Document:

EX-10.10 PROMISSORY NOTE DATE DECEMBER 8, 2006

 

Exhibit
10.10

MS Loan No. 06-29049

PROMISSORY NOTE

(Fixed — Defeasance or Yield Maintenance)

					
	 	 	 	 	 
	$37,950,000.00
	 	 
	 	Dallas, Texas

December 8, 2006

     FOR VALUE RECEIVED, AMREIT CASA LINDA, 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 Thirty-Seven Million Nine Hundred Fifty Thousand and
No/100 Dollars ($37,950,000.00), 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, 2007, and on the first day of each calendar month
thereafter, up to and including the first day of December, 2013 (each, a “Payment Date”), payments
of interest only based on the Applicable Interest Rate accrued on the outstanding principal
balance; and

     (c) the balance of the principal sum and all interest thereon on the first day of January 1,
2014 (the “Maturity Date”).

Article 2: Interest

     The interest rate on this Note is five and forty-eight hundredths percent (5.48%) per annum
(the “Applicable Interest Rate”). 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.

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 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; Defeasance or Yield Maintenance

     (a) The principal balance of this Note may not be prepaid in whole or in part except as
expressly permitted pursuant hereto.

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     (b) Subject to compliance with and satisfaction of the terms and conditions of this
Article 6 and provided that no Event of Default exists, Borrower may elect to obtain a release (the
“Release”) of the Property from the lien of the Security Instrument on any Payment Date after the
Lockout Period Expiration Date (defined below) by delivering to Lender, as security for the payment
of all interest due and to become due pursuant to this Note through the Maturity Date, plus the
principal balance of this Note scheduled to be outstanding on the Maturity Date, Defeasance
Collateral (defined below) sufficient to generate Scheduled Defeasance Payments (defined below)
(the Release and the delivery of the Defeasance Collateral, a “Defeasance”).

     (c) As a condition precedent to a Defeasance, and prior to any Release, Borrower shall have
complied with all of the following:

          (i) Borrower shall provide not less than sixty (60) days prior written notice to Lender
specifying a Payment Date upon which it intends to effect a Defeasance hereunder (the “Defeasance
Date”).

          (ii) All accrued and unpaid interest on the principal balance of this Note to and including
the Defeasance Date, the scheduled amortization payment due on such Defeasance Date, and all other
sums then due under this Note, the Security Instrument and the Other Security Documents, shall be
paid in full on or prior to the Defeasance Date.

          (iii) Borrower shall execute and deliver to Lender any and all certificates, opinions,
documents or instruments reasonably required by Lender in connection with the Defeasance and
Release, including, without limitation, a pledge and security agreement reasonably satisfactory to
Lender creating a first priority lien on the Defeasance Collateral (a “Defeasance Security
Agreement”). This Note shall thereafter be secured by the Defeasance Collateral delivered in
connection with the Defeasance. After Defeasance, this Note cannot be prepaid in whole or in part
or be the subject of any further Defeasance.

          (iv) Borrower shall have delivered to Lender an opinion of Borrower’s counsel that would be
satisfactory to a prudent lender stating (A) that the Defeasance Collateral and the proceeds
thereof have been duly and validly assigned and delivered to Lender and that Lender has a valid,
perfected, first priority lien and security interest in the Defeasance Collateral delivered by
Borrower and the proceeds thereof, (B) that if the holder of this Note shall at the time of the
Release be a REMIC (defined below), (1) the Defeasance Collateral has been validly assigned to the
REMIC Trust which holds this Note (the “REMIC Trust”), (2) the Defeasance has been effected in
accordance with the requirements of Treasury Regulation 1.860(g)-2(a)(8) (as such regulation may be
amended or substituted from time to time) and will not be treated as an exchange pursuant to
Section 1001 of the IRS Code and (3) the tax qualification and status of the REMIC Trust as a REMIC
will not be adversely affected or impaired as a result of the Defeasance and (C) that the delivery
of the Defeasance Collateral and the grant of a security interest therein to Lender shall not
constitute an avoidable preference under Section 547 of the U.S. Bankruptcy Code or applicable
state law. The term “REMIC” shall mean a “real estate mortgage investment conduit” within the
meaning of Section 860D of the IRS Code. The term “IRS Code” shall mean the United States Internal
Revenue Code of 1986, as amended, and the related Treasury Department regulations, including
temporary regulations.

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          (v) Borrower shall have delivered to Lender written confirmation from the Rating
Agencies (defined in the Security Instrument) that such Defeasance will not result in a
withdrawal, downgrade or qualification of the then current ratings by the applicable Rating
Agencies of the Securities or Participations (each as defined in the Security Instrument). If
required by the Rating Agencies, Borrower shall, at Borrower’s expense, also deliver or cause to
be delivered a non-consolidation opinion with respect to the Defeasance Obligor (as defined
below), if any, in form and substance that would be satisfactory to a prudent lender.

          (vi) Borrower shall have delivered to Lender a certificate given by Borrower’s independent
certified public accountant certifying that the Defeasance Collateral shall generate the Scheduled
Defeasance Payments.

     (d) In connection with any Defeasance hereunder, Borrower shall transfer and assign all
obligations, rights and duties under and to this Note and the Defeasance Security Agreement
together with the pledged Defeasance Collateral to a newly -created successor entity, which entity
shall be a single purpose, bankruptcy remote entity and which entity shall be designated or
established by Lender, at Lender’s option (the “Defeasance Obligor”). Lender shall also have the
right to purchase on behalf of Borrower, or cause to be purchased on behalf of Borrower, the
pledged Defeasance Collateral. Such rights to designate or establish the Defeasance Obligor as
provided above or to purchase or cause the purchase on behalf of Borrower of the pledged Defeasance
Collateral as provided above may be exercised by Lender in its sole discretion and shall be
retained by Lender named herein (and any successor or assign of such Lender named herein under a
specific assignment of such retained rights separate and apart from a transfer or securitization of
the Loan in whole or in part), notwithstanding any transfer or securitization of the Loan in whole
or in part. Such Defeasance Obligor shall assume the obligations under the Note and any
Defeasance Security Agreement and shall be bound by and obligated under Sections 3.1, 7.2, 7.4(a),
11.2, 11.7 and 14.2 and Articles 13 and 15 of the Security Instrument; provided, however, that all
references therein to “Property” or “Personal Property” shall be deemed to refer only to the
Defeasance Collateral delivered to Lender, and Borrower shall be relieved of its obligations under
such documents and, except with respect to any provisions therein which by their terms expressly
survive payment of the Debt in full, the Other Security Documents. Borrower shall pay $1,000 to
any such Defeasance Obligor as consideration for assuming such obligations.

     (e) The following terms shall have the meaning set forth below:

          (i) The term “Defeasance Collateral” as used herein shall mean direct, non-callable and
non-redeemable obligations of the United States of America for the payment of which its full faith
and credit is pledged, each of which shall be duly endorsed by the holder thereof as directed by
Lender or accompanied by a written instrument of transfer in form and substance wholly satisfactory
to Lender (including, without limitation, such instruments as may be required by the depository
institution holding such securities or by the issuer thereof, as the case may be, to effectuate
book-entry transfers and pledges through the book-entry facilities of such institution) in order to
perfect upon the delivery of the Defeasance Collateral a first priority security interest therein
in favor of the Lender in conformity with all applicable state and federal laws governing the
granting of such security interests. Borrower shall authorize and direct that the payments received
from such obligations shall be made directly to Lender or Lender’s

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designee and applied to satisfy the obligations of Borrower or, if applicable, the
Defeasance Obligor, under this Note.

          (ii) The term “Scheduled Defeasance Payments” as used herein shall mean the scheduled
payments of interest and principal in accordance with the terms of the Defeasance Collateral
(without consideration of any reinvestment of interest therefrom), providing for payments prior,
but as close as possible, to all successive Payment Dates after the Defeasance Date through and
including the Maturity Date, and in amounts equal to or greater than the scheduled payments of
interest and principal due under this Note, including the principal balance of this Note scheduled
to be outstanding on the Maturity Date.

          (iii) The term “Lockout Period Expiration Date” shall mean the date which is the earlier of
(A) the second anniversary, of the date that is the “startup day,” within the meaning of Section
860G(a) (9) of the IRS Code, of a REMIC that holds this Note or (B) the five (5) year anniversary
of the first day of the first full calendar month following the date of this Note.

     (f) Upon Borrower’s compliance with all of the conditions to Defeasance and a Release set
forth in this Article 6, Lender shall release the Property from the lien of the Security Instrument
and the Other Security Documents. All costs and expenses of Lender, third parties and the Rating
Agencies incurred in connection with the Defeasance and Release, including, without limitation, the
cost of establishing the Defeasance Obligor and Lender’s counsel’s fees and expenses, shall be paid
by Borrower simultaneously with the delivery of the Release documentation. Any revenue, documentary
stamp or intangible taxes or any other tax or charge due in connection with the Defeasance shall be
paid by Borrower simultaneously with the occurrence of any Defeasance.

     (g) If a Default Prepayment (defined below) occurs, Borrower shall pay to Lender the entire
Debt, including, without limitation, an amount (the “Default Consideration”) equal to the greater
of (i) the amount (if any) which when added to the then outstanding principal amount of this Note
will be sufficient to purchase Defeasance Collateral providing the
required Scheduled. Defeasance
Payments assuming Defeasance would be permitted hereunder, or (ii) one percent (1%) of the Default
Prepayment. For purposes of this Note, the term “Default Prepayment” shall mean a prepayment of the
principal amount of this Note made after the occurrence 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.

     (h) (i) Notwithstanding anything to the contrary set forth in this Article 6, at any time
after the Lockout Period Expiration Date, Borrower may elect, in lieu of a Defeasance, to prepay
the principal balance of this Note 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:

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

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

     (C) the Prepayment Consideration (as defined below).

          (ii) The Prepayment Consideration shall equal an amount equal to the greater of (A) one
percent (1%) of the principal balance of this Note being prepaid or (B) the product of (1) the
ratio of the amount of the principal balance of this Note being prepaid over the outstanding
principal balance of this Note on the Prepayment Date (after subtracting the scheduled principal
payment on such Prepayment Date), multiplied by (2) the present value as of the Prepayment Date of
the remaining scheduled payments of principal and interest from the Prepayment Date through the
Maturity 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. 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 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 required prepayment consideration.

          (iii) If any notice of prepayment is given under this subparagraph (h), 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.

     (i) Notwithstanding anything to the contrary herein, Borrower may prepay the principal balance
of this Note in whole, without premium or penalty, on any Payment Date during the three (3) months
prior to the Maturity Date. In addition, Borrower shall prepay without premium or penalty the
principal balance of this Note in an amount equal to any insurance proceeds or condemnation awards
which Lender elects to have applied to the Debt pursuant to Sections 3.6 and 3.7 of the Security
Instrument or the amount required by Lender due to changes in tax and debt credit pursuant to
Section 7.3 (a) or (b) of the Security Instrument (provided, however, that in the event any such
prepayment pursuant to this sentence shall be made on a date other than a Payment Date, the amount
so prepaid shall include all interest which would have accrued on such amount through the next
Payment Date). In each instance of prepayment permitted under this subparagraph (h), Borrower shall
be required to pay all other sums due hereunder, and no principal amount repaid may be reborrowed.

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 $37,950,000.00 given by Borrower to (or for the benefit of)

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Lender covering the fee simple estate of Borrower in certain premises located in Dallas
County, State of Texas, and other property, as more particularly described therein (collectively,
the “Property”) and intended to be duly recorded in said Comity (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, 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 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

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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, Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Lender to accelerate the maturity of any
interest that has not accrued at the time of such acceleration or to collect unearned interest at
the time of such acceleration.

     (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 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

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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.

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

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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 Property of Borrower (as defined in the
Security Instrument) 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; (xvi) any failure by
Borrower to comply with any provision of Section 4.2(a), (f), (h), (i), (j), (k), (1), (n), (o),
(p), (q), (r), (s), (t), (u), (v), (w), (x), (y), (z), (aa), (bb), (cc), (dd), (ee), (ff), (gg),
(hh), (ii), (jj), (kk), (ll) or (mm) of the Security Instrument. Borrower’s failure to deliver to
Lender any Letter of Credit (as defined in that certain Springing Letter of Credit and Security
Agreement, of even date herewith, given by Borrower in favor of Lender (the “Springing Letter of
Credit Agreement”)) required to be delivered by Borrower to Lender pursuant to the Springing Letter
of Credit and Security Agreement; and/or (xvi) the failure of any tenant at the Property to obtain
a permanent certificate of occupancy with respect to the space occupied by each such tenant at the
Property; provided, however, that this subsection (xvi) shall be of no further force and effect
upon delivery by

10

 

Borrower to Lender of evidence satisfactory to Lender in its reasonable discretion that each
tenant at the Property has obtained a permanent certificate of occupancy with respect to the space
occupied by each such tenant at the Property.

     (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 interest under Section l(b) of this Note is not
paid when due; (ii) Borrower fails to comply with any provision of Section 4.2(b), (c), (d), (e),
(g) or (m) 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), 11 11(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 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.

11

 

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.

     (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]

12

 

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

	 	 	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	AMREIT CASA LINDA, LP,	 	 
	 	 	a Texas limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	AmREIT Casa Linda GP, Inc.,
	 	 	 	 	a Texas corporation,
	 	 	 	 	Its General Partner
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Chand C. Braun	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Chad C. Braun	 	 
	 

	 	 	 	Title:
	 	Vice President	 	 

13EX-10.11 SECURED PROMISSORY NOTED

 

Exhibit
10.11

SECURED PROMISSORY NOTE 

755368

			
	 	 	 
	$11,175,000.00
	 	September 29, 2006
	 	 	 

1.  FOR VALUE RECEIVED, AMREIT OLMOS CREEK, LP, a Texas limited partnership, as “Borrower”
(“Borrower” to be construed as “Borrowers” if the context so requires), hereby promises to pay to
the order of NLI COMMERCIAL MORTGAGE FUND, LLC, a Delaware limited liability company (as “Lender”),
the principal sum of Eleven Million One Hundred Seventy-five Thousand and 00/100 Dollars
($11,175,000.00) (the “Loan Amount”) or so much thereof as shall from time to time have been
advanced, together with interest on the unpaid
balance of said sum from September 29, 2006 (the “Closing Date”), at the rate of six and
two one-hundredths percent (6.02%) per annum.

     A payment of interest from the Closing Date to and including October 31, 2006 shall be paid on
the Closing Date calculated by multiplying the actual number of days elapsed in the period for
which interest is being calculated by a daily rate based on the foregoing annual interest rate and
a 360-day year. Thereafter, interest shall be computed on the unpaid balance on the basis of a
360-day year composed of twelve 30-day months. Beginning on December 1, 2006. interest shall be due
and payable in installments of Fifty-six Thousand Sixty-one and
25/100 Dollars ($56,061.25), with
an installment in a like amount due and payable on the same day of each month thereafter continuing
to and including November 1, 2011 (“Call Date”). Lender shall have the right to declare this Note
to be due and payable in full on the Call Date or to adjust the per annum interest rate on the Rate
Adjustment Date to an interest rate established by Lender (“Adjusted Interest Rate”) as herein
provided (and apply an amortization schedule, if any, as herein provided). In the event Lender
elects to declare this Note to be due and payable, this Note shall become due and payable, in full,
without a Make Whole Premium or any other charge on the Call Date. In the event Lender elects to
adjust the interest rate (and apply as amortization schedule, if any), then on November 1, 2011
(“Rate Adjustment Date”) the per annum interest rate shall be adjusted to the Adjusted Interest
Rate and commencing on December 1, 2011, monthly installments of principal (if applicable) and
interest as provided for herein shall be due and payable on the same day of each month thereafter,
except that all remaining principal and interest to the date of payment shall be due and payable on
November 1, 2016 or such earlier date resulting from acceleration of the Indebtedness by Lender in
accordance with this Note (“Maturity Date”). Each installment shall be credited first upon interest
then accrued and the remainder upon principal. All principal and interest shall be paid in lawful
money of the United States of America by automated clearing house transfer through such bank or
financial institution as shall be approved in writing by Lender, shall be made to an account
designated by Lender, and shall be initiated by Lender or shall be made in such other manner as
Lender may direct from time to time. Any other monthly deposits or payments Borrower is required to
make to Lender under the terms of the Loan Documents shall be made by the same payment method and
on the same date as the monthly installments of interest due under this Note.

     Lender shall notify Borrower in writing (“Lender’s Election Notice”) on or before August
1, 2011 of Lender’s election to adjust the interest rate or of Lender’s intention to

 

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declare this Note to be due and payable in full. In the event Lender elects to adjust the interest
rate, Lender’s Election Notice will contain (i) the number of basis points (“Spread”) and the
United States Treasury Issue that Lender anticipates it will use to establish the Adjusted Interest
Rate and (ii) the amortization schedule Lender has elected to apply, if any. The Spread shall be
determined by Lender in its sole discretion based on Lender’s evaluation of: (i) the then current
financial performance and projected risk of the Premises, which shall encompass various factors,
including but not limited to contract debt service coverage, loan-to-value ratio, economic debt
service coverage, occupancy, frequency of tenant rollover, financial strength and stability of
tenants; (ii) the then current financial status of Borrower, which shall include but not be limited
to creditworthiness, financial strength, percentage of liabilities to liquid assets, and annual net
income; and (iii) the remaining term and current outstanding balance of the Note.

     At any time and from time to time before the Adjusted Interest Rate is established, provided
at least seven (7) days have elapsed since the previous Lender’s Election Notice, Lender may
establish a new Spread which Lender anticipates it will use to establish the Adjusted Interest Rate
and notify Borrower of the same. The Adjusted Interest Rate and amortization schedule, if any must
be established by mutual written agreement of Lender and Borrower by October 1, 2011 (the “Rate Set Deadline”). The Adjusted Interest Rate may only be established by mutual written agreement of
Lender and Borrower and simultaneous payment by Borrower of Twenty-seven Thousand Nine Hundred
Fifty and 00/100 Dollars ($27,950.00) (“Rate Adjustment Fee”). In the event: (i) Lender notifies
Borrower of its intention to declare this Note to be due and payable in full, (ii) Lender and
Borrower are unable for any reason to mutually agree in writing on the Adjusted Interest Rate by
the Rate Set Deadline; or (iii) Borrower fails to pay the Rate Adjustment Fee to Lender when due,
this Note shall become due and payable in full, on the Call Date, without a Make Whole Premium, and
all principal, interest accrued or to accrue to the date of prepayment at the rate in effect at the
time of the initial Lender’s Election Notice, and all other Indebtedness shall become immediately
due and payable in full. Notwithstanding any other provision herein, Lender shall not be obligated
to adjust the interest rate if any Event of Default
exists under this Note or the Loan Documents.

     In the event Borrower accepts the Adjusted Interest Rate, then notwithstanding anything herein
or in any of the Loan Documents to the contrary, Borrower shall have no right to prepay the Loan at
par during the Open Period and any prepayment will be subject to a Make Whole Premium for the
period ending on the Maturity Date calculated at the Adjusted Interest Rate.

     In the event Borrower accepts the Adjusted Interest Rate, Borrower is required to provide
Lender the following:

	 	(i)	 	a new TLTA Mortgagee Policy of Title Insurance for the Loan or an
endorsement updating the original title policy in the full amount of the Loan in form
and by an issuer satisfactory to Lender at the time of the rate adjustment unless (x)
the outstanding balance of the Loan at the time of the Call Date is less than
$20,000,000.00, (y) no liens or encumbrances exist against the Premises except as
previously approved by Lender in the Deed of Trust, and (z) no mortgages or deeds

 

-3-

	 	 	 	of trust exist against the Premises except for the Mortgage. Borrower further
agrees that the policy shall insure Lender’s Deed of Trust, at the Adjusted Interest
Rate to be a first and prior lien subject only to those exceptions which were
previously approved by Lender and provide coverage against mechanic’s liens;
	 
	 	(ii)	 	an amendment to the Note in form and substance satisfactory to Lender
executed by Borrower evidencing the Adjusted Interest Rate and a representation that
the Premises is free and clear of any liens, privileges, mortgages or encumbrances
except as expressly permitted in the Loan Documents;
	 
	 	(iii)	 	a usury opinion or endorsement to the title policy acceptable to Lender if
Lender reasonably believes that the Adjusted Interest Rate is or may be usurious; and
	 
	 	(iv)	 	if a new title policy or endorsements is not required per (i) above a title search
acceptable to Lender and reimbursement for Lender’s costs incurred in obtaining the
same.

2. No privilege is reserved by Borrower to prepay any principal of this Note prior to the
Maturity Date, except on or after the date hereof, privilege is reserved, after giving thirty (30)
days’ prior written notice to Lender, to prepay in full, but not in part, all principal and
interest to the date on which payment is made, along with all sums, amounts, advances, or charges
due under any instrument or agreement by which this Note is secured, upon the payment of a
“Make Whole Premium .” The Make Whole Premium shall be the greater of one percent (1%) of the
principal amount to be prepaid or a premium calculated as provided in subparagraphs (a) through (c)
below:

	 	(a)	 	Determine the “Reinvestment Yield.” The Reinvestment Yield will be equal to the
yield on the *applicable U.S. Treasury Issue (“Primary Issue”) published one week prior
to the date of prepayment and converted to an equivalent monthly compounded nominal
yield. In the event there is no market activity involving the Primary Issue at the time
of prepayment, Lender shall choose a comparable Treasury Bond, Note or Bill (“Secondary Issue”) which Lender reasonably deems to be similar to the Primary Issue’s
characteristics (i.e., rate, remaining time to maturity, yield).
	 
	 	 	 	*At this time there is not a U.S. Treasury Issue for this prepayment period. At the
time of prepayment, Lender shall select in its sole and absolute discretion a U.S.
Treasury Issue with similar remaining time to the end of the applicable prepayment
period.
	 
	 	(b)	 	Calculate the “Present Value of the Loan.” The Present Value of the
Loan is the present value of the payments to be made in accordance with this Note (all
installment payments and any remaining payment due on the Call Date or if the Call Date
has already passed, on the Maturity Date) discounted at the

 

-4-

	 	 	 	Reinvestment Yield for the number of months remaining from the date of
prepayment to the Call Date, or if the Call Date has already passed, to the
Maturity Date.
	 
	 	(c)	 	Subtract the amount of the prepaid proceeds from the Present Value of
the Loan as of the date of prepayment. Any resulting positive differential shall be
the Make Whole Premium.

During the period beginning with the payment date in the month three months prior to either the
Call Date or the Maturity Date (each an “Open Period”), no Make Whole Premium shall be payable.

3. Borrower agrees that if Lender accelerates the whole or any part of the principal sum evidenced
hereby after the occurrence of an Event of Default but prior to the Open Period, Borrower waives
any right to prepay said principal sum in whole or in part without premium and agrees to pay, as
yield maintenance protection and not as a penalty, the Make Whole Premium.

In the event any proceeds from a casualty or Taking of the Premises are applied to reduce the
principal balance hereof, such reduction shall be made without a Make Whole Premium, provided no
Event of Default then exists under the Loan Documents.

4. If any payment of principal, interest, or other Indebtedness is not made when due, damages will
be incurred by Lender, including additional expense in handling overdue payments, the amount of
which is difficult and impractical to ascertain. In such event, Borrower agrees to pay, upon
demand, the sum of four cents ($.04) for each one dollar ($1.00) of each said payment which becomes
overdue (“Late Charge”) as a reasonable estimate of the amount of said damages, subject, however,
to the limitations contained in paragraph 6 hereof.

Notwithstanding anything hereinabove to the contrary, the Late Charge assessed on any amount due on
the Maturity Date but not then paid, whether or not by acceleration, shall not be four cents for
each one dollar as described above, but shall instead be a sum equal to the interest which would
have accrued on the principal balance then outstanding from the date the payment is made to the end
of the month in which the Maturity Date occurs. Such Late Charge shall be in addition to interest
otherwise accruing under this Note.

5. If any Event of Default has occurred and is continuing under the Loan Documents, the entire
principal balance of the Loan, interest then accrued, and Make Whole Premium, and all other
Indebtedness whether or not otherwise then due, shall at the option of Lender, become immediately
due and payable without demand or notice, and whether or not Lender has exercised said option,
interest shall accrue on the entire principal balance, interest then accrued, Make Whole Premium
and any other Indebtedness then due, at a rate equal to the Default Rate until fully paid.

 

-5-

6. Notwithstanding anything herein or in any of the other Loan Documents to the contrary, no
provision contained herein or therein which purports to obligate Borrower to pay any amount of
interest or any fees, costs or expenses which are in excess of the maximum permitted by applicable
law, shall be effective to the extent it calls for the payment of any interest or other amount in
excess of such maximum. All agreements between Borrower and Lender, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no contingency,
whether by reason of demand for payment or acceleration of the maturity hereof or otherwise, shall
the interest contracted for, charged or received by Lender exceed the maximum amount permissible
under applicable law. If, from any circumstance whatsoever, interest would otherwise be payable to
Lender in excess of the maximum lawful amount, the interest payable to Lender shall be reduced to
the maximum amount permitted under applicable law; and if from any circumstance Lender shall ever
receive anything of value deemed interest by applicable law in excess of the maximum lawful amount,
an amount equal to any excessive interest shall, at the option of Lender, be refunded to Borrower
or be applied to the reduction of the principal hereof, without a Make Whole Premium and not to the
payment of interest or, if such excessive interest exceeds the unpaid balance of principal hereof
such excess shall be refunded to Borrower. All interest paid or agreed to be paid to Lender shall,
to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout
the full period until payment in full of the principal (including the period of any renewal or
extension hereof) so that the interest herein for such full period shall not exceed the maximum
amount permitted by applicable law. This paragraph shall control all agreements between Borrower
and Lender.

7. Borrower and any endorsers or guarantors waive presentment, protest and demand, notice of
protest, demand and dishonor and nonpayment, notice of default, notice of intent to accelerate
maturity, and notice of acceleration of maturity, and agree the Maturity Date of this Note or any
installment may be extended without affecting any liability hereunder, and further promise to pay
all reasonable costs and expenses, including but not limited to, reasonable attorney’s fees
incurred by Lender in connection with any default or in any proceeding to interpret and/or enforce
any provision of the Loan Documents. No release of Borrower from liability hereunder shall release
any other maker, endorser or guarantor hereof.

8. This Note is secured by the Loan Documents creating among other things legal and valid
encumbrances on and an assignment of all of Borrower’s interest in any Leases of the Premises
located in the county of Bexar, state of Texas. Capitalized terms used herein and not otherwise
defined shall have those meanings given to them in the Loan Documents. In no event shall such
documents be construed inconsistently with the terms of this Note, and in the event of any
discrepancy between any such documents and this Note, the terms hereof shall govern. The proceeds
of this Note are to be used for business, commercial, investment or other similar purposes, and no
portion thereof will be used for any personal, family or household use. This Note shall be governed
by and construed in accordance with the laws of the State where the Premises is located, without
regard to its conflict of law principles.

 

-6-

9. Notwithstanding any provision to the contrary in this Note or the Loan Documents and
except as otherwise provided for below, the liability of Borrower under the Loan Documents shall be
limited to the interest of Borrower in the Premises and the Rents. If an Event of Default occurs,
except as set forth below in this Section 9, neither Borrower nor any partner of Borrower, nor any
partner, member, stockholder, manager, director, or officer of any partner of Borrower, shall be
personally liable for the payment of any principal, interest, or other charges under the Loan
Documents, or for the performance of any covenants of Borrower under the Loan Documents, and in the
event of foreclosure of the liens evidenced by the Loan Documents, no judgment for any deficiency
upon the Indebtedness evidenced by the Loan Documents shall be sought or obtained by Lender against
Borrower or any of such parties. Nothing herein shall in any manner limit or impair (i) the lien or
enforcement of the Loan Documents pursuant to the terms thereof or (ii) the obligations of any
indemnitor or guarantor, if any.

     Notwithstanding any provision hereinabove to the contrary, Borrower shall be personally liable
to Lender for:

	 	(a)	 	any loss or damage to Lender arising from (i) the sale or forfeiture of the
Premises resulting from Borrower’s failure to pay any of the taxes, assessments or
charges specified in the Loan Documents attributable to the period during which
Borrower owns the Premises or (ii) Borrower’s failure to insure the Premises in
compliance with the provisions of the Loan Documents;
	 
	 	(b)	 	any event or circumstance for which Borrower indemnifies Lender under the
Environmental Indemnity;
	 
	 	(c)	 	nonpayment of taxes, assessments, insurance premiums and utilities for the
Premises attributable to the period during which Borrower owns the Premises and any
penalty or late charge associated with nonpayment thereof;
	 
	 	(d)	 	waste to the Premises arising from physical damage or deterioration caused by
any action or inaction of Borrower;
	 
	 	(e)	 	any sums expended by Lender in fulfilling the obligations of Borrower as lessor
under any Lease of the Premises prior to a sale of the Premises pursuant to foreclosure
or power of sale, a bona fide sale (permitted by the terms of paragraph 2(f) of the
Mortgage (it being agreed that “Mortgage” as used herein shall be construed to
mean “mortgage” or “deed of trust” or “trust deed” as the context so requires) or
consented to in writing by Lender) to an unrelated third party or upon conveyance to
Lender of the Premises by a deed acceptable to Lender in form and content (each of
which shall be referred to as a “Sale” for purposes of this paragraph) or expended by
Lender after a Sale of the Premises for obligations of Borrower which arose prior to a
Sale of the Premises;

 

-7-

	 	 	Borrower’s personal liability for items specified in (c), (d) and (e) above shall be
limited to the amount of rents, issues, proceeds and profits from the Premises (“Rents and
Profits”) received by Borrower for the twenty-four (24) months preceding an Event of
Default and thereafter; but less any such Rents and Profits applied to (A) payment of
principal, interest and other charges when due under the Loan Documents, or (B) payment of
expenses for the operation, maintenance, taxes, assessments, utility charges and insurance
of the Premises including sufficient reserves for the same or replacements or renewals
thereof (“Operation Expense(s)”) provided that (x) Borrower has furnished Lender with
evidence reasonably satisfactory to Lender of the Operation Expenses and payment thereof,
and (y) any payments to parties related to Borrower shall be considered an Operation
Expense only to the extent that the amount expended for the Operation Expense does not
exceed the then current market rate for such Operation Expense.
	 
	(f)	 	any rents or other income regardless of type or source of payment or other considerations in
lieu thereof (including, but not limited to, common area maintenance charges, lease
termination payments, refunds of any type, prepayment of rents, settlements of litigation, or
settlements of past due rents) from the Premises which Borrower has received or will receive
after an Event of Default under the Loan Documents which are not applied to (A) payment of
principal, interest and other charges when due under the Loan Documents or (B) payment of
Operation Expenses provided that (x) Borrower has furnished Lender with evidence reasonably
satisfactory to Lender of the Operation Expenses and payment thereof, and (y) any payments to
parties related to Borrower shall be considered an Operation Expense only to the extent that
the amount expended for the Operation Expense does not exceed the then current market rate for
such Operation Expense;
	 
	(g)	 	any security deposits of tenants not otherwise applied in accordance with the terms of the
Lease(s), together with any interest on such security deposits required by law or the leases,
not turned over to Lender upon conveyance of the Premises to Lender pursuant to foreclosure or
power of sale or by a deed acceptable to Lender in form and content;
	 
	(h)	 	misapplication or misappropriation of tax reserve accounts, tenant improvement reserve
accounts, security deposits, prepaid rents or other similar sums paid to or held by Borrower
or any other entity or person in connection with the operation of the Premises;
	 
	(i)	 	any insurance or condemnation proceeds or other similar funds or payments
applied by Borrower in a manner other than as expressly provided in the Loan Documents;
and

 

-8-

	 	(j)	 	any loss or damage to Lender arising from any fraud or willful
misrepresentation by or on behalf of Borrower, Interest Owner or any guarantor
regarding the Premises, the making or delivery of any of the Loan Documents or in any
materials or information provided by or on behalf of Borrower, Interest Owner or
guarantor, if any, in connection with the Loan.
	 
	 	 	 	Notwithstanding anything contained in paragraphs 9(a)(i) and 9(c) hereinabove as it
relates solely to taxes, assessments and insurance premiums, to the extent Lender is
impounding for taxes, assessments and insurance premiums in accordance with the Loan
Documents and Borrower has fully complied with all terms and conditions of the Loan
Documents relating to impounding for the same, then Borrower shall not be personally
liable for Lender’s failure to apply any of said impound amounts held by Lender in
accordance with the Loan Documents.

     Notwithstanding anything to the contrary in the Loan Documents, the limitation on
liability contained in the first paragraph of this paragraph 9 SHALL BECOME NULL AND VOID and
shall be of no further force and effect in the event:

	 	(y)	 	of any breach or violation of paragraph 2(f) (due on sale or encumbrance)
of the Mortgage, other than (i) the filing of a nonmaterial
mechanic’s lien affecting
the Premises or a mechanic’s lien affecting the Premises for which Borrower has
complied with the provisions of paragraph 1(e) of the Mortgage, or (ii) the granting of
any utility or other nonmaterial easement or servitude burdening the Premises, or (iii)
any transfer or encumbrance of a nonmaterial economic interest in the Premises not
otherwise set forth in (i) or (ii); or
	 
	 	(z)	 	of any filing by Borrower of a petition in bankruptcy or insolvency or a
petition or answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the Bankruptcy laws of the United
States or under any other applicable federal, state or other statute or law.

10. If more than one, all obligations and agreements of Borrower are joint and several.

11. This Note may not be changed or terminated orally, but only by an agreement in writing and
signed by the party against whom enforcement of any waiver, change, modification or discharge is
sought. All of the rights, privileges and obligations hereunder shall inure to the benefit of the
heirs, successors and assigns of Lender and shall bind the heirs and permitted successors and
assigns of Borrower.

12. If any provision of this Note shall, for any reason, be held to be invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provision hereof, but this Note
shall be construed as if such invalid or unenforceable provision had never been contained herein.

 

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13. This Note may be executed in counterparts, each of which shall be deemed an original; and such
counterparts when taken together shall constitute but one agreement.

14. THIS NOTE IS A REGISTERED OBLIGATION AS SET FORTH IN SECTION 871(h) OF THE UNITED STATES
INTERNAL REVENUE CODE, AS AMENDED AND, AS PROVIDED IN THE DEED OF TRUST, IT MAY BE TRANSFERRED IN
WHOLE OR IN PART ONLY AS STRICTLY SET FORTH IN THE DEED OF TRUST.

15. This provision
does not represent a commitment by Lender to lend additional dollars (the
“Additional Advance”) to Borrower, as Lender is under no obligation to make an Additional Advance.
Borrower may request Lender to fund to Borrower an additional advance of principal (“Request for
Advance”), provided the requested Additional Advance, in combination with the original Loan, meet
certain “Minimum Economic Criteria” (set forth below).

If Lender does choose to make an Additional Advance, the following conditions precedent must be
satisfied:

The “Minimum Economic Criteria” are:

	(a)	 	The combined outstanding Indebtedness on the original Loan and the Additional Advance does
not exceed seventy-five percent (75%) of the appraised value of the Premises after completion
of construction as established by an appraisal of the Premises prepared by Lender;

	(b)	 	Debt service of coverage of 1.30 times the annual debt service on the combined outstanding
Indebtedness on the original Loan and the Additional Advance, as determined by Lender. The
debt service coverage shall be the annual net operating income divided by the total annual
installment payments due under the combined outstanding Indebtedness on the original Loan and
the Additional Advance, including accrued or capitalized interest. Only net operating income
from approved executed Leases in effect (whether or not rent has commenced) on the Premises
with no uncured defaults and with
a remaining term of at least twelve (12) months shall be used in Lender’s determination of
the foregoing. Borrower shall provide a certified rent roll with its Request for Advance.

Provided no Event of Default exists under the Loan Documents, if Lender determines that the Minimum
Economic Criteria are satisfied, Lender may notify Borrower in writing (“Lender’s AA Notice”) of
the number of basis points (“AA Spread”) and the United States Treasury Issue (“Treasury Issue”)
that Lender will use to establish the interest rate applicable to the Additional Advance
(“AA Interest Rate”). The AA Spread shall be determined by the Lender, in its sole discretion.

At any time and from time to time before the date that the AA Interest Rate is agreed to, provided
at least seven (7) days have elapsed since the previous Lender’s AA Notice, Lender may establish

 

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a new AA Spread which Lender anticipates it will use to establish the AA Interest Rate and notify
Borrower of the same. The AA Interest Rate must be established by the date which is 30 days
following the date of the initial Lender’s AA Notice (the “AA Rate Set Deadline”). The AA Interest
Rate may only be established on a date mutually agreed to by Lender and Borrower. If Borrower fails
to respond to the most current Lender’s AA Notice in writing by the AA Rate Set Deadline, all of
the Lender’s AA Notices shall be deemed rejected. If Borrower
rejects the terms set forth in the
Lender’s AA Notice, Borrower shall then have the right to obtain Mezzanine Financing on the terms
set forth in the Mortgage. If Borrower accepts the terms set forth in Lender’s AA Notice, Lender
shall agree to fund the Additional Advance, provided the following closing conditions
(“Closing Conditions”) are met:

	(a)	 	Borrower’s execution, delivery, acknowledgement and recordation, as applicable, of acceptable
documentation evidencing and securing the Additional Advance including, but not limited to,
additional note(s), revised and/or replacement loan modification agreements, indemnification
agreements, escrow security or property reserve agreements, security instruments, financing
statements, UCCs, new or revised letters of credit and/or guarantees in form and substance
satisfactory to Lender;

	(b)	 	Receipt of either (at Lender’s discretion) a new TLTA Mortgagee Policy of Title Insurance or
an endorsement updating the Lender’s existing loan policy in the full amount of the Loan (as
increased by the Additional Advance), in form and by an issuer satisfactory to Lender, and
which insures the Mortgage to be a first and prior lien subject only to those exceptions which
were previously approved by Lender and provides coverage against
usury and mechanic’s liens (an
acceptable usury opinion can be substituted for the usury coverage);

	(c)	 	Compliance with Lender’s then current underwriting and closing due diligence
requirements.

	(d)	 	Receipt of acceptable third party reports addressing property physical and environmental
condition, upon request of Lender, prepared by consultants acceptable to Lender;

	(e)	 	Payment by Borrower of all third party expenses incurred, including but not limited to
outside counsel reasonable fees and costs; and

	(f)	 	Payment of Borrower of an “Additional Advance Fee” equal to the greater of .5%
of the amount of the Additional Advance or $20,000. The Additional Advance Fee is
non-refundable and is due upon Borrower’s acceptance of the terms set forth in the Lender’s AA
Notice.
	 
	 	 	In the event (i) Lender does not choose to make the Additional Advance; (ii) Borrower
rejects the terms set forth in the Lender’s AA Notice, or (iii) Borrower is unable to
satisfy

 

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the Closing Conditions, Borrower shall have the ability to obtain Mezzanine Financing as
more particularly described in paragraph 2(f) of the Mortgage.

(Signatures on next page)

 

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     IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and delivered as of the
date first set forth above.

	 	 	 	 	 	 	 
	 	 	AMREIT OLMOS CREEK, LP, a Texas limited partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	AMREIT OLMOS CREEK GP, INC., 

a Texas
corporation, its general partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By
	 	/s/ Chad C. Braun
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Chad C. Braun
	 

	 	 	 	 	 	Title: Vice President

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