist any Lien on any of Borrower’s assets now owned or hereafter acquired,
 securing any obligations or indebtedness upon which Lender is the holder of a
 lien securing the payment of any Indebtedness herein; 

 
	
  

 	
  

 
	
 (b)

 	
 Debts. Incur any loan except under the Line
 of Credit or under loans from the Guarantor which loans have been
 subordinated to the Indebtedness to the reasonable satisfaction of and on the
 terms required by, Lender, including payments of interest only. This Subsection
 5.02(b) shall not apply to Guarantor. 

 
	
  

 	
  

 
	
 (c)

 	
 Mergers or Consolidations. Except if both
 prior to and following such merger or consolidation the entities involved
 were affiliates of Borrower or Guarantor, merge or consolidate with any
 Person; 

 
	
  

 	
  

 
	
 (d)

 	
 Business Activity. Change its major business
 pursuit from commercial real estate secured financing to anything else; 

 
	
  

 	
  

 
	
 (e)

 	
 Corporate Existence and Authority. Fail to
 maintain its authority to do business or its legal existence under the laws
 of the State of Texas; 

 
	
  

 	
  

 
	
 (f)

 	
 Loans. Make any investments in or loans to
 any individual or other business entity, except as otherwise contemplated and
 permitted under this Agreement. 

 
	
  

 	
  

 
	
 (g)

 	
 Distribution Restrictions. Borrower may not
 make any distributions to its Owners if Default has occurred, or if making
 such distribution would cause a Default. However, if ceasing such
 distributions from Borrower would cause the Guarantor to fail to qualify as a
 REIT, and the Default is a non-monetary default, Borrower may still make the
 distributions to the minimum amount necessary to continue to qualify as a
 REIT for federal tax purposes and will provide Lender with the calculations
 for such distributions. 

 


21










	
  

 	
  

 
	
 (h)

 	
 Partnership cash distributions from the Primary Pledged Properties
 and Supporting Pledged Properties may not be assigned or pledged to any other
 parties other than Lender. 

 



          Section
5.03 Financial Reporting Requirements. Borrower and Guarantor shall keep
adequate books and records of account in accordance with GAAP, or in accordance
with other methods acceptable to Lender in its sole discretion, consistently
applied and shall furnish to Lender: 


	
  

 	
  

 
	
 (a)

 	
 as to Borrower, annual balance sheet, profit and loss statements,
 statement of cash flow, and a statement of change in financial position of
 Borrower, in the form reasonably required by Lender, certified by a financial
 officer of Guarantor within ninety (90) days after the close of each fiscal
 year of Borrower; 

 
	
  

 	
  

 
	
 (b)

 	
 as to Borrower, quarterly balance sheet, profit and loss statements,
 statement of cash flow, and a statement of change in financial position of
 Borrower, in the form reasonably required by Lender, certified by a financial
 officer of Guarantor, within forty-five (45) days after the close of each of
 the first three calendar quarters; 

 
	
  

 	
  

 
	
 (c)

 	
 as to Borrower, as soon as possible but in any event within thirty
 (30) days after filing, a true, accurate, complete and correct copy of the
 federal income tax return of Borrower for the tax year then ended including
 all related schedules filed or to be filed therewith, and all amendments
 thereto; 

 
	
  

 	
  

 
	
 (d)

 	
 as to Borrower, within forty-five (45) days after the close of each
 calendar quarter, a quarterly Borrowing Base Certificate showing the Loan
 Value, the calculation of the Borrowing Base and the Maximum Loan Amount and
 such other information as Lender may reasonably require; 

 
	
  

 	
  

 
	
 (e)

 	
 as to Borrower, quarterly statements of cash flow of the operation of
 the Properties securing the Note comprising the Collateral Base (including
 rent rolls), in form required by Lender, certified by a financial officer of
 Guarantor acceptable to Lender within forty-five (45) days after the close of
 each calendar quarter; 

 
	
  

 	
  

 
	
 (f)

 	
 as to Guarantor, annual balance sheet, profit and loss statements,
 statement of cash flow, and a statement of change in financial position of
 Guarantor, in the form required by Lender, audited by an independent
 certified public accountant acceptable to Lender, within ninety (90) days
 after the close of each fiscal year of Guarantor; 

 
	
  

 	
  

 
	
 (g)

 	
 as to Guarantor, quarterly balance sheet, profit and loss statements,
 statement of cash flow, and a statement of change in financial position of
 Guarantor, in the form required by Lender, certified by its chief financial
 officer, within forty-five (45) days after the close of each of the first
 three calendar quarters; 

 
	
  

 	
  

 
	
 (h)

 	
 as to Guarantor, as soon as possible but in any event within thirty
 (30) days after filing, a true, accurate, complete and correct copy of the
 federal income tax return of Guarantor for the tax year then ended including
 all related schedules filed or to be filed therewith, and all amendments
 thereto; and 

 


22










	
  

 	
  

 
	
 (i)

 	
 any other financial information as to Borrower, Guarantor or the
 Properties which may be reasonably requested by Lender. 

 


Article VI.         - EVENTS OF DEFAULT


          Section
6.01 Events of Default. Any of the following events shall be considered
an Event of Default as that term is used herein, subject however to the
provisions of Section 6.03 of this Agreement concerning notice and cure,
to-wit: 


	
  

 	
  

 
	
 (a)

 	
 Payment or Other Default. Borrower and
 Guarantor shall fail to pay when due all or any portion of the Indebtedness,
 or an event of default shall have occurred within the terms of the Note, this
 Agreement or any other Loan Document and shall fail to cure such default
 within the applicable cure period allowed by the Note, this Agreement or any
 other Loan Documents; 

 
	
  

 	
  

 
	
 (b)

 	
 Representation and Warranties. Any
 representation or warranty made by the Borrower herein or by the Borrower (or
 any of its officers) in connection with this Agreement shall prove to have
 been incorrect in any material respect when made, or shall become incorrect
 in any material respect as determined by Lender in its reasonable discretion
 and the result thereof is a Material Adverse Effect which is not cured within
 thirty (30) days written notice from Lender to Borrower; 

 
	
  

 	
  

 
	
 (c)

 	
 Covenants and Agreements. Borrower and
 Guarantor shall fail to perform or observe any covenant or agreement
 contained in this Agreement, or in the other Loan Documents and shall fail to
 cure such default within thirty (30) days after written notice thereof from
 Lender to Borrower; 

 
	
  

 	
  

 
	
 (d)

 	
 Bankruptcy or Other Proceedings. Borrower
 and Guarantor shall generally not pay their respective Debts as such Debts
 become due, or shall admit in writing their inability to pay their respective
 Debts generally, or shall make a general assignment for the benefit of
 creditors; or any proceeding shall be instituted by or against any such party
 seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
 winding up, reorganization, arrangement, adjustment, protection, relief, or
 composition of its Debts under any law relating to bankruptcy, insolvency or
 reorganization or relief of debtors, or seeking the entry of any order for
 relief or the appointment of a receiver, trustee, or other similar official
 for it or for any substantial part of its property, and such action is not
 dismissed within ninety (90) days thereafter; or any such party (or any of
 its subsidiaries) shall take any corporate action to authorize any of the
 actions set forth above in this Subsection 6.01(d); 

 
	
  

 	
  

 
	
 (e)

 	
 Undischarged Judgments. A final judgment or
 judgments in the aggregate for the payment of money in excess of $25,000.00,
 shall be rendered against any Co-Borrower or $200,000.00 with respect to the
 Guarantor and the same shall remain undischarged for a period of thirty (30)
 days during which execution shall not effectively be stayed; 

 
	
  

 	
  

 
	
 (f)

 	
 Material Adverse Effect. A situation exists
 which has a Material Adverse Effect as to Borrower or Guarantor; 

 


23










	
  

 	
  

 
	
 (g)

 	
 Security Instruments. The Security
 Instruments after delivery thereof shall for any reason, except to the extent
 permitted by the terms hereof or thereof, cease to create a valid and
 perfected first priority security interest in any of the Collateral purported
 to be covered thereby, which is not cured within ten (10) days after written
 notice thereof from Lender. 

 


          Section
6.02 Remedies Upon Default. In the event any Event of Default, as
defined above, shall occur and be continuing and any applicable cure period has
expired, the Lender may, with or without notice to the Borrower: 


	
  

 	
  

 
	
 (a)

 	
 Acceleration. (i) Declare its obligation to
 make any Advance to be terminated, and (ii) declare the Note, all interest
 thereon and all other amounts payable under this Agreement to be forthwith
 due and payable, whereupon the Note, all such interest and all such amounts
 shall become and be forthwith due and payable, (subject to Section 6.03)
 without grace, presentment, demand, demand for payment, notice of
 acceleration, notice of intent to accelerate, protest or notice of protest,
 or of non-payment, or further notice of any kind, all of which are hereby
 expressly waived by the Borrower and Guarantor; 

 
	
  

 	
  

 
	
 (b)

 	
 Cessation of Credit. Cease make Advances or
 extending credit to or for the benefit of the Borrower under this Agreement; 

 
	
  

 	
  

 
	
 (c)

 	
 Rights under the Texas Business and Commerce Code.
 Exercise any or all of the rights accruing to a secured party under the Texas
 Business and Commerce Code, as amended, and exercise any or all of the rights
 accruing to a secured party under any other law applicable upon default by a
 debtor; 

 
	
  

 	
  

 
	
 (d)

 	
 Rights under the Loan Documents. Exercise
 any or all rights under the Loan Documents including the Guaranty; 

 
	
  

 	
  

 
	
 (e)

 	
 Sale or Disposition of Collateral. Sell or
 otherwise dispose of the Collateral (in its then condition or after further
 manufacturing, processing or preparation thereof, utilizing in connection
 therewith, without charge to or liability of the Lender therefor, any of the
 Borrower’s assets) at a public or a private sale, as the Lender deems
 advisable, for cash or credit; provided, however, that the Borrower shall be
 credited with the net proceeds of such sale only when such proceeds are
 actually received by the Lender, and the Lender may become the purchaser at
 any sale if permissible under applicable law. Upon the occurrence of an Event
 of Default, the Borrower shall, if the Lender requests, assemble the
 Collateral and make it available to the Lender at a place or places to be
 designated by the Lender which is reasonably convenient to the Lender; 

 
	
  

 	
  

 
	
 (f)

 	
 No Waiver or Exhaustion. No waiver by Lender
 of any of its rights or remedies hereunder, in the other Loan Documents, or
 otherwise, shall be considered a waiver of any other or subsequent right or
 remedy of Lender; no delay or omission in the exercise or enforcement by
 Lender of any rights or remedies shall ever be construed as a waiver of any
 right or remedy of Lender; and, no exercise or enforcement of such rights or
 remedies shall ever be held to exhaust any right or remedy of Lender; and 

 


24










	
  

 	
  

 	
  

 
	
 (g)

 	
 Additional Information. Upon the occurrence
 of an Event of Default, Lender shall have the right to request certain
 additional information from Borrower, which Borrower shall provide to Lender
 within ten (10) Business Days of such request, with respect to each Property
 in the Collateral Base, to-wit: 

 
	
  

 	
  

 	
  

 
	
  

 	
 (1.)

 	
 the amounts and names of parties to whom money is owed for services
 actually performed or materials actually furnished in connection with the
 construction of the improvements with copies of billing statements, invoices,
 or vouchers from such parties; and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (2.)

 	
 evidence that no mechanic’s or materialman’s liens or other
 encumbrances have been filed and remain in effect against the improvements
 and/or property, 

 
	
  

 	
  

 	
  

 
	
  

 	
 (3.)

 	
 final lien releases or waivers from all sub-contractors, materialmen,
 laborers, and other parties who have supplied labor, material, or services
 for the construction of the improvements, or who otherwise might be entitled
 to claim a contractual, statutory, or constitutional lien against the
 improvements and/or property, and 

 
	
  

 	
  

 	
  

 
	
  

 	
 (4.)

 	
 such other documents, instruments and certificates as Lender may
 reasonably require. 

 


          Section
6.03 Notices and Cure Periods. Notwithstanding anything to the contrary
contained in this Agreement, Borrower shall have the notice and right to cure
rights given to Borrower under the Note and the other Loan Documents. In the
event Borrower fails to cure such default within the respective times mentioned
above, then Lender shall have the right to declare the Line of Credit to be in
Default and to take actions and elections as Lender may be entitled pursuant to
this Agreement and the other Loan Documents. 


Article VII.         - MISCELLANEOUS


          Section
7.01 Amendments, Etc. No amendment, extension of the Qualification Date
and the Maturity Date, or waiver of any provisions of this Agreement, the Note,
or the Loan Documents shall be effective unless the same shall be in writing
and signed by Lender and Borrower. 


          Section
7.02 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing, and mailed or facsimiled or delivered, as
follows: 


	
  

 	
  

 	
  

 
	
  

 	
 If to
 Borrower:

 	
 AmREIT Inc.

 
	
  

 	
  

 	
 8 Greenway
 Plaza, Suite 1000

 
	
  

 	
  

 	
 Houston,
 Texas 77046

 
	
  

 	
  

 	
 Attn: Chief
 Financial Officer

 
	
  

 	
  

 	
 Facsimile
 No.: 713-850-0498

 
	
  

 	
  

 	
  

 
	
  

 	
 With a copy
 to:

 	
 Bass, Barry
 & Sims PLC

 
	
  

 	
  

 	
 100 Peabody
 Place, Suite 900

 
	
  

 	
  

 	
 Memphis,
 Tennessee 38103

 
	
  

 	
  

 	
 Attn: John
 A. Good, Esq.

 
	
  

 	
  

 	
 Facsimile
 No.: (901) 543-5999

 


25










	
  

 	
  

 	
  

 
	
  

 	
 If to
 Lender:

 	
 Amegy
 Mortgage Company, L.L.C.

 
	
  

 	
  

 	
 d/b/a Q10
 Amegy Mortgage Capital

 
	
  

 	
  

 	
 4576 Research
 Forest Drive

 
	
  

 	
  

 	
 The
 Woodlands, Texas 77381

 
	
  

 	
  

 	
 Attention:
 Don Hickey

 
	
  

 	
  

 	
 Facsimile
 No.: (281) 297-7837

 


          Or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications shall
be deemed given when delivered personally, delivered overnight via nationally
recognized overnight service including without limitation, Lone Star Overnight,
or by confirmed facsimile or upon deposit in a regularly maintained receptacle
of the United States Postal Service, registered or certified mail, postage
prepaid, addressed as aforesaid. 


26







          Section
7.03 No Waiver. Remedies. No course of dealings by the Lender, its
officers, employees, consultants, or agents, nor any failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder, under the
Note, or under the Loan Agreement shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder, under the Note, or under
the Loan Agreement preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law. 


          Section
7.04 Invalidity. In the event that any one or more of the provisions
contained in the Note, this Agreement or in any other Loan Document shall, for
any reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of the Note, this Agreement or any other Loan Document. 


          Section
7.05 Survival of Agreements. All representations and warranties of
Borrower or Guarantor herein or in the other Security Instruments, and all
covenants and agreements herein and in the other Loan Documents, shall survive
until repayment in full of the Indebtedness and termination of any obligation
of Lender to advance funds hereunder. 


          Section
7.06 Singular and Plural. Words used herein in the singular, where the
context so permits, shall be deemed to include the plural and vice versa. The
definitions of words herein in the singular, where the context so permits,
shall apply to such words when used in the plural, and vice versa. 


          Section
7.07 Interest. To the extent that Texas Finance Code Sections 303.002,
303.003 and 303.009; [provided however, that the ceiling rate provided for in
Texas Finance Code subsection 303.009(d) (which regulates certain open-end
account credit agreements) shall not apply to the Loan] are relevant to the
Lender for the purpose of determining the Highest Lawful Rate, the Lender
hereby elects to determine the applicable rate ceiling under such Sections by
the indicated (weekly) rate ceiling from time to time in effect, subject to the
Lender’s right subsequently to change such rate ceiling in accordance with
applicable law. 


          Section
7.08 References. The words “herein,” “hereof,” “hereunder” and other
words of similar import when used in this Agreement refer to this Agreement as
a whole, and not to any particular article, section or subsection. 


          Section
7.09 Exhibits. The exhibits attached to this Agreement are incorporated
herein and shall be considered a part of this Agreement for the purposes stated
herein, except that in the event of any conflict between any of the provisions
of such exhibits and the provisions of this Agreement, the provisions of this
Agreement shall prevail. 


          Section
7.10 Titles of Sections and Subsections. All titles or headings to
sections, subsections or other divisions of this Agreement or the exhibits
hereto are only for the convenience of the parties and shall not be construed
to have any effect or meaning with respect to the other content of such
articles, sections, subsections or other divisions, such other content being
controlling as to the agreement between the parties hereto. 


          Section
7.11 Counterparts. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument. 


27






          Section
7.12 Binding Effect: Governing Law. This Agreement shall be binding upon
and inure to the benefit of the Borrower, Guarantor and the Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender. This Agreement, the Note and the Loan Documents
shall be governed by, and construed in accordance with, the laws of the State
of Texas. 


          Section
7.13 No Third Party. This Agreement is made for the sole protection and
benefit of the parties hereto and is not intended for the protection or benefit
of any other person or entity and no other person or entity shall be deemed to
have any privity of contract hereunder nor any right of action of any kind
hereon, or be entitled to rely hereon to any extent whatsoever. This Agreement
furthermore shall be binding upon Borrower and Lender and their respective
heirs, legal representatives, successors and assigns, but no assignment hereof
may be made by Borrower, in whole or in part, without the prior written consent
of Lender. 


          Section
7.14 Time of the Essence. Time is of the essence in the performance by
Borrower of its obligations hereunder. 


          Section
7.15 Assignment by Lender. It is expressly agreed by Borrower that the
Note, the Loan Documents and all rights and benefits under the terms of this
Agreement, the Loan Documents and any other instrument executed
contemporaneously with, or in connection with, any of such documents may be
assigned to (and at Lender’s option, Lender’s duties hereunder may be delegated
to), in whole or in part, any other lending institution by way of participation
or otherwise, without the consent of Borrower or any other party. Lender shall
give Borrower prompt notice of an assignment of all of Lender’s interest in the
Note and Loan Documents. Lender and any assignee, participant or other holder
of all or any portion of any loan made pursuant to this Agreement shall be
jointly entitled to all of the benefits of Lender under this Agreement,
including the right to enforce all provisions of this Agreement binding upon
Borrower and Guarantor. None of the rights, privileges or benefits of Borrower
may be assigned to any person or entity, nor may any of the duties or
obligations of Borrower and Guarantor be delegated to any person or entity,
without the prior express written consent of Lender. Notwithstanding anything
contained herein to the contrary, Lender shall not sell the Note and the Loan
Documents except to a lender experienced in servicing loans of a similar
nature. 


          Section
7.16 Waiver of Trial by Jury. Dispute Resolution. This section contains
a jury waiver, arbitration clause, and a class action waiver. READ IT
CAREFULLY. 


	
  

 	
  

 
	
 (a)

 	
 Jury Trial Waiver. As permitted by
 applicable law, each party waives their respective rights to a trial before a
 jury in connection with any Dispute (as “Dispute” is hereinafter defined),
 and Disputes shall be resolved by a judge sitting without a jury. If a court
 determines that this provision is not enforceable for any reason and at any
 time prior to trial of the Dispute, but not later than 30 days after entry of
 the order determining this provision is unenforceable, any party shall be
 entitled to move the court for an order compelling arbitration and staying or
 dismissing such litigation pending arbitration (“Arbitration Order”). 

 


28










	
  

 	
  

 
	
 (b)

 	
 Arbitration. If a claim, dispute, or
 controversy arises between us with respect to this Agreement, related
 agreements, or any other agreement or business relationship between any of us
 whether or not related to the subject matter of this Agreement (all of the
 foregoing, a “Dispute”), and only if a jury trial waiver is not permitted by
 applicable law or ruling by a court, any of us may require that the Dispute
 be resolved by binding arbitration before a single arbitrator at the request
 of any party. By agreeing to arbitrate a Dispute, each party gives up any
 right that party may have to a jury trial, as well as other rights that party
 would have in court that are not available or are more limited in
 arbitration, such as the rights to discovery and to appeal. 

 
	
  

 	
  

 
	
  

 	
 Arbitration shall be commenced by filing a petition with, and in
 accordance with the applicable arbitration rules of, JAMS or National
 Arbitration Forum (“Administrator”) as selected by the initiating party. If
 the parties agree, arbitration may be commenced by appointment of a licensed
 attorney who is selected by the parties and who agrees to conduct the
 arbitration without an Administrator. Disputes include matters (i) relating
 to a deposit account, application for or denial of credit, enforcement of any
 of the obligations we have to each other, compliance with applicable laws
 and/or regulations, performance or services provided under any agreement by
 any party, (ii) based on or arising from an alleged tort, or (iii) involving
 any of the employees, agents, affiliates, or assigns of a party. However,
 Disputes do not include the validity, enforceability, meaning, or scope of
 this arbitration provision and such matters may be determined only by a
 court. If a third party is a party to a Dispute, each party hereto will consent
 to including the third party in the arbitration proceeding for resolving the
 Dispute with the third party. Venue for the arbitration proceeding shall be
 at a location determined by mutual agreement of the parties or, if no
 agreement, in the city and state where Lender is headquartered. 

 
	
  

 	
  

 
	
  

 	
 After entry of an Arbitration Order, the non-moving party shall
 commence arbitration. The moving party shall, at its discretion, also be
 entitled to commence arbitration but is under no obligation to do so, and the
 moving party shall not in any way be adversely prejudiced by electing not to
 commence arbitration. The arbitrator: (i) will hear and rule on appropriate
 dispositive motions for judgment on the pleadings, for failure to state a
 claim, or for full or partial summary judgment; (ii) will render a decision
 and any award applying applicable law; (iii) will give effect to any
 limitations period in determining any Dispute or defense; (iv) shall enforce
 the doctrines of compulsory counterclaim, res judicata, and collateral
 estoppel, if applicable; (v) with regard to motions and the arbitration
 hearing, shall apply rules of evidence governing civil cases; and (vi) will
 apply the law of the state specified in the Agreement giving rise to the
 Dispute. Filing of a petition for arbitration shall not prevent any party
 from (i) seeking and obtaining from a court of competent jurisdiction
 (notwithstanding ongoing arbitration) provisional or ancillary remedies
 including but not limited to injunctive relief, property preservation orders,
 foreclosure, eviction, attachment, replevin, garnishment, and/or the
 appointment of a receiver, (ii) pursuing non-judicial foreclosure, or (iii)
 availing itself of any self-help remedies such as setoff and repossession.
 The exercise of such rights shall not constitute a waiver of the right to
 submit any Dispute to arbitration. 

 


29










	
  

 	
  

 
	
  

 	
 Judgment upon an arbitration award may be entered in any court having
 jurisdiction except that, if the arbitration award exceeds $4,000,000, any
 party shall be entitled to a de novo appeal of the award before a panel of
 three arbitrators. To allow for such appeal, if the award (including
 Administrator, arbitrator, and attorney’s fees and costs) exceeds $4,000,000,
 the arbitrator will issue a written, reasoned decision supporting the award,
 including a statement of authority and its application to the Dispute. A
 request for de novo appeal must be filed with the arbitrator within 30 days
 following the date of the arbitration award; if such a request is not made within
 that time period, the arbitration decision shall become final and binding. On
 appeal, the arbitrators shall review the award de novo, meaning that they
 shall reach their own findings of fact and conclusions of law rather than
 deferring in any manner to the original arbitrator. Appeal of an arbitration
 award shall be pursuant to the rules of the Administrator or, if the
 Administrator has no such rules, then the JAMS arbitration appellate rules
 shall apply.

 
	
  

 	
  

 
	
  

 	
 Arbitration under this provision concerns a transaction involving
 interstate commerce and shall be governed by the Federal Arbitration Act, 9
 U.S.C. § 1 et seq. This arbitration provision shall survive any termination,
 amendment, or expiration of this Agreement. If the terms of this provision vary
 from the Administrator’s rules, this arbitration provision shall control.

 
	
  

 	
  

 
	
 (c)

 	
 Class Action Waiver. Each party waives the
 right to litigate in court or arbitrate any claim or Dispute as a class
 action, either as a member of a class or as a representative, or to act as a
 private attorney general. 

 
	
  

 	
  

 
	
 (d)

 	
 Reliance. Each party (i) certifies that no
 one has represented to such party that the other party would not seek to
 enforce jury and class action waivers in the event of suit, and (ii)
 acknowledges that it and the other party have been induced to enter into this
 Agreement by, among other things, the mutual waivers, agreements, and
 certifications in this section. 

 


30






           IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in multiple originals, this 23rd day of December, 2009, to be
effective December 23rd, 2009. 


BORROWER:



	
  

 	
  

 	
  

 	
  

 
	
 410
 BLANCO, LP a Texas
 limited partnership

 
	
  

 	
  

 	
  

 
	
 By: 

 	
 410 Blanco GP, LLC, its
 general partner

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
   /s/ Chad C.
 Braun



 	
  

 
	
  

 	
  

 	
 Chad C. Braun, Vice
 President

 
	
  

 	
  

 	
  

 
	
 AMREIT
 UPTOWN HOUSTON, LP,
 a Texas limited partnership

 
	
  

 	
  

 	
  

 
	
 By: 

 	
 AmREIT Uptown Houston GP,
 LLC, its general partner

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
    /s/ Chad
 C. Braun



 	
  

 
	
  

 	
  

 	
 Chad C. Braun, Vice
 President

 
	
  

 	
  

 	
  

 
	
 AMREIT
 COURTYARD, LP a
 Texas limited partnership

 
	
  

 
	
  

 	
  

 	
  

 
	
 By: 

 	
 AmREIT Courtyard GP, LLC,
 its general partner

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
      /s/
 Chad C. Braun



 	
  

 
	
  

 	
  

 	
 Chad C. Braun, Vice
 President

 
	
  

 	
  

 	
  

 
	
 AMREIT
 5402 WESTHEIMER, LP
 a Texas limited partnership

 
	
  

 	
  

 	
  

 
	
 By: 

 	
 AmREIT 5402 Westheimer GP,
 LLC, its general partner

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
      /s/
 Chad C. Braun



 	
  

 
	
  

 	
  

 	
 Chad C. Braun, Vice
 President

 
	
  

 	
  

 	
  

 
	
 AMREIT GC
 HOUSTON, LP a Texas
 limited partnership

 
	
  

 
	
 By: 

 	
 AmREIT GC Houston GP, LLC,
 its general partner

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
      /s/
 Chad C. Braun



 	
  

 
	
  

 	
  

 	
 Chad C. Braun, Vice
 President

 







	
  

 	
  

 	
  

 	
  

 
	
 AMREIT
 I-45 SOUTHPOINT, LP
 a Texas limited partnership

 
	
  

 	
  

 	
  

 
	
 By: 

 	
 AmREIT I-45 Southpoint GP,
 LLC, its general partner

 
	
  

 	
  

 	
  

 
	
  

 	
 By: 

 	
      /s/
 Chad C. Braun



 	
  

 
	
  

 	
  

 	
 Chad C. Braun, Vice
 President

 
	
  

 	
  

 	
  

 	
  

 
	
 GUARANTOR:

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 AMREIT INC., a Maryland corporation

 
	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
      /s/
 Chad C. Braun


 	
  

 
	
  

 	
 Chad C.
 Braun, Chief Financial Officer

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 








31










	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 LENDER:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 AMEGY MORTGAGE COMPANY, L.L.C., a

 
	
  

 	
  

 	
 Texas
 limited liability company d/b/a Q10

 
	
  

 	
  

 	
 Amegy
 Mortgage Capital

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 By:

 	
      /s/
 Don Hickey



 
	
  

 	
  

 	
  

 	
 Don Hickey,
 Senior Vice President -

 
	
  

 	
  

 	
  

 	
 Commercial
 Real Estate Lending

 
	
  

 	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §        

 	
  

 	
  

 
	
  

 	
 §        

 	
  

 	
  

 
	
 COUNTY OF
 HARRIS

 	
 §        

 	
  

 	
  

 


          This
instrument was acknowledged before me on the 18th day of December, 2009, by
Chad C. Braun, Vice President of 410 Blanco GP, LLC, a Texas limited liability
company, in its capacity as General Partner of 410 BLANCO, LP, a Texas limited partnership, on behalf of said
limited partnership. 


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
      /s/
 Mary Trupia



 
	
  

 	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 My
 commission expires:

 	
          7/16/2010



 
	
  

 	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §

 	
  

 	
  

 
	
  

 	
 §

 	
  

 	
  

 
	
 COUNTY OF
 HARRIS

 	
 §

 	
  

 	
  

 


          This instrument
was acknowledged before me on the 18th day of December, 2009, by Chad C. Braun,
Vice President of AmREIT Uptown Houston GP, LLC, a Texas limited liability
company, in its capacity as General Partner of AMREIT UPTOWN HOUSTON, LP, a Texas limited partnership, on
behalf of said limited partnership. 


	
  

 	
  

 	
  

 
	
  

 	
      /s/
 Mary Trupia



 
	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 
	
  

 	
 My
 commission expires:

 	
          7/16/2010



 


32










	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §

 	
  

 
	
  

 	
 §

 	
  

 
	
 COUNTY OF
 HARRIS

 	
 §

 	
  

 


          This
instrument was acknowledged before me on the 18th day of December, 2009, by
Chad C. Braun, Vice President of AmREIT Courtyard GP, LLC, a Texas limited
liability company, in its capacity as General Partner of AMREIT COURTYARD, LP, a Texas limited
partnership, on behalf of said limited partnership. 


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
      /s/
 Mary Trupia



 
	
  

 	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 My
 commission expires:

 	
          7/16/2010



 
	
  

 	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §

 	
  

 	
  

 
	
  

 	
 §

 	
  

 	
  

 
	
 COUNTY OF
 HARRIS

 	
 §

 	
  

 	
  

 


          This
instrument was acknowledged before me on the 18th day of December, 2009, by
Chad C. Braun, Vice President of AmREIT 5402 Westheimer GP, LLC, a Texas
limited liability company, in its capacity as General Partner of AMREIT 5402 WESTHEIMER, LP, a Texas limited
partnership, on behalf of said limited partnership. 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
      /s/
 Mary Trupia




 
	
  

 	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 My
 commission expires:

 	
          7/16/2010



 
	
  

 	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §

 	
  

 	
  

 
	
  

 	
 §

 	
  

 	
  

 
	
 COUNTY OF
 HARRIS

 	
 §

 	
  

 	
  

 


          This
instrument was acknowledged before me on the 18th day of December, 2009, by
Chad C. Braun, Vice President of AmREIT GC Houston GP, LLC, a Texas limited
liability company, in its capacity as General Partner of AMREIT UPTOWN HOUSTON, LP, a Texas limited
partnership, on behalf of said limited partnership. 


	
  

 	
  

 	
  

 
	
  

 	
      /s/
 Mary Trupia



 
	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 
	
  

 	
 My
 commission expires:

 	
          7/16/2010



 


33










	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §

 	
  

 
	
  

 	
 §

 	
  

 
	
 COUNTY OF
 HARRIS

 	
 §

 	
  

 


          This
instrument was acknowledged before me on the 18th day of December,
2009, by Chad C. Braun, Vice President of AmREIT I-45 Southpoint GP, LLC, a
Texas limited liability company, in its capacity as General Partner of AMREIT I-45 SOUTHPOINT, LP, a Texas limited
partnership, on behalf of said limited partnership. 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
      /s/
 Mary Trupia



 
	
  

 	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 My
 commission expires:

 	
          7/16/2010



 
	
  

 	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §

 	
  

 	
  

 
	
  

 	
 §

 	
  

 	
  

 
	
 COUNTY OF
 HARRIS

 	
 §

 	
  

 	
  

 


          This
instrument was acknowledged before me on the 18th day of December, 2009, by
Chad C. Braun, Chief Financial Officer of AMREIT
INC., a Maryland corporation, on behalf of said corporation. 


	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
      /s/
 Mary Trupia



 
	
  

 	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 My
 commission expires:

 	
          7/16/2010



 
	
  

 	
  

 	
  

 	
  

 
	
 STATE OF
 TEXAS

 	
 §

 	
  

 	
  

 
	
  

 	
 §

 	
  

 	
  

 
	
 COUNTY OF
 MONTGOMERY

 	
 §

 	
  

 	
  

 


          This
instrument was acknowledged before me on the 23rd day of December, 2009, by Don
Hickey, Senior Vice President - Commercial Real Estate Lending of AMEGY MORTGAGE COMPANY, L.L.C., a Texas
limited liability company, d/b/a Q10 Amegy Mortgage Capital, on behalf of said
limited liability company. 


	
  

 	
  

 	
  

 
	
  

 	
      /s/
 Margaret Byrd Taylor



 
	
  

 	
 Notary
 Public, State of Texas

 
	
  

 	
  

 	
  

 
	
  

 	
 My
 commission expires:

 	
          3/20/2010



 


34






Attachments: 


Exhibit “A” -
Addendum to Loan Agreement 

Exhibit “B” - Initial Primary Pledged Properties 

Exhibit “C” - Borrowing Base Certificate 

Exhibit “D” - Request for Advance 


35