Document:

exv10w3

Exhibit
10.3

EXECUTION COPY

AMENDMENT TO INVESTMENT AGREEMENT

     This amendment (this “Amendment”) dated as of July 14, 2011, amends the Investment Agreement
dated as of June 27, 2011 (the “Investment Agreement”) among First BanCorp (the “Company”), a
Puerto Rico chartered financial holding company, and each of the Investors (the “Investors”) that
signed the Investment Agreement.

     The Investment Agreement describes an expectation that the sales of Common Stock to the
Investors and Other Investors will not exceed “$515 million ($550 million minus the expected $35
million purchase price of the shares that would be issuable on exercise of rights expected to be
issued in the Rights Offering).” The Company and the Investors now agree that the sales of Common
Stock to the Investors and Other Investors will not exceed $525 million ($562.3 million minus the
expected $37.3 million purchase price of the shares that would be issuable on exercise of rights
expected to be issued in the Rights Offering) and the Company and the Investor are amending the
Investment Agreement to reflect that.

     1. Pursuant to Section 12.13 of the Investment Agreement, the parties amend the Investment
Agreement as follows:

	 	a.	 	Each reference in the Investment Agreement to “$515 million” is changed
to “$525 million.”
	 
	 	b.	 	Each reference in the Investment Agreement to “$550 million,” other
than the references in Sections 3.1(u) and 5.2(o), is changed to “$562.3 million.”
	 
	 	c.	 	Each reference in the Investment Agreement to the size, or expected
size, of the Rights Offering is changed from “$35 million” to “approximately $37.3
million.”
	 
	 	d.	 	Section 1.1 of the Investment Agreement is amended to state that the
aggregate number of shares the Company will sell to all Investors together (and all
Investors together will purchase) shall be 20,220,300 shares of Common Stock.
	 
	 	e.	 	The reference in Section 3.1(h) of the Investment Agreement to
“147,142,858 shares of Common Stock” is changed to “150,000,000 shares of Common
Stock.”
	 
	 	f.	 	The reference in Section 3.1(h) of the Investment Agreement to
“32,931,770 shares of Common Stock” is changed to “32,941,797 shares of Common
Stock.”

     2. For each Investor, the number of shares of Acquired Common Stock for which such Investor
is obligated to purchase and the Aggregate Purchase Price to be paid by such Investor, as set
forth below such Investor’s name on its signature page to the Investment Agreement, are each
hereby amended to be the number of shares of Acquired Common Stock and the Aggregate Purchase
Price set forth below such Investor’s name on its signature page to this Amendment.

     3. Exhibit A contains hypothetical examples illustrating how the number of shares of
Acquired Common Stock would be calculated if the Investors and Other Investors purchase
Common Stock for (i) $500 million and (ii) $525 million (equal to $562.3 million minus the

 

 

$37.3 million purchase price of the shares that would be issuable on exercise of rights expected
to be issued in the Rights Offering), respectively, and in either event, all the Series G
Preferred Stock is converted into Common Stock.

     4. Except as and to the extent expressly modified by this Amendment, the Investment
Agreement shall remain in full force and effect in all respects and the definitions of terms in
the Investment Agreement and the provisions of Article 12 of the Investment Agreement
shall apply, mutatis mutandis, to this Amendment.

     5. This Amendment and all disputes arising out of or relating to this Amendment and the
subject matter hereof or the actions of the parties hereto in the negotiation, execution,
administration, performance or nonperformance, enforcement, interpretation, termination and
construction hereof and all matters based upon, arising out of or related to any of the
foregoing (whether based on contract, tort or otherwise), including all matters of construction,
validity and performance, shall be governed by and construed in accordance with the internal
laws, both procedural and substantive, of the State of New York, without regard to conflicts of
laws principles (whether of the State of New York or any other jurisdiction) that would apply
the laws of any jurisdiction other than the State of New York.

     6. This Amendment may be executed in two or more counterparts, some of which may be signed
by fewer than all the parties or may contain facsimile copies of pages signed by some of the
parties. Each of those counterparts will be deemed to be an original copy of this Amendment,
but all of them together will constitute one and the same agreement.

[Signature pages follow]

 - 2 -

 

          IN WITNESS WHEREOF, the Company and the Investors have executed this Amendment, intending to
be legally bound by it, as of the day shown on the first page of this Amendment.

	 	 	 	 	 
	 	FIRST BANCORP

 	 
	 	By:  	/s/ Lawrence Odell
 	 
	 	 	Title: General Counsel, EVP 	 

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	 	INVESTORS

Ithan Creek Master Investment Partnership (Cayman) II,
L.P.
 	 
	 	By:  	Wellington Management Company, LLP.
 	 
	 	As investment adviser 	 
	 
	 	By:  	                   /s/ Steven M. Hoffman
 	 
	 	 	Name:  	Steven M. Hoffman 	 
	 	 	Title:  	Vice President & Counsel
 	 
	 	
Number of Shares: 488,900 	 
	 
	 	Bay Pond Partners, L.P.
 	 
	 	By:  	                                             Wellington Management Company, LLP.
 	 
	 	As investment adviser 	 
	 
	 	 	 
	 	By:  	                   /s/ Steven M. Hoffman
 	 
	 	 	Name:  	Steven M. Hoffman 	 
	 	 	Title:  	Vice President & Counsel
 	 
	 	
Number of Shares: 9,012,600 	 
	 
	 	Bay Pond Investors (Bermuda), L.P.
 	 
	 	By:  	                                             Wellington Management Company, LLP.
 	 
	 	As investment adviser 	 
	 
	 	 	 
	 	By:  	                   /s/ Steven M. Hoffman
 	 
	 	 	Name:  	Steven M. Hoffman 	 
	 	 	Title:  	Vice President & Counsel
 	 
	 	
Number of Shares: 4,721,600 	 
	 
	 	Ithan Creek Master Investors (Cayman) L.P.
 	 
	 	By:  	                                             Wellington Management Company, LLP.
 	 
	 	As investment adviser 	 
	 
	 	By:  	 /s/ Steven M. Hoffman
 	 
	 	 	Name:  	Steven M. Hoffman 	 
	 	 	Title:  	Vice President & Counsel
 	 
	 	
Number of Shares: 3,299,200 	 
	 
	 	Wolf Creek Partners, L.P.
 	 
	 	By:  	                                             Wellington Management Company, LLP.
 	 
	 	As investment adviser 	 
	 

	 	 	 	 	 
	 	By:  	                   /s/ Steven M. Hoffman
 	 
	 	 	Name:  	Steven M. Hoffman 	 
	 	 	Title:  	Vice President & Counsel
	 
	 	
Number of Shares: 1,413,300 	 

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	 	Wolf Creek Investors (Bermuda) L.P.
 	 
	 	By:  	                                             Wellington Management Company, LLP.
 	 
	 	As investment adviser 	 
	 
	 	 	 
	 	By:  	                   /s/ Steven M. Hoffman
 	 
	 	 	Name:  	Steven M. Hoffman 	 
	 	 	Title:  	Vice President & Counsel
	 
	 	
Number of Shares: 1,284,700 	 

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EXECUTION COPY

EXHIBIT A

PRO FORMA CAPITALIZATION

“If issuance price of new common shares is less than 90% of Market Price on Trading Day Immediately preceding the pricing

of the equity offering, then the following factor must be multiplied against the Series G Conversion Price as agreed to in the

exchange agreement which increases the shares to Treasury”

“Market Price means, with respect to the Common Stock, on any given date, the average VWAP for the 5 consecutive trading

day-period ending on the Trading Day immediately preceding such given date.”

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Offering Assumptions:	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	90	%	 	 	90	%	 	Threshold Rate per Treasury Agreement
	 
	 	$	4.4605	 	 	$	4.4605	 	 	FBP “Market Price” One Day Prior to Pricing
	 
	 	 	78	%	 	 	78	%	 	Implied Equity Raise Price (% of Market)
	 
	 	$	3.5000	 	 	$	3.5000	 	 	Equity Raise Price
	 
	 	$	525,000	 	 	$	500,000	 	 	Gross Proceeds from Common Equity Raise ($000s)
	 
	 
	(1)
	 	 	21,303,669	 	 	 	21,303,669	 	 	# of shares of common stock outstanding immediately prior to equity raise issuance
	+
	 	 	 	 	 	 	 	 	 	 	 	 
	(2)
	 	 	130,777,566	 	 	 	124,550,063	 	 	# of additional shares from common
stock offering at 90% of the market price prior to the offering
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	(A)
	 	 	152,081,235	 	 	 	145,853,732	 	 	Numerator
	 
	(1)
	 	 	21,303,669	 	 	 	21,303,669	 	 	# of shares of common stock in effect immediately prior to equity raise issuance
	+
	 	 	 	 	 	 	 	 	 	 	 	 
	(2)
	 	 	150,000,000	 	 	 	142,857,143	 	 	# of additional shares of common stock for the equity raise issuance
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	(B)
	 	 	171,303,669	 	 	 	164,160,812	 	 	Denominator
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	$	10.8780	 	 	$	10.8780	 	 	SERIES G Conversion Price ($0.7252 ADJUSTED FOR REVERSE STOCK SPLIT)
	x
	 	 	0.8878	 	 	 	0.8885	 	 	Treasury Factor (“A” divided by “B” as defined above)
	 
	 
	 	$	9.6574	 	 	$	9.6649	 	 	Revised SERIES G Conversion Price
	 
	 
	 
	 	$	424,174	 	 	$	424,174	 	 	SERIES G Balance ($000s)
	x
	 	 	75.0	%	 	 	75.0	%	 	TARP Pricing/% of Par
	/
	 	$	10.8780	 	 	$	10.8780	 	 	Conversion Price Per Agreement (VWAP at date of agreement)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	29,245,312	 	 	 	29,245,312	 	 	Shares Issued from Series G Exchange
	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	$	424,174	 	 	$	424,174	 	 	SERIES G Balance
	x
	 	 	75.0	%	 	 	75.0	%	 	TARP Pricing/% of Par
	/
	 	$	9.6574	 	 	$	9.6649	 	 	Conversion Price Per Agreement
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	32,941,797	 	 	 	32,916,087	 	 	Shares Issued from adjusted Series G Exchange
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	21,303,669	 	 	 	21,303,669	 	 	Current Shareholder Ownership
	 
	 	 	32,941,797	 	 	 	32,916,087	 	 	Treasury Ownership
	 
	 	 	150,000,000	 	 	 	142,857,143	 	 	New Shareholder Ownership
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	204,245,466	 	 	 	197,076,899	 	 	Total Pro Forma Shares Outstanding
	 
	 	$	714,859,131	 	 	$	689,769,145	 	 	Pro Forma Market Capitalization
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	10.43	%	 	 	10.81	%	 	Current Shareholder Ownership
	 
	 	 	16.13	%	 	 	16.70	%	 	Treasury Ownership
	 
	 	 	73.44	%	 	 	72.49	%	 	New Shareholder Ownership
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	20,220,300	 	 	 	19,510,613	 	 	9.9% Shareholder (shares)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	$	70,771,050	 	 	$	68,287,145	 	 	9.9% Shareholder ($)

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[K&L GATES LETTERHEAD]

[Date]               

The Investors set forth on Schedule I

c/o Wellington Management Company, LLP

280 Congress Street

Boston, MA 02210

Attn: Legal and Compliance Department

Ladies and Gentlemen:

     We have acted as counsel to First BanCorp, a Puerto Rico chartered financial holding company
(the “Company”), in connection with the Investment Agreement dated as of June 27, 2011, as
amended by an Amendment Agreement dated as of July 14, 2011 (the “Investment Agreement”)
among the investors set forth on Schedule I to this letter (the “Investors”) and the
Company. The Investment Agreement provides for the issuance and sale by the Company to the
Investors (the “Transaction”) of [___] shares (the “Acquired Shares”) of the common
stock of the Company, par value $0.10 per share (“Common Stock”). We are delivering this
opinion letter to you at the Company’s request in order to enable it to fulfill the condition in
Section 5.2(t) of the Investment Agreement.

     In connection with rendering the opinions set forth below, we have, in addition to reviewing
the Investment Agreement and the documents the Company is required by the Investment Agreement to
deliver to the Investors at or before the Closing Date (as defined in the Investment Agreement),
reviewed and relied on statements by officers of the Company, certifications by governmental
authorities and a fact certificate of an officer of the Company (the “Fact Certificate”)
and such other documents as we deemed are necessary to enable us to render those opinions. We have
also made the assumptions that are customary in opinion letters of this kind, including the
assumptions that each document submitted to us is accurate and complete, that each such document
that is an original is authentic, that each such document that is a copy conforms to an authentic
original, that all signatures on each such document are genuine, and that no changes in the facts
certified in the Fact Certificate have occurred or will occur between the date of the Fact
Certificate and the date of this letter.

     We have further assumed the legal capacity of natural persons, and have assumed that each
party to the Investment Agreement (other than the Company) has the legal capacity and has satisfied
all legal requirements that are applicable to that party to the extent necessary to make the
Investment Agreement enforceable against that party. We have further assumed that the Company (a)
is duly incorporated and in good standing under the laws of the Commonwealth of Puerto Rico, (b)
has the corporate power to execute, deliver, and perform its obligations under the Investment
Agreement, (c) has taken all corporate action necessary to authorize the execution, delivery, and
performance of the Investment Agreement and (d) has duly executed and delivered the Investment
Agreement. With respect to the assumptions described in (a), (b),

 

 

(c) and (d), we have relied on the legal opinion delivered to you by Martinez Odell & Calabria
in connection with the Investment Agreement. We have not independently verified any of the
foregoing assumptions or independently established any of the facts so relied upon.

     Except the opinions contained in numbered paragraphs 4,5 and 6 below, which are limited to
United States federal law, and the opinion contained in numbered paragraph 1 below, which is
limited to the rules of the New York Stock Exchange (“NYSE”) contained in the NYSE Listed
Company Manual, the opinions expressed in this opinion letter are limited to the laws of the State
of New York, without regard to conflicts of laws principles (whether of the State of New York or
any other jurisdiction) that would apply the laws of any jurisdiction other than New York. We are
not opining on, and we assume no responsibility with respect to, the applicability to or effect on
any of the matters covered by our opinion of any other laws, the laws of any other jurisdiction or
the laws of any county, municipality or other political subdivision or any local governmental
agency or authority.

     Based on, and subject to, the foregoing and the additional qualifications and other matters
set forth below, it is our opinion that:

     1. The stockholder approval required by the Section 312.03 of the NYSE Listed Company Manual
is the affirmative vote of a majority of the votes cast, provided that that total votes cast
represent over 50% of all of the outstanding Common Stock.

     2. The Investment Agreement is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.

     3. When the Acquired Shares are sold to and paid for by the Investors on the Closing Date as
contemplated by the Investment Agreement, the respective Investors will receive such shares free
and clear of any liens, encumbrances or claims of any other persons, other than liens imposed
because of acts of, or conditions relating to, the Investors and restrictions on transfer imposed
by applicable securities or banking laws or Section 8-511(c) of the New York Uniform Commercial
Code.

     4. Except with regard to approvals required to be obtained by the Investors, as to which we
render no opinion, neither the execution and delivery of the Investment Agreement by the Company,
nor completion by the Company of the Transaction, requires the consent of, approval by, or a filing
or notification by the Company with any Governmental Entity (as defined in the Investment
Agreement) under United States federal law other than filings and notifications that have already
been made.

     5. Assuming the accuracy of the representations and warranties made by the Investors in
Section 3.2 of the Investment Agreement and by the Company in Section 3.1 of the Investment
Agreement and in the Fact Certificate, the issuance and sale of the Acquired Shares in accordance
with the Investment Agreement will be exempt from the registration requirements of the Securities
Act of 1933, as amended.

     6. The Company is not, and will not become solely as a result of the consummation of the
transactions that are the subject of the Investment Agreement, an “investment company”

- 2 -

 

or a “company” “controlled” by an “investment company” (as each of those terms is defined in
the Investment Company Act of 1940 (“1940 Act”)) that is required to be registered under
the 1940 Act.

     Our opinion in numbered paragraph 2 above is subject to the effect of bankruptcy, insolvency,
fraudulent transfer, reorganization, receivership, moratorium, and other laws affecting the rights
and remedies of creditors generally, and to general principles of equity (whether applied by a
court of law or equity).

     We are furnishing this opinion letter to you solely in connection with the Transaction. You
may not rely on this opinion letter in any other connection, and it may not be furnished to or
relied upon by any other person for any purpose, without our specific prior written consent. The
foregoing opinions are rendered as of the date of this letter. We assume no obligation to update
or supplement any of our opinions to reflect any changes of law or fact that may occur.

	 	 	 	 	 
	 	Yours truly,

 	 
	 	 	 
	 	 	 
	 	 	 
	 

Attachment: Schedule I — Investors

- 3 -

 

Schedule I

Ithan Creek Master Investment Partnership (Cayman) II, L.P.

Bay Pond Partners, L.P.

Bay Pond Investors (Bermuda) L.P.

Ithan Creek Master Investors (Cayman) L.P.

Wolf Creek Partners, L.P.

Wolf Creek Investors (Bermuda) L.P.

 

Exhibit C

Form of Opinion of Martinez Odell & Calabria

(see attached)

 

 

[MARTINEZ ODELL & CALABRIA LETTERHEAD]

[Date]

The Investors set forth on Schedule I

c/o Wellington Management Company, LLP

280 Congress Street

Boston, MA 02210

Attn: Legal and Compliance Department

Ladies and Gentlemen:

     We have acted as counsel to First BanCorp, a Puerto Rico chartered financial holding company
(the “Company”), in connection with the Investment Agreement dated as of June 27, 2011, as
amended by an Amendment Agreement dated as of July 14, 2011 (the “Investment Agreement”)
among the investors set forth on Schedule I to this letter (the “Investors”) and the
Company. The Investment Agreement provides for the issuance and sale by the Company to the
Investors (the “Transaction”) of [___] shares (the “Acquired Shares”) of the common
stock of the Company, par value $0.10 per share (“Common Stock”). We are delivering this
opinion letter to you at the Company’s request in order to enable it to fulfill the condition in
Section 5.2(t) of the Investment Agreement.

     In connection with rendering the opinions set forth below, we have, in addition to reviewing
the Investment Agreement and the documents the Company is required by the Investment Agreement to
deliver to the Investors at or before the Closing Date (as defined in the Investment Agreement),
reviewed and relied on statements by officers of the Company, certifications by governmental
authorities and a fact certificate of an officer of the Company (the “Fact Certificate”)
and such other documents as we deemed are necessary to enable us to render those opinions. We have
also made the assumptions that are customary in opinion letters of this kind, including the
assumptions that each document submitted to us is accurate and complete, that each such document
that is an original is authentic, that each such document that is a copy conforms to an authentic
original, that all signatures on each such document are genuine, and that no changes in the facts
certified in the Fact Certificate have occurred or will occur between the date of the Fact
Certificate and the date of this letter.

     We have further assumed the legal capacity of natural persons, and have assumed that each
party to the Investment Agreement (other than the Company) has the legal capacity and has satisfied
all legal requirements that are applicable to that party to the extent necessary to make the
Investment Agreement enforceable against that party. We have not verified any of the foregoing
assumptions, or others contained herein, or independently established any of the facts so relied
upon.

     The opinions expressed in this opinion letter are limited to the laws of the Commonwealth of
Puerto Rico the (“Commonwealth”), without regard to conflicts of laws principles (whether
of the Commonwealth or any other jurisdiction) that would apply the laws of any jurisdiction other
than the Commonwealth. We are not opining on, and we assume no

 

 

responsibility with respect to, the applicability to or effect on any of the matters covered
by our opinion of any other laws or the laws of any other jurisdiction.

     Based on the foregoing, and subject to the foregoing and the additional qualifications and
other matters set forth below, it is our opinion that:

     1. The Company is a corporation validly existing and, with the exception of any consent order
or agreement with a governmental authority, in good standing under the laws of the Commonwealth.
Each of the Company and each subsidiary of the Company or FirstBank Puerto Rico set forth on
Schedule II (each a “Subsidiary,” collectively, the “Subsidiaries”) is duly
qualified to do business in the Commonwealth.

     2. Each of the Subsidiaries has been and is validly existing and, to the extent the concept is
applicable, and with the exception of any consent order or agreement with a governmental authority,
in good standing under the laws of the Commonwealth.

     3. The Company has all corporate power and authority that is necessary to enable it to enter
into the Investment Agreement and carry out the Transaction, and all corporate actions necessary to
enable the Company to enter into the Investment Agreement and carry out the Transaction have been
taken. The Investment Agreement has been duly executed and delivered by the Company.

     4. The purchase of the Acquired Shares by the Investors will not constitute a “Business
Combination” subject to Section B of Article Tenth of the Company’s Articles of Incorporation and
will not be subject to any statutory or other provisions regarding business combinations with
interested stockholders.

     5. The Acquired Shares have been duly authorized and validly issued and, upon receipt of the
full amount of requisite consideration, will be non-assessable outstanding shares of Common Stock.
The sale of the Acquired Shares and the sale of Common Stock to Other Investors under Investor
Agreements (as defined in the Investment Agreement) will not give any other person preemptive
rights or other rights to acquire shares of Company of any class or series under Commonwealth law,
under the Certificate of Incorporation or by-laws of the Company, or under any agreement of which
we are aware to which the Company is a party.

     6. The only authorized stock of the Company is 2,000,000,000 shares of Common Stock and
50,000,000 shares of preferred stock.

     7. Except with regard to approvals required to be obtained by the Investors, as to which we
render no opinion, neither the execution and delivery of the Investment Agreement by the Company,
nor completion by the Company of the Transaction, requires the consent of, approval by, or a filing
or notification by the Company with any Governmental Entity (as defined in the Investment
Agreement) under the laws of the Commonwealth other than filings and notifications already made
and/or consents and approvals already obtained.

- 2 -

 

     Our opinions expressed above are further subject to the following limitations, exceptions,
qualifications and assumptions:

     (a) We express no opinion with respect to limitations imposed by law and court decisions upon
the availability of the remedy of specific performance, injunctive relief and other equitable
remedies, whether sought in legal or equitable proceedings.

     (b) We note that the enforcement of any obligations of the Company under the Investment
Agreement may be limited by the receivership, conservatorship and supervisory powers of depository
institution regulatory agencies generally, as well as by, and our opinions are subject to,
applicable bankruptcy, solvency, insolvency, reorganization, moratorium, marshaling, or other
similar laws and legal requirements (including, without limitation, fraudulent transfer laws) and
general equitable principles (whether considered in a proceeding in equity or at law).

     (c) We express no opinion as to, and have assumed for purposes of our opinions, the fairness
of, the transactions contemplated under the Investment Agreement, and the adequacy of consideration
for the obligations of each party thereunder.

     (d) Limitations imposed by general principles of equity upon the availability of equitable
remedies or the enforcement of provisions of the Investment Agreement and the effect of judicial
decisions which have held that certain provisions are unenforceable where their enforcement would
violate the implied covenant of good faith and fair dealing, or would be commercially unreasonable,
or where a default under the revised documents is not material.

     (e) We express no opinion as to the validity or enforceability of any provision in the
Investment Agreement waiving, expressly or by implication, stated rights, defenses or rights
granted by laws, where such waivers are or may be deemed to be against public policy or prohibited
by law.

     (f) We express no opinion as to the enforceability of any rights to indemnification provided
for in the Investment Agreement which may be limited by (i) laws rendering unenforceable
indemnification contrary to federal or state securities laws and the public policy underlying such
laws, and (ii) laws limiting the enforceability of provisions exculpating or exempting a party from
liability, or requiring indemnification of a party, for its own action or inaction, to the extent
such action or inaction involves gross negligence, recklessness or willful or unlawful conduct.

     (g) We express no opinion as to the validity or enforceability of any particular provision
that the Investment Agreement may contain relating to (i) waivers of rights to object to
jurisdiction or venue, or consents to jurisdiction or venue, (ii) waivers of rights to (or methods
of) service of process, or rights to trial by jury, or other rights or benefits bestowed by
operation of law, or (iii) exculpation or exoneration clauses, indemnity clauses, and clauses
relating to releases or waivers of unmatured claims or rights.

- 3 -

 

     (h) We have also assumed that, without independent investigation or verification, there are no
extrinsic agreements, arrangements or understandings between or among any of the parties to the
Investment Agreement that would modify or interpret the terms of the same or the respective rights
or obligations of the parties thereunder.

     (i) We express no opinion on whether the Company or each Subsidiary has conducted all required
local, municipal, state and/or federal tax filings or paid all corresponding taxes, and we express
no opinion on any tax matters addressed in the Investment Agreement.

     (j) The opinions expressed in paragraphs 1 and 2 of this opinion are based upon certain
certificates, confirmations, statements and information issued by or received from the appropriate
Governmental Entities.

     (k) The Commonwealth’s Department of State has informed us that it does not issue good
standing certificates in connection with international banking entities; therefore, we provide no
opinion as to whether First Bank Overseas Corp., or any other international banking entity, is in
good standing under the laws of the Commonwealth.

     (l) For purposes of the opinions set forth herein, we have relied on the Fact Certificate, the
Company’s Articles of Incorporation, and minute books and stock records relating to meetings and
written actions of the Board of Directors and stockholders of the Company. The Company has
represented to us that the records and documents made available to us are complete and accurate.

     (m) We have assumed the conformity of the documents filed with the U.S. Securities and
Exchange Commission via EDGAR, except for required EDGAR formatting changes to physical copies of
the documents delivered to or prepared by, the Company and submitted for our examination.

     We are furnishing this opinion letter to you solely in connection with the Transaction. You
may not rely on this opinion letter in any other connection, and it may not be furnished to or
relied upon by any other person for any purpose, without our specific prior written consent. The
foregoing opinions are rendered as of the date of this letter. We assume no obligation to update
or supplement any of our opinions to reflect any changes of law or fact that may occur.

	 	 	 	 	 
	 	Yours truly,

 	 
	 	 	 
	 	 	 
	 	 	 
	 

Attachment: Schedule I — Investors

Attachment: Schedule II — Subsidiaries

- 4 -

 

Schedule I

Ithan Creek Master Investment Partnership (Cayman) II, L.P.

Bay Pond Partners, L.P.

Bay Pond Investors (Bermuda) L.P.

Ithan Creek Master Investors (Cayman) L.P.

Wolf Creek Partners, L.P.

Wolf Creek Investors (Bermuda) L.P.

 

 

Schedule II

	 	 	 
	FirstBank Puerto Rico

	 	Puerto Rico
	First Federal Finance Corporation (d/b/a Money Express)

	 	Puerto Rico
	FirstMortgage, Inc.

	 	Puerto Rico
	FirstBank Overseas Corp.

	 	Puerto Rico
	FirstBank Puerto Rico Securities Corp.

	 	Puerto Rico
	First Management of Puerto Rico, Inc.

	 	Puerto Rico
	FirstBank Insurance Agency, Inc.

	 	Puerto Ricoexv10w1

Exhibit 10.1

MS Loan No.: 05-20161

PROMISSORY NOTE

(Fixed — Yield Maintenance)

			
	$49,000,000.00
	 	Houston, Texas

June 1, 2005

     FOR VALUE RECEIVED, AmREIT UPTOWN PARK, 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 c/o ARCap Servicing, Inc., 5605 North MacArthur
Boulevard, Suite 950, Irving, Texas 75038 (“Lender”), or at such other place as the holder hereof
may from time to time designate in writing, the principal sum of Forty-Nine Million and 00/100
Dollars ($49,000,000.00), 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) beginning on the first day of July, 2005 and on the first day of each calendar month
thereafter up to and including the first day of May, 2015 (each, a “Payment Date”) payments of
interest only based on the Applicable Interest Rate (as defined below) accrued on the outstanding
principal balance; and

     (b) the balance of the principal sum and all interest thereon on the first day of June 1, 2015
(the “Maturity Date”).

ARTICLE 2: INTEREST

     The interest rate on this Note is five and 37/100 percent (5.37%) 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.

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 right 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

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          (iii) the Prepayment Consideration (defined below).

     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 three months prior to the Maturity
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 (1) 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 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 (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 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.

     (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.

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

          (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 the during the continuation 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 $49,000,000.00 given by Borrower to Warren F. Miller, trustee, 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

     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

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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) from time to time in
effect and applicable to the Debt for so long as the Debt is outstanding.

     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. 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.

     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.

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     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 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 II: 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

7

 

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(a), (f), (h), (i), (j), (k), (l), (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.

     (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(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), 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

8

 

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.

     (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.

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     (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]

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

	 	 	 	 	 
	 	Borrower:

AmREIT UPTOWN PARK, LP,

a Texas limited partnership

	 
	 	By:  	                                              AmREIT Uptown Park GP, Inc.,
 	 
	 	 	a Texas corporation, 	 
	 	 	Its general partner 	 
	 	 	 
	 	By:  	/s/ H. Kerr Taylor
 	 
	 	 	Name:  	H. Kerr Taylor 	 
	 	 	Title:  	President 	 
	 

11

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