Document:

EX-10.6 PROMISSORY NOTE

 

Exhibit
10.6

MS Loan No. 05-23686

PROMISSORY NOTE

(Fixed — Yield Maintenance/Hyperamortization)

			
	$15,675,000.00
	 	Houston, Texas
	 
	 	December 12, 2005

     FOR VALUE RECEIVED AMREIT LAKE HOUSTON, LP, a Texas limited partnership, as maker, having its
principal place of business at 8 Greenway Plaza, Suite 1000, Houston, Texas 77046 (“Borrower”),
hereby unconditionally promises to pay to the order of MORGAN STANLEY MORTGAGE CAPITAL INC., a New
York corporation, as payee, having an address at 1221 Avenue of the Americas, 27th Floor, New York,
New York 10020 (“Lender”), or at such other place as the holder hereof may from time to time
designate in writing, the principal sum of FIFTEEN MILLION SIX HUNDRED SEVENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($15,675,000.00), in lawful money of the United States of America with interest
thereon to be computed from the date of this Note at the Applicable Interest Rate (defined below)
in accordance with the terms of this Note.

ARTICLE 1: Payment Terms

     Borrower agrees to pay sums under this Note in installments as follows:

     (a) on the date hereof, a payment of interest only with respect to the period commencing on
the date hereof and ending on, and including, the last day of the month in which this Note is
executed;

     (b) beginning on the first day of February, 2006 and on the first day of each calendar month
thereafter (each a “Payment Date”) up to and including the first day of January, 2016 (the
“Anticipated Repayment Date”) payments of interest only based on the Applicable Interest Rate (as
defined below) accrued on the outstanding principal balance;

     (c) (i) a constant payment of Ninety One Thousand Four Hundred Seventy-Five and No/100
Dollars ($91,475.10) on the first day of each calendar month following the Anticipated Repayment
Date up to and including the first day of December, 2035; each of the payments to be applied as
follows: (A) first, to the payment of interest (without adjustment for Accrued Interest (defined
below)) computed at the Initial Interest Rate; and (B) the balance toward the reduction of the
principal balance; and

          (ii) a payment of an amount equal to the Excess Cash Flow (as defined in the certain Cash
Management Agreement (the “Cash Management Agreement”), dated as of the date hereof, by and among
Borrower, Amreit Realty Investment Corporation, and Lender) for the preceding month, to be applied
toward the reduction of the principal balance; and

     (d) the balance of the principal sum and all interest thereon (including, without
limitation, all Accrued Interest) on January 1, 2036 (the “Maturity Date”).

 

 

ARTICLE 2: Interest

     The term “Applicable Interest Rate” as used in this Note shall mean (a) from the date hereof
through and including the day immediately prior to the Anticipated Repayment Date, a rate of
interest equal to five and seventy-five hundredths percent (5.75%) per annum (the “Initial
Interest Rate”), and (b) from the Anticipated Repayment Date through and including the Maturity
Date, a rate of interest (the “Adjusted Interest Rate”) equal to five percentage points (5.0%)
above the greater of (i) the Initial Interest Rate or
(ii) the Treasury Rate. “Treasury Rate”
shall mean the yield calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. government
securities/Treasury constant maturities for the week ending prior to the Anticipated Repayment
Date, of U.S. Treasury constant maturities with maturity dates (one longer and one shorter) most
nearly approximating the Maturity Date. In the event Release H.15 is no longer published, Lender
shall select a comparable publication to determine the Treasury Rate. Lender shall notify Borrower
of the amount and the basis of determination of the Adjusted Interest Rate, which shall be
conclusive and binding on Borrower absent manifest error.

     Interest on the principal sum of this Note shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by (b) a daily rate
based on a three hundred sixty (360) day year (that is, the Applicable Interest Rate or the
Default Rate, as then applicable, divided by 360) by (c) the outstanding principal balance.

     Interest due on the outstanding principal balance computed at the Adjusted Interest Rate and
not paid pursuant to paragraph (c) of Article 1 above (“Accrued Interest”) shall be added to the
outstanding principal balance and shall earn interest at the Adjusted Interest Rate, to the extent
permitted by applicable law.

ARTICLE 3: Default and Acceleration

     Borrower covenants and agrees that if (a) any payment required hereunder (other than the
payment due on the Maturity Date) is not paid prior to the fifth (5th) day after the same is due,
or (b) the entire Debt (defined below) is not paid on or before the Maturity Date or (c) any other
Event of Default (as defined in the Security Instrument (defined below)) shall continue to exist
after giving effect to all applicable grace periods, then at the option of Lender (i) the whole of
the principal sum of this Note, (ii) interest, default interest, late charges and other sums, as
provided in this Note, the Security Instrument or the Other Security Documents (as defined in the
Security Instrument), (iii) all other monies agreed or provided to be paid by Borrower in this
Note, the Security Instrument or the Other Security Documents, (iv) all sums advanced pursuant to
the Security Instrument to protect and preserve the Property (defined below) and the lien and the
security interest created thereby, and (v) all sums advanced and costs and expenses incurred by
Lender in connection with the Debt or any part thereof, any renewal, extension, or change of or
substitution for the Debt or any part thereof, or the acquisition or perfection of the security
therefor, whether made or incurred at the request of Borrower or Lender (all the sums referred to
in (i) through (v) above shall collectively be referred to as the “Debt”) shall without notice
become immediately due and payable. Whenever any payment to be made under this Note, the Security
Instrument or under any Other Security Document shall be stated to be due on a day

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which is not a Business Day (hereinafter defined), the due date thereof shall be the Business Day
immediately preceding such day. For purposes hereof, the term “Business Day” shall mean any day
other than a Saturday, Sunday or any other day on which banks in New York, New York are not open
for business.

ARTICLE 4: Default Interest

     Borrower agrees that upon the occurrence of an Event of Default, Lender shall be entitled to
receive and Borrower shall pay interest on the entire unpaid principal sum at a per annum rate
equal to the lesser of (a) five percent (5%) plus the Applicable Interest Rate or (b) the maximum
interest rate which Borrower may by law pay (the “Default Rate”). The Default Rate shall be
computed from the occurrence of the default giving rise to such Event of Default (without regard
to any notice or grace period) until the earlier of the date upon which the Event of Default is
cured or the date upon which the Debt is paid in full. Interest calculated at the Default Rate
shall be deemed part of the Debt, and shall be deemed secured by the Security Instrument. This
clause, however, shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of
the occurrence of any Event of Default.

ARTICLE 5: Late Charge

     If any monthly installment payable under this Note is not paid prior to the fifth (5th) day
after the applicable Payment Date, Borrower shall pay to Lender upon demand an amount equal to the
lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by applicable law
to defray the expenses incurred by Lender in handling and processing the delinquent payment and to
compensate Lender for the loss of the use of the delinquent payment and the amount shall be
secured by the Security Instrument and the Other Security Documents.

ARTICLE 6: Prepayment

     (a) The principal balance of this Note may not be prepaid in whole or in part prior to the
earlier of the second annual anniversary of the securitization of the Loan or the beginning of the
sixth Loan Year (defined below). At any time after the earlier of the second annual anniversary of
the securitization of the Loan or the beginning of the sixth Loan Year, the principal balance of
this Note may be prepaid in whole, but not in part, upon not less than sixty (60) days prior
written notice to Lender specifying the date on which prepayment is to be made (the “Prepayment
Date”) which date must be a Payment Date and upon payment of:

          (i) all accrued interest to and including the Prepayment Date;

          (ii) all other sums due under this Note, the Security Instrument and all Other Security
Documents; and

          (iii) the Prepayment Consideration (defined below).

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     Notwithstanding anything to the contrary herein, provided no Event of Default exists, in the
event of any prepayment which occurs (i) in whole during the four (4) months prior to the
Anticipated Repayment Date or (ii) in whole or in part in connection with a prepayment resulting
from the application of insurance proceeds or condemnation awards pursuant to Sections 3.3 and 3.6
of the Security Instrument or changes in tax and debt credit pursuant to Section 7.3 (a) or (b) of
the Security Instrument, no Prepayment Consideration shall be due in connection therewith, but in
each instance Borrower shall be required to pay all other sums due hereunder, and no principal
amount repaid may be reborrowed.

     (b) The Prepayment Consideration shall equal an amount equal to the greater of (i) one
percent (1%) of the principal balance of this Note being prepaid, or (ii) the product of (A) the
ratio of the amount of the principal balance of this Note being prepaid (after subtracting the
scheduled principal payment on such Prepayment Date) over the outstanding principal balance of
this Note on the Prepayment Date (after subtracting the scheduled principal payment on such
Prepayment Date), multiplied by (B) the present value as of the Prepayment Date of the remaining
scheduled payments of principal and interest from the Prepayment Date through the Anticipated
Repayment Date (including any balloon payment) determined by discounting such payments at the
Discount Rate (as hereinafter defined) less the amount of the outstanding principal balance of
this Note on the Prepayment Date (after subtracting the scheduled principal payment on such
Prepayment Date). The “Discount Rate” is the rate which, when compounded monthly, is equivalent to
the Treasury Rate (as hereinafter defined), when compounded semi-annually. The “Treasury Rate” is
the yield calculated by the linear interpolation of the yields, as reported in Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S. government
securities/Treasury constant maturities for the week ending prior to the Prepayment Date, of U.S.
Treasury constant maturities with maturity dates (one longer and one shorter) most nearly
approximating the Anticipated Repayment Date. (In the event Release H.15 is no longer published,
Lender shall select a comparable publication to determine the Treasury Rate.) Lender shall notify
Borrower of the amount and the basis of determination of the required prepayment consideration.

     (c) “Loan Year” as used in this Note shall mean each 365 or 366, if applicable, day period
after the first day of the first calendar month after the date of this Note (or the date of this
Note if it is dated the first day of a calendar month).

     (d) If any notice of prepayment is given under this Article 6, the principal balance of this
Note and the other sums required under this prepayment section shall be due and payable on the
Prepayment Date. Lender shall not be obligated to accept any prepayment of the principal balance of
this Note unless it is accompanied by all sums due in connection therewith. Notwithstanding
anything contained in this Article 6 to the contrary, provided no Event of Default exists, no
Prepayment Consideration shall be due in connection with a complete or partial prepayment resulting
from the application of insurance proceeds or condemnation awards pursuant to Sections 3.3 and 3.6
of the Security Instrument or changes in tax and debt credit pursuant to Section 7.3(a) or (b) of
the Security Instrument, but Borrower shall be required to pay all other sums due hereunder.

     (e) If a Default Prepayment (defined below) occurs, Borrower shall pay to Lender the entire
Debt, including, without limitation, the following amounts:

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          (i) if the Default Prepayment occurs prior to the time when prepayment of the principal
balance of this Note is permitted, an amount equal to the sum of (A) the present value of the
interest payments which would have accrued on the principal balance of this Note (outstanding as
of the date of such Default Prepayment) at the Applicable Interest Rate from the date of such
Default Prepayment to the first date prepayment is permitted pursuant to this Note discounted at a
rate equal to the Treasury Rate except that such Treasury Rate shall be based on the U.S. Treasury
constant maturity most nearly approximating the date upon which prepayment is first permitted
pursuant to this Note, and (B) the Prepayment Consideration calculated as of the first date
prepayment is permitted pursuant to this Note; and

          (ii) if the Default Prepayment occurs at a time when prepayment of the principal balance of
this Note is permitted, the Prepayment Consideration.

     For purposes of this Note, the term “Default Prepayment” shall mean a prepayment of the
principal amount of this Note made after the occurrence and during the continuance of any Event of
Default or an acceleration of the Maturity Date under any circumstances, including, without
limitation, a prepayment occurring in connection with reinstatement of the Security Instrument
provided by statute under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory right to redeem or
prevent foreclosure, any sale in foreclosure or under exercise of a power of sale or otherwise.

ARTICLE 7: Security

     This Note is secured by that certain Deed of Trust and Security Agreement dated the date
hereof in the principal sum of $15,675,000 given by Borrower to (or for the benefit of) Lender
covering the fee simple estate of Borrower in certain premises located in Harris County, State of
Texas, and other property, as more particularly described therein (collectively, the “Property”)
and intended to be duly recorded in said County (the “Security Instrument”), and by the Other
Security Documents.

ARTICLE 8: Loan Charges

     (a) This Note, the Security Instrument and the Other Security Documents are subject to the
express condition that at no time shall Borrower be obligated or required to pay interest on the
principal balance due hereunder at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which Borrower is permitted
by applicable law to contract or agree to pay. If by the terms of this Note, the Security
Instrument and the Other Security Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of such maximum rate, the
Applicable Interest Rate or the Default Rate or any other
consideration that constitutes interest
under applicable law, as the case may be, shall be deemed to be immediately reduced to such maximum
rate and all previous payments in excess of the maximum rate shall be deemed to have been payments
in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed
to be paid to Lender for the use, forbearance, or detention of the Debt, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full
stated term of the Note until payment in full so that the rate or amount of

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interest on account of the Debt does not exceed the Maximum Lawful Rate (as defined below) of
interest from time to time in effect and applicable to the Debt for so long as the Debt is
outstanding.

     (b) It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times
to comply strictly with the applicable Texas law governing the maximum rate or amount of interest
payable on this Note (or applicable United Stated federal law to the extent that it permits Lender
to contract for, charge, take, reserve or receive a greater amount of interest than under Texas
law). If the applicable law is ever judicially interpreted so as to render usurious any amount (i)
contracted for, charged, taken, reserved or received pursuant to this Note, any of the other Loan
Documents or any other communications or writing by or between Borrower and Lender related to the
transaction or transactions that are the subject matter of the Loan Documents, (ii) contracted for,
charged or received by reason of Lender’s exercise of the option to accelerate the maturity of this
Note, or (iii) Borrower will have paid or Lender will have received by reason of any voluntary
prepayment by Borrower of this Note, then it is Borrower’s and Lender’s express intent that all
amounts charged in excess of the Maximum Lawful Rate shall be automatically cancelled, ab
initio, and all amounts in excess of the Maximum Lawful Rate theretofore collected by Lender
shall be credited on the principal balance of this Note (or, if this Note has been or would thereby
be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and
thereunder reduced, without the necessity of the execution of any new document, so as to comply
with the applicable law, but so as to permit the recovery of the fullest amount otherwise called
for hereunder and thereunder; provided, however, if this Note has been paid in full before the end
of the stated term of this Note, then Borrower and Lender agree that Lender shall, with reasonable
promptness after Lender discovers or is advised by Borrower that interest was received in an amount
in excess of the Maximum Lawful Rate, either refund such excess interest to Borrower and/or credit
such excess interest against this Note then owing by borrower to Lender. In no event shall the
provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan
accounts and revolving triparty accounts) apply to this Note. Not-withstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender
to accelerate the maturity of any interest that has not accrued at the time of such acceleration or
to collect unearned interest at the time of such acceleration.

     (c) As used herein, the term “Maximum Lawful Rate” shall mean the maximum lawful rate
of interest which may be contracted for, charged, taken, received or reserved by Lender in
accordance with the applicable laws of the State of Texas (or applicable United States federal law
to the extent that it permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law), taking into account all Charges (as herein defined) made
in connection with the transaction evidenced by this Note and the other Loan Documents. As used
herein, the term “Charges” shall mean all fees, charges and/or any other things of value, if any,
contracted for, charged, received, taken or reserved by Lender in connection with the transactions
relating to this Note and the other Loan Documents, which are treated as interest under applicable
law.

     (d) To the extent that Lender is relying on Chapter 303 of the Texas Finance Code to
determine the Maximum Lawful Rate payable on this Note, Lender will utilize the weekly

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ceiling from time to time in effect as provided in such Chapter 303, as amended. To the extent
United States federal law permits Lender to contract for, charge, take, receive or reserve a
greater amount of interest than under Texas law, Lender will rely on United States federal law
instead of such Chapter 303 for the purpose of determining the
Maximum Lawful Rate. Additionally,
to the extent permitted by applicable law now or hereafter in effect, Lender may, at its option and
from time to time, utilize any other method of establishing the Maximum Lawful Rate under such
Chapter 303 or under other applicable law by giving notice, if required, to Borrower as provided by
applicable law now or hereafter in effect.

ARTICLE 9: Waivers

     Borrower and all others who may become liable for the payment of all or any part of the Debt
do hereby severally waive presentment and demand for payment, notice of dishonor, protest and
notice of protest and non-payment and all other notices of any kind, except for notices expressly
provided for in this Note, the Security Instrument or the Other Security Documents. No release of
any security for the Debt or extension of time for payment of this Note or any installment hereof,
and no alteration, amendment or waiver of any provision of this Note, the Security Instrument or
the Other Security Documents made by agreement between Lender or any other person or party shall
release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of
Borrower, and any other person or entity who may become liable for the payment of all or any part
of the Debt, under this Note, the Security Instrument or the Other Security Documents. No notice
to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the
right of Lender to take further action without further notice or demand as provided for in this
Note, the Security Instrument or the Other Security Documents. If Borrower is a partnership,
corporation or limited liability company, the agreements contained herein shall remain in full
force and effect, notwithstanding any changes in the individuals or entities comprising Borrower,
and the term “Borrower,” as used herein, shall, to the extent permitted by applicable law, include
any alternate or successor entity, but any predecessor entity, and its partners or members, as the
case may be, shall not thereby be released from any liability incurred prior to the date of such
change. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any
prohibition or restriction on transfers of interests in Borrower which may be set forth in the
Security Instrument or any Other Security Document.)

ARTICLE 10: Waiver of Trial By Jury

     BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY
OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS
NOTE, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS
OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

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ARTICLE 11: Exculpation

     (a) Notwithstanding anything to the contrary contained in this Note, the Security Instrument
or any Other Security Document (but subject to the provisions of subsections (b), (c) and (d) of
this Article 11), Lender shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in this Note or the Security Instrument by any action or
proceeding wherein a money judgment or any deficiency judgment or other judgment establishing any
personal liability shall be sought against Borrower or any principal, director, officer, employee,
beneficiary, shareholder, partner, member, trustee, agent or affiliate of Borrower or any person
owning, directly or indirectly, any legal or beneficial interest in Borrower, or any successors or
assigns of any of the foregoing (collectively, the “Exculpated Parties”), except that Lender may
bring a foreclosure action, action for specific performance or other appropriate action or
proceeding to enable Lender to enforce and realize upon this Note, the Security Instrument, the
Other Security Documents, and the interest in the Property, the Rents (as defined in the Security
Instrument) and any other collateral given to Lender to secure this Note; provided, however,
subject to the provisions of subsections (b), (c) and (d) of this Article 11, that any judgment in
any such action or proceeding shall be enforceable against Borrower only to the extent of
Borrower’s interest in the Property, in the Rents and in any other collateral given to Lender to
secure this Note. Lender, by accepting this Note and the Security Instrument, agrees that it shall
not, except as otherwise provided in this Article 11, sue for, seek or demand any deficiency
judgment against Borrower or any of the Exculpated Parties, in any such action or proceeding, under
or by reason of or under or in connection with this Note, the Security Instrument or the Other
Security Documents. The provisions of this Article 11 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the Security Instrument
or the Other Security Documents delivered to Lender; (ii) impair the right of Lender to name
Borrower as a party defendant in any action or suit for judicial foreclosure and sale under the
Security Instrument; (iii) affect the validity or enforceability of any indemnity, guaranty, master
lease or similar instrument made in connection with this Note, the Security Instrument, or the
Other Security Documents; (iv) impair the right of Lender to obtain the appointment of a receiver;
(v) impair the enforcement of the Assignment of Leases and Rents executed in connection herewith;
(vi) impair the right of Lender to enforce the provisions of Section 12.2 of the Security
Instrument or of Section 3.12(e) of the Security Instrument; or (vii) impair the right of Lender to
obtain a deficiency judgment or other judgment on the Note against Borrower if necessary to fully
realize the security granted by the Security Instrument or to commence any other appropriate action
or proceeding in order for Lender to exercise its remedies against the Property.

     (b) Notwithstanding the provisions of this Article 11 to the contrary, Borrower shall be
personally liable to Lender for the Losses (as defined in the Security Instrument) Lender incurs
due to: (i) fraud or intentional misrepresentation by Borrower or any of the Exculpated Parties in
connection with the Loan; (ii) the gross negligence or willful misconduct of Borrower; (iii) the
removal or disposal of any portion of the Property after an Event of Default; (iv) Borrower’s
misapplication, misappropriation or conversion of Rents received by Borrower after the occurrence
of an Event of Default; (v) Borrower’s misapplication, misappropriation or conversion of tenant
security deposits or Rents collected more than one (1) month in advance which are not delivered to
Lender for application to the Loan; (vi) the misapplication, misappropriation or conversion of
insurance proceeds or condemnation awards; (vii) Personal

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Property (as defined in the Security Instrument) of the Borrower taken from the Property by or on
behalf of Borrower or any of the Exculpated Parties and not replaced with Personal Property of the
same utility and of the same or greater value; (viii) any act of arson by Borrower or any of the
Exculpated Parties; (ix) any fees or commissions paid by Borrower after the occurrence of an Event
of Default to any Exculpated Party in violation of the terms of this Note, the Security Instrument
or the Other Security Documents; (x) failure to pay charges for labor or materials or other charges
that can create liens on any portion of the Property; (xi) any security deposits, advance deposits
or any other deposits collected under leases with respect to the Property not being delivered to
Lender upon a foreclosure of the Property or action in lieu thereof, except to the extent any such
security deposits were applied in accordance with the terms and conditions of the applicable Leases
(as defined in the Security Instrument) prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof; (xii) any failure by Borrower to permit on-site
inspections of the Property as required by the Security Instrument and/or the Other Security
Documents; (xiii) any failure of Borrower to appoint a new property manager upon the request of
Lender as required by the terms of the Security Instrument and/or the Other Security Documents;
(xiv) Borrower’s material breach of, or failure to comply with, the representations, warranties and
covenants contained in Articles 5.8(b), 5.19 and/or 12 of the Security Instrument; (xv) Borrower’s
failure to provide financial information to Lender as required by Section 3.12 of the Security
Instrument; and/or (xvi) any failure by Borrower to comply with any provisions of Section 4.2 (e),
(f), (g), (i), (j), (k), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w), (x), (y), (z),
(aa), (bb), (cc), (dd), (ee), (ff), (gg), (hh), or (ii) of the Security Instrument.

     (c) Notwithstanding the foregoing, the agreement of Lender not to pursue recourse liability
against Borrower as set forth in subsection (a) above as to Borrower SHALL BECOME NULL AND VOID
and shall be of no further force and effect and the Debt shall be fully recourse to Borrower in
the event that: (i) the first full monthly payment of principal and interest under this Note is
not paid when due; (ii) Borrower fails to comply with any provision of Section 4.2 (a), (b), (c),
(d), (h) and (aa) of the Security Instrument; (iii) Borrower defaults under Article 8 of the
Security Instrument; (iv) Borrower files a voluntary petition under the U.S. Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law; (v) an affiliate, officer, director or
representative which controls Borrower, directly or indirectly, files, or joins in the filing of,
an involuntary petition against Borrower under the U.S. Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition against Borrower from any person or entity; (vi) Borrower files an
answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed
against it, by any other person or entity under the U.S. Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any person or entity; (vii) any affiliate, officer, director or
representative which controls Borrower consents to or acquiesces in or joins in an application for
the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of the
Property; or (viii) Borrower makes an assignment for the benefit of creditors, or admits, in
writing or in any legal proceeding, its insolvency or inability to pay its debts as they become
due.

     (d) Nothing herein shall be deemed to be a waiver of any right which Lender may have under
Section 506(a), 506(b), 1111(b) or any other provision of the U.S. Bankruptcy Code to file a claim
for the full amount of the indebtedness secured by the Security Instrument or to

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require that all collateral shall continue to secure all of the indebtedness owing to Lender
in accordance with this Note, the Security Instrument and the Other Security Documents.

ARTICLE 12: Authority

     Borrower (and the undersigned representative of Borrower, if any) represents that Borrower
has full power, authority and legal right to execute and deliver this Note, the Security
Instrument and the Other Security Documents and that this Note, the Security Instrument and the
Other Security Documents constitute valid and binding obligations of Borrower.

ARTICLE 13: Governing Law

     This Note shall be governed, construed, applied and enforced in accordance with the laws of
the state in which the Property is located without reference or giving effect to any choice of law
doctrine.

ARTICLE 14: Notices

     All notices required or permitted hereunder shall be given as provided in the Security
Instrument.

ARTICLE 15: Incorporation By Reference

     All of the terms, covenants and conditions contained in the Security Instrument and the Other
Security Documents are hereby made part of this Note to the same extent and with the same force as
if they were fully set forth herein.

ARTICLE 16: Miscellaneous

     (a) Wherever pursuant to this Note it is provided that Borrower pay any costs and expenses,
such costs and expenses shall include, but not be limited to, reasonable legal fees and
disbursements of Lender, whether with respect to retained firms, the reimbursement for the
expenses of in-house staff, or otherwise. Borrower shall pay to Lender on demand any and all
expenses, including legal expenses and reasonable attorneys’ fees, incurred or paid by Lender in
enforcing this Note, whether or not any legal proceeding is commenced hereunder, together with
interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses
are paid by Borrower.

     (b) This Note may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by
an agreement in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.

10

 

     (c) If Borrower consists of more than one person or party, the obligations and
liabilities of each person or party shall be joint and several.

     (d) Whenever used, the singular number shall include the plural, the plural number shall
include the singular, and the words “Lender” and “Borrower” shall include their respective
successors, assigns, heirs, executors and administrators.

[NO
FURTHER TEXT ON THIS PAGE]

11

 

     IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above
written.

	 	 	 	 	 	 	 	 	 
	 	 	Borrower:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	AMREIT LAKE HOUSTON, LP,	 	 
	 	 	a Texas limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	AmREIT Lake Houston GP, Inc.,	 	 
	 	 	 	 	a Texas corporation,	 	 
	 	 	 	 	Its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Chad C. Braun
 

	 	 
	 

	 	 	 	Name:
	 	Chad C. Braun	 	 
	 

	 	 	 	Title:
	 	 Vice President	 	 

12EX-10.7 COMMERICAL PROPERTY MANAGEMENT

 

Exhibit
10.7

COMMERCIAL PROPERTY MANAGEMENT AND

LEASING AGREEMENT

     THIS
COMMERCIAL PROPERTY MANAGEMENT AND LEASING AGREEMENT (this “Agreement”) is dated as
of March 30, 2006, and is entered into by and between 5433 WESTHEIMER, LP, a
Texas limited
partnership (“Owner”), and SONGY PARTNERS LIMITED, a Florida
limited partnership (“Manager” or
“Leasing Agent”).

BACKGROUND

     A. Owner owns that certain real estate project improved with buildings and common areas
commonly known as the office building located at 5433 Westheimer Road, Houston, Harris County,
Texas which is more particularly described on Exhibit “A” attached hereto and incorporated
herein (the “Property”).

     B. 
The primary use of the Property as of this date is for general office use (the “Existing
Use”).

     C. Owner may redevelop and/or remodel the Property in the future to provide for an alternate
use or additional uses other than the Existing Use of the Property (“Future
Redevelopment”).

     D. Owner desires to engage Manager as its exclusive agent to lease, manage and operate the
Property with respect to the Existing Use, and Manager desires to accept such engagement upon the
terms set forth herein.

STATEMENT OF AGREEMENT

     In consideration of the foregoing recitals and the mutual promises and covenants
contained herein, Owner and Manager agree as follows:

ARTICLE I

EXCLUSIVE AGENCY

     1.1 Appointment. With respect to the Existing Use only, Owner hereby appoints
Manager as the sole and exclusive leasing agent, rental agent and manager of the Property and
Manager hereby accepts such appointment, upon the terms, covenants and conditions set forth
herein.

ARTICLE II

TERM OF AGREEMENT

     2.1 Initial Term: Option to Renew. Except as provided in Section 2.3 below, the term
of this Agreement shall commence on the date hereof, and shall continue for a period of one (1)
year, automatically renewable for additional periods of one (1) year each. Each such renewal of
this Agreement shall be automatic unless either party provides written notice to the other of its
election to terminate this Agreement not less than sixty (60) days prior to the expiration of the
initial term or succeeding option term, as applicable.

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     2.2 Force Majeure; Cure Rights.

          
(a) The obligations of Owner and of Manager under this Agreement (except the
obligation of Owner to provide funds to Manager for the timely payment of fees and expenses of
Manager and expenses of the Property to be paid by Manager on behalf of Owner pursuant to this
Agreement) shall be excused for that period of time that Owner or Manager, as applicable, cannot
fulfill such obligations by reason of delays beyond its control, including without limitation acts
of God, inclement weather, war, insurrection, labor strikes, inability to obtain necessary
materials or supplies, inability to obtain necessary permits, licenses or approvals, or any other
event commonly included within the definition of force majeure.

     2.3 Termination of Agreement. This Agreement may be terminated prior to the
expiration of the initial term or of any renewal term, as applicable, by either party hereto
providing sixty (60) days’ prior written notice to the other party of such termination; provided
that termination shall not relieve either Owner nor Manager from liabilities or claims accruing and
arising up to and including the date of termination, including, without limitation, Owner’s
obligation to Manager for compensation and reimbursement for expenses applicable to such period and
Owner’s liability to Manager for commissions that survive termination.

     2.4 Obligations Upon Termination. Within thirty (30) days of the expiration or
termination date of this Agreement, Leasing Agent shall furnish to Owner in writing a list of
prospects, if any, with whom Leasing Agent has been “holding negotiations” for lease of space in
the Property or for any Lease Extension or Renewal as defined in Section 5.3(c) or Lease Expansion
as defined in Section 5.3(e). For the purposes of this Paragraph, Leasing Agent shall be deemed to
have been holding negotiations, and no further evidence need be submitted to Owner, if either
(i)(A) Leasing Agent has been in contact with such prospective tenant at any time within the sixty
(60) days preceding the termination or expiration of this Agreement, and (B) Leasing Agent has
shown, or caused to be shown, to said prospective tenant the Property or a model of the Property,
or (ii) Leasing Agent has submitted a written leasing proposal to such party relating to occupancy
of the Property or to any Lease Extension or Lease Expansion. If, within three (3) months after
the expiration or termination of this Agreement, whichever is applicable, any space at the Property
is leased to any one of the parties with which Leasing Agent was holding negotiations, or any Lease
Extension or Lease Expansion is entered into with any of such parties, Leasing Agent shall be
considered the procuring broker hereunder for such space and shall be entitled to receive from
Owner a commission in accordance with Article V below as if such transaction occurred prior to such
termination or expiration date, as applicable. If Leasing Agent shall fail to furnish such a
written list, Owner shall not be liable for any commission with respect to any space at the
Property leased after the expiration or termination of this Agreement. Further, if for any reason
other than intentional suspension of negotiations to avoid payment of a commission hereunder, no
agreement has been reached respecting space in the Property or any Lease Extension or Renewal or
Lease Expansion, with any such tenant within said three (3) month period, Owner shall not be liable
for any commission hereunder for such tenant. The provisions of this Section 2.4 shall survive the
termination or expiration of this Agreement.

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ARTICLE III

BUDGETS AND ACCOUNTING

     3.1 Preparation of Budget. Manager shall prepare and submit to Owner a proposed
budget in a form approved by Owner for the promotion, leasing, operation, repair and maintenance of
the Property for the forthcoming fiscal year. Each proposed budget for the forthcoming fiscal
year shall be delivered to Owner at least 90 days prior to the expiration of the then current
fiscal year, provided Owner has provided Manager with the information necessary to complete the
budget. Owner will consider each proposed budget and will consult with Manager in the period
prior to the commencement of the forthcoming fiscal year in order to agree upon an “Approved
Budget.”

     3.2 Accounting. Manager shall use diligence and employ reasonable efforts to assure
that the actual costs of managing, maintaining and operating the Property do not exceed the
Approved Budget. During the fiscal year Manager shall inform Owner of any material increases in
costs and expenses that were not reflected in the Approved Budget and shall secure Owner’s prior
approval for any expenditure that will result in an increase of whichever of the following is
greater: in excess of five percent (5%) of the annual budgeted amount in any one accounting
category of the Approved Budget or $5,000.00.

     3.3 Books and Records. Manager shall maintain reasonably adequate books and records
for the Property with sufficient supporting documentation to ensure that all entries in the books
and records are materially accurate and substantially complete. Such books and records shall be
maintained by Manager at its address stated herein or such other address of which Manager notifies
Owner in writing. Manager shall use its reasonably diligent efforts to exercise such control over
accounting and financial transactions so as to protect Owner’s assets from theft or fraudulent
activity on the part of Manager’s employees, provided that Manager shall not be responsible or in
any way liable for the protection of Owner’s assets from theft or fraudulent activity on the part
of Owner, or its associates, agents, representatives and employees.

     3.4 Reports to Owner. Manager shall, by the 20th calendar day of each month, or if
such day is not a regular business day, on the next succeeding business day, furnish to Owner an
accounting of receipts and disbursements for the immediately preceding month. Such
accounting shall contain: (i) a rent roll showing, by tenant, security deposits, cash collected and
prepaid or accrued rents and stacking plan; (ii) a cash disbursements journal, together with such
other information, including supporting invoices and vouchers, as Owner may reasonably request;
(iii) a reconciliation of advanced operating funds; (iv) a reconciliation of cash receipts to
deposits; (v) a reconciliation of security deposits accounts; (vi) a computation of management fee;
(vii) a report of aging accounts payable and accounts receivable; (viii) a detail of actual capital
expenditures vs. budgeted capital expenditures for the current period and year-to-date, and a
narrative discussing major variances between actual and budget performance; and (ix) any other
matters pertaining to the management, operation and maintenance of the Property during the month.
The accounting shall also include a comparison of monthly and year-to-date actual income and
expense with the Approved Budget for the Property. In addition, if such funds are not in Owner’s
account, Manager shall remit to Owner all unexpended funds, after deducting the management fees and
reimbursements due to Manager and a reserve for contingencies in the

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amount set forth in the Approved Budget or as may be otherwise agreed to from time to time by
Owner and Manager, along with such accounting.

     3.5 Financial Information. Manager shall maintain, and supply to Owner upon written
request, copies of:

          (a) all bank statements, bank deposit slips and bank reconciliations;

          (b) detailed cash receipts and disbursement records;

          (c) paid invoices; and

          (d) summaries of adjusting journal entries.

     3.6 Method of Accounting. All financial statements and reports required hereunder
will be prepared on a cash basis.

ARTICLE IV

MANAGEMENT OF PROJECT

     4.1 General Duties and Responsibilities. Manager shall manage, operate and maintain
the Property in accordance with the general standards set forth in this Article IV. Without
limiting the generality of the foregoing, Manager’s functions hereunder shall include the
following:

          (a) Manager shall coordinate, supervise and direct the management and physical operation of
the Property, including but not limited to, building cleaning, security, maintenance and general
building repairs and maintenance, all to be directed by a full-time
on site “General Manager” (the initial General Manager being Pamela Andino).

          In no event shall Manager have the right to change the management team without the Owner’s prior
written consent, such consent not to be unreasonably withheld; provided, however, that the Owner
shall have the right, at any time and from time to time, to require Manager to remove any one or
more persons from the Property in the Owner’s reasonable discretion.

          (b) Manager shall use reasonably diligent efforts to collect all rents and other charges which
may become due at any time from any tenant or from others for services provided in connection with
or for the use of the Property or any portion thereof. All funds received by Manager for or on
behalf of Owner (less any sums properly deducted by Manager pursuant to any of the provisions of
this Agreement) shall be deposited in a bank selected by Owner and Manager in a special account
maintained by Manager in the name of and at the expense of Owner for the deposit of funds of Owner.

          (c) Manager shall, in the name of and at the expense of Owner, make or cause to be made such
ordinary repairs and alterations as Manager may deem advisable or necessary to the improvements on
the Property, subject to and within the limitations of the Approved Budget; provided, however, that
Manager shall not perform any activities for which any governing association of the Property (an
“Association”) is responsible as set forth in any declaration of covenants, conditions and
restrictions for the Property; and provided further that Manager shall

- 4 -

 

not expend more than Ten Thousand Dollars ($ 10,000) for any one item of repair or alteration
without Owner’s prior written approval, except for monthly reoccurring maintenance expenses and
emergency repairs if (i) in the reasonable opinion of Manager, such repairs are necessary to
protect the Property from further damage or to maintain services to tenants as called for in such
tenants’ leases, and (ii) Owner is immediately notified of such emergency repairs. The authority
provided to Manager in this paragraph shall not extend to capital improvements or the associated
tenant finish, refurbishing and rehabilitation or remodeling areas covered by new leases. The
latter expenditures are subject to Owner’s prior approval which shall be given at the time of the
execution of new leases and in accordance with the provisions of this Agreement. Manager shall
promptly inform Owner of material increases in repair and maintenance costs not reflected in the
Approved Budget.

          (d) Manager shall, in the name of and at the expense of Owner, contract for those utilities
and other building operation and maintenance services and parking facility management services that
Manager shall deem advisable; provided that no service contract shall be for a term not cancelable
upon thirty (30) days advance notice without prior written approval of Owner and the cost of all
such services shall be included in the Approved Budget or otherwise approved in writing in advance
by Owner. All such contracts shall be competitively bid as reasonably directed by Owner.
Manager shall, at Owner’s expense, purchase and keep the Property furnished with all reasonably
necessary supplies.

          (e) Subject to the provisions of Section 7.3 below, Manager shall pay at the expense of Owner,
from the account or accounts provided for in Section 7.1 below or from funds otherwise provided by
Owner, expenses of the Property, including without limitation real and personal property taxes,
payments due under service contracts, utilities, materials and supplies necessary for the operation
of the Property, and such other expenses as may be incurred in connection with the operation and
management of the Property in the ordinary course of business or as set forth under this Agreement.

          (f) Manager shall notify Owner promptly in writing of all significant occurrences and
circumstances affecting the Property of which Manager has actual knowledge. In addition, Manager
shall promptly investigate and make a full written report as to all accidents or claims for damage
relating to the ownership, operation and maintenance of the Property, which reports shall include
any such damage or destruction to the Property and the estimated cost of repair, and shall
cooperate with and make any and all reports required by an insurance company in connection
therewith to the extent Manager has the requisite information to complete such reports.

          (g) Manager shall prepare and deliver to Owner an annual inventory of the personal property
(including, without limitation, office equipment and motor vehicles) owned or leased in connection
with the Property; provided, however, that such inventory shall exclude office supplies and other
expendable items. Said inventory shall be submitted to Owner on or before February 1 of each
calendar year or on such other date each year as Owner may specify. Promptly following the date
upon which any item of such personal property is acquired, replaced or disposed of, Manager shall
notify Owner in writing of such change in said inventory. Manager shall work with the accountants
of the Owner with respect to the preparation of the foregoing.

- 5 -

 

          (h) Promptly upon receipt thereof, Manager shall submit to Owner a copy of all notices or
statements received with respect to bank accounts and insurance policies relating to the
Property or received from any governmental agency or any tenant of the Property, together with
any other notices or statements received by Manager which threaten or are reasonably expected
to have a material effect upon the Property or Owner; provided, however, that such items
submitted shall exclude copies of information bulletins, questionnaires and similar materials
of general distribution unless reasonably expected to have a material effect upon the Property
or Owner.

          (i) Monthly, Manager shall walk through the Property and notify Owner of the need for
repairs and maintenance to the Property that come to the attention of Manager.

     4.2 Limitation of Authority. Notwithstanding any provision in this
Agreement to the contrary, Manager shall not without the prior approval of Owner:

          (a) convey or otherwise transfer or pledge or encumber the Property or any other property or
asset of Owner;

          (b) institute or defend lawsuits except as otherwise provided herein or other legal
proceedings on behalf of Owner;

          (c) pledge the credit of Owner (except for purchases made in the ordinary course of operating
the Property or as otherwise contemplated pursuant to this Agreement); or

          (d) borrow money or execute any promissory note or deed of trust, security agreement, guaranty
or other encumbrance in the name of or on behalf of Owner.

ARTICLE V

LEASING OF PROPERTY

     5.1 Standard of Care; Brokerage License. Leasing Agent, as exclusive leasing agent
for Owner, shall market and lease tenant space in the Property for and on behalf of Owner,
diligently and in good faith, and in accordance with sound, reasonable and prudent leasing
practices.

5.2 Leasing.

          (a) Leasing Agent shall be responsible for coordinating the leasing activities of the Property
and shall use its reasonable, good faith efforts to obtain tenants for all unleased space and to
renew existing leases. Leasing Agent shall develop and submit to Owner a marketing plan for
approval by Owner, including a strategy for tenant solicitation, advertising and development and
maintenance of good relations with the brokerage community in the applicable metropolitan area.
Leasing Agent shall market tenant space within the Property in accordance with the marketing plan
approved by Owner, it being understood and agreed that all expenses incurred by Leasing Agent in
the marketing, promoting and leasing of the Property shall be subject to the limitations set forth
in the Approved Budget and that any costs and expenses incurred by Leasing Agent in performing its
duties hereunder not specifically set forth in the Approved Budget (including salaries, wages and
office expenses) shall be borne solely by

- 6 -

 

Leasing Agent, except as otherwise expressly set forth in this Agreement. Without limitation of the
foregoing, Leasing Agent shall perform the following services for and on behalf of Owner:

     (i) Leasing Agent shall direct, supervise and coordinate the leasing of the Property,
shall list the Property for leasing purposes with its salesmen and third-party licensed
real estate brokers (hereinafter referred to as “Co-Brokers”), shall negotiate and, to the
extent possible and expedient, prepare all tenant leases on the standard form of lease
provided by Owner to Leasing Agent under and at the direction of Owner’s counsel. Owner may
change the standard form of lease from time to time upon reasonable prior written notice to
Leasing Agent along with a copy of the new standard form of lease. Leasing Agent shall make
submittals to Owner concerning the economics of prospective leases and concerning the
creditworthiness and other relevant information with respect to prospective tenants on
Owner’s standard form. Leasing Agent shall submit all proposed leases to Owner for approval
and for execution by Owner. Leasing Agent shall follow the written leasing guidelines and
parameters delivered to Leasing Agent by Owner in leasing the Property. Owner shall have
the right from time to time, and in its sole discretion, to modify said leasing guidelines.
Such modification shall only be effective and binding upon Leasing Agent upon delivery
thereof to Leasing Agent;

     (ii) Leasing Agent shall assist tenants in coordinating the preparation of plans for
the improvement of tenant space and for taking occupancy of the Property; and

     (iii) Leasing Agent shall cooperate with, and shall affirmatively solicit the
participation of Co-Brokers in promoting the leasing of tenant space within the Property;

          (b) Leasing Agent shall furnish detailed market reports and market surveys for Owner on a
quarterly or as requested basis, containing such information relating to the applicable
metropolitan area as Leasing Agent deems appropriate, including, but not limited to: (i) a report
on current prospects to lease space in the building (the “Building”) located on the Property; and
(ii) copies of floor plans of each floor of the Building showing all leased and unleased space.
Leasing Agent shall submit to Owner any other special information or reports as are reasonably
required from time to time by Owner, including, without limitation, completed lease abstracts with
respect to leases in effect regarding the Property.

          (c) Leasing Agent shall furnish to Owner, on an annual basis, simultaneously with submitting
the proposed budget to Owner: (i) recommendations concerning marketing efforts relating to the
Property, including recommendations on public relations and advertising for the Property; and (ii)
recommendations on capital improvements or operating changes that could be made to improve the
marketability of the Property.

          (d) Notwithstanding anything to the contrary contained herein, Owner, in Owner’s sole and
absolute discretion, may reject any lease for space in the Building proposed by Leasing Agent or
any cooperating broker, for any reason or for no reason. If, for any reason whatsoever, any lease
submitted and/or obtained by Leasing Agent or any cooperating broker is not executed and delivered
by Owner, no commission or any other fee shall be due to, payable to or earned by Leasing Agent or
the cooperating broker unless otherwise agreed to in writing by Owner.

- 7 -

 

     5.3 Leasing Commissions. As compensation for the negotiation and consummation of
tenant leases executed by Owner during the term of this Agreement covering portions of the
Property (hereinafter referred to collectively as “Leases” and individually
as a “Lease”), and as
compensation for the performance of marketing services by Leasing Agent, Owner shall pay to
Leasing Agent a leasing commission as follows:

          (a) Lease; Co-Broker Not Involved. As compensation for Leasing Agent’s services as
exclusive agent with respect to any Lease in which a Co-Broker is not involved, Owner agrees to pay
Leasing Agent the lease commission set forth in Paragraph 1 of Exhibit C attached hereto and made a
part hereof.

          (b) Lease; Co-Broker Involved. As compensation for Leasing Agent’s services as
exclusive agent with respect to any Lease in which a Co-Broker is involved, Owner agrees to pay
Leasing Agent the lease commission set forth in Paragraph 2 of Exhibit C attached hereto.

          (c) Lease Extensions; Co-Broker Not Involved. In the event that during the term of
this Agreement and pursuant to executed documentation (1) any tenant lease is renewed because an
option to renew pursuant to any tenant lease is exercised; (2) the term of any tenant lease is
extended; or (3) a new Lease is entered into between Owner and the tenant in question covering the
premises occupied by such tenant, or any part thereof (any of such events as described in (1), (2)
or (3) immediately above being herein referred to as a “Lease Extension”
or “Renewal”), and
provided no Co-Broker is involved in the Lease Extension, Owner agrees to pay Leasing Agent the
amount set forth in Paragraph 3 of Exhibit C attached hereto.

          (d) Lease Extensions; Co-Broker Involved. As compensation for Leasing Agent’s
services as exclusive agent with respect to any Lease Extension in which a Co-Broker is involved,
Owner agrees to pay to Leasing Agent the leasing commission set forth in Paragraph 4 of Exhibit C
attached hereto.

          (e) Lease Expansions; Co-Broker Not Involved. In the event that during the term of
this Agreement and pursuant to executed documentation (1) a right to expand pursuant to any tenant
lease is exercised, or (2) a new Lease is entered into between Owner and any tenant covering any
other premises (other than the premises then being occupied by such tenant) as an expansion of or
as a substitute for the premises occupied by such tenant within the Property or any part thereof
(the “Expansion Premises”) (any of the events described in (1) or (2) immediately above being
herein referred to as a “Lease Expansion”), and provided no Co-Broker is involved in such Lease
Expansion, then Owner, with respect to any such Lease Expansion, agrees to pay to Leasing Agent the
Lease commission set forth in Paragraph 5 of Exhibit C attached hereto.

          (f) Lease Expansions; Co-Broker Involved. As compensation for Leasing Agent’s
services as exclusive agent with respect to any Lease Expansion in which a Co-Broker is involved,
Owner agrees to pay to Leasing Agent the lease commission set forth in Paragraph 6 of Exhibit C
attached hereto.

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ARTICLE VI

METHODS OF OPERATION

     6.1 Contracts. All service contracts, and (to the extent they are within the
scope of Manager’s duties under this Agreement) all contracts for capital improvements and all
contracts for the improvement, refurbishing or remodeling of tenant spaces (“Contracts”) which (a)
cover expenditures included within the Approved Budget, are required by any approved lease or are
otherwise approved in advance by Owner, and (b) meet the criteria set forth hereunder for such
Contracts or are approved in advance by Owner or otherwise meet criteria established by Owner for
such Contracts, shall be executed by Manager in the name of, and as agent for Owner. Upon written
request of Owner, any and all such Contracts shall be subject to Owner’s prior approval. At
Manager’s sole option and election, any or all Contracts shall be executed by Owner. All
Contracts shall be with such contractors and service providers as Manager may select and Owner
shall approve from time to time. Upon any termination of this Agreement, to the extent
necessary, Manager shall assign all Contracts executed by Manager to Owner. Owner will provide
Manager with any additional documentation reasonably necessary to establish Manager’s
authority to act as required hereunder. Upon termination of this Agreement, Owner agrees to
specifically assume Contracts that are in the name of Manager provided that such Contracts were
approved by Owner or otherwise entered into in accordance with the terms of this Agreement.

     6.2 Compliance with Laws. Subject to the other provisions of this Agreement, at
Owner’s expense, Manager shall use reasonable efforts to cause the Property to comply with federal,
state and municipal laws, all known ordinances, regulations and orders relative to the leasing,
use, operation, repair and maintenance of the Property and with the rules, regulations or orders of
the local Board of Fire Underwriters or other similar body. Manager shall use reasonable efforts
to remedy the violation of any such law, ordinance, rule, regulation or order of which it has
actual knowledge and which violation occurs after the date hereof, at Owner’s expense. Expenses
incurred in so complying and in correcting any such violation shall be included in the Approved
Budget or otherwise approved in advance by Owner. At Owner’s expense, Manager shall use its
reasonably diligent efforts to comply with all terms and conditions contained in any ground lease,
mortgage, deed of trust or other security instruments affecting the Property of which Manager has
actual knowledge and for remedying any breach thereof. Notwithstanding the foregoing, however,
Manager’s responsibilities under this Section shall not extend to matters as to which the
expenditure of Owner’s funds is required but disapproved by Owner or such funds are not made
available by Owner.

     6.3 Licenses and Permits. Manager shall apply for and obtain and maintain in the
name and at the expense of Owner all licenses and permits required of Owner or Manager in
connection with the management and operation of the Property. Owner agrees to execute and deliver
any and all applications and other documents and to otherwise cooperate to the fullest extent with
Manager in applying for, obtaining and maintaining such licenses and permits.

     6.4 Hazardous Materials. Owner acknowledges and understands that Manager is not
qualified to evaluate the presence or absence of hazardous or toxic substances, waste, materials,
electromagnetic field, radon, or radioactive materials upon, within, above, or beneath the
Property; compliance with environmental, hazardous or solid materials or waste laws, rules

- 9 -

 

and regulations; or the clean-up or remediation of hazardous materials spills or contamination.
Accordingly, notwithstanding the provisions of Section 6.2 above, Manager’s obligations to Owner
with respect to the presence of hazardous or toxic substances, waste (including solid waste) gas,
liquid or materials; electromagnetic field and radon; lead; asbestos; or radioactive materials
upon, within, above, or beneath the Property (hereinafter collectively “Hazardous
Materials”), and/or with the compliance and enforcement of federal, state, and local laws,
rules, regulations, directives, ordinances, and requirements relating to Hazardous Materials
(hereinafter collectively “Hazardous Materials Laws”) shall be subject to, conditioned
upon, and limited by the following:

          (a) Owner shall, at Owner’s sole discretion and expense, obtain from an independent
environmental consultant retained by Owner, and reasonably acceptable to Manager, an
environmental assessment report on the Property, and shall have such assessment report periodically
updated by such environmental consultant based upon the consultant’s inspections of the Property,
including tenant spaces and tenants’ proposed and actual uses of such spaces. The environmental
assessment report and all updates thereto shall be delivered to Owner and Manager, and shall
include evaluations by the consultant as to whether the Property or any tenant’s space is in
violation of any Hazardous Materials Laws or whether the Property or any tenant’s space is one in
which a specific disclosure regarding Hazardous Materials must be made.

          (b) In no event will Manager make an independent determination as to the presence or absence
of Hazardous Materials, or whether the Property or any particular tenant space is in violation or
compliance with any Hazardous Materials Laws. Manager’s sole responsibility shall be to act, at
the direction of Owner’s environmental consultant, if any, and Owner, to (i) undertake, on Owner’s
behalf and at Owner’s expense, necessary actions for Owner to comply with Hazardous Materials Laws
in accordance with the environmental recommendations contained in the environmental assessment
report, and/or (ii) seek, on Owner’s behalf and at Owner’s expense, to enforce a tenant’s
compliance with any Hazardous Materials Laws in accordance with the environmental consultant’s
recommendations contained in the environmental assessment report.

          (c) After any action on behalf of Owner has been taken by Manager in accordance with the
recommendations contained in any environmental assessment report, if any, and the directions of
Owner’s environmental consultant and Owner, Owner’s environmental consultant shall re-inspect to
ensure that there has been full compliance with all Hazardous Materials Laws. Manager shall not,
and shall have no obligation to, determine whether or not Owner, any tenants, the Property, or any
portion thereof is in compliance with Hazardous Materials Laws.

          (d) Manager shall have absolutely no responsibility or obligation with respect to the
abatement, clean-up or remediation of any spill of or contamination from any Hazardous Materials
upon, beneath, or within all, or any portion, of the Property not caused by Manager or existing
prior to the date of this Agreement and the entire responsibility for such clean-up, abatement, or
remediation shall lie with Owner and Owner’s environmental consultant. Owner agrees that, with
respect to any abatement, clean-up or remedial action, Owner shall employ a qualified and licensed
environmental clean-up company to undertake such clean-up and

- 10 -

 

remediation, and Owner’s environmental consultant shall oversee the entire abatement, clean-up and
remediation process and the obtaining of any required governmental approvals.

          (e) The indemnities in Section 6.4(d) shall be immediately vested and shall survive the
expiration or termination of this Agreement. Manager shall use reasonably diligent efforts to
comply with any written operations and management plan for the Property for the remediation of
asbestos (the “O&M.Plan”) of which Manager has notice and shall use reasonably diligent efforts
to monitor and ensure that all tenants are complying with the O&M Plan.

     6.5 Employees. Manager shall have in its employ or under separate contract at all
times a sufficient number of capable employees enabling it to properly, adequately, safely and
economically manage, operate and maintain the Property. All matters pertaining to the
employment, supervision, compensation, promotion and discharge of such employees, as well as union
negotiations and compliance with laws and regulations dealing with employee matters, are the
responsibility of Manager, which is in all respects the employer of such employees. All employees
of Manager who handle or are responsible for Owner’s funds shall, if requested in writing by Owner,
be covered by a fidelity bond. The amount of such bond shall be reasonably determined by Owner and
the premium therefore shall be a cost of Owner.

     6.6 Legal Counsel. Manager shall, at Owner’s request and expense, engage counsel and
cause legal proceedings to be instituted as may be necessary to enforce payment of rent and
compliance with provisions of tenant leases, or to dispossess tenants. Manager shall use legal
counsel approved by Owner to assist as necessary in lease and/or contract preparation and
negotiation, to provide legal advice in connection with management issues at the Property, and to
institute legal proceedings. All compromises, settlements, or legal proceedings shall be subject
to the prior approval of Owner. Attorneys’ fees and costs incurred in any of the foregoing shall be
expenses of the Property. Owner and Manager shall agree upon a reasonable projection for the
attorney’s fees and costs in the Approved Budget.

ARTICLE VII

FINANCIAL MATTERS

     7.1 Bank Accounts. Manager shall establish an operating account or accounts for the
Property in the name and at the expense of Owner at such bank(s), under such designation(s) and
with such authorized signatures of Manager as Manager and Owner may mutually agree upon from time
to time and all funds collected from the operation of the Property (the “Property Funds”)
shall be deposited in the account(s) so established and all expenses of the Property shall be
disbursed from such account(s). Manager shall not commingle its own funds or funds of any other
property with Property Funds. If required by law or by Owner, a separate account for tenant
security deposits shall be established in the same manner as provided in the preceding sentence and
shall be maintained as required by law or Owner. Owner will provide whatever signing authority is
necessary for Manager to fulfill its obligations under this Agreement.

     7.2 Audits. Owner reserves the right upon five (5) days prior written notice, to audit
all books and records maintained by Manager solely with respect to the Property. All audits shall
be at Owner’s cost and expense, shall be conducted during normal business hours and shall be
conducted at the Property. Any audit may be conducted by Owner’s employees or by

- 11 -

 

independent persons engaged by Owner and Manager shall, at no cost to Manager, reasonably
cooperate with Owner during any such audit. Any discrepancies noted in any audit shall be promptly
corrected.

     7.3 Payments of Expenses. If gross income from the Property is not sufficient to pay
bills and charges incurred, available funds shall be applied first to bills and charges of third
parties and second to fees and expenses of Manager to be charged to Owner pursuant to this
Agreement. After exhausting available funds, Manager shall submit to Owner a statement of remaining
unpaid bills and Owner shall promptly provide sufficient funds to pay such bills.

ARTICLE VIII

INSURANCE AND INDEMNIFICATION

     8.1 Indemnity and Subrogation.

          (a) Subject to Section 8.1(e), Owner shall indemnify, defend and hold harmless Manager and
its affiliates and each of their respective officers, directors, employees, stockholders, partners,
agents, lenders, representatives, and contractors, and each of their respective successors and
assigns, from and against any and all liabilities, obligations, claims, losses, causes of action,
suits, proceedings, awards, judgments, settlements, demands, damages, costs, expenses, fines,
penalties, deficiencies, taxes and fees, (including without limitation the fees, expenses,
disbursements and investigation costs of attorneys and consultants) arising directly or indirectly
out of or resulting in any way from or in connection with the Property, the management of the
Property by Manager, or the performance or exercise by Manager of the duties, obligations, powers,
or authorities herein, or hereafter granted to Manager, except for those actions and omissions of
Manager in relation to which Manager agrees to indemnify Owner
pursuant to Section 8.1(b).

          (b) Subject to Section 8.1(e), Manager agrees to indemnify and hold Owner and its affiliates
and each of their respective employees, officers, directors, and agents harmless from and against
any and all costs, expenses, attorneys’ fees, suits, liabilities, damages, or claim for damages, in
any way arising out of (i) any acts or omissions of Manager, its agents or employees which have
been held to be grossly negligent or which were the result of willful misconduct; (ii) any failure
of Manager to promptly perform in any material respect any of its obligations under this Agreement,
provided such failure was not caused by Owner or by events beyond the reasonable control of
Manager, and Owner has furnished to Manager sufficient funds to perform such obligations; or (iii)
any acts of Manager beyond the scope of Manager’s authority hereunder.

          (c) “Indemnified Party” and “Indemnitor” shall mean Manager and Owner, respectively,
as to Section 8.1 (a) and shall mean Owner and Manager, respectively, as to Section 8.1(b). If
any action or proceeding is brought against the Indemnified Party with respect to which indemnity
may be sought under this Section 8.1, the Indemnitor, upon written notice from the Indemnified
Party, shall assume the investigation and defense thereof, including the employment of counsel
and payment of all reasonable expenses. The Indemnified Party shall have the right to employ
separate counsel in any such action or proceeding and to participate in the defense thereof, but
the Indemnitor shall not be required to pay the reasonable fees and

- 12 -

 

expenses of such separate counsel, unless such separate counsel is employed with the written
approval and consent of the Indemnitor.

          (d) The indemnities in this Section 8.1 shall survive the expiration or termination of this
Agreement.

          (e) Anything in this Agreement to the contrary notwithstanding, Owner and Manager hereby waive
and release each other of, and from, any and all right of recovery, claim, action, or cause of
action against each other, their agents, officers, and employees, for any loss or damage that may
occur to the Property, improvements to the Property, or personal property within the Property, by
reason of fire or the elements, or other casualty, regardless of cause or origin, including
negligence of Owner or Manager and their agents, officers, and employees, to the extent the same is
insured against under insurance policies carried by Owner or Manager (or required to be carried by
Manager hereunder); however, Owner’s waiver shall not include any deductible amounts on insurance
policies carried by Owner, nor extend to acts of the type described in clauses (i), (ii) or (iii)
of Section 8.1(b). Owner and Manager agree to obtain a waiver of subrogation from the respective
insurance companies which have issued policies of insurance covering all risk of direct physical
loss and to have the insurance policies endorsed, if necessary, to prevent the invalidation of the
insurance coverages by reason of the mutual waivers.

          (f) For the purposes of Section 8.1 term “Owner” shall be construed as meaning Owner and its
respective affiliates, directors, officers, employees, agents, and representatives and the
term “Manager” shall be construed as meaning Manager and its affiliates, directors, officers,
employees, agents, and representatives.

8.2 Property Insurance.

          (a) Owner shall, at its sole expense, maintain in full force and effect during the term of
this Agreement “Special Form Causes of Loss” or “All Risk” property damage insurance, including
builder’s risk insurance where applicable, to cover physical loss or damage to the Property from
fire and extended coverage perils, including but not limited to vandalism and malicious mischief;
and comprehensive general liability insurance, on an occurrence (and not claims — made) form, in
an amount not less than $1,000,000 each occurrence with respect to the Property and covering
third-party personal injury, property damage, and bodily injury (including death). Owner shall
furnish Manager certificates of insurance evidencing that such insurance is in force as of the
date of this Agreement or such date as services are performed by Manager, whichever is earlier.
All such insurance shall be placed with insurers authorized to do business in the state where the
property is located; be written on a non-surplus lines basis; have a rating of A-VIII or better as
reported by Best’s Property & Casualty Reports Key Rating Guide for the most current reporting
period; and contain waivers of subrogation as to Manager, its employees, insurers, shareholders
and authorized agents. All such insurance shall include, by endorsement only, Manager as an
additional insured thereunder. Such insurance shall in all respects be the primary insurance for
claims arising at or on the Property and any policy of Manager shall be non-contributing in all
respects. Subject to Section 8.1(e), the satisfaction of all deductibles or self-insured
retentions shall be the responsibility of Owner for all claims arising at the property. To the
extent that Owner or the Property has insurance covering any

- 13 -

 

actual or potential environmental liability at the property, Owner shall undertake to have Manager
added as an additional insured to such 
policy(ies).

          (b) Manager shall use its reasonably diligent efforts at all times to comply with all
warranties, terms, and conditions of Owner’s insurance. Manager shall notify Owner within
forty-eight (48) hours after Manager receives actual notice of any loss, damage, or injury, which
in Manager’s opinion may result in a claim under such insurance and shall not take any action which
knowingly might prejudice Owner in its defense to any claim based on such loss, damage, or injury.

          (c) During the term of this Agreement, Manager shall maintain the following insurance for its
business operations:

	 	 	 
	INSURANCE	 	LIMITS
	Workers’
Compensation And
Employers’
Liability:
	 	Coverage A: 
	 

	 	Limits required by statute in the state where
the property is located and where any operations relating
to this agreement are performed.
 
	 

	 	Coverage B: 
	 

	 	$500,000 Bodily Injury by Accident (Each Accident)

$500,000 Bodily Injury by Disease (Policy Limit)

$500,000 Bodily Injury by Disease (Each Employee)
	 
	 	 
	Commercial
or Comprehensive General Liability Insurance:

	 	$1,000,000 per occurrence/ $2,000,000 aggregate
	 
	 	 
	Automobile
(Single Limit
Bodily Injury and
Property
Damage):

	 	$1,000,000 Any Auto/Accident (hired/owned and
non-owned)

Upon written request, Manager shall furnish Owner, at the time of execution of this
Agreement, certificates of insurance evidencing the insurance coverage required under this
Agreement. Such certificates shall be issued by the insurer(s) or its authorized agent(s) and shall
provide that Owner will be given thirty (30) days prior written notice of cancellation or material
change in Manager’s coverage. All such insurance shall be placed with insurers authorized to do
business in the state where the Property is located and that have a rating of A-VIII or better as
reported by Best’s Property and Casualty Reports Key Rating Guide for the most current reporting
period. All such policies shall contain waivers of subrogation as to Owner, its employees,
insurers, shareholders and authorized agents. All such policies of Manager, except for workers’
compensation and fidelity coverage for Manager’s employees directly involved with the operation of
the Property, shall be at Manager’s sole cost. Manager may maintain such coverage through the use
of “blanket coverage.” In cases where Owner and Manager maintain insurance policies that duplicate
coverage for the Property, then Owner’s policies shall provide in all respects primary coverage,
without regard to any “other insurance” clauses. The addition of

- 14 -

 

Owner as an additional insured under any of Manager’s insurance policies shall not obligate
Manager to provide Owner a defense or indemnity for claims not covered under any such policy.

          (d) Manager shall require that each contractor and subcontractor hired to perform work at the
Property maintain insurance against risk of bodily injury, personal injury, and physical damage to
personal property belonging to it in amounts sufficient to replace such personal property in the
event of loss, at such contractor’s and subcontractor’s sole cost and expense, in the following
minimum amounts:

	 	 	 	 	 
	INSURANCE	 	MINIMUM LIMITS
	Workers’ Compensation

	 	As required by law in the state where property is
located and where any operations relating to the contract
are located.

	 
	 	 	 	 
	Employer’s Liability

	 	$1,000,000	 	 
	 
	 	 	 	 
	Comprehensive General Liability*

	 	$1,000,000 per occurrence/$2,000,000 aggregate

	 
	 	 	 	 
	Comprehensive Auto Liability*

	 	$1,000,000 (any auto/owned/non-owned/hired)

 

			
	*	 	These coverages shall be primary as to Owner and Manager and will respond to any
allegation, claim, loss, damage, demand, or judgment, or other causes of action arising out
of work done at the Property by the contractor or subcontractor on behalf of Owner and
Manager. Owner and Manager shall be named as additional insureds on such policies. The
policies shall be written on an “occurrence” and not “claims-made” form basis.

Owner or Manager may require additional coverage if the work to be performed is, in their
judgment, sufficiently hazardous and may waive certain limits on a case-by-case basis for
incidental or personal service contracts or jobs. Before any work can begin, each contractor or
subcontractor will submit Certificates of Insurance and endorsements in form and substance
satisfactory to Owner or Manager as evidence of the coverages required. Each certificate will
provide for (i) cross-liability or severability of interests for the benefit of the Additional
Insureds; (ii) waiver of subrogation as against Owner and Manager and their insurers; and (iii) if
Contractor’s insurance is provided by means of a so called “blanket policy,” the aggregate must
apply per project or per location. Each certificate will bear an endorsement requiring thirty (30)
days’ prior written notice of cancellation, material alteration, or non-renewal. All such policies
shall be issued by insurers with a Best’s rating of A-VIII or higher as reported in the most
recent edition.

ARTICLE IX

COMPENSATION OF MANAGER

     9.1 Management Fee. For its services hereunder with respect to the
Existing Use, Manager shall be paid a monthly management fee in an amount equal to, and in
accordance with,

- 15 -

 

the schedule set forth in Exhibit “B” attached hereto and made a part hereof. In addition
to the management fees to be paid to Manager in accordance with the terms of the immediately
preceding sentence, if the total job costs exceed Twenty-Five Thousand and No/100 Dollars
($25,000.00) for any project related to (i) capital improvements to the Property as are
contemplated by and included in the Approved Budget or otherwise as approved by Owner, or (ii)
fixturization, remodeling and refurbishing of tenant premises as approved by Owner or in accordance
with the Approved Budget, then Manager shall be paid a construction management fee equal to three
and one-half percent (3.5%) of the total job costs for each such project, provided however such
construction management fee shall not apply to any Future Redevelopment of the Property.

     9.2 Employee Compensation and Office Expense.

          (a) Employee salaries, bonuses, benefits and other expenses that are
reimbursable under this Agreement shall be set forth in the Approved Budget. All such expenses
shall be subject to adjustment from time to time during the term of this Agreement as reflected in
each annual Approved Budget. Manager shall identify its employees whose salaries and bonuses may
from time to time be charged pro rata to the Property for direct services rendered to the Property.
In the event that employees of Manager other than those identified from time to time perform
services for the Property, an appropriate portion of such employee’s compensation and benefits and
the expenses related thereto shall be included within the coverage of this paragraph.

          (b) Manager shall make disbursements and deposits for all compensation and other amounts
payable with respect to persons employed by Manager in the operation of the Property, or performing
special services from time to time at the request of Owner. The amounts so payable shall include,
but not be limited to, unemployment insurance, social security, worker’s compensation and other
charges imposed by a governmental authority or provided for in a union agreement. Manager shall
maintain complete payroll records. All payroll costs, including, but not limited to, those
enumerated herein, are operating expenses to be reimbursed by Owner to Manager.

     9.3 Out-of-Pocket Expenses and Other Costs. Manager shall be entitled to
reimbursement of all out of pocket costs and expenses, including, but not limited to, long distance
telephone calls and, with prior approval of Owner, the cost of out-of-town travel incurred by
Manager in performing its duties pursuant to this Agreement. In addition, as approved by Owner
or in accordance with the Approved Budget, Manager shall be entitled to reimbursement of all costs
and expenses incurred with respect to any accounting software, license, or training associated with
use of any accounting package other than Manager’s standard system. In addition, as approved by
Owner or in accordance with the Approved Budget, Manager shall be entitled to reimbursement for all
reasonable fees or expenses incurred by Manager’s onsite employees in connection with the
application for and maintenance of appropriate licenses, training, professional designations, and
memberships.

     9.4 Method of Payment. Payment or reimbursement, as applicable, of the amounts
described in Sections 9.1 through 9.3 above shall be as follows:

- 16 -

 

          (a) The management fee and any additional fees and compensation shall be calculated and paid
monthly and such amounts shall be shown in Manager’s submission of its monthly accounting to Owner.
Manager may pay such fees and compensation from Property operating funds then in its possession
or control.

          (b) Employee expenses and out-of-pocket expenses pursuant to Sections 9.2 and 9.3 shall be
reimbursed to Manager at the time incurred by Manager and Manager may reimburse such costs and
expenses from time to time from Property operating funds under its possession or control. A
detailed summary of such reimbursable costs and expenses shall be included on Manager’s monthly
accounting to Owner.

          (c) In the event there shall not be Property operating funds available to pay or reimburse the
fees and/or costs and expenses or other amounts due hereunder to Manager and all amounts due
hereunder, Owner hereby assumes responsibility for the same and agrees to promptly pay such amounts
to Manager.

ARTICLE X

GENERAL PROVISIONS

     10.1 Independent Contractor. It is expressly understood and agreed that
Manager will act in all respects as an independent contractor in the performance of this Agreement.
The parties hereby agree that nothing in the Agreement shall be intended or construed to create an
employer-employee relationship, a fiduciary relationship, a partnership or a joint venture with
respect to the Property or otherwise.

     10.2 Notices. All notices, demands, reports or other communications required or
desired to be given hereunder shall be in writing and shall be personally served or sent by first
class mail, postage prepaid to the parties at the following respective addresses for notice:

	 	 	 	 	 
	(i)

	 	If to Owner:
	 	5433 Westheimer, LP
	 

	 	 	 	8 Greenway Plaza, Suite 1000
	 

	 	 	 	Houston, TX 77046
	 

	 	 	 	Attention: John N. Anderson
	 

	 	 	 	Phone: 713-860-4957
	 

	 	 	 	Fax: 713-850-0498
	 
	 	 	 	 
	 

	 	With a Copy to:
	 	5433 Westheimer, LP
	 

	 	 	 	8 Greenway Plaza, Suite 1000
	 

	 	 	 	Houston, TX 77046
	 

	 	 	 	Attention: Todd McDonald
	 

	 	 	 	Phone: 713-860-4923
	 

	 	 	 	Fax: 713-850-0498
	 
	 	 	 	 
	(ii)

	 	If to Manager:
	 	Songy Partners Limited
	 

	 	 	 	Tower Place 200, Suite 675
	 

	 	 	 	3348 Peachtree Road, NE
	 

	 	 	 	Atlanta, Georgia 30326

- 17 -

 

	 	 	 	 	 
	 

	 	 	 	Attention: Todd W. Nocerini 
	 

	 	 	 	Telephone: (404) 995-8191
	 

	 	 	 	Telecopy: (404) 995-8171

     Valid notices may also be sent via a reputable overnight delivery service or by telecopy (so
long as the original of said telecopy is mailed the next day). For purposes of this Agreement
notices will be deemed to have been “given” upon personal delivery thereof or forty-eight (48)
hours after having been deposited in the United States mail postage prepaid and properly addressed
or upon receipt with respect to notices sent via overnight delivery service or telecopy.

     10.3 Attorneys’ Fees. In connection with any controversy arising out of this
Agreement, the prevailing party shall be entitled to recover, in addition to costs, damages or
other relief, its reasonable attorneys’ fees and costs incurred.

     10.4 Assignments. This Agreement and the rights and obligations hereunder shall not be
assignable by either party hereto without the written consent of the other; provided, however, that
the foregoing shall not extend to assignments required by: (a) any insurance carrier in any matter
relating to subrogation, (b) Manager in order to assign this Agreement to any entity which it
controls, is controlled by or with which it is under common control, or (c) Owner or Manager to
secure or collateralize any financing by Owner or Manager or its affiliates, as applicable.

     10.5 Amendments. Except as otherwise provided herein, all amendments to this
Agreement shall be in writing and executed by both parties.

     10.6 Entire Agreement. This Agreement and the Exhibits and any Riders attached
hereto and made a part hereof, comprise the entire agreement of the parties with respect to the
matters contained herein, and supersedes all prior agreements. The parties acknowledge that there
are no representations, warranties, agreements, arrangements or understandings with respect to the
subject matter hereof other than as expressly set forth in this Agreement.

     10.7 Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

     10.8 Cooperation and Assistance. Owner agrees to execute such documents and provide
such further assurances as may be reasonably necessary for Manager to fulfill its duties and
obligations under this Agreement. Should any claim, demand, action or other legal proceeding
arising out of matters covered by this Agreement be made or instituted by any third party against a
party to this Agreement, the other party to this Agreement shall furnish such information and
reasonable assistance in defending such proceeding as may be requested by the party against whom
such proceeding is brought.

     10.9 Waiver. No consent or waiver, express or implied, by any party to or of any
breach or default by the other party in the performance by such other party of the obligations
thereof under this Agreement shall be deemed or construed to be a consent or waiver to or of any
other breach or default in the performance by such other party under this Agreement. Failure on the
part of either party to raise any claim(s) with respect to any act or failure to act of the other

- 18 -

 

party or to declare the other party in default, irrespective of how long such failure continues,
shall not constitute a waiver by such party of the rights thereof under this Agreement.

     10.10
Severability. It is the intention of the parties that if any such provision is
held to be illegal, invalid or unenforceable, there will be added in lieu thereof a provision as
similar in terms to such provision as is possible and be legal, valid and enforceable.

     10.11
No Obligation to Third Party. Except as otherwise set forth in this Agreement,
the execution and delivery of this Agreement shall not be deemed to confer any rights upon, or
obligate either of the parties hereto to, any person or entity other than each other.

     10.12 Captions. The captions appearing at the commencement of the sections hereof
are descriptive only and for convenience and reference. Should there be any conflict between any
such captions in the section and the text in the section, the text and not such caption shall
control and govern in the construction of this Agreement.

     10.13 Time of Essence. Time is of the essence with respect to all of the terms,
provisions, rights and obligations contained in this Agreement.

     10.14 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which shall constitute one and the same
instrument.

     10.15 Non-Discrimination. Owner and Manager each mutually agree that there shall be
no illegal discrimination against or segregation of any person or of a group of persons on account
of race, color, religion, creed, sex, sexual orientation, or national origin in leasing,
transferring, use, occupancy or enjoyment of the Property, nor shall Owner or Manager knowingly
permit any such practice or practices of discrimination or segregation with respect to the
selection, location, use or occupancy of tenants at the Property.

     10.16 Certain Interpretative Matters. No provision of this Agreement will be
interpreted in favor of, or against, any of the parties hereto by reason of the extent to which any
such party or its counsel participated in the drafting thereof or by reason of the extent to which
any such provision is inconsistent with any prior draft hereof or thereof.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

- 19 -

 

     IN WITNESS WHEREOF, this Agreement has been executed by Manager and Owner by their respective
duly authorized officers as of the day and year first written above.

	 	 	 	 	 	 	 
	 	 	OWNER:	 	 
	 
	 	 	 	 	 	 
	 	 	5433 WESTHEIMER, LP,	 	 
	 	 	a Texas limited partnership	 	 
	 
	 	 	 	 	 	 
	 	 	By: AmREIT 5433 Westheimer GP, LLC, its	 	 
	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:

Title:
	 	/s/ H. Kerr Taylor
 

H. Kerr Taylor

President
	 	 
	 
	 	 	 	 	 	 
	 	 	MANAGER:	 	 
	 
	 	 	 	 	 	 
	 	 	SONGY PARTNERS LIMITED,	 	 
	 	 	a Florida limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	,	 
	 

	 	 	 	 

its general partner
	 	 

	 	 	 	 	 	 	 
	 

	 	By:

Name:

Title:
	 	/s/ Todd Mocerini
 

Todd Mocerini

COO
	 	 

- 20 -

 

EXHIBIT “A”

DESCRIPTION OF PROPERTY

A-1

 

EXHIBIT “A”

Being a tract or parcel containing 3.290 acres (143,323 square feet) of land situated in the
Charles Sage Survey, Abstract Number 697, Harris County, Texas; being out of and a part of that
certain tract conveyed to RLG Realty Holdings, Ltd. by deed recorded under Harris County Clerk’s
File (H.C.C.F.) Number L484704; said 3.290 acre tract being more particularly described as follows
(bearings are oriented to the bearing base reflected in said deed):

BEGINNING
at a 5/8-inch iron rod with cap set marking the intersection of the southeasterly
right-of-way (R.O.W.) line of Westheimer Road (120 feet wide) with the northerly R.O.W. line of
West Alabama Avenue (width varies) and marking the westerly corner of the herein described tract;

THENCE, North 69°43'30"
East, along said southeasterly R.O.W. line of Westheimer Road, a distance
of 918.26 feet to a 5/8-inch iron rod with cap set in the present westerly R.O.W. line of Yorktown
Road (60 feet wide), marking the northeasterly corner of the herein described tract;

THENCE, along said westerly R.O.W. line of Yorktown Road the following courses:

South
48°26'28"East, a distance of 13.21 feet to a 5/8-inch iron rod with cap set marking
an angle point;

South
08°50'00" East, a distance of 45.54 feet to a 5/8-inch iron rod with cap set marking
an angle point of the herein described tract;

South 00°00'30" West, a distance of 267.12 feet to a 1-inch iron pipe found in the
northerly R.O.W. line of the aforesaid West Alabama Avenue and for the southeasterly
corner of the herein described tract;

THENCE,
North 89°49'30" West, along said northerly R.O.W. line of West Alabama Avenue, a distance
of 878.20 feet (called 877.75 feet) to the POINT OF BEGINNING and containing 3.290 acres (143,323
square feet) of land. This description is based on the Land Title Survey and plat made by Terra
Surveying Company, Inc., dated January 24, 1997, TSC Project Number 2247-9701-S.

 

 

EXHIBIT “B”

MANAGEMENT FEE

     During the term of this Agreement, Manager shall be paid a monthly management fee equal to the
greater of (i) three percent (3%) of the gross receipts derived from the Property during the
preceding calendar month; or (ii) Four Thousand and No/100 Dollars ($4,000.00).

     The
term “gross receipts” for all purposes under this Agreement shall be defined as: (i)
receipts from the leasing of rentable space in the Property; (ii) receipts from lease rental
escalations, late charges and/or cancellation fees; (iii) receipts from tenants for reimbursable
operating expenses; (iv) receipts from concessions granted or services provided at the Property
(including, but not limited to, parking lot collections, if any); (v) other miscellaneous
operating receipts; (vi) proceeds from rent or business interruption insurance; (vii) any
percentage rents collected; and (viii) all common area maintenance charges.

     In addition, the term “gross receipts” for all purposes under this Agreement shall be
defined to exclude: (i) tenants’ security deposits until the same are forfeited by the person
making such deposits; (ii) property damage insurance proceeds; and (iii) any award or payment
made by any governmental authority in connection with the exercise of any right of eminent
domain.

B-1

 

EXHIBIT C

LEASING COMMISSIONS

     1. Lease; Co-Broker Not Involved. In new lease transactions in which no
Co-Broker is involved, Owner agrees to pay to Leasing Agent a leasing commission equal to the
percentage set forth on the commission schedule attached hereto as
EXHIBIT “C-1” multiplied
by all “Rent” (as defined below) payable by the tenant under the terms of such Lease during the
initial stated term of the Lease. Such commission shall be one hundred percent (100%) due by Owner
to Leasing Agent at the time of execution of such Lease and shall be payable fifty percent (50%) at
the time of execution of said Lease and fifty percent (50%) at the earlier of the tenant’s
commencement of rental payments or the time the tenant takes occupancy of the space demised under
the Lease.

     2. Lease; Co-Broker Involved. In new lease transactions in which any Co-Broker is
involved, Owner agrees to pay to Leasing Agent a leasing commission equal to the percentage set
forth on the commission schedule attached hereto as EXHIBIT
“C-1” multiplied by all “Rent”
(as defined below) payable by the tenant under the terms of such Lease during the initial stated
term of the Lease. Such commission be one hundred percent (100%) due by Owner to Leasing Agent at
the time of execution of such Lease and shall be payable fifty percent (50%) at the time of
execution of said Lease and fifty percent (50%) at the time the tenant takes occupancy of the space
demised under the Lease. Leasing Agent shall be responsible for any commission to be paid to any
Co-Broker to the extent Leasing Agent and Co-Broker have entered into a written commission
Agreement with respect thereto.

     3. Lease
Extensions or Renewals; Co-Broker Not Involved. With respect to any Lease
Extension or Renewal in which no Co-Broker is involved, Owner agrees to pay to Leasing Agent a
leasing commission equal to the percentage set forth on the commission schedule attached hereto as
EXHIBIT “C-1” multiplied by all “Extension Base Rentals” (as defined below). Said lease
commission shall be due and payable to Owner to Leasing Agent upon the execution of the
documentation evidencing the Lease Extension.

     4. Lease Extensions or Renewals; Co-Broker Involved. With respect to any Lease
Extension or Renewal in which a Co-Broker is involved, Owner agrees to pay to Leasing Agent a
leasing commission equal to the percentage set forth on the commission schedule attached hereto as
EXHIBIT “C-1” multiplied by all “Extension Base Rentals” (as defined below). Said lease
commission shall be due and payable by Owner to Leasing Agent upon the execution of the
documentation evidencing the Lease Extension. Leasing Agent shall be responsible for any
commission to be paid to any Co-Broker to the extent Leasing Agent and Co-Broker have entered into
a written commission Agreement with respect thereto.

     5. Lease Expansions; Co-Broker Not Involved. With respect to any Lease
Expansion in which no Co-Broker is involved, Owner agrees to pay to Leasing Agent a lease
commission equal to the percentage set forth on the commission schedule attached hereto as
EXHIBIT “C-l” multiplied by all “Expansion Base Rentals” (as defined below). Said lease
commission shall be due and payable by Owner to Leasing Agent upon the execution of the
documentation evidencing the Lease Expansion.

C-1

 

     6. Lease Expansions; Co-Broker Involved. With respect to any Lease Expansion in which
a Co-Broker is involved, Owner agrees to pay to Leasing Agent a lease commission equal to the
percentage set forth on the commission schedule attached hereto as EXHIBIT “C-1” multiplied
by all “Expansion Base Rentals” (as defined below). Said lease commission shall be due and payable
by Owner to Leasing Agent upon the execution of the documentation evidencing the Lease Expansion.
Leasing Agent shall be responsible for any commission to be paid to any Co-Broker to the extent
Leasing Agent and Co-Broker have entered into a written commission Agreement with respect thereto.

     7. Month-to-Month Leases. Notwithstanding anything contained in this Agreement to the
contrary, with respect to any Lease which is on a “month-to-month” basis (but excluding any
“month-to-month” term due to a tenant holding over under an expired Lease, the commissions
payable in connection with such Lease shall be in the applicable amounts set forth above in this
Exhibit C and shall be payable in arrears (i) upon the expiration of each six (6) months that such
Lease remains in existence for the Rent received during the immediately preceding six (6) month
period; and (ii) upon the expiration or termination of any such Lease for the Rent received between
the date of the last payment hereunder and such expiration or termination.

     8. Termination Clauses. Notwithstanding anything herein to the contrary, in the
event the Lease contains a tenant termination or “kickout” clause, then no leasing commission shall
be paid on that portion of the Lease affected by the tenant termination or “kickout” clause until
the termination or “kickout” clause expires or is not exercised by Tenant; provided, however, in
the event the termination or “kick-out” clause expressly provides that the Tenant is responsible
for reimbursing Landlord for the unamortized portion of brokerage commissions paid by Landlord,
then the foregoing provisions shall not be applicable.

     9. Defined Terms. For purposes of this Agreement, the following terms shall have the
meanings set forth below.

          (a) “Rent”, as used herein, shall mean and refer to the total of any base rent or fixed rent
payable by a tenant under any Lease during the initial stated term of the Lease and excludes (i)
any payments made by a tenant which are expressly provided for in such tenant’s lease as a
repayment for costs incurred by Owner for capital improvements made to such tenant’s premises, (ii)
any percentage rent; and (iii) any security deposits paid by tenants.

          (b) “Extension Base Rentals” shall be defined as the total base rent or fixed rent payable by
a tenant during the initial stated term of the Lease Extension, “Extension Base Rentals” shall
specifically exclude (i) any payments made by a tenant which are expressly provided for in such
tenant’s lease as a repayment for costs incurred by Owner for capital improvements made to such
tenant’s premises in excess of the tenant fix-up and finish work for such premises which would
otherwise be provided to such tenant; (ii) any percentage rent; and (iii) any security deposits
paid by tenants.

          (c) “Expansion Base Rentals” shall be defined as the total base rent or fixed rent payable by
a tenant during the initial stated term of the Lease Expansion. “Expansion Base Rentals” shall
specifically exclude (i) any payments made by a tenant which are expressly

C-2

 

provided for in such tenant’s lease as a repayment for costs incurred by Owner for capital
improvements made to such tenant’s premises in excess of the tenant fix-up and finish work for such
premises which would otherwise be provided to such tenant; (ii) any percentage rent; and (iii) any
security deposits paid by tenants.

C-3

 

EXHIBIT
C-1

LEASING COMMISSIONS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Fee:
	Type of Lease	 	Co-Broker Involved	 	% to Agent
	New Lease
	 	Yes	 	 	6	 
	New Lease
	 	No	 	 	4	 
	Lease Extension/Renewal
	 	Yes	 	 	6	 
	Lease Extension/Renewal
	 	No	 	 	3	 
	Expansion
	 	Yes	 	 	6	 
	Expansion
	 	No	 	 	4	 

C-1-1

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