Document:

shadowcreekjvagreement.htm

     

    
      	
              LIMITED
      LIABILITY COMPANY AGREEMENT

              OF

              SHADOW
      CREEK HOLDING COMPANY LLC

            
	 
      
	
               

              February
      29, 2008

            

    

    

    THE
LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS LIMITED LIABILITY
COMPANY AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE DELAWARE SECURITIES ACT, OR OTHER SIMILAR FEDERAL OR STATE
STATUTES OR AGENCIES IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION AS PROVIDED
IN THOSE STATUTES.  THE SALE, ASSIGNMENT, TRANSFER, EXCHANGE,
MORTGAGE, PLEDGE OR OTHER DISPOSITION OF ANY LIMITED LIABILITY COMPANY INTEREST
IS RESTRICTED IN ACCORDANCE WITH THE PROVISIONS OF THIS LIMITED LIABILITY
COMPANY AGREEMENT, AND THE EFFECTIVENESS OF ANY SUCH SALE OR OTHER DISPOSITION
MAY BE CONDITIONED UPON, AMONG OTHER THINGS, RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE OR
OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, THE DELAWARE SECURITIES ACT AND OTHER APPLICABLE FEDERAL OR
STATE STATUTES.  BY ACQUIRING THE LIMITED LIABILITY COMPANY INTERESTS
REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT, EACH MEMBER REPRESENTS
THAT IT WILL NOT SELL OR OTHERWISE DISPOSE OF ITS LIMITED LIABILITY COMPANY
INTERESTS WITHOUT REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID STATUTES
AND RULES AND REGULATIONS THEREUNDER AND THE TERMS AND PROVISIONS OF THIS
LIMITED LIABILITY COMPANY AGREEMENT.

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    TABLE OF
CONTENTS

     

    
    

     

    
      	 	 	
               PAGE

            
	 ARTICLE I	 ORGANIZATION	
                1

            

    

    
      	 	 	 	 1
	
               
      

            	
              SECTION 1.1.

            	
              Formation and
      Continuation

            	
              1

            

    

    
      	
               
      

            	
              SECTION 1.2.

            	
              Name and Office 

            	
              1

            

    

    
      	
               
      

            	
              SECTION 1.3.

            	
              Purpose 

            	
              1

            

    

    
      	
               
      

            	
              SECTION 1.4.

            	
              Term 

            	
              1

            

    

    
      	
               
      

            	
              SECTION 1.5.

            	
              Defined Terms 

            	
              1

            

    

    
      	 	 	 
	 ARTICLE II	 CAPITAL	
              7

            

    

    
      	 	 	 	7
	
               
      

            	
              SECTION 2.1.

            	
              Initial Capital
      Contributions. 

            	
              7

            

    

    
      	
               
      

            	
              SECTION 2.2.

            	
              Operating Capital; Additional Capital
      Contributions. 

            	
              7

            

    

    
      	
               
      

            	
              SECTION 2.3.

            	
              Default Loans. 

            	
              7

            

    

    
      	
               
      

            	
              SECTION 2.4.

            	
              No Third Party
      Beneficiaries 

            	
              8

            

    

     

    
      
        	 ARTICLE III	 COMPANY INTERESTS 	
                 8

              

      
        

    
      	
               
      

            	
              SECTION 3.1.

            	
              Percentage Interests 

            	
              8

            

    

    
      	
               
      

            	
              SECTION 3.2.

            	
              Capital Accounts 

            	
              8

            

    

    
      	
               
      

            	
              SECTION 3.3.

            	
              Return of Capital 

            	
              8

            

    

     

    
      	 ARTICLE IV	 DISTRIBUTIONS	 	
               8

            

    

     

    
      	
               
      

            	
              SECTION 4.1.

            	
              General 

            	
              8

            

    

    
      	
               
      

            	
              SECTION 4.2.

            	
              Net Cash Flow 

            	
              8

            

    

    
      	
               
      

            	
              SECTION 4.3.

            	
              Net Proceeds of a Capital
      Transaction 

            	
              8

            

    

    
      	
               
      

            	
              SECTION 4.4.

            	
              Tax Payments 

            	
              8

            

    

    
      	
               
      

            	
              SECTION 4.5.

            	
              Limitation on
      Distributions 

            	
              8

            

    

     

    
      	 ARTICLE V	 ALLOCATION OF PROFITS AND
      LOSSES 	
               9

            

    

                       

    
      	
               
      

            	
              SECTION 5.1.

            	
              Profits 

            	
              9

            

    

    
      	
               
      

            	
              SECTION 5.2.

            	
              Losses 

            	
              9

            

    

    
      	
               
      

            	
              SECTION 5.3.

            	
              Special Allocations. 

            	
              9

            

    

    
      	
               
      

            	
              SECTION 5.4.

            	
              Other Allocation
    Rules. 

            	
              10

            

    

    
      	
               
      

            	
              SECTION 5.5.

            	
              Tax Allocations:  Code Section
      704(c). 

            	
              10

            

    

     

    
      	 ARTICLE VI	 MANAGEMENT	
               10

            

    

     

    
      	
               
      

            	
              SECTION 6.1.

            	
              Management. 

            	
              10

            

    

    
      	
               
      

            	
              SECTION 6.2.

            	
              Major Decisions 

            	
              11

            

    

    
      	
               
      

            	
              SECTION 6.3.

            	
              Property Management 

            	
              13

            

    

    
      	
               
      

            	
              SECTION 6.4.

            	
              Duties and Conflicts. 

            	
              13

            

    

    
      	
               
      

            	
              SECTION 6.5.

            	
              Company’s Counsel 

            	
              13

            

    

    
      	
               
      

            	
              SECTION 6.6.

            	
              Exculpation/Indemnification. 

            	
              13

            

    

    
      	
               
      

            	
              SECTION 6.7.

            	
              Rights During a Material Default or
      Following an AmREIT Change of Control/Removal of AmREIT as Managing
      Member/Standard of Care. 

            	
              13

            

    

    
      	
               
      

            	
              SECTION 6.8.

            	
              Transactions with Related
      Parties. 

            	
              14

            

    

    
      	
               
      

            	
              SECTION 6.9.

            	
              Indebtedness; UBTI. 

            	
              14

            

    

     

    
      	 ARTICLE VII	 BOOKS AND RECORDS; RESERVES 	
              15

            

    

      

    
      	
               
      

            	
              SECTION 7.1.

            	
              Bank Accounts 

            	
              15

            

    

    
      	
               
      

            	
              SECTION 7.2.

            	
              Books of Account 

            	
              15

            

    

    
      	
               
      

            	
              SECTION 7.3.

            	
              Operating
Statements. 

            	
              15

            

    

    
      	
               
      

            	
              SECTION 7.4.

            	
              The Accountant 

            	
              15

            

    

    
      	
               
      

            	
              SECTION 7.5.

            	
              Tax Matters Member 

            	
              15

            

    

    
      	
               
      

            	
              SECTION
      7.6.

            	
              Appraisals 

            	
              16

            

    

    
      	
               
      

            	
              SECTION 7.7.

            	
              Annual Budget 

            	
              16

            

    

    
      	
               
      

            	
              SECTION 7.8.

            	
              Leasing and Property
      Guidelines. 

            	
              16

            

    

     

    
      	 ARTICLE VIII  	 TRANSFER OF COMPANY INTERESTS 	
              16

            

    

     

    
      	
               
      

            	
              SECTION 8.1.

            	
              No Transfer 

            	
              16

            

    

    
      	
               
      

            	
              SECTION 8.2.

            	
              Succession by Operation of Law/Certain
      Permitted Transfers/Prorations/Cooperation. 

            	
              16

            

    

    
      	
               
      

            	
              SECTION 8.3.

            	
              General Conditions Applicable to
      Transfers. 

            	
              17

            

    

    
      	
               
      

            	
              SECTION 8.4.

            	
              Intentionally
    Omitted. 

            	
              17

            

    

    
      	
               
      

            	
              SECTION 8.5.

            	
              Buy/Sell Rights. 

            	
              17

            

    

    
      	
               
      

            	
              SECTION 8.6.

            	
              Project Sale Option. 

            	
              19

            

    

    
      	
               
      

            	
              SECTION 8.7.

            	
              ERISA. 

            	
              20

            

    

    
      	
               
      

            	
              SECTION 8.8.

            	
              VCOC 

            	
              21

            

    

    
      	
               
      

            	
              SECTION 8.9.

            	
              Bankruptcy or Dissolution of a
      Member 

            	
              21

            

    

     

    
      	
               ARTICLE IX

            	 BROKERS	
               21

            

    

     

    
      	
               
      

            	
              SECTION 9.1.

            	
              Brokers 

            	
               21

            

    

     

    
      	 ARTICLE X	 TERMINATION 	
               21

            

    

     

    
      	
               
      

            	
              SECTION 10.1.

            	Dissolution	 21

    

    
      	
               
      

            	SECTION 10.2.	
              Termination

            	 21

    

    
      	
               
      

            	
              SECTION 10.3.

            	Liquidating Member.	 22

    

    
      	
               
      

            	
              SECTION 10.4.

            	No Redemption	 22

    

    
      	
               
      

            	
              SECTION 10.5.

            	Governance	 22

    

    
      	
               
      

            	
              SECTION 10.6.

            	Return of Capital	 22

    

     

    
      	ARTICLE XI  	 MISCELLANEOUS 	
               22

            

    

                                

    
      	
               
      

            	 SECTION 11.1.	 Further Assurances	
              22

            

    

    
      	
               
      

            	
              SECTION 11.2.

            	 Notices	 22

    

    
      	
               
      

            	
              SECTION 11.3.

            	 Governing Law	 23

    

    
      	
               
      

            	
              SECTION 11.4.

            	 Captions	 23

    

    
      	
               
      

            	
              SECTION 11.5.

            	 Pronouns	 23

    

    
      	
               
      

            	
              SECTION 11.6.

            	 Successors and Assigns	 23

    

    
      	
               
      

            	
              SECTION 11.7.

            	 Extension Not a Waiver	 23

    

    
      	
               
      

            	
              SECTION 11.8.

            	 Construction	 23

    

    
      	
               
      

            	
              SECTION 11.9.

            	 Severability	 23

    

    
      	
               
      

            	
              SECTION 11.10.

            	 Consents	 23

    

    
      	
               
      

            	
              SECTION 11.11.

            	 Entire Agreement	 23

    

    
      	
               
      

            	SECTION 11.12.	 Consent to Jurisdiction	
              23

            

    

    
      	
               
      

            	
              SECTION 11.13.

            	 Counterparts	 23

    

    
      	
               
      

            	
              SECTION 11.14.

            	 Tax Election	 23

    

    
      	
               
      

            	
              SECTION 11.15.

            	 Costs	 23

    

    
      	
               
      

            	
              SECTION 11.16.

            	 Representations and
      Warranties	 23

    

    
      	
               
      

            	
              SECTION 11.17.

            	 Right to Participate; Right of First
      Offer	 25

    

    
      	
               
      

            	
              SECTION 11.18.

            	 Limitation of Liability	 25

    

    
      	
               
      

            	
              SECTION 11.19.

            	 Company Name	 25

    

    
      	
               
      

            	
              SECTION 11.20.

            	 Ownership of Company
    Property	 25

    

    
      	
               
      

            	
              SECTION 11.21.

            	 Time of the Essence	 25

    

    
      	
               
      

            	
              SECTION 11.22.

            	 Status Reports	 25

    

    
      	
               
      

            	
              SECTION 11.23.

            	 Disposition of Documents	 26

    

    
      	
               
      

            	
              SECTION 11.24.

            	 Waiver of Partition	 26

    

    
      	
               
      

            	
              SECTION 11.25.

            	 Calculation of Days	 26

    

    
      	
               
      

            	
              SECTION 11.26.

            	 Disclosure	 26

    

     

    EXHIBIT A – IRR CALCULATION

     

    EXHIBIT B – LEASE REQUEST FORM

     

    EXHIBIT C – FORM OF MANAGEMENT AGREEMENT

     

    EXHIBIT D – LAND

     

    EXHIBIT E – LEASING AND PROPERTY
GUIDELINES

     

    
      
         

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    

    LIMITED
LIABILITY COMPANY AGREEMENT

    OF

    SHADOW
CREEK HOLDING COMPANY LLC

    

    THIS
LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”), is made as of February
29, 2008, by and between SHADOW CREEK RANCH TOWN CENTER ACQUISITION LLC, a
Delaware limited liability company, having an office c/o J.P. Morgan Investment
Management Inc., 245 Park Avenue, New York, New York 10167 (“Acquisition”), and
AMREIT SHADOW CREEK ACQUISITION, LLC, a Texas limited liability company having
an office at 8 Greenway Plaza, Suite 1000, Houston, Texas 77046 (“AmREIT SCA”),
pursuant to the provisions of the Delaware Limited Liability Company Act, Title
6 of the Delaware Code, Section 18-101 et seq., as amended from
time to time (“Delaware Act”).  Capitalized terms used herein are
defined in Section 1.5 below or as elsewhere provided herein.

     

    WHEREAS,
Shadow Creek Holding Company LLC (the “Company”) was formed by the filing of the
Certificate (as hereinafter defined) on February 25, 2008.

     

    WHEREAS,
the Members desire to adopt this Agreement in accordance with the Delaware
Act.

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, Acquisition and AmREIT SCA do hereby mutually covenant and agree as
follows:

     

    ARTICLE I

     

    ORGANIZATION

     

    SECTION 1.1. Formation and
Continuation.

     

    (a) The
Company was formed under and pursuant to the provisions of the Delaware Act and
on the terms and conditions set forth in the Certificate as filed with the
Secretary of State of the State of Delaware.  The rights and
liabilities of all Members shall be as provided under the Delaware Act, the
Certificate and this Agreement.  To the extent permitted by applicable
law, the provisions of this Agreement shall override the provisions of the
Delaware Act in the event of any inconsistency or contradiction between
them.  The fact that the Certificate is on file in the office of the
Secretary of State shall constitute notice that the Company is a limited
liability company, pursuant to Section 18-207 of the Delaware Act.

     

    (b) In order
to maintain the Company as a limited liability company under the laws of the
State of Delaware, the Company shall, from time to time, take appropriate
action, including the preparation and filing of such amendments to the
Certificate and such other assumed name certificates, documents, instruments and
publications as may be required by or desirable under law, including, without
limitation, action to reflect:

     

    (i) any
change in the Company name; or

     

    (ii) any
correction of false or erroneous statements in the Certificate or the desire of
the Members to make a change in any statement therein in order that it shall
accurately represent the agreement among the Members.

     

    (c) Each
necessary Member shall further execute, and the Company shall file and record
(or cause to be filed and recorded) and shall publish, if required by law, such
other and further certificates, statements or other instruments as may be
necessary or desirable under the laws of the State of Delaware or the state in
which the Property is located in connection with the formation of the Company
and the commencement and carrying on of its business.  The Managing
Member shall be an authorized person of the Company for purposes of any filings
under the Delaware Act and shall be authorized to execute and deliver on behalf
of the Company any of the foregoing certificates.

     

    SECTION 1.2. Name
and Office.  The name of the Company shall be “Shadow Creek
Holding Company LLC”.  All business of the Company shall be conducted
under such name and title to all property, real, personal, or mixed, owned by or
leased to the Company shall be held in such name.  The principal place
of business and office of the Company shall be located at 8 Greenway Plaza,
Suite 1000, Houston, Texas  77046 or at such other place or places as
the Members may from time to time designate.  The Company may have
such additional offices and places of business as may be established at such
other locations as may be determined from time to time by the
Members.  The registered agent of the Company within the State of
Delaware is Corporation Trust Company and the registered office of the Company
within the State of Delaware is 1209 Orange Street, Wilmington, Delaware
19801.

     

    SECTION 1.3. Purpose.  (a)  The purpose and
business of the Company shall be to (i) own the Subsidiary Entities (as defined
in Section 1.5), and (ii) acquire and own, directly or indirectly, the Property,
and in connection therewith to (A) act and perform as a partner or member, as
applicable, of each Subsidiary Entity, and (B) directly or indirectly, develop,
finance, own, operate, lease, manage, dispose of (in whole or in part) and
otherwise deal with the Property and any other real property and Company Assets
acquired, directly or indirectly, by the Company in accordance with the terms
hereof.

     

    (b) The
Company shall not engage in any other business or activity without the prior
written consent of all the Members.

     

    SECTION 1.4. Term.  The term of the Company commenced on the
filing of the Certificate with the Secretary of State of the State of Delaware
and shall continue until December 31, 2058, unless sooner terminated pursuant to
the provisions hereof.  The existence of the Company as a separate
legal entity shall continue until the cancellation of the Certificate in the
manner required by the Delaware Act.

     

    SECTION 1.5. Defined
Terms.  The following terms shall have the following
meanings when used herein:

     

    “8.25%
IRR Deficiency” - As defined in Exhibit
A.

     

    “10%
Interest” - As defined in Section 8.7(c).

     

    “10%
Plan” - As defined in Section 8.7(b).

     

    “12% IRR
Deficiency” - As defined in Exhibit
A.

     

    “Accountant”
- As defined in Section 7.4.

     

    “Acquisition”
- As defined in the Preamble.

     

    “Acquisition
Entity” - Any separate account, pension fund or collective investment fund
containing pension funds, separate accounts or other investors for which J.P.
Morgan Investment Management Inc. or JPM (or one of the parents, Affiliates, or
subsidiaries of either of the foregoing or any successor to either of the
foregoing) acts as trustee, agent or independent advisor.

     

    “Additional
Capital Contribution” – As defined in Section 2.2(b).

     

    “Adjacent
Property Acquisition” – As defined in Section 11.17(a).

     

    “Adjacent
Property Offeree” - As defined in Section 11.17(a).

     

    “Adjacent
Property Offeror” - As defined in Section 11.17(a).

     

    
      
         

      

      
        ~1~

        
          

        

      

      
        Table of Contents

      

    

     

    “Adjusted
Capital Account” - With respect to any Member, the balance, if any, in such
Member’s Capital Account as of the end of the relevant Fiscal Year, after giving
effect to the adjustments set forth herein and the following
adjustments:

     

    (a) Credit to
such Capital Account any amounts which such Member is obligated to restore
pursuant to the terms of this Agreement or is deemed to be obligated to restore
pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(c) or pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and

     

    (b) Debit to
such Capital Account the items described in paragraphs (4), (5) and (6) of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d).

     

    The
foregoing definition of Adjusted Capital Account is intended to comply with the
provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations to the
extent relevant thereto and shall be interpreted consistently
therewith.

     

    “Affiliate”
- Means with respect to any Person, any other Person directly or indirectly
controlled by, controlling or under direct or indirect common control with the
Person in question, or such Person who owns, directly or indirectly, five
percent (5%) or more of the equity interest of the other Person.  For
the purposes of this definition, “control” when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interest, by contract or otherwise; and the terms
“controlling” and “controlled” have the meanings correlative to the
foregoing.

     

    “Affiliate
Guarantee” - Means any guarantee or other surety arrangement executed by any
Member or by any Affiliate of any Member, or by any Affiliate of any general
partner of AmREIT, in each case for the benefit of any lender or other creditor
to the Company.

     

    “Agreement”
- As defined in the Preamble.

     

    “AmREIT”
– Means AmREIT, a Texas real estate investment trust, and its successors and
assigns.

     

    “AmREIT
Affiliate Bankruptcy” – Means a Bankruptcy Event with respect to any Affiliate
of AmREIT (other than the Company) that is a party to a Managing Member
Affiliate Agreement.

     

    “AmREIT
Change of Control” – Means any of the following:  (i) AmREIT SCA is no
longer under the Control of AmREIT, (ii) there is a change in the power,
directly or indirectly, to direct or cause the direction of the management and
policies of AmREIT, whether by contract or otherwise (including, without
limitation, as a result of a transfer permitted pursuant to the penultimate
sentence of Section 8.1), (iii) a sale of all or substantially all of the assets
of AmREIT, excluding a sale to an entity with respect to which AmREIT or a
direct or indirect wholly-owned subsidiary of AmREIT is the general partner or
managing member (or comparable managing entity) and Controls such entity, or
(iv) any event following which none of the Key Personnel shall exercise
(directly or indirectly) day-to-day operational, managerial and developmental
control over AmREIT SCA.

     

    “AmREIT
Corp.” – Means AmREIT Monthly Income & Growth IV Corporation, a Texas
corporation, and its successors and assigns.

     

    “AmREIT
Ltd.” – Means AmREIT Monthly Income & Growth IV Ltd., a Texas limited
partnership, and its successors and assigns.

     

    “AmREIT
SCA” - As defined in the Preamble.

     

    “Annual
Budget” - As defined in Section 7.7.

     

    “Applicable
AmREIT Entity” – As defined in Section 11.17(b).

     

    “Applicable
Purchase Price” - As defined in Section 8.5(a).

     

    “Approved
Leases” – Means any lease of space that (i) is in accordance with the Leasing
and Property Guidelines, (ii) is on the standard form of lease approved from
time to time by the Members pursuant to Section 6.2, without material changes
thereto that are adverse to the Company, and (iii) covers less than 5,000
rentable square feet of space.

     

    “Approved
Tenant Representative Agreement” – Means any tenant representative agreement in
connection with a lease of space at the Property on the standard form of tenant
representative agreement approved from time to time by the Members pursuant to
Section 6.2.

     

    “ARIC” –
Means AmREIT Realty Investment Corporation.

     

    “Bankruptcy
Event” - Means, with respect to any Person, the occurrence of any of the
following events:  (i) the making by it of an assignment for the
benefit of its creditors, (ii) the filing by it of a voluntary petition in
bankruptcy, (iii) an adjudication that it is bankrupt or insolvent unless such
adjudication is stayed or dismissed within sixty (60) days, or the entry against
it of an order for relief in any bankruptcy or insolvency proceeding unless such
order is stayed or dismissed within ninety (90) days, (iv) the filing by it of a
petition or an answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, (v) the filing by it of an answer or other pleading
admitting or failing to contest the material allegations of the petition filed
against it in any proceeding of the nature described in the preceding clause
(iv), (vi) its seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator of it or of all or any substantial part of its
properties, or (vii) ninety (90) days after the commencement of any proceeding
against it seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation,
if the proceeding has not been stayed or dismissed, or if within ninety (90)
days after the appointment without its consent or acquiescence of a trustee,
receiver or liquidator of it or of all or any substantial part of its
properties, the appointment is not vacated or stayed, or within ninety (90) days
after the expiration of any such stay, the appointment is not
vacated.

     

    “Business
Day” - Any day other than Saturday, Sunday or any other day on which banks or
savings and loan associations in New York, New York or Houston, Texas are not
open for business.

     

    “Buy/Sell
Deposit” - As defined in Section 8.5(c).

     

    “Capital
Account” - The Capital Account maintained for each Member pursuant to Section
3.2 as the same may be credited or debited in accordance with the terms
hereof.

     

    “Capital
Contribution” - With respect to any Member, the amount of money and the initial
Gross Asset Value of any property (other than money) contributed, or deemed
contributed, by such Member or, in connection with a Default Loan, on behalf of
such Member, to the Company (net of any liabilities secured by such property or
to which such property is otherwise subject), including any Initial Capital
Contribution and Additional Capital Contribution.

     

    “Capital
Expenditures” - For any period, the amount expended for items capitalized under
generally accepted accounting principles, consistently applied, except for such
items as are otherwise classified under this Agreement.

     

    “Capital
Transaction” - Means any of the following:  (a) a Transfer of all or a
portion of any Company Asset other than tangible personal property that is not
Transferred in connection with the Transfer of real property or a leasehold
interest in real property and is otherwise Transferred in the ordinary course of
business; (b) any condemnation or deeding in lieu of condemnation of all or a
portion of any Company Asset; (c) any financing or refinancing of any Company
Asset; (d) the receipt of proceeds due to any fire or other casualty to the
Property or any other Company Asset; and (e) any other transaction involving
Company Assets, the proceeds of which, in accordance with generally accepted
accounting principles, are considered to be capital in nature.

     

    
      
         

      

      
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    “Certificate”
- The Certificate of Formation for the Company filed with the Secretary of State
of the State of Delaware, pursuant to Section 18-201 of the Delaware Act, as the
same may be amended and restated.

     

    “Check
The Box Regulations” - Means regulations (in temporary or in final form) or
other equivalent authority issued by the Internal Revenue Service and all state
and local jurisdictions in which the income, assets or operations of the Company
are, or may be, subject to income or similar tax, permitting the Company to make
an election to be treated as a partnership for U.S. federal, state and, if
applicable, local income tax purposes.

     

    “Code” -
The Internal Revenue Code of 1986, as amended, or any corresponding provision or
provisions of prior or succeeding law.

     

    “Company”
– As defined in the Recitals.

     

    “Company
Assets” - The assets and property, whether tangible or intangible and whether
real, personal, or mixed, at any time owned by or held for the benefit of the
Company and all direct or indirect interests in the Property.

     

    “Company
Counsel” - As defined in Section 6.5.

     

    “Company
Interest” - As to any Member, all of the interest of that Member in the Company
including, without limitation, such Member’s (i) right to a distributive share
of the profits and losses and cash flow of the Company, and (ii) right to
participate in the management of the business and affairs of the Company in
accordance with the terms hereof.

     

    “Company
Minimum Gain” - Means “partnership minimum gain” as set forth in Treasury
Regulations Section 1.704-2(d).

     

    “Competing
Property Acquisition” – As defined in Section 11.17(b).

     

    “Control”
- Direct or indirect ownership of not less than fifty percent (50%) of all the
voting stock of a corporation or direct or indirect ownership of not less than
fifty percent (50%) of the legal and equitable interest in a partnership,
limited liability company or other entity, or the ability to direct management,
operations or policy decisions of such corporation, partnership, limited
liability company or other entity.

     

    “Default
Loan” - As defined in Section 2.3(a).

     

    “Default
Loan Rate” - Six percent (6%) per annum above the prime or base lending rate
announced, from time to time, by Citibank, N.A. in New York City or, in the
event that Citibank, N.A. shall no longer announce its prime or base lending
rate as aforesaid, six percent (6%) per annum above the prime or base lending
rate announced, from time to time, by JPMorgan Chase Bank, N.A. or, in the event
that neither Citibank, N.A. nor JPMorgan Chase Bank, N.A. shall announce its
prime or base lending rate as aforesaid, six percent (6%) per annum above the
prime or base lending rate announced, from time to time, by the largest bank, by
assets, with its principal place of business located in New York City to publish
its so called “prime” or “base lending” rates.

     

    “Defaulting
Member” - As defined in Section 2.3(a).

     

    “Delaware
Act” - As defined in the Preamble.

     

    “Depreciation”
- For each Fiscal Year or other period, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable with respect to an
asset for such Fiscal Year or other period, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such Fiscal Year or other period bears to such beginning adjusted tax
basis.  If any asset shall have a zero adjusted basis for federal
income tax purposes, Depreciation shall be determined utilizing any reasonable
method selected by the Members.

     

    “Downpayment”
- As defined in Section 8.6(c).

     

    “Due
Date” - As defined in Section 2.2(b).

     

    “Effective
Date” - The date of the execution and delivery of this Agreement.

     

    “ERISA” -
Means the Employee Retirement Income Security Act of 1974, as
amended.

     

    “Escrow
Agent” - Any reputable, nationally recognized and financially solvent title
insurance company designated by the Member purchasing a Company
Interest.

     

    “Estimated
Purchase Price” - As defined in Section 8.6(a).

     

    “Fair
Market Value” - The value of the particular asset or interest in question
determined on the basis of an arm’s length transaction for cash between an
informed and willing seller (under no compulsion to sell) and an informed and
willing purchaser (under no compulsion to purchase), taking into account, among
other things, the anticipated cash flow, taxable income and taxable loss
attributable to the asset or interest in question.  Except as
otherwise expressly set forth herein, in the case of any asset other than a
marketable security, the Fair Market Value shall be determined by agreement of
all of the Members; in determining the value of any asset other than a
marketable security, the Members may, but shall not be under any obligation to,
engage an independent appraiser having recognized qualifications necessary in
order to make such determination and the fees and expenses of such appraiser
shall be borne by the Company.  Except as otherwise expressly set
forth herein, in the case of any marketable security at any date, the Fair
Market Value of such security shall equal the closing sale price of such
security on the Business Day (on which any national securities exchange is open
for the normal transaction of business) next preceding such date, as appearing
in any published list of any national securities exchange or in the Global
Market List of the National Association of Securities Dealers, Inc., or, if
there is no such closing sale price of such security, the final price of such
security at face value quoted on such Business Day by a financial institution of
recognized standing which regularly deals in securities of such
type.

     

    “Financing
Document” - Any loan agreement, security agreement, mortgage, deed of trust,
indenture, bond, note, debenture or other instrument or agreement relating to
indebtedness of the Company or any Subsidiary Entity for borrowed
money.

     

    “First
Mortgage Loan” – Means that first mortgage loan in the original principal amount
of $65,000,000 made by Metropolitan Life Insurance Company to Property Owner, as
amended, modified or supplemented from time to time with consent of the
Members.

     

    “Fiscal
Year” - Except as otherwise required by law, the calendar year, except that the
first Fiscal Year of the Company shall have commenced on the date of
commencement of the Company and end on the next succeeding December 31, and the
last Fiscal Year of the Company shall end on the date on which the Company shall
terminate and commence on the January 1 immediately preceding such date of
termination.

     

    “Fund” -
As defined in Section 8.7(a).

     

    “Gross
Asset Value” - With respect to any asset, the asset’s adjusted basis for federal
income tax purposes, except as follows:

     

    (a) The
initial Gross Asset Value of any asset contributed by a Member to the Company
shall be the gross Fair Market Value of such asset, as determined by the Members
(as evidenced by this Agreement or an amendment hereto);

     

    (b) The Gross
Asset Values of all Company Assets shall be adjusted to equal their respective
gross Fair Market Values, as determined by the Members, as of the following
times:  (i) the acquisition of an interest or an additional interest
in the Company by any new or existing Member in exchange for more than a de
minimis Capital Contribution or other consideration; (ii) the distribution by
the Company to a Member of more than a de minimis amount of property or money as
consideration for an interest in the Company; and (iii) the liquidation of the
Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (i) and (ii) above shall
be made only if the Members determine that such adjustments are necessary or
appropriate to reflect the relative economic interests of the
Members;

     

    (c) The Gross
Asset Value of any Company Asset distributed to a Member shall be the gross Fair
Market Value of such asset on the date of distribution;

     

    (d) The Gross
Asset Values of Company Assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that such adjustments are taken
into account in determining Capital Accounts pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), clause (f) of the definition of Profits and Losses
and Section 5.3(g); provided, however, that Gross Asset Values shall not be
adjusted pursuant to this paragraph (d) to the extent the Members determine that
an adjustment pursuant to paragraph (b) hereof is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this paragraph (d); and

     

    (e) If the
Gross Asset Value of an asset has been determined or adjusted pursuant to
paragraphs (a), (b), or (d), such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset for purposes
of computing Profits and Losses.

     

    
      
         

      

      
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    “Gross
Value Amount” - As defined in Section 8.5(a).

     

    “Impositions”
- Means all taxes (including sales and use taxes), assessments (including all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof), water, sewer or other rents, rates and
charges, excises, levies, license fees, permit fees, inspection fees and other
authorization fees and other charges, in each case whether general or special,
ordinary or extraordinary, of every character (including all interest and
penalties thereon), which at any time may be assessed, levied, confirmed or
imposed by any governmental or quasi-governmental authority having jurisdiction
over the Property on or in respect of or be a lien upon (i) the Property or any
estate or interest therein, (ii) any occupancy, use or possession of, or
activity conducted on, the Property, or (iii) the Rents from the Property or the
use or occupancy thereof.

     

    “Indemnified
Losses” - As defined in Section 6.6(b).

     

    “Initial
Capital Contribution” – Means, with respect to AmREIT SCA, the Capital
Contribution made by it (or on its behalf) pursuant to Section 2.1(a), and with
respect to Acquisition, the Capital Contribution made by it (or on its behalf)
pursuant to Section 2.1(b).

     

    “JPM” -
Means JPMorgan Chase Bank, N.A., and its successors and assigns.

     

    “Key
Documents” - Means the Purchase Agreement, all Financing Documents, partnership
agreements, limited liability company agreements or other joint venture
agreements to which the Company is a party or by which the Company is bound, and
any material reciprocal easement agreement to which the Company is a party or by
which the Company is bound.

     

    “Key
Personnel” – Means H. Kerr Taylor, Chad C. Braun, Charles Scoville and John
Anderson.

     

    “Land” -
Means that certain real property situated in the City of Pearland, County of
Brazoria, Texas, and being more particularly described on Exhibit D attached
hereto and by reference made a part hereof.

     

    “Leasing
and Property Guidelines” – As defined in Section 7.8(a).

     

    “Lease
Request Form” - As defined in Section 7.8(b).

     

    “Lending
Eligible Member” - As defined in Section 2.3(a).

     

    “Lending
Member” - As defined in Section 2.3(b).

     

    “Liquidating
Member” - As defined in Section 10.3(a).

     

    “Lockout
Date” - Means (i) with respect to Acquisition, the earliest of (x) the two (2)
year anniversary of the date of this Agreement, (y) the date on which AmREIT SCA
shall be in Material Default and (z) the date on which an AmREIT Change of
Control occurs, and (ii) with respect to AmREIT SCA, the earliest of (x) the two
(2) year anniversary of the date of this Agreement, (y) the date on which
Acquisition shall be in Material Default and (z) the date on which Acquisition
exercises any of its rights pursuant to Section 6.7(a) as a result of an AmREIT
Change of Control.

     

    “Major
Decision” - As defined in Section 6.2.

     

    “Major
Decision Deadlock” - Means a deadlock between the Members on a Major Decision
that shall remain unresolved for over thirty (30) days.

     

    “Management
Agreement” - As defined in Section 6.3.

     

    “Managing
Member” - Means the Member then authorized to carry out the management of the
business and affairs of the Company pursuant to Article 6 hereof.  The
initial Managing Member shall be AmREIT SCA.

     

    “Managing
Member Affiliate Agreement” - Means any contract or agreement between the (x)
Company or any Subsidiary Entity and (y) Managing Member, any general partner or
managing member of the Managing Member, or any Affiliate of Managing Member, or
any Affiliate of any general partner or managing member of the Managing
Member.

     

    “Material
Default” - Means any of (a) a default specifically designated as a Material
Default in this Agreement, (b) other than defaults covered by clause (a) above,
a default by a Member in the performance or observance of any of its covenants
or obligations under this Agreement with respect to the payment of money
(including, without limitation, Additional Capital Contributions) due hereunder
which such default continues beyond any applicable grace and cure periods, or if
no such grace and cure period shall be contained herein, which such default
continues uncured for a period of ten (10) Business Days after written notice,
(c) other than defaults covered by clauses (a) and (b) above, a default by a
Member in the performance or observance of any of its material covenants or
obligations under this Agreement, which such default continues beyond any
applicable grace and cure periods, or if no such grace and cure period shall be
contained herein, which such default continues uncured for a period of fifteen
(15) days after written notice unless such default can be cured but is not
susceptible, using due diligence, of being cured within such fifteen (15) day
period, in which event such default shall not constitute a Material Default if
the defaulting Member shall promptly commence and at all times thereafter
diligently pursue the cure of such default, and such default shall, in any
event, be cured within an additional sixty (60) day period, (d) any act or
omission by a Member that shall constitute fraud, willful misconduct or gross
negligence or the willful misapplication or misappropriation of Company funds by
a Member or any Person Controlling a Member, (e) a Bankruptcy Event occurs with
respect to a Member or any Person Controlling a Member, (f) a representation or
warranty contained in this Agreement being untrue in any material respect when
made; provided, however, that in the case of a representation or warranty
contained in this Agreement as to which the underlying factual circumstance
making the representation or warranty not true when made can be corrected within
fifteen (15) days, the Member shall have such fifteen (15) day period to cure
such representation or warranty; provided, further, that if such representation
or warranty cannot reasonably be cured within such fifteen (15) day period, the
Member shall have an additional period of time not to exceed sixty (60) days, to
cure such breached representation or warranty, provided such Member promptly
commences and diligently prosecutes such cure to completion, (g) with respect to
AmREIT SCA so long as it is Managing Member, a default (excluding defaults
caused by the Company’s failure to have sufficient funds to make payments or
otherwise to pay Company costs and expenses) caused by AmREIT SCA (unless AmREIT
SCA was acting pursuant to the approval of all Members) after expiration of
applicable cure periods under any document or instrument evidencing, securing or
relating to any loan made to the Company, or (h) with respect to Acquisition if
it becomes Managing Member and so long as it is Managing Member, a default
(excluding defaults caused by the Company’s failure to have sufficient funds to
make payments or otherwise to pay Company costs and expenses) caused by
Acquisition (unless Acquisition was acting pursuant to the approval of all
Members) after expiration of applicable cure periods, under any document or
instrument evidencing, securing or relating to any loan made to the
Company.

     

     

    
      
         

      

      
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    “Maximum
Rate” - Means the highest lawful rate of interest allowable under applicable
law.

     

    “Member”
- Means, at any time, any person or entity admitted and remaining as a member of
the Company pursuant to the terms of this Agreement.  As of the date
of this Agreement, the Members of the Company are Acquisition and AmREIT
SCA.

     

    “Member
Nonrecourse Debt” - Means “partner non-recourse debt” as set forth in Treasury
Regulations Section 1.704-2(b)(4).

     

    “Member
Nonrecourse Debt Minimum Gain” - Means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Treasury Regulations Section 1.704-2(i)(2) and (3).

     

    “Member
Nonrecourse Deductions” - Means “partner nonrecourse deductions” as set forth in
Treasury Regulations Section 1.704-2(i)(2).  For any Fiscal Year, the
amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse
Debt equals the excess, if any, of the net increase, if any, in the amount of
the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt over the aggregate amount of any distributions during such Year to the
Member that bears the economic risk of loss for such Member Nonrecourse Debt to
the extent such distributions are from proceeds of such Member Nonrecourse Debt
and are allocable to an increase in Member Nonrecourse Debt Minimum Gain,
determined according to the provisions of Treasury Regulations Section
1.704-2(i)(2).

     

    “MRI” -
As defined in Section 7.3(c).

     

    “Net Cash
Flow” - Means, with respect to the Company, with respect to any period, the sum
of all money available to the Company at the end of that period for distribution
to its Members after (1) payment of all debt service and other expenses
(including, without limitation, payments due on or with respect to operating and
maintenance expenses, general and administrative expenses, insurance costs,
Impositions and other expenses paid or required to be paid); (2) satisfaction of
the Company’s liabilities as they come due; and (3) establishment of (and
contributions to) such reserves as are required under any Financing Documents or
additional reasonable reserves required to operate the Company; provided,
however, that Net Cash Flow shall not include Net Proceeds of a Capital
Transaction, Capital Contributions, loans or Default Loans, or tenant security
deposits or earnest money deposits or any interest thereon so long as the
Company has a contingent obligation to return the same.

     

    “Net
Proceeds of a Capital Transaction” - Means the net cash proceeds (other than
insurance proceeds for lost rental incomes) from a Capital Transaction less any
portion thereof used to (i) establish (and contribute to) such reserves as are
required under any Financing Documents or additional reasonable reserves
required to operate the Company, (ii) repay any debts or other obligations of
the Company in connection with such Capital Transaction, (iii) restore the
Property following a casualty or condemnation, (iv) pay costs reasonably and
actually incurred in connection with the Capital Transaction, or (v) pay
creditors in the event of a liquidation.  “Net Proceeds of a Capital
Transaction” shall include all principal, interest and other payments as and
when received with respect to any note or other obligation received by the
Company in connection with a Capital Transaction.

     

    “Non-Defaulting
Member” - As defined in Section 2.3(a).

     

    “Nonrecourse
Deductions” - Has the meaning set forth in Treasury Regulations Section
1.704-2(b)(1).  The amount of Nonrecourse Deductions for a Fiscal Year
equals the excess, if any, of the net increase, if any, in the amount of Company
Minimum Gain during that Fiscal Year, over the aggregate amount of any
distributions during that Fiscal Year of proceeds of a Nonrecourse Liability
that are allocable to an increase in Company Minimum Gain, determined according
to the provisions of Treasury Regulations Section 1.704-2(c).

     

    “Nonrecourse
Liability” - Has the meaning set forth in Treasury Regulations Section
1.704-2(b)(3).

     

    “Notices”
- As defined in Section 11.2.

     

    “Offeree”
- As defined in Section 8.5(a).

     

    “Offer
Notice” - As defined in Section 8.5(a)

     

    “Offeror”
- As defined in Section 8.5(a).

     

    “On-Site
Property Manager” - As defined in Section 6.3.

     

    “Party in
Interest” – As defined in Section 8.7(c).

     

    “Percentage
Interest” - As to any Member, the Percentage Interest of such Member specified
in Section 3.1.

     

    “Person”
- Means any individual, corporation, partnership, limited liability company,
association, trust or other entity or organization.

     

    “Plan” –
As defined in Section 8.7(a).

     

    “Plan
Asset Regulations” – As defined in Section 8.8.

     

    “Profits”
and “Losses” - For each Fiscal Year or other period, an amount equal to the
Company’s taxable income or loss for such Fiscal Year or period, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:

     

    (a) Any
income of the Company that is exempt from federal income tax and not otherwise
taken into account in computing Profits or Losses pursuant to this definitional
Section shall be added to such taxable income or loss;

     

    (b) Any
expenditures of the Company described in Code Section 705(a)(2)(B) or treated as
Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits
or Losses pursuant to this definitional Section, shall be subtracted from such
taxable income or loss;

     

    (c) In the
event the Gross Asset Value of any Company Asset is adjusted pursuant to
paragraph (b) or (c) under the definition of “Gross Asset Value,” the amount of
such adjustment shall be taken into account as gain or loss from the disposition
of such Company Asset for purposes of computing Profits or Losses;

     

    (d) Gain or
loss resulting from any disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its Gross Asset
Value;

     

    (e) In lieu
of the depreciation, amortization and other cost recovery deductions taken into
account in computing such taxable income or loss, there shall be taken into
account Depreciation for such Fiscal Year or other period, computed in
accordance with the definition thereof;

     

    (f) To the
extent an adjustment to the adjusted tax basis of any Company Asset pursuant to
Code Section 734(b) or Code Section 743(b) is required pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than in
complete liquidation of a Member’s Company Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Profits or Losses; and

     

    (g) Notwithstanding
any other provision of this definitional Section, any items which are specially
allocated under this Agreement shall not be taken into account in computing
Profits or Losses.

     

     

    
      
         

      

      
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    “Property”
– Means the real property located on the Land, and all improvements, fixtures,
personal property, appurtenances, rights and interests in connection
therewith.

     

    “Property
Owner” – Means AmREIT SPF Shadow Creek, LP, a Delaware limited
partnership.

     

    “Property
Sale Acceptance Notice” - As defined in Section 8.6(b).

     

    “Property
Sale Exercise Notice” - As defined in Section 8.6(a).

     

    “Property
Sale Offer” - As defined in Section 8.6(d).

     

    “Property
Sale Rejection Notice” - As defined in Section 8.6(b).

     

    “Purchase
Agreement” – Means that certain Agreement of Purchase and Sale, dated as of
December 28, 2007, between Shadow Creek Retail, LP, as seller, and ARIC, as
purchaser, as amended by First Amendment to Agreement of Purchase and Sale dated
as of January 11, 2008, Second Amendment to Agreement of Purchase and Sale dated
as of January 18, 2008 and Third Amendment to Agreement of Purchase and Sale
dated as of January 25, 2008, as assigned to Property Owner by ARIC pursuant to
an assignment agreement dated as of the date hereof.

     

    “QPAM” -
As defined in Section 8.7(c).

     

    “Qualified
Organization” – Has the meaning set forth in Section 514(c)(9)(C) of the
Code.

     

    “Receivables”
– As defined in Section 2.1(c).

     

    “Regulations”
or “Treasury Regulations” - The Income Tax Regulations promulgated under the
Code as such regulations may be amended from time to time (including Temporary
Regulations).

     

    “Regulatory
Allocations” - As defined in Section 5.3(h).

     

    “Reimbursement
Agreement” – Means that certain reimbursement agreement dated as of January 18,
2008 between Commingled Pension Trust Fund (Strategic Property) of JPMorgan
Chase Bank, N.A., an Affiliate of Acquisition, and ARIC, an Affiliate of AmREIT
SCA, which Reimbursement Agreement is superseded by this Agreement.

     

    “Rents” -
Means, collectively, all fixed, base, minimum, guaranteed, additional,
retroactive, percentage, participation or escalation rents, operating cost
pass-throughs, utility charges, common area maintenance or management charges,
administrative charges, parking, maintenance, tax and insurance contributions
payable under any lease for space at the Property, deficiency rents and
liquidated damages following default by any tenant at the Property, premiums
payable by any tenant at the Property upon the exercise of a cancellation
privilege originally provided in any lease for space at the Property, and any
rights and claims of any kind which the Company may have against any tenant at
the Property.

     

    “REOC” –
A “real estate operating company” as defined in the Plan Asset
Regulations.

     

    “Required
Capital Contribution” – Means (i) with respect to AmREIT SCA, any Additional
Capital Contributions approved by all of the Members, and (ii) with respect to
Acquisition, any Additional Capital Contributions approved by all of the
Members.

     

    “Shortfall”
- As defined in Section 2.2(a).

     

    “Shortfall
Amount” - As defined in Section 2.2(a).

     

    “Shortfall
Notice” - As defined in Section 2.2(a).

     

    “Subsidiary
Entity” – Means each of (i) Property Owner, and (ii) AmREIT SPF Shadow Creek GP,
LLC, a Delaware limited liability company.

     

    “Subsidiary
Organizational Documents” – Means the organizational documents of each
Subsidiary Entity.

     

    “Tax
Matters Member” - As defined in Section 7.5.

     

    “Tax
Payments” - As defined in Section 4.4.

     

    “Transaction
Documents” - As defined in Section 11.16(a)(ii).

     

    “Transfer”
- As defined in Section 8.1.

     

    “Transferee”
- As defined in Section 8.6(a).

     

    “Transferor”
- As defined in Section 8.6(a).

     

    “Transferor
Purchase Price” - As defined in Section 8.6(a).

     

    “UBTI” -
Means “unrelated business taxable income” within the meaning of Sections 511-514
of the Code.

     

    “VCOC” –
A “venture capital operating company” as defined in the Plan Asset
Regulations.

     

    “Withdrawal
Event” - As defined in Section 8.9.

     

    “Withdrawn
Member” - As defined in Section 8.9.

     

     

    
      
         

      

      
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    ARTICLE II

     

    CAPITAL

     

    SECTION 2.1. Initial Capital
Contributions.

     

    (a) AmREIT
SCA shall, at the time of closing of the purchase of the Property pursuant to
the Purchase Agreement, contribute $8,934,571.36 in cash to the capital of the
Company as its Initial Capital Contribution.

     

    (b) Acquisition
shall, at the time of closing of the purchase of the Property pursuant to the
Purchase Agreement, contribute $35,738,285.43 in cash to the capital of the
Company as its Initial Capital Contribution.

     

    (c) Contemporaneously
with the execution of this Agreement, AmREIT SCA will cause ARIC to assign to
the Company all of its rights in and to the Purchase Agreement, other than
rights and obligations of ARIC in connection with or related to the receivables
described in Section 1.2(e) of the Purchase Agreement (the
“Receivables”).  AmREIT SCA represents and warrants to Acquisition and
the Company that (i) the Purchase Agreement is in full force and effect, (ii)
neither ARIC, nor to the best knowledge of AmREIT SCA, any other party to any
such Purchase Agreement is in default thereunder, (iii) the rights of ARIC under
the Purchase Agreement are not subject to any liens, encumbrances or legal or
equitable claims, and (iv) to the best of AmREIT SCA’s knowledge, the
representations and warranties contained in the Purchase Agreement are true,
complete and correct in all material respects.  The Members agree that
AmREIT SCA shall not receive any Capital Account credit in connection with the
assignment of the Purchase Agreement.  Contemporaneously with the
execution of this Agreement and the funding of the Initial Capital
Contributions, the Company shall reimburse the Members and their respective
Affiliates for all Costs (as defined in the Reimbursement Agreement) in
connection with the purchase of the Property.

     

    (d) No Member
shall have the right to withdraw any capital from the Company or be repaid its
Capital Contribution except as provided in this Agreement.

     

    SECTION 2.2. Operating Capital; Additional Capital
Contributions.

     

    (a) In the
event at any time or from time to time additional funds are necessary to operate
the Property and the gross receipts (including, without limitation, proceeds
under all loans) together with the proceeds of any reserve account established
by the Company may be insufficient to pay all expenses when due (a “Shortfall”),
then the Managing Member shall notify each Member of such Shortfall (a
“Shortfall Notice”) identifying the amount of such Shortfall (the “Shortfall
Amount”) and any reason for such Shortfall.  The Managing Member shall
consult with the other Member within a reasonable period of time prior to
delivering any Shortfall Notice.  Any Member may direct the Managing
Member to provide a Shortfall Notice in the event such Member determines that
there is a Shortfall.

     

    (b) To the
extent approved by all of the Members, each Member shall contribute to the
capital of the Company (each, an “Additional Capital Contribution”) its
Percentage Interest of the Shortfall Amount, on or before the Due Date, such
that the Shortfall Amount specified in the Shortfall Notice shall not exist
subsequent to the Due Date (it being acknowledged and agreed that neither Member
shall have the right or obligation to make Additional Capital Contributions to
the Company except as expressly provided herein).  Additional Capital
Contributions shall be credited to the Capital Account of the Member making such
Additional Capital Contributions or the Capital Account of any Member on whose
behalf such Additional Capital Contributions are being made pursuant to Section
2.3.  As used in this Agreement, “Due Date” shall mean the fifteenth
(15th) day following the date on which such contribution was approved by all of
the Members; provided, however, that if such fifteenth (15th) day shall fall on
the last five (5) Business Days of a calendar month, the Due Date shall be the
second (2nd) Business Day of the immediately succeeding calendar
month.

     

    (c) 

     

    SECTION 2.3. Default
Loans.

     

    (a) If any
Member shall fail to advance any Required Capital Contribution pursuant to
Section 2.1 or Section 2.2 hereof by 5:00 P.M. Eastern Standard Time of the Due
Date thereof (a “Defaulting Member”), each non-defaulting Member (a
“Non-Defaulting Member”) that does not have an outstanding Default Loan made to
it hereunder (a “Lending Eligible Member”) may deliver a notice to the
Defaulting Member which shall include the following statement set forth in all
capital letters:  “NOTE:  YOU HAVE FAILED TO MAKE A REQUIRED
CAPITAL CONTRIBUTION TO SHADOW CREEK HOLDING COMPANY LLC IN THE AMOUNT OF
$________, AND THE UNDERSIGNED CAN ELECT TO FUND THE SAME AS A “DEFAULT LOAN” AS
DEFINED IN SECTION 2.3 OF THE LIMITED LIABILITY COMPANY AGREEMENT OF SHADOW
CREEK HOLDING COMPANY LLC IF SUCH REQUIRED CAPITAL CONTRIBUTION IS NOT MADE BY
YOU ON OR BEFORE THIRTY (30) DAYS FOLLOWING THE DATE HEREOF.”  The
Lending Eligible Member shall have the right, but not the obligation, to make a
loan (a “Default Loan”) to such Defaulting Member in an amount equal to the
Defaulting Member’s Percentage Interest of such Required Capital Contribution,
within thirty (30) days after the delivery of such notice provided that such
Defaulting Member has not made such Required Capital Contribution within such
thirty (30) day period.  If a Default Loan(s) shall be made in
accordance with this Section 2.3, the Company shall notify the Defaulting Member
of the amount and date of the Default Loan(s) and the Capital Account of the
Defaulting Member shall be credited to reflect the payment of the proceeds of
the Default Loan to the Company.  Each Default Loan shall be deemed to
be made to the Defaulting Member, with the proceeds of each Default Loan by the
Lending Eligible Member making same being delivered to the Company in
immediately available funds on such Defaulting Member’s behalf.  A
Default Loan shall be deemed to have been advanced on the date actually
advanced.  Default Loans shall earn interest on the outstanding
principal amount thereof at a rate equal to the lesser of (i) the Default Loan
Rate or (ii) the Maximum Rate, from the date actually advanced until the same is
repaid in full.

     

    (b) Default
Loans shall be non-recourse (except to a Member’s Company Interest), secured as
provided in paragraph (c) of this Section 2.3 and shall have a term of one
hundred twenty (120) days and be repayable by and collectible from the
Defaulting Member only as set forth in this Section 2.3(b).  A Member
making a Default Loan (a “Lending Member”) may, in the exercise of such Member’s
sole and absolute discretion, extend (for one (1) or more periods to be
determined by such Member) the term of a Default Loan.  If a Member
makes a Default Loan, the Defaulting Member shall not receive any distributions
of Net Cash Flow or Net Proceeds of a Capital Transaction or any proceeds from
the transfer of all or any part of its interest in the Company while the Default
Loan remains unpaid.  Instead, the Defaulting Member’s share of Net
Cash Flow and Net Proceeds of a Capital Transaction or such other proceeds shall
(until all Default Loans and interest thereon shall have been repaid in full)
first be paid to the Lending Member.  Such payments shall be applied
first to the payment of interest on such Default Loans and then to the repayment
of the principal amounts thereof, but shall be considered, for all other
purposes of this Agreement, to have been distributed or paid to the Defaulting
Member and applied by the Defaulting Member in repayment of the applicable
Default Loan.  Distributions of Net Cash Flow and Net Proceeds of a
Capital Transaction to such Defaulting Member shall be immediately reinstated
prospectively upon the full repayment of a Default Loan and interest thereon to
the Lending Member (if a Default Loan has been made).  In addition, at
any time during the term of such Default Loan, the Defaulting Member shall have
the right to repay, in full, the Default Loan (including interest).

     

    (c) To the
extent permitted under any Financing Documents, if a Member makes a Default
Loan, the Defaulting Member shall be deemed to have pledged to the Lending
Member, and granted to such Lending Member a continuing first priority security
interest in, all of the Defaulting Member’s Company Interest to secure the
payment of the principal of, and interest on, such Default Loan in accordance
with the provisions hereof, and for such purpose this Agreement shall constitute
a security agreement.  The Defaulting Member shall promptly execute,
acknowledge and deliver such financing statements, continuation statements or
other documents and take such other actions as the Lending Member shall request
in order to perfect or continue the perfection of such security interest; and,
if the Defaulting Member shall fail to do so within seven (7) days after demand
therefor, the Lending Member is hereby appointed the attorney-in-fact of, and is
hereby authorized on behalf of, the Defaulting Member, to execute, acknowledge
and deliver all such documents and take all such other actions as may be
required to perfect such security interest.  Such appointment and
authorization are coupled with an interest and shall be
irrevocable.  Any Lending Member holding a security interest in
another Member’s Company Interest as a result of the making of a Default Loan to
another Member shall, prior to exercising any right or remedy (whether at law,
in equity or pursuant to the terms hereof) available to such Lending Member in
connection with such security interest, provide to the Defaulting Member written
notice, in reasonable detail, of the right or remedy to be exercised and the
intended timing of such exercise, which notice shall be sent not less than
thirty (30) days prior to the timing of such exercise.

     

     

    
      
         

      

      
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    (d) In
addition to the rights granted to the Non-Defaulting Member herein, the
Non-Defaulting Member may, at its sole election, institute suit in any court of
competent jurisdiction to obtain (i) reimbursement for all costs of court and
reasonable attorneys’ fees thereby reasonably incurred and (ii) actual damages
(as opposed to special, consequential or punitive damages), if any, reasonably
resulting to the Company or the Non-Defaulting Member from such default by the
Defaulting Member plus interest thereon at the Default Rate from the date
incurred until the date paid; provided, that any amount recovered against the
Defaulting Member shall be limited exclusively to the Defaulting Member’s
Company Interest.

     

    (e) If the
Non-Defaulting Member shall elect not to make a Default Loan, then the Company
shall promptly return the Required Capital Contribution advanced by the
Non-Defaulting Member to the Non-Defaulting Member.

     

    SECTION 2.4. No
Third Party Beneficiaries.  The right of a Member to
require a Required Capital Contribution or to make a Default Loan shall not
confer upon any creditor or other third party having dealings with the Company
any right, claim or other benefit, including the right to require any such
Required Capital Contribution or Default Loan.

     

    ARTICLE III

     

    COMPANY INTERESTS

     

    SECTION 3.1. Percentage Interests.  The
Percentage Interest of Acquisition in the Company shall be eighty percent (80%)
and the Percentage Interest of AmREIT SCA in the Company shall be twenty percent
(20%).

     

    SECTION 3.2. Capital Accounts.  The Company shall
establish and maintain a separate Capital Account for each Member in accordance
with the following provisions:

     

    (a) To each
Member’s Capital Account there shall be credited such Member’s Capital
Contributions (including, with respect to the Capital Account of any Defaulting
Member, Additional Capital Contributions made to the Company on such Defaulting
Member’s behalf pursuant to the terms of Section 2.3 hereof), such Member’s
allocable share of Profits, and any items in the nature of income or gain that
are specially allocated to such Member under this Agreement, and the amount of
any Company liabilities that are assumed by such Member in accordance with the
terms hereof (other than liabilities that are secured by any Company Asset
distributed to such Member).

     

    (b) To each
Member’s Capital Account there shall be debited the amount of cash and the Gross
Asset Value of any Company property distributed (or deemed distributed to a
Defaulting Member in connection with the repayment of a Default Loan to a
Lending Member in accordance with the terms hereof) to such Member pursuant to
any provision of this Agreement (net of liabilities secured by such distributed
property that such Member is considered to assume or take subject to under Code
Section 752), such Member’s allocable share of Losses, and any items in the
nature of expenses or losses that are specially allocated to such Member under
this Agreement, and the amount of any liabilities of such Member that are
assumed by the Company (other than liabilities that are secured by any property
contributed by such Member to the Company).

     

    (c) In the
event any Company Interest is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred Company Interest.  In the
case of Transfer of a Company Interest at a time when an election under Code
Section 754 is in effect, the Capital Account of the transferee Member shall not
be adjusted to reflect the adjustments to the adjusted tax bases of Company
property required under Code Sections 754 and 743, except as otherwise permitted
by Treasury Regulations Section 1.704-1(b)(2)(iv)(m).

     

    (d) In
determining the amount of any liability for purposes of paragraphs (a) and (b)
above, there shall be taken into account Code Section 752(c) and the Treasury
Regulations promulgated thereunder, and any other applicable provisions of the
Code and Regulations.

     

    (e) The
foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury Regulations
Section 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner
consistent with such Regulations.

     

    SECTION 3.3. Return of
Capital.  No Member shall be liable for the return of the
Capital Contributions (or any portion thereof) of any other Member, it being
expressly understood that any such return shall be made solely from the Company
Assets.  No Member shall be required to pay to the Company or to any
other Member any deficit in its Capital Account upon dissolution of the Company
or otherwise, and no Member shall be entitled to withdraw any part of its
Capital Contributions or Capital Account, to receive interest on its Capital
Contributions or Capital Account or to receive any distributions from the
Company, except as expressly provided for in this Agreement or under the
Delaware Act as then in effect.

     

    ARTICLE IV

     

    DISTRIBUTIONS

     

    SECTION 4.1. General.  Net
Cash Flow and/or Net Proceeds of a Capital Transaction shall be distributed to
the Members as set forth in Section 4.2 and 4.3 below.

     

    SECTION 4.2. Net Cash
Flow.  Subject to Section 10.2 and Section 2.3 hereof, Net
Cash Flow of the Company for any Fiscal Year shall be distributed monthly (if
available) by the Managing Member to the Members in accordance with their
Percentage Interests.

     

    SECTION 4.3. Net Proceeds of a Capital
Transaction.  Subject to Section 10.2 and Section 2.3
hereof, Net Proceeds of a Capital Transaction shall be distributed by the
Managing Member as soon as practicable after the receipt thereof to the Members
in the following manner and priority:

     

    (a) First,
eighty percent (80%) to Acquisition and twenty percent (20%) to AmREIT SCA until
Acquisition’s 8.25% IRR Deficiency is equal to zero;

     

    (b) Second,
seventy-five percent (75%) to Acquisition and twenty-five percent (25%) to
AmREIT SCA until Acquisition’s 12% IRR Deficiency is equal to zero;
and

     

    (c) Third,
seventy percent (70%) to Acquisition and thirty percent (30%) to AmREIT
SCA.

     

    SECTION 4.4. Tax
Payments.  To the extent that any taxes or withholding
taxes are due on behalf of or with respect to any Member and the Company is
required by law to withhold or to make such tax payments (“Tax Payments”), the
Company shall withhold such amounts and make such Tax Payments as so
required.  Each Tax Payment made on behalf of or with respect to a
Member shall be deemed a distribution of Net Cash Flow in such amount to such
Member to the extent such Tax Payment was not attributable to a Capital
Transaction, and to the extent such Tax Payment is attributable to a Capital
Transaction, it shall be deemed a distribution of Net Proceeds of a Capital
Transaction to such Member, and any such deemed distribution shall be deemed to
have been paid to the Member on the earlier of the date when the corresponding
Tax Payment is made by the Company or the date that the distributions, if any,
giving rise to the obligation to make such Tax Payment were made.

     

    SECTION 4.5. Limitation on
Distributions.  Notwithstanding anything to the contrary
contained herein, without the prior consent of the Members, no distribution of
Net Cash Flow or Net Proceeds of a Capital Transaction shall be made hereunder
if such distribution would cause the Company to default under any Key Document
or violate Section 18-607 of the Delaware Act or other applicable
law.

     

     

    
      
         

      

      
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    ARTICLE V

     

    ALLOCATION OF PROFITS AND
LOSSES

     

    SECTION 5.1. Profits.  After giving effect to the special
allocations set forth in Section 5.3 hereof, Profits for any Fiscal Year shall
be allocated as follows:

     

    (a) First, to
the Members, in accordance with their Percentage Interests, until the aggregate
amount of Profits allocated to them under this Section 5.1(a) for the Fiscal
Year and all prior Fiscal Years equals the aggregate amount of Losses allocated
to them pursuant to Section 5.2(e) for all prior Fiscal Years;

     

    (b) Second,
to the Members, until the aggregate amount of Profits allocated to them under
this Section 5.1(b) for the Fiscal Year and all prior Fiscal Years equals the
aggregate amount of Losses allocated to them pursuant to Section 5.2(d) for all
prior Fiscal Years, in proportion to their shares of such Losses being
offset;

     

    (c) Third,
eighty percent (80%) to Acquisition and twenty percent (20%) to AmREIT SCA until
the aggregate amount of Profits allocated to each Member under this Section
5.1(c) equals the sum of (x) the amount of distributions made pursuant to
Section 4.2 and (y) the amount of distributions made and the amount of accrued,
unpaid distributions that would be made, to each Member under Section 4.3(a) in
order to reduce Acquisition’s 8.25% IRR Deficiency to zero, (excluding, in each
case, distributions representing a return of capital), plus the amount of Losses
allocated to such Member under Section 5.2(c);

     

    (d) Fourth,
seventy-five percent (75%) to Acquisition and twenty-five percent (25%) to
AmREIT SCA until the aggregate amount of Profits allocated to each Member under
this Section 5.1(d) equals the cumulative amount of distributions made, and the
amount of accrued, unpaid distributions that would be made, to each Member under
Section 4.3(b) in order to reduce Acquisition’s 12% IRR Deficiency to zero
(excluding, in each case, distributions representing a return of capital), plus
the amount of Losses allocated to such Member under Section 5.2(b);
and

     

    (e) Fifth,
the balance, if any, seventy percent (70%) to Acquisition and thirty percent
(30%) to AmREIT SCA.

     

    SECTION 5.2. Losses.  After
giving effect to the special allocations set forth in Section 5.3 hereof, Losses
for any Fiscal Year shall be allocated as follows:

     

    (a) First, to
the Members until the aggregate amount of Losses allocated to them under this
Section 5.2(a) for the Fiscal Year and all prior Fiscal Years equals the
aggregate amount of Profits allocated to them for all prior Fiscal Years
pursuant to Section 5.1(e), in proportion to their shares of the Profits being
offset;

     

    (b) Second,
to the Members until the aggregate amount of Losses allocated to them under this
Section 5.2(b) for the Fiscal Year and all prior Fiscal Years equals the
aggregate amount of Profits allocated to them for all prior Fiscal Years
pursuant to Section 5.1(d), in proportion to their shares of the Profits being
offset;

     

    (c) Third, to
the Members until the aggregate amount of Losses allocated to them under this
Section 5.2(c) for the Fiscal Year and all prior Fiscal Years equals the
aggregate amount of Profits allocated to them for all prior Fiscal Years
pursuant to Section 5.1(c), in proportion to their share of the Profits being
offset;

     

    (d) Fourth,
to the Members, in proportion to their relative positive Capital Account
balances, until the positive Capital Account balance of each Member has been
reduced to zero; and

     

    (e) Fifth,
the balance, if any, to the Members in accordance with their Percentage
Interests.

     

    SECTION 5.3. Special Allocations.

     

    (a) Minimum Gain
Chargeback.  Notwithstanding any other provision of this
Article V, if there is a net decrease in Company Minimum Gain during any
Company Fiscal Year, the Members shall be specially allocated items of Company
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal
Years) in an amount equal to such Member’s share of the net decrease in Company
Minimum Gain, determined in accordance with Treasury Regulations Section
1.704-2(g)(2).  Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto.  The items so allocated shall be determined
in accordance with Treasury Regulations Section 1.704-2(f).  This
Section 5.3(a) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(f) of the Treasury Regulations and shall be
interpreted consistently therewith.

     

    (b) Member Nonrecourse Debt
Minimum Gain Chargeback.  Notwithstanding any other provision
of this Article V, except Section 5.3(a), if there is a net decrease in
Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt
during any Fiscal Year, each Member who has a share of the Member Nonrecourse
Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Treasury Regulations Section 1.704-2(i)(5), shall be specially
allocated items of Company income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such Member’s share of
the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Treasury Regulations
Section 1.704-2(i)(4).  Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto.  The items so allocated shall be
determined in accordance with Treasury Regulations Section
1.704-2(i)(4).  This Section 5.3(b) is intended to comply with the
minimum gain chargeback requirement in such Section of the Treasury Regulations
and shall be interpreted consistently therewith.

     

    (c) Qualified Income
Offset.  In the event any Member unexpectedly receives any
adjustments, allocations, or distributions described in paragraphs (4), (5) and
(6) of Treasury Regulations Section 1.704-1(b)(2)(ii)(d), items of Company
income and gain shall be specially allocated to such Members in an amount and
manner sufficient to eliminate, to the extent required by such Regulations, the
Adjusted Capital Account deficit of such Members as quickly as possible,
provided that an allocation pursuant to this Section 5.3(c) shall be made only
if and to the extent that such Member would have an Adjusted Capital Account
deficit after all other allocations provided for in this Article V have been
tentatively made as if this Section 5.3(c) were not in the
Agreement.

     

    (d) Nonrecourse
Deductions.  Nonrecourse Deductions shall be allocated to the
Members in accordance with their respective Percentage Interests.

     

    (e) Member Nonrecourse
Deductions.  Any Member Nonrecourse Deductions for any Fiscal
Year or other period shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with Treasury
Regulations Section 1.704-2(i)(1).

     

    (f) Limitation on Allocation of
Losses.  In no event shall Losses be allocated to a Member to
the extent such allocation would result in such Member having an Adjusted
Capital Account deficit at the end of any Fiscal Year.  All such
Losses shall be allocated to the other Member, provided, however, that
appropriate adjustments shall be made to the allocation of future Profits in
order to offset such specially allocated Losses hereunder.

     

    (g) Section 754
Adjustments.  To the extent an adjustment to the adjusted tax
basis of any Company Asset pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be allocated to
the Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the Treasury
Regulations.

     

     

    
      
         

      

      
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    (h) Special
Allocations.  Notwithstanding any other provision of this
Agreement, allocations under this Agreement shall be made only to the extent
that, and shall be adjusted to the extent necessary to ensure that, the
Company’s allocations satisfy the requirements of Code Section 514(c)(9)(E), the
Treasury Regulations promulgated thereunder and any administrative guidelines or
pronouncements thereunder, including so that all allocations have “substantial
economic effect” for purposes of Code Section 514(c)(9)(E)(i)(II).

     

    (i) Curative
Allocations.  The allocations contained in Sections 5.3(a)
through 5.3(g) (the “Regulatory Allocations”) are intended to comply with
certain requirements of the Code and Treasury Regulations.  The
Members intend that, to the extent possible, all Regulatory Allocations shall be
offset either by other Regulatory Allocations or with special allocations of
other items of Company income, gain, loss or deduction pursuant to this Section
5.3(i).  Therefore, notwithstanding any other provisions of this
Article V (other than the Regulatory Allocations and Section 5.3(h)), the
Members shall make such offsetting special allocations of Company income, gain,
loss or deduction in whatever manner they reasonably determine to be appropriate
so that, after such offsetting allocations are made, each Member’s Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Member would have had if the Regulatory Allocations were not part of this
Agreement.

     

    SECTION 5.4. Other Allocation Rules.

     

    (a) For
purposes of determining the Profits, Losses, or any other items allocable to any
period, Profits, Losses, and any such other items shall be determined on a
daily, monthly, or other basis, as reasonably determined by the Members using
any permissible method under Code Section 706 and the Treasury Regulations
thereunder.

     

    (b) Except as
otherwise provided in this Agreement, all items of Company income, gain, loss,
deduction, and any other allocations not otherwise provided for shall be divided
among the Members for tax purposes in the same proportions as they share Profits
or Losses, as the case may be, for the Fiscal Year.

     

    (c) The
Members are aware of the income tax consequences of the allocations made by this
Article V and hereby agree to be bound by the provisions of this Article V in
reporting their shares of Company income and loss for income tax
purposes.

     

    (d) Solely
for purposes of determining a Member’s proportionate share of the “excess
nonrecourse liabilities” of the Company within the meaning of Treasury
Regulations Section 1.752-3(a)(3), the Members’ interests in Company profits are
in proportion to their Percentage Interests.

     

    (e) To the
extent permitted by Treasury Regulations Section 1.704-2(h)(3), the Members
shall treat distributions of Net Proceeds of a Capital Transaction as not
allocable to an increase in Company Minimum Gain to the extent the distribution
does not cause or increase a deficit balance in the Adjusted Capital Account of
any Member.

     

    SECTION 5.5. Tax
Allocations:  Code Section 704(c).

     

    (a) Except as
otherwise provided in this Section 5.5, items of Company taxable income, gain,
loss and deduction shall be determined in accordance with Code Section 703, and
the Members’ distributive shares of such items for purposes of Code Section 702
shall be determined according to their respective shares of Profits or Losses to
which such items relate.

     

    (b) In
accordance with Code Section 704(c) and the Treasury Regulations thereunder,
income, gain, loss, and deduction with respect to any property contributed to
the capital of the Company shall, solely for tax purposes, be allocated among
the Members so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its initial
Gross Asset Value.

     

    (c) In the
event the Gross Asset Value of any Company property is adjusted pursuant to
paragraph (b) of the definition of Gross Asset Value, subsequent allocations of
income, gain, loss, and deduction with respect to such asset shall take account
of any variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.

     

    (d) Any
elections or other decisions relating to such allocations shall be made by the
Members, in any manner that reasonably reflects the purpose and intention of
this Agreement.  Allocations pursuant to this Section 5.5 are solely
for purposes of federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Member’s Capital Account or share of
Profits, Losses, other items, or distributions pursuant to any provision of this
Agreement.

     

    ARTICLE VI

     

    MANAGEMENT

     

    SECTION 6.1. Management.

     

    (a) Except as
otherwise expressly provided in this Agreement, the business and affairs of the
Company initially shall be exclusively vested in the Members.  The
Managing Member shall carry out and implement the day to day affairs of the
Company within the scope of the authority granted pursuant to this
Agreement.  In addition to the obligations of the Managing Member
specifically set forth herein, the Managing Member shall keep the Members
reasonably informed as to all material matters of concern to the Company and the
Members.  The Managing Member agrees to devote to the Company’s
business such time as reasonably shall be necessary in connection with its
duties and responsibilities hereunder.  Except to the extent limited
by the provisions of Section 6.2 or otherwise in this Agreement, the Managing
Member shall have the authority without the consent of the other Member
to:

     

    (i) implement
all decisions approved by the Members (to the extent such approval is required
hereunder);

     

    (ii) conduct
(or cause to be conducted under its supervision) the day-to-day business and
affairs of the Company and the Subsidiary Entities subject to, and in accordance
with, this Agreement;

     

    (iii) perform
or observe all of the specific obligations to be performed by the Managing
Member hereunder;

     

    (iv) open and
maintain bank accounts for funds of the Company and the Subsidiary Entities in
the name of the Company and the Subsidiary Entities and designate the persons
authorized on behalf of the Company and the Subsidiary Entities to make deposits
therein and withdrawals therefrom;

     

    (v) employ
independent unaffiliated contractors at market rates for the ordinary
maintenance and repair of the Property;

     

     

    
      
         

      

      
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    (vi) retain or
engage independent unaffiliated real estate brokers licensed to do business in
Texas;

     

    (vii) pay,
extend, renew, modify, adjust, submit to arbitration, prosecute, defend or
compromise upon such terms as the Managing Member may determine and upon such
evidence as it deems sufficient any obligation, suit, liability, cause of action
or claim, either in favor of or against the Company or any Subsidiary
Entity;

     

    (viii) enter
into, execute, acknowledge and deliver any and all contracts, agreements or
other instruments the Managing Member deems necessary or appropriate in
connection with the business or affairs of the Company or any Subsidiary
Entity;

     

    (ix) apply
for, file, prosecute, obtain, appeal and challenge any permit, approval,
authorization, filing or consent with respect to the Company or any Subsidiary
Entity issued by any governmental authority;

     

    (x) engage in
any kind of activity and execute, perform and carry out contracts of any kind
necessary, or in connection with or convenient or incidental to any of the
foregoing or the Company’s purposes as set forth herein; and

     

    (xi) otherwise
take any other action in furtherance of the Company’s stated purpose hereunder
unless consent of one or more of the Members is otherwise expressly required
hereunder.

     

    Any third
party dealing with the Company may, without any inquiry, rely upon any
instrument or agreement executed and delivered by the Managing Member on behalf
of the Company as constituting the binding act and deed of the
Company.  Except to the extent limited by the provisions of Section
6.2 or otherwise in this Agreement, the Managing Member shall have the authority
to employ on behalf of the Company such agents, managers, accountants,
attorneys, consultants and other Persons as the Managing Member may deem
necessary and in the best interests of the Company.  The Managing
Member agrees to notify the other Member from time to time of the name, address
and telephone number of the person or persons primarily responsible for carrying
out Managing Member’s obligations hereunder with respect to the day-to-day
management of the Property.

     

    (b) In
addition to and without limiting (except as otherwise set forth in this Section
6.1) the duties and obligations of the Managing Member as set forth above,
subject to the limitations set forth in Section 6.2 and otherwise in this
Agreement, the Managing Member shall use commercially reasonable efforts to
cause the Company to comply with the following duties:

     

    (i) directly
or through its agents, at all times, use commercially reasonably efforts to
perform and comply with in all material respects and enforce the material
provisions of any Key Document, lease, management agreement, development
agreement, renovation agreement, construction contract or other contract,
instrument or agreement to which the Company or any Subsidiary Entity is a party
or which affects the Property or the operation thereof;

     

    (ii) to the
extent the Company has available funds, keep and maintain in effect commercially
reasonable insurance coverage in accordance with usual and customary standards
or as otherwise required under any agreement to which the Company is otherwise
bound;

     

    (iii) deliver
to the Members promptly upon the receipt or sending thereof copies of all
material notices, reports and communications (i) between the Company and any
holder of a mortgage or deed of trust or any party to any material operating
agreement, construction contract, major lease or other material contract
affecting the Company or all or any portion of the Property which in each case
relate to any existing or pending default thereunder or to any financial or
operational information requested by such party, or expressly required under
this Agreement, and (ii) regarding material violations or material matters
affecting the Company or the Property;

     

    (iv) not
knowingly permit the Company to operate in such manner as to be classified as an
“investment company” for purposes of the Investment Company Act of 1940, as
amended;

     

    (v) if (i)
the Company is operated in such manner as to be classified as an “investment
company”, or (ii) the Company fails to qualify as a REOC or a VCOC, cooperate
with any adversely affected Member in connection therewith and use best efforts
to satisfy such Member and promptly alleviate any adverse consequences to such
Member resulting therefrom;

     

    (vi) not
violate or cause the Company to violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.  Without limiting the
generality of the foregoing, each Member hereby represents and warrants that
neither such Member nor any subsidiary or, to its knowledge, any Affiliate of
such Member (A) is or will become a “blocked person” described in Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Person Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) or (B) knowingly engages or will knowingly engage
(including, without limitation, in connection with the sale of any portion of
the Property) in any dealings or transactions, or is or will be otherwise
associated, with any such blocked person; and

     

    (vii) to the
extent the Company has available funds, cause to be paid any and all
Impositions.

     

    SECTION 6.2. Major
Decisions.  Notwithstanding the provisions of Section 6.1
but subject to the express terms of Section 6.3, Section 6.7, Section 6.8 and
Article VIII of this Agreement, without the prior written consent, of all
Members in each instance (a “Major Decision”), the Company shall not, and shall
not allow any Subsidiary Entity to:

     

    (a) Transfer
the Property or the Company Assets (other than personal property at the Property
which may be disposed of or replaced due to wear and tear or obsolescence or
otherwise in the ordinary course of business) or any part thereof or interest
therein;

     

    (b) acquire
other real property, or any interest therein on behalf of the Company or any
Subsidiary Entity, either directly or indirectly;

     

    (c) borrow
money on behalf of the Company or any Subsidiary Entity other than the First
Mortgage Loan, whether on a secured or unsecured basis, prepay, in whole or in
part, refinance, recast, modify, extend or compromise any debt for borrowed
money, issue evidences of indebtedness for borrowed money or secure the same by
mortgages, deeds of trust, security agreements or other similar documents or
assert or make a claim that any debt (including, without limitation, any
construction loan) violates applicable law (including, without limitation, usury
laws) or to amend, modify or terminate such arrangement;

     

    (d) (i)
adopt, amend, modify, alter or change the Approved Lease or the Approved Tenant
Representative Agreement or (ii) enter into any property management, brokerage,
leasing, finder’s fee, or commission agreement or cancel, extend or otherwise
amend, modify, alter or change in any respect any such property management,
brokerage, leasing, finder’s fee or commission agreement, in each case excluding
any (A) Approved Tenant Representative Agreement or (B) Approved
Leases;

     

    (e) engage in
any transaction between the Company or any Subsidiary Entity on the one hand and
the Managing Member, any general partner or managing member of the Managing
Member, any Affiliate of the Managing Member or any Affiliate of any general
partner or managing member of the Managing Member on the other hand (other than
the Managing Member Affiliate Agreements approved by the other Member), or
amend, modify or terminate any Managing Member Affiliate Agreement, permit the
assignment of any Managing Member Affiliate Agreement, release any party from
any liability arising from any Managing Member Affiliate Agreement, waive any
material rights or exercise any rights under any Managing Member Affiliate
Agreement that will have an adverse effect on the Company or any Subsidiary
Entity or upon the value, use, development, renovation or financeability of the
Property;

     

     

    
      
         

      

      
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    (f) name the
Property or change the name of the Property, change the primary use of the
Property or make or agree to any material changes to the site-plan, subdivision
or zoning of the Property or any portion thereof, alter (in any material
respect), approve the terms or provisions of (or amend or modify) any
restrictive covenants or easement agreements or other encumbrance on title, or
re-develop or renovate the Property;

     

    (g) [intentionally
omitted];

     

    (h) [intentionally
omitted];

     

    (i) take any
action related to the construction of the Property;

     

    (j) establish
any contingency funds or reserves on behalf of the Company or any Subsidiary
Entity, except as may be expressly required by any Financing
Document;

     

    (k) extend
credit, make loans or become or act as a surety, guarantor, endorser or
accommodation endorser (or modify any obligations relating to the foregoing)
except in connection with negotiating checks or other instruments received by
the Company or any Subsidiary Entity;

     

    (l) approve
any insurance program for the Company or any Subsidiary Entity or the
Property;

     

    (m) approve
or replace the Company Counsel, the Accountant, the general contractor, project
architect, project engineer or any other professional consultants for the
Company or any Subsidiary Entity or any successors thereto;

     

    (n) settle
any insurance claim or condemnation action or legal proceeding or claim brought
against the Company and/or any Subsidiary Entity involving a claim in excess of
Twenty-Five Thousand Dollars ($25,000) or which, when added to all other
insurance or condemnation claims or legal proceeding or claim during a single
calendar year, exceeds Fifty Thousand Dollars ($50,000);

     

    (o) assert or
initiate (and once initiated, settle) any claim, suit, litigation or other
proceeding against any Person, excluding actions instituted against tenants in
the ordinary course of business;

     

    (p) take any
action in respect of the Property or any portion thereof relating to
environmental matters other than (i) to obtain environmental studies and reports
and conduct (or arrange for) evaluations and analyses thereof if there is a
reasonable basis to believe that the Property has been affected by hazardous
substances in violation of applicable law, (ii) as may be necessary or
appropriate to preserve or protect life or property or (iii) as may be necessary
in the Managing Member’s good faith determination to comply with applicable law
if the failure to immediately comply therewith is, in the Managing Member’s good
faith determination, reasonably likely to (x) subject the Company to criminal or
unbonded civil liability or subject the Property to an unbonded lien or (y) give
rise to material risk of loss; provided that the Managing Member shall promptly
notify the other Member of any actions taken pursuant to the foregoing clauses
(ii) or (iii);

     

    (q) decide
whether to repair or rebuild in case of material damage to any of the
improvements on the Property, or any part thereof, arising out of a casualty or
condemnation, except such emergency repairs (i) as may be necessary or
appropriate to preserve or protect life or property or (ii) as may be necessary
in the Managing Member’s good faith determination to comply with applicable law
if the failure to immediately comply therewith is, in the Managing Member’s good
faith determination, reasonably likely to (x) subject the Company to criminal or
unbonded civil liability or subject the Property to an unbonded lien or (y) give
rise to material risk of loss; provided that the Managing Member shall promptly
notify the other Member of any actions taken pursuant to the foregoing clauses
(i) or (ii);

     

    (r) execute
or deliver documents, agreements or instruments on behalf of the Company or any
Subsidiary Entity, except those which (A) are not Managing Member Affiliate
Agreements, (B) do not grant any lien or encumbrance against the Property, (C)
are customary for the ordinary day to day operations of the Property and which
are reasonably unlikely to have a material adverse effect on the Company or any
Subsidiary Entity or upon the value, use, development, renovation or
financeability of the Property, and (D) (1) are for a term of twelve (12) months
or less and (2) provide for consideration of less than Fifty Thousand Dollars
($50,000);

     

    (s) modify in
any material respect (i) any Key Document or (ii) any other material agreement
or contracts described in Section 6.2(r) after the same has been approved by the
Members and executed by the Company or any Subsidiary Entity;

     

    (t) take any
action under applicable bankruptcy, insolvency or similar laws with respect to
the Company or any Subsidiary Entity;

     

    (u) except as
otherwise expressly set forth in this Agreement, permit the admission of a new
member in the Company or a new partner or new member, as applicable, in a
Subsidiary Entity or the issuance of additional Company Interests in the Company
or interests in a Subsidiary Entity;

     

    (v) enter
into any lease, license or other occupancy agreement other than Approved Leases
or enter into any joint ventures (regardless of the form of the joint
venture);

     

    (w) merge or
consolidate the Company or any Subsidiary Entity with or into another Person (or
take any action which has substantially the same effect or commits the Company
or any Subsidiary Entity to do any of the foregoing);

     

    (x) execute
and deliver any document which is prohibited under the Delaware Act or this
Agreement;

     

    (y) amend,
modify or terminate this Agreement or any of the organizational documents and
organizational instruments governing the Company or any of the Subsidiary
Organizational Documents;

     

    (z) take any
action not in furtherance of the stated purposes or intended business of the
Company as set forth in this Agreement;

     

    (aa) take any
action in contravention of, amend, modify or waive the provisions of any
agreement that the Members would have the right to consent or
approve;

     

    (bb) exercise
or waive any material rights under the Purchase Agreement or the Construction
Escrow Agreement (as defined in the Purchase Agreement), or amend, modify, alter
or change the Purchase Agreement or the Construction Escrow Agreement;
or

     

    (cc) approve
any other matter set forth in this Agreement expressly requiring the approval of
all the Members (including, without limitation, the matters set forth in Section
2.2 and Section 6.8 of this Agreement).

     

     

    
      
         

      

      
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    SECTION 6.3. Property Management.  The Company
shall cause concurrently with the execution of this Agreement, Property Owner to
enter into an agreement with ARIC (together with any successor thereof, the
“On-Site Property Manager”), an Affiliate of AmREIT, to manage, lease and
otherwise operate the Property on a day-to-day basis pursuant to a management
agreement (the “Management Agreement”) in the form set forth as Exhibit C attached
hereto and made a part hereof.  The Managing Member shall supervise
the On-Site Property Manager, enforce the Property Owner’s rights under the
Management Agreement and cause the On-Site Property Manager to carry out all
policy decisions made by the Company on behalf of the Property Owner pursuant to
the Management Agreement.  Upon the termination of the employment of
the On-Site Property Manager, Managing Member shall propose the employment of a
new manager in accordance with Section 6.2 hereof, which approval shall
require the written consent of all the Members.  Except as expressly
provided in the Management Agreement and this Agreement, the On-Site Property
Manager shall not be authorized to lease any space at the Property without the
prior written approval of the Company.

     

    SECTION 6.4. Duties and Conflicts.

     

    (a) The
Members, in connection with their respective duties and responsibilities
hereunder, shall at all times act in good faith and, except as expressly set
forth herein, any decision or exercise of right of approval, consent,
disapproval or deferral of approval by a Member is to be made by such Member
pursuant to the terms of this Agreement in good faith.  Subject to the
terms of Section 6.7(c) of this Agreement, Managing Member shall, in the
performance of its duties hereunder, at all times act as a fiduciary for the
Company and the other Member and shall act with the care, skill, prudence and
diligence that a prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of like character and with
like aims.  Except for reimbursement of the Managing Member’s
reasonable and actual out-of-pocket expenses (not including any general office
overhead) and as otherwise expressly set forth herein, or as otherwise agreed to
in writing by the Members, no Member or any partner, officer, shareholder or
employee of any Member shall receive any salary or other remuneration for its
services rendered pursuant to this Agreement.  Any particular fees
payable or expenses or costs reimbursed to Managing Member under this Agreement
shall not be paid or reimbursed to Managing Member or any Affiliate of Managing
Member under any Managing Member Affiliate Agreement, and any fees payable or
expense or cost reimbursed to Managing Member or any Affiliate of the general
partner of the Managing Member under any Managing Member Affiliate Agreement
shall not be paid or reimbursed to Managing Member under this Agreement, it
being the intention and agreement of the parties that Managing Member and the
Affiliates of the general partner shall be reimbursed only once for any
particular fee or reimbursable cost or expense.

     

    (b) Each
Member recognizes that the other Members have or may have other business
interests, activities and investments, some of which may be in conflict or
competition with the business of the Company and that such other Member is
entitled to carry on such other business interests, activities and
investments.  No Member shall be obligated to devote all or any
particular part of its time and effort to the Company and its
affairs.

     

    (c) Except as
otherwise expressly provided in this Agreement, any Member or Affiliate thereof,
and JPM, AmREIT and their respective Affiliates, may engage in or possess an
interest in any other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Company, and neither the Company nor any Member shall have any rights by virtue
of this Agreement or the relationship created hereby in or to any other ventures
or activities engaged in by any Member or Affiliate thereof or by JPM, AmREIT or
their respective Affiliates, or to the income or proceeds derived therefrom, and
the pursuit of such ventures or activities by any Member or its Affiliate or by
JPM, AmREIT or their respective Affiliates shall not be deemed wrongful or
improper, even to the extent the same are competitive with the business
activities of the Company.  Except as otherwise expressly provided in
this Agreement, no Member or Affiliate thereof nor any of JPM, AmREIT or their
respective Affiliates shall be obligated to present any particular investment
opportunity to the Company even if such opportunity is of a character which, if
presented to the Company, could be taken by the Company, and any Member or
Affiliate thereof and JPM, AmREIT and their respective Affiliates shall have the
right to take for its own account (individually or as a partner, member or
fiduciary) or to recommend to others any such particular investment
opportunity.

     

    SECTION 6.5. Company’s Counsel.  To the extent that
the Managing Member deems necessary, the Company shall retain one (1) or more
law firms acceptable to the Members to be the Company’s initial legal counsel
(the “Company Counsel”).  The fees and expenses of the Company Counsel
shall be a Company expense.  Nothing herein shall restrict the Company
Counsel from acting as counsel to any Member or any Affiliate of such Member or
to JPM, AmREIT or any of their respective Affiliates, and the Members agree that
Company Counsel may represent such Member or any Affiliate of such Member or
JPM, AmREIT or any of their respective Affiliates in any dispute involving any
other Member or the Company.  In the event the Managing Member shall
desire to terminate the employment of the Company Counsel and to substitute
other counsel therefor, such substitute counsel shall be subject to the approval
of all of the Members.

     

    SECTION 6.6. Exculpation/Indemnification.

     

    (a) No Member
shall be liable to the Company or to any Member for any act performed or omitted
to be performed by it on behalf of the Company provided such Member acts in
accordance with its duties and responsibilities hereunder and provided such act
or omission was taken in good faith and within the scope of authority granted or
reserved to such Member under this Agreement, and did not constitute fraud,
gross negligence or willful misconduct, or a breach of this
Agreement.

     

    (b) The
Members shall be indemnified, defended and held harmless by the Company from and
against any and all expenses (including reasonable attorneys’ fees), losses,
damages, liabilities, charges and claims of any kind or nature whatsoever
(collectively “Indemnified Losses”), incurred by them in their capacities as
Members, arising out of or incidental to any act performed or omitted to be
performed by any one or more of the Members in good faith in their capacities as
Members and/or in connection with the business of the Company, including any act
or omission constituting ordinary negligence of such Members provided that such
Member acted in accordance with its duties and responsibilities hereunder and
provided such act or omission was within the scope of authority granted or
reserved to such Member(s) by the terms of this Agreement and did not constitute
gross negligence, willful misconduct or fraud, or a breach of this
Agreement.

     

    (c) The
Company and the Members shall be indemnified and held harmless by each Member
from and against any and all Indemnified Losses arising out of or incidental to
the failure of such Member to act in accordance with its duties and
responsibilities hereunder, for any act or omission taken in bad faith or
outside the scope of authority granted or reserved to such Member under this
Agreement, or any fraudulent act, gross negligence, or willful misconduct
performed by such Member, or a breach of this Agreement.

     

    (d) The
Members acknowledge and agree that (i) ARIC shall retain all rights and
obligations under the Purchase Agreement with respect to the Receivables and
(ii) neither the Company nor any Subsidiary Entity shall have any obligations or
liabilities in connection with the Receivables, including, without limitation,
fulfillment of any conditions precedent to receipt of any reimbursements from
any governmental authority.  ARIC shall indemnify and hold harmless
the Company, Acquisition and any Affiliates of Acquisition from any Indemnified
Losses arising out of or in connection with the Receivables or any provisions of
the Purchase Agreement relating to the Receivables.

     

    SECTION 6.7. Rights During a Material Default or Following
an AmREIT Change of Control/Removal of AmREIT as Managing Member/Standard of
Care.

     

    (a) If AmREIT
SCA shall be in Material Default or an AmREIT Change of Control shall have
occurred, Acquisition shall have the right, exercisable by delivery of written
notice to AmREIT SCA, to permanently replace AmREIT SCA as Managing
Member.  If AmREIT SCA shall be in Material Default or an AmREIT
Change of Control or an AmREIT Affiliate Bankruptcy shall have occurred,
Acquisition shall have the right, exercisable by delivery of written notice to
AmREIT SCA, and to terminate all Managing Member Affiliate Agreements in
accordance with the terms of Section 6.8(c).  Notwithstanding
anything to the contrary contained herein, from and only after the removal of
AmREIT SCA as Managing Member as a result of a Material Default or an AmREIT
Change of Control, AmREIT SCA shall no longer have the right to participate in
the management of the Company including, without limitation, the right to
exercise any consent and/or approval rights contained herein including, without
limitation, all of the matters set forth in Section 6.2; provided, however,
AmREIT SCA shall in all events have the right to approve the Major Decisions set
forth in Subsections 6.2 (a), (b), (c), (j), (k), (t), (u), (v), (w), (x), (y)
and (z);

     

     

    
      
         

      

      
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    (b) Notwithstanding
anything to the contrary contained in this Agreement, Acquisition shall have the
right, exercisable by delivery of written notice to AmREIT SCA, to become
Managing Member at any time following the Transfer of AmREIT SCA’s entire
Company Interest to any Person or Entity, other than a Transfer by AmREIT SCA
permitted pursuant to Section 8.2.

     

    (c) Notwithstanding
anything to the contrary contained in this Agreement (including, without
limitation, the provisions of Section 6.6), if Acquisition shall become Managing
Member for any reason, (i) Acquisition shall owe no greater duty to any Member
or the Company other than the duty to act in good faith and not to commit gross
negligence, willful misconduct or fraud, (ii) Acquisition shall have no
liability to the Company or to any other Member (and no obligation to indemnify,
defend and hold harmless the Company or any other Member) for any act performed
or omitted to be performed by Acquisition in good faith provided such act or
omission shall not constitute gross negligence, willful misconduct or fraud and
(iii) the Company shall indemnify, defend and hold Acquisition harmless from and
against all Indemnified Losses arising out or incidental to any act performed or
omitted to be performed by Acquisition in good faith provided such act or
omission shall not constitute gross negligence, willful misconduct or
fraud.

     

    SECTION 6.8. Transactions with Related
Parties.

     

    (a) No
agreement or transaction between the Company on the one hand and any Member, any
Affiliate of any Member, JPM, AmREIT or any of their respective Affiliates
(each, a “Related Party”) on the other hand shall be void or voidable solely by
reason of such relationship.  The execution of any such agreement or
the entering into or consummation of such transaction by the Company shall not
subject the participating Related Party or any of their respective Affiliates,
or their respective officers, directors, managers, members or stockholders to
liability to the Company or any Member for breach of fiduciary duty if (i) all
of the material facts as to the agreement or transaction and the relationship
between any such Related Party and the Company and the nature of any conflict of
interest are disclosed or are known to AmREIT and Acquisition and (ii) both
AmREIT and Acquisition approve or ratify such agreement or
transaction.

     

    (b) Managing
Member agrees to cause the Company to use commercially reasonable efforts to
enforce each Managing Member Affiliate Agreement, provided that in the event
such enforcement action requires the consent of the other Member pursuant to the
terms of this Agreement and such consent is not granted, the Managing Member
shall have no liability for the failure to take such enforcement
action.  Upon a default by any Affiliate of the Managing Member under
a Managing Member Affiliate Agreement, Managing Member agrees to promptly notify
the other Member of such default and, in addition to Managing Member’s
obligation to cause the Company to (i) enforce such Managing Member Affiliate
Agreement and (ii) exercise any self help rights under such Managing Member
Affiliate Agreement or applicable law to cure the same within the applicable
cure period.  If any default by any Affiliate of Managing Member under
a Managing Member Affiliate Agreement is not cured within the applicable cure
period, Managing Member agrees that (i) upon the request of the other Member,
Managing Member shall terminate such Managing Member Affiliate Agreement and
(ii) the other Member shall have the right on behalf of the Company to terminate
such Managing Member Affiliate Agreement and to take all other actions on behalf
of the Company to protect the interest of the Company without the consent of the
Managing Member.  The Member other than the Managing Member shall have
the right on behalf of the Company without the consent of the Managing Member to
declare defaults under a Managing Member Affiliate Agreement.  In the
event of a dispute pursuant to a Managing Member Affiliate Agreement, all
actions with respect to the Company under such Managing Member Affiliate
Agreement may be taken by the Member other than Managing Member and shall not
require any consent or other action by Managing Member.

     

    (c) In the
event of the occurrence of a Material Default by AmREIT SCA or an AmREIT Change
of Control or an AmREIT Affiliate Bankruptcy, or upon the Transfer of AmREIT
SCA’s entire Company Interest to any Person or Entity other than an AmREIT SCA
Entity, Acquisition shall have the right immediately thereafter to terminate all
Managing Member Affiliate Agreements and enter into replacement agreements, and
AmREIT SCA shall be liable for any and all termination fees, premiums, or other
expenses associated with such termination.  Managing Member shall
cause all Managing Member Affiliate Agreements to contain termination rights
allowing a termination pursuant to the terms of the immediately preceding
sentence upon notice and without any termination charge or fee.

     

    (d) In the
event of any conflict between the provisions of this Section 6.8 and any other
provision of this Agreement, the provisions of this Section 6.8 shall
govern.

     

    SECTION 6.9. Indebtedness; Guarantees of Company Indebtedness; Payments
under Guaranties; UBTI.

     

    (a) The
Company will not, and no Member shall take any action to cause the Company to
(i) incur any indebtedness other than (A) indebtedness that is incurred to
acquire or improve real property within the meaning of Section 514(c)(9)(A) of
the Code and that is not described in Section 514(c)(9)(B)(ii) of the Code, or
(B) other indebtedness that will not give rise to UBTI to any Member that is a
Qualified Organization, or any of a Member’s direct or indirect members or
participants that are Qualified Organizations, or will not give rise to income
that would be UBTI if a Member, or any of a Member’s direct or indirect members
or participants, were Qualified Organizations, (ii) guarantee the obligations of
others or (iii) incur any Member Nonrecourse Debt (except as provided in Section
6.9(b)).

     

    (b) The
Members acknowledge and agree that (i) each of Commingled Pension Trust Fund
(Strategic Property) of JPMorgan Chase Bank, N.A., ARIC and AmREIT Ltd.
(collectively, “Guarantors”) have executed and delivered to Metropolitan Life
Insurance Company (“Lender”) that certain Guaranty Agreement dated the date
hereof (the “Guaranty”) in connection with the $65,000,000 loan made by Lender
to Property Owner and (ii) pursuant to the terms of that certain Reimbursement
and Indemnity Agreement (the “Guaranty Reimbursement Agreement”) dated the date
hereof among the Guarantors relating to the Guaranty, any Shared Payment (as
defined in the Guaranty Reimbursement Agreement) shall be treated as a Capital
Contribution to the Company made proportionately on behalf of the Members, and
the failure of any Non-Contributing Party (as defined in the Guaranty
Reimbursement Agreement) to reimburse the Contributing Party (as defined in the
Guaranty Reimbursement Agreement) for the amounts owed to such Contributing
Party pursuant to the Guaranty Reimbursement Agreement shall constitute a
Default Loan by the Contributing Party to the Affiliate of each Non-Contributing
Party that is Member of the Company.

     

    (c) The
Company shall not (i) enter into any lease with, or borrow any amounts for the
acquisition or improvement of any property (or any portion thereof) from, any
person described in Section 514(c)(9)(B)(iii) or (iv) of the Code; or (ii) enter
into any lease or other arrangement with respect to any Property or any portion
thereof if such lease or arrangement would result in (1) the payment of rent or
any other amount to the landlord which depends in whole or in part on the income
or profits derived by any person (including, but not limited to, a tenant or a
subtenant) from any portion of the Property (other than an amount based upon a
fixed percentage of the receipts or sales of the tenant and, if any, the
subtenants), (2) an obligation of the landlord to furnish or render any service
not customarily furnished or rendered in connection with the rental of space for
occupancy, as determined under Section 512(b) of the Code and any applicable
Treasury Regulations, including, but not limited to, services with respect to
parking, or (3) any portion of the Company’s income (or loss) otherwise being
UBTI for a Qualified Organization.  Notwithstanding anything to the
contrary herein contained, Acquisition shall have the right to object to any
proposed tenant lease or other arrangement if the same would result in any of
the events set forth in clauses (1) - (3) of the immediately preceding
sentence.  In the event that Acquisition determines, in its sole
reasonable judgment, that (A) as the result of any change in applicable statute,
regulation or administrative or judicial interpretation thereof (including,
without limitation, private letter rulings, technical advice memoranda and other
similar pronouncements), any lease could cause the Company to generate UBTI for
a Qualified Organization or (B) any other arrangement entered into with respect
to the Property or any portion thereof could cause the Company to generate UBTI
for a Qualified Organization, the Members agree to use their best efforts to
reform such lease or other arrangement, or to take any other action necessary or
appropriate, to prevent the Company from generating any UBTI for a Qualified
Organization.

     

     

    
      
         

      

      
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    ARTICLE VII

     

    BOOKS AND RECORDS; RESERVES

     

    SECTION 7.1. Bank
Accounts.  The Managing Member shall have authority to open
bank accounts and designate signatories with respect thereto on behalf of the
Company as it shall deem necessary or desirable for the management and operation
of the Property and the conduct of Company business.  An individual
designated by Acquisition, from time to time, shall at all times be a designated
signatory with respect to all Company bank accounts.  The Company’s
funds shall not be commingled with any other funds.

     

    SECTION 7.2. Books
of Account.  The Company shall keep accurate and complete
books of account and records showing the assets and liabilities, operations,
transactions and financial condition of the Company and the Property on an
accrual basis in accordance with generally accepted accounting principles,
consistently applied.  The books of account and records of the Company
and the Property shall at all times be maintained at the principal office of the
Company.  All such books of account and records may be inspected,
copied and audited by any Member, its designees or representatives from time to
time and upon reasonable prior notice at the office of the Company or other
Person maintaining the same.

     

    SECTION 7.3. Operating Statements.

     

    (a) The
Managing Member shall, as a Company expense, at least once every calendar year
have the Company’s books and records audited by the Accountant.  A
copy of the annual audited financial statements shall be submitted promptly
after completion to all Members, and not later than one hundred twenty (120)
days after the end of each Fiscal Year.

     

    (b) The
Managing Member shall furnish the following monthly reports prepared on an
accrual basis showing monthly and year to date activity (without notice or
demand) not later than the twentieth (20th) day following the end of each
calendar month:

     

    (i) an
unaudited cash flow statement setting forth the calculation of Net Cash Flow and
all disbursements of cash from the Company;

     

    (ii) an
unaudited balance sheet for the Company;

     

    (iii) an
unaudited profit and loss statement;

     

    (iv) a check
register, itemizing by check number and payee, each disbursement made during the
prior calendar month;

     

    (v) banks
statements and reconciliations for all accounts;

     

    (vi) in the
event a Capital Transaction has occurred, an unaudited statement of the Net
Proceeds of a Capital Transaction for such Capital Transaction; and

     

    (vii) such
other reports as reasonably requested by any Member.

     

    All
reports shall be completed in hard copy format.  In addition, Manager
Member shall submit certain information in a format requested by Acquisition via
diskette or electronically using Acquisition’s account numbers.

     

    (c) Managing
Member shall convert on a monthly basis, at its sole expense, financial data
from its property management software to Management Reports, Inc. (“MRI”)
property management software, or any other property management software which
Acquisition shall reasonably require, with the version release number to be
provided by Acquisition.  The modules required for implementation
shall include general ledger, commercial management, accounts payable, and
distributed processing.  Acquisition, at its sole discretion, may
require modified version and release of the property management
software.  The database structure, system type, and property number
will be provided by Acquisition and will not be modified without the consent of
Acquisition.  Acquisition will provide Managing Member with a standard
chart of accounts, tenant charge (billing) codes, and report formats which are
to be used unless otherwise agreed to in advance by
Acquisition.  Managing Member shall submit, on a date to be determined
by Acquisition, a monthly electronic download of selected financial and
operational data, including general ledger information, using either the
distributive processing function of MRI or data extract routines identified
and/or provided by Acquisition.  Acquisition reserves the right to
periodically modify the foregoing software and reporting
requirements.  Managing Member shall pay all costs and expenses of any
outside consultants employed and the purchase of any computer software to assist
in the conversion of its financial data from its property management software to
MRI property management software.

     

    (d) No later
than one hundred twenty (120) days after the end of each Fiscal Year of the
Company, the Company shall, as a Company expense, furnish the Members with all
necessary tax reporting information required by the Members for the preparation
of their respective federal, state and local income tax returns, including each
Member’s pro rata share of income, gain, loss, deductions and credits for such
Fiscal Year.  The Managing Member shall supervise the Accountant in
the preparation of the Company’s tax returns.

     

    (e) Within
one hundred twenty (120) days following the end of the Fiscal Year of the
Company, the Company shall, as a Company expense, furnish each Member with
copies of the Company’s federal partnership Return of Income and other income
tax returns, together with each Member’s Schedule K-1 or analogous schedule,
which returns shall be signed by the Tax Matters Member on behalf of the Company
and co-signed by the Accountant as preparer.

     

    (f) Except as
otherwise provided in this Agreement, all decisions as to accounting principles,
whether for the Company’s books or for income tax purposes (and such decisions
may be different for each such purpose) and all elections available to the
Company under applicable tax law, shall be made by the Tax Matters
Member.  Upon the request of any Member in connection with the
transfer of all or part of such Member’s Company Interest, the Company shall
make an election under Code Section 754.  The Tax Matters Member
shall, on behalf of the Company, use best efforts to cause all federal, state
and local income and other tax returns to be timely filed by the Company and
each Subsidiary Entity.  The Tax Matters Member shall deliver to the
other Members for their review all federal, state and local income tax returns
at least twenty (20) days prior to the filing thereof.

     

    SECTION 7.4. The
Accountant.  The Company shall retain a “Big Four”
independent certified public accounting firm selected by the Managing Member to
be the accountant and auditor for the Company (the “Accountant”).  The
fees and expenses of the Accountant shall be a Company expense.

     

    SECTION 7.5. Tax
Matters Member.  Managing Member is hereby designated as
the tax matters partner under Code Section 6231(a)(7) (the “Tax Matters
Member”).  In addition to the duties described in Section 7.3(f) of
this Agreement, the Tax Matters Member shall manage audits of the Company
conducted by the Internal Revenue Service or any other taxing authority pursuant
to the audit procedures under the Code and the Treasury Regulations promulgated
thereunder or other applicable law.  The Tax Matters Member shall give
prompt notice to each other Member of any and all notices it receives from the
Internal Revenue Service concerning the Company or any Subsidiary Entity,
including any notice of audit, any notice of action with respect to a revenue
agent’s report, any notice of a 30-day appeal letter and any notice of a
deficiency in tax concerning the Company’s or any Subsidiary Entity’s federal
income tax return.  The Tax Matters Member shall at Company expense
furnish each Member with timely periodic status reports regarding any
negotiations between the Internal Revenue Service and the Company or any
Subsidiary Entity, and each such Member, if it so requests, may participate in
such negotiation.  The Tax Matters Member shall not enter into any
settlement with any taxing authority (federal, state or local), or extend the
statute of limitations, on behalf of the Company or any Subsidiary Entity or the
Members without the approval of the Members, which approval shall not be
unreasonably withheld or delayed.

     

     

    
      
         

      

      
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        SECTION 7.6. Appraisals.  At
the request of either Member (the “Requesting Member”), the Managing Member, on
behalf of and at the expense of the Requesting Member, shall cause an
independent appraiser to determine the Fair Market Value of the Property;
provided that a Requesting Member may request such an appraisal not more than
one time per calendar year.  The Managing Member shall cooperate with
the independent appraiser selected by and paid by the Requesting
Member.  All appraisals conducted pursuant to this Section 7.6 shall
be addressed to the Requesting Member.  Such appraisal shall set forth
the appraiser’s determination of the Fair Market Value of the
Property.  In making the appraisal of the Property, the appraiser
shall value the Property unencumbered and shall assume that the improvements
then situated on the Property are the highest and best use to which the Property
can lawfully be put.  Appraisals obtained pursuant to this Section 7.6
shall be for the use of the Requesting Member and shall not be binding upon the
Company or any Member for any reason, including any matters described in Article
VIII.

     

    SECTION 7.7. Annual
Budget.  To the extent the Company shall, directly or
indirectly, own and operate the Property, the Managing Member shall prepare a
proposed annual budget for the Property for each Fiscal Year in form
satisfactory to all of the Members.  Not later than sixty (60) days
prior to the commencement of each Fiscal Year, the Managing Member shall submit
to the Members such proposed budget for the ensuing Fiscal Year.  Each
Member shall endeavor within thirty (30) days from the receipt of the proposed
budget, to deliver to the Company a written acceptance or rejection (in
reasonable detail indicating recommended changes, in the case of a rejection) of
the proposed budget.  The implementation of any proposed budget shall
require approval of all of the Members.  Said budget, once approved as
aforesaid, shall herein be referred to as the “Annual Budget.”  If an
annual budget is not approved as aforesaid, the Company shall operate the
Property pursuant to the budget for such year with respect to those portions
approved by the Members and with respect to those portions not approved by the
Members, in accordance with the prior year’s Annual Budget with each
non-approved line item (except for non-recurring expenditures and capital
expenditures) increased by two percent (2%) from such prior year’s Annual
Budget.  Notwithstanding anything to the contrary contained herein,
expenditures by the Managing Member for Nondiscretionary Items shall not be
limited by amounts set forth in an approved Annual Budget.

     

    SECTION 7.8. Leasing and Property
Guidelines.

     

    (a) Not later
than ninety (90) days prior to the commencement of each Fiscal Year, the
Managing Member shall submit, or shall cause the On-Site Property Manager to
submit, to the other Members leasing and property guidelines for the Property
for the ensuing year in the form of the Leasing and Property Guidelines for the
current Fiscal Year attached hereto as Exhibit E and
acceptable to the Members in the exercise of their reasonable
judgment.  Such leasing and property guidelines shall include, but not
necessarily be limited to, (i) a true, complete and accurate copy of the most
recent rent roll for the Property, (ii) basic, additional and percentage rent
parameters for the leasing of space at the Property, (iii) tenant improvement,
free rent, tenant allowances and other incentive parameters for the leasing of
space at the Property, (iv) a net effective rent calculation, (v) credit
worthiness parameters for prospective tenants at the Property, (vi) a
narrative description setting forth leasing strategies for the Property,
(vii) a description of the nature of acceptable tenants for the Property,
(viii) projected occupancy and vacancy levels for the ensuing Fiscal Year,
(ix) any changes to the standard form of lease to be used at the Property and
(x) a written narrative discussion of significant events in the relevant market
where the Property is located which shall highlight the Property’s position in
its relevant market and discuss matters such as vacancy, new construction,
rental trends, etc.  Each Member shall endeavor within thirty (30)
days from the receipt of the proposed leasing and property guidelines to deliver
to the Company a written acceptance or rejection (in reasonable detail
indicating recommended changes, in the case of a rejection) of such proposed
leasing and property guidelines.  The implementation of any proposed
leasing and property guidelines shall require approval of all of the
Members.  Said leasing and property guidelines, once approved by all
of the Members, shall herein be referred to collectively as the “Leasing and
Property Guidelines.”  Once approved, the Managing Member shall not
supplement, modify or amend the Leasing and Property Guidelines without the
prior express written consent of all of the Members.  If proposed
leasing and property guidelines for the Property are not approved, the Managing
Member shall resubmit to the other Members within ten (10) days of such
disapproval revised leasing and property guidelines reflecting
changes.  If Acquisition shall reject the revised leasing and property
guidelines for the Property, then until such time as revised leasing and
property guidelines are approved by all of the Members, the Company shall
operate the Property pursuant to the leasing and property guidelines for such
year with respect to those portions approved by the Members and with respect to
those portions not approved by the Members, in accordance with the last approved
Leasing and Property Guidelines for the Property, and the Managing Member shall,
as expeditiously as practicable, revise and resubmit leasing and property
guidelines for approval by all of the Members.

     

    (b) Except
for Approved Leases, Managing Member shall not be authorized to bind the Company
or a Subsidiary Entity with regard to any new lease or renewal of a preexisting
lease for space at the Property without first providing to Acquisition the lease
request form (“Lease Request Form”) substantially in the form of Exhibit B attached
hereto and obtaining Acquisition’s prior written consent and
approval.  The Lease Request Form shall contain a written request for
consent together with the following information: (i) the tenant’s name, (ii) the
basic, additional and percentage rent to be paid, (iii) a net effect rent
computation, (iv) the square footage of the premises, (v) any tenant
improvement, free rent, tenant allowances and other incentives, (vi) the
proposed use of the premises, (vii) credit information regarding the tenant, and
(viii) significant changes from the applicable approved standard form of
lease.  The Managing Member shall send the Lease Request Form to the
Members in the manner provided for Notices set forth in Section 11.2 of this
Agreement.

     

    (c) Managing
Member shall provide to Acquisition a true and complete copy of each executed
lease, or sublease or termination, amendment, assignment or modification thereof
within thirty (30) days of its execution.

     

    ARTICLE VIII

     

    TRANSFER OF COMPANY INTERESTS

     

    SECTION 8.1. No
Transfer.  No Member may sell, assign, pledge, transfer,
give, hypothecate or otherwise encumber (any such sale, assignment, pledge,
transfer, gift, hypothecation or encumbrance being hereinafter referred to as a
“Transfer”), directly or indirectly, or by operation of law or otherwise, any
direct or indirect interest in the Company, the Property or any Subsidiary
Entity, except as hereinafter set forth in this Article VIII (or as otherwise
permitted pursuant to this Agreement) or upon prior written consent of the other
Member, which may be granted or withheld in the sole and absolute discretion of
the other Member.  In order to effectuate the purpose of this Section
8.1, each Member agrees that to the extent it desires that its Company Interest
be at any time held by any other Person, such Member will Transfer its Company
Interest, or part thereof, to such Person only through a direct Transfer in the
manner contemplated in Article VIII, and that, except as expressly authorized in
Section 8.2, no Transfer or other disposition of any stock, partnership, limited
liability company or other beneficial interest in any Member or other such
Person which holds any part of a Company Interest, will be effected, directly or
indirectly, unless approved by all of the Members; provided that,
notwithstanding anything to contrary contained in this Agreement, (i) transfers
of units of participation in the Fund, (ii) transfers of shares in AmREIT and
(iii) transfers of limited partnership interests in AmREIT Ltd. shall be
permitted; provided further that the foregoing clauses (ii) and (iii) shall in
no event limit the rights of Acquisition pursuant to this Agreement following an
AmREIT Change of Control.  Any Transfer of any Company Interest in
contravention of this Article VIII shall be null and void and shall be deemed a
material breach of the terms of this Agreement, and the other Member shall have
all the rights and remedies available under this Agreement and applicable
law.

     

    SECTION 8.2. Succession by Operation of Law/Certain Permitted
Transfers/Prorations/Cooperation.

     

    (a) Subject
to Article VIII and Section 10.1, in the event of the merger, consolidation,
dissolution or liquidation of any Member, all of such Member’s rights to
distributions and allocations by the Company, shall pass to such Member’s legal
successor, but such legal successor shall not become a Member of the Company
without the prior written consent of all of the Members.

     

     

    
      
         

      

      
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    (b) Notwithstanding
anything in this Agreement to the contrary, Acquisition shall have the right, at
any time (whether prior to or after the Lockout Date), and without the
requirement of Member consent or complying with the procedures of Sections 8.5
and 8.6 hereof, to Transfer its entire Company Interest or any direct or
indirect interest therein to any Acquisition Entity or any Affiliate thereof and
such Acquisition Entity or any Affiliate thereof shall, upon complying with the
provisions of Section 8.3(d), become a Member hereunder; provided that such
Acquisition Entity or Affiliate represents and warrants to the Company and to
AmREIT that either (i) it is not and it is not acting on behalf of any Plan or
(ii) all of the conditions of PTCE 84-14 or another administrative or statutory
prohibited transaction exemption are satisfied with respect to such Acquisition
Entity’s or Affiliate’s acquisition and holding of the Company Interest and any
other transaction contemplated under this Agreement, and such Acquisition Entity
or any Affiliate thereof shall, upon complying with the provisions of Section
8.3(d), become a Member hereunder.

     

    (c) Notwithstanding
anything in this Agreement to the contrary, ARIC shall have the right at any
time, and without the requirement of Member consent or complying with the
procedure of Section 8.5 or 8.6 herein, to Transfer its membership interest in
AmREIT SCA to any wholly-owned subsidiary of AmREIT.

     

    (d) If any
Company Interest is Transferred pursuant to this Article VIII, except as
otherwise expressly provided in this Article VIII, items of income and expense
that would customarily be adjusted between a seller and purchaser of commercial
real estate will be adjusted in accordance with local custom as of the date of
such Transfer in the State in which the Property is located.

     

    (e) If any
Company Interest is Transferred or proposed to be Transferred pursuant to this
Article VIII, the parties hereto agree to reasonably cooperate with each other
in good faith to structure such Transfer to avoid or minimize transfer fees to
lenders and any transfer, deed or similar taxes due in connection therewith and,
if so desired, to avoid termination of the Company for Federal income tax
purposes.

     

    SECTION 8.3. General Conditions Applicable to
Transfers.

     

    (a) Notwithstanding
anything in this Agreement to the contrary (including but not limited to any of
the other sections of this Article VIII), in no event shall (i) any Transfer be
made, recognized or consented to by the Members or deemed effective unless such
Transfer will not constitute or result in a material violation or default under
any Key Document or (ii) a Company Interest be Transferred to a Person who is
the subject of any pending bankruptcy proceedings, or to a Person who is a minor
or who otherwise lacks legal capacity, and any attempt to effect a Transfer to
such a Person shall be void and of no effect and shall not bind the
Company.

     

    (b) In the
event that any filing, application, approval or consent is required in
connection with any Transfer, whether by any governmental entity or other
third-party, the transferring Member shall promptly make such filing or
application or obtain such approval or consent, at its sole
expense.

     

    (c) Notwithstanding
anything to the contrary contained in this Agreement (including but not limited
to the other sections of this Article VIII), each Member and each transferee of
all or any part of a Company Interest, (i) shall at all times maintain an office
or agency for the service of process in the United States of America, which
shall also be its address for delivery of notices hereunder or (ii) shall be a
citizen or national of the United States.

     

    (d) Notwithstanding
anything to the contrary contained in this Agreement (including but not limited
to the other sections of this Article VIII), no Transfer of all or any portion
of any Member’s Company Interest shall be binding upon the other Member or the
Company, and the Company shall be entitled to treat the record owner of any
Company Interest as the absolute owner thereof in all respects, unless and until
(i) true copies of the instruments of transfer executed and delivered pursuant
to or in connection with such Transfer shall have been delivered to such other
Member and the Company, (ii) the transferee shall have delivered to such other
Member and the Company an executed and acknowledged assumption agreement
pursuant to which the transferee assumes all the obligations of the transferor
arising and accruing from and after the date of such Transfer under, and agrees
to be bound by all the provisions of, this Agreement, (iii) all Default Loans
for which the transferor is the obligor shall be repaid in full to the Lending
Member, (iv) the transferee shall have executed, acknowledged and delivered any
instruments required under any applicable laws to effect such Transfer and, if
applicable, its admission to the Company, (v) the transferee shall have executed
and delivered such other instruments, documents and agreements reasonably
required by the non-transferring Member in connection with such Transfer which
are consistent with the other terms hereof and (vi) the transferee shall have
executed and delivered such other instruments or documents or shall have
provided such information to the non-transferring Member as such
non-transferring Member may reasonably require to assure itself that neither the
transferee’s acquisition and holding of the Company Interest nor any transaction
contemplated under this Agreement will result in a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code.  Upon compliance
with the provisions of this Section 8.3(d), any Person who acquires a Company
Interest in a transaction permitted by this Article VIII shall, unless otherwise
provided in this Agreement, be admitted as a Member.  Except as
otherwise set forth herein, upon the execution and delivery of such assumption
agreement, the transferor shall have no further obligation hereunder after the
date of the Transfer except that the transferor shall remain primarily liable
for all accrued obligations (as of the date of Transfer) of the transferor under
this Agreement, notwithstanding any Transfer pursuant to this Article
VIII.

     

    (e) Except as
otherwise expressly provided herein, all reasonable costs and expenses incurred
by the Company in connection with any Transfer of a Company Interest and, if
applicable, the admission of a Person or Entity as a Member hereunder, shall be
paid by the transferor.  Upon compliance with all provisions hereof
applicable to any transferee of a Company Interest becoming a Member, all
Members hereby agree to execute and deliver such reasonable amendments hereto as
are necessary to constitute such person or entity a Member of the
Company.

     

    (f) If any
Person acquires all or any part of the Company Interest of a Member in violation
of this Article VIII whether by operation of law, judicial proceeding, or other
manner not expressly permitted hereunder, such Person shall have no rights under
this Agreement with respect to the Company Interest so acquired.

     

    SECTION 8.4. Intentionally
Omitted.

     

    SECTION 8.5. Buy/Sell Rights.

     

    (a) Subject
to the terms and conditions of Article VIII of this Agreement, (i) at any time
following the Lockout Date or (ii) during the continuance of (A) a Major
Decision Deadlock, (B) a Material Default (including, without limitation, by
AmREIT SCA in its capacity as Managing Member) or (C) a material default under
any Managing Member Affiliate Agreement by any Affiliate of Managing Member,
which default continues beyond any applicable cure or grace periods, each Member
(“Offeror”) shall have the right to effect the provisions of this Section 8.5 as
hereinafter provided, by delivering written notice (the “Offer Notice”) to the
other Member (“Offeree”) (x) invoking the provisions of this Section 8.5, (y)
designating an amount (the “Gross Value Amount”) that shall be the Offeror’s
determination of the value of all Company Assets (without regard to any
indebtedness encumbering such assets), and (z) designating the Applicable
Purchase Price, subject to adjustments, with respect to each Member’s Company
Interest.  Notwithstanding anything contained herein to the contrary,
prior to the Lockout Date neither a Member in Material Default nor, with respect
to a default referenced in clause (C) of the foregoing sentence, the Managing
Member, shall have the right to effect the provisions of this Section
8.5.  For the purposes hereof, the “Applicable Purchase Price” payable
to any Member that sells its Company Interest pursuant to this Section 8.5 shall
be the amount that such selling Member would receive (without regard to any
Default Loans) if, as of the date of the Offer Notice, the Gross Value Amount,
after payment of all debts and liabilities of the Company, was distributed among
the Members in accordance with the provisions of Section 10.2.  Any
disputes as to the Applicable Purchase Price shall be resolved by the
Accountant.  The Members agree to promptly provide the Accountant with
all information necessary to resolve such dispute and shall instruct the
Accountant to resolve such dispute as expeditiously as possible.

     

    
      
         

      

      
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    (b) Upon
receipt of the Offer Notice given pursuant to Section 8.5(a) hereof, Offeree
shall then be obligated either to:

     

    (1) purchase
the entire Company Interest of Offeror for cash at a price equal to the
Applicable Purchase Price; or

     

    (2) sell to
Offeror its entire Company Interest for cash at a price equal to the Applicable
Purchase Price.

     

    Offeree
shall give written notice of its election to Offeror within thirty (30) days
after receipt of the Offer Notice (unless Offeree disputes the Applicable
Purchase Price determination, then within thirty (30) days of the date such
dispute is finally resolved by the Accountant).  Failure of Offeree to
give Offeror notice within such time shall be a conclusive election under
subsection (b)(2) above.

     

    (c) Within
five (5) Business Days after Offeree’s election under subsection 8.5(b), the
purchasing Member shall deposit in cash an amount equal to the greater of (I)
Two Hundred Fifty Thousand Dollars ($250,000) and (II) an amount equal to five
percent (5%) of the Applicable Purchase Price (“Buy/Sell Deposit”) with the
Escrow Agent.  If the purchasing Member shall fail to deposit the
Buy/Sell Deposit within such five (5) Business Day period, the purchasing Member
shall be in default hereunder, the selling Member shall have all remedies
available at law or in equity and shall have the right, exercisable by delivery
of written notice to the purchasing Member within ten (10) days of the
expiration of such five (5) Business Day period, to purchase (pursuant to the
terms of this Section 8.5) the entire Company Interest of the purchasing Member
in the Company for cash at a price equal to the Applicable Purchase
Price.  The charges of the Escrow Agent shall be paid fifty percent
(50%) by each of the Members.  The Escrow Agent shall hold the
Buy/Sell Deposit in an interest bearing account pursuant to a written agreement
among the Offeror, the Offeree and the Escrow Agent, which agreement shall be
satisfactory to such parties in the exercise of their respective reasonable
discretion and shall provide, among other things, that the Escrow Agent shall
not commingle the Buy/Sell Deposit with any other funds.  In the event
of a closing pursuant to the terms of this subsection 8.5(c), the Buy/Sell
Deposit, together with any interest earned thereon, shall be credited against
the Applicable Purchase Price and paid to the selling Member.  In the
event of a default by the purchasing Member in its obligation to purchase the
selling Member’s Company Interest pursuant to, and in accordance with, the terms
of this subsection 8.5(c), the Buy/Sell Deposit, and any interest thereon, shall
be paid to the selling Member by the Escrow Agent promptly following written
request therefor as the selling Member’s sole and exclusive remedy (other than
as set forth in Section 6.7).  If the selling Member shall default in
any of its obligations under this subsection 8.5(c), the Buy/Sell Deposit, and
any interest earned thereon, shall be returned to the purchasing Member promptly
following written request therefor, and the purchasing Member shall have all
other remedies available to it at law or in equity (including, without
limitation, an action for specific performance).  Upon deposit by the
purchasing Member of the Buy/Sell Deposit with the Escrow Agent as aforesaid,
(i) a binding contract shall be deemed to exist between Offeror and Offeree with
respect to the sale and purchase of the Company Interest of the selling Member,
and (ii) the closing shall be held at the principal place of business of the
Company (or, at either Member’s election, pursuant to escrow arrangement
acceptable to each Member in the exercise of their reasonable judgment) on a
Business Day selected by the purchasing Member not less than thirty (30) days
and not more than one hundred twenty (120) days from the Offeror’s receipt of
the Offeree’s election pursuant to Section 8.5(b).  The purchasing
Member shall pay the Applicable Purchase Price (less the Buy/Sell Deposit and
any interest earned thereon) by wire transfer of immediately available federal
funds to an account designated in writing by the selling Member.

     

    At the
closing for the purchase of the selling Member’s Company Interest, (A) the
selling Member shall deliver to the purchasing Member or its designee an
assignment of all of the selling Member’s Company Interest, which assignment
shall be free and clear of all legal and equitable claims (other than the legal
and equitable claims, if any, of the purchasing Member pursuant to this
Agreement) and all liens and encumbrances (other than liens and encumbrances
under Financing Documents that shall remain in full force and effect following
the closing) and (B) the purchasing Member shall deliver to the selling Member
an assumption of the selling Member’s obligations under this Agreement arising
from and after the date of such assignment.  At the closing, the
selling Member and the purchasing Member shall execute an agreement acceptable
to the selling Member and the purchasing Member in the exercise of their
reasonable judgment whereby (X) the Members shall represent and warrant to each
other with respect to only that each is duly organized, validly existing, has
the necessary corporate power and authority to consummate the subject
transactions and requires no consents which have not been obtained and (Y) the
selling Member shall represent to the purchasing Member that the selling Member
is the owner of its Company Interest free and clear of all liens and
encumbrances (other than liens and encumbrances under Financing Documents that
shall remain in full force and effect following the closing) and that the
transfer is being made free and clear of all legal and equitable claims (other
than the legal and equitable claims of the purchasing Member pursuant to this
Agreement).  Each party shall pay their own costs and expenses in
connection with the conveyance of the selling Member’s Company Interest to the
purchasing Member.  Any transfer, deed, documentary stamp or other
similar tax due in connection with a Transfer of selling Member’s Company
Interest pursuant to this Section 8.5(c) shall be paid fifty (50%) by the
selling Member and fifty percent (50%) by the purchasing Member.  In
addition, at the closing, (i) the selling Member and the purchasing Member shall
execute an agreement acceptable to the selling Member and the purchasing Member
in the exercise of their reasonable judgment whereby the purchasing Member shall
indemnify, defend and save the selling Member from and against responsibility
for all debts, obligations, liabilities, costs, expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) and claims with
respect to the Company accruing from and after the closing date and the selling
Member shall indemnify, defend and save the purchasing Member from and against
responsibility for all debts, obligations, liabilities, costs, expenses
(including, without limitation, reasonable attorneys’ fees and disbursements)
and claims against the Company arising from the selling Member’s fraud, gross
negligence or willful misconduct occurring prior to the closing, (ii) the
Accountants shall close the books of the Company as of the closing date, and all
items of the Company’s income and expense shall be apportioned in calculating
Net Cash Flow as of 11:59 p.m. of the day preceding the closing date, (iii) Net
Cash Flow earned through the day preceding the closing date and Net Proceeds of
a Capital Transaction received prior to closing shall be distributed in
accordance with the provisions of Article IV, which provisions shall survive the
closing pursuant hereto for purposes of making or correcting any closing
adjustments, (iv) the purchase price to be paid by the purchasing Member shall
be (x) increased by the aggregate amount of all Additional Capital Contributions
made by the selling Member in the period between the date of the Offer Notice
and the closing date (excluding Additional Capital Contributions made for
payment of ordinary operating expenses), (y) decreased by any amounts of Net
Proceeds of a Capital Transaction received by the Company during the period
between the date of the Offer Notice and the closing date and distributed to the
selling Member pursuant to the terms hereof and (z) adjusted to account for, and
fully repay, all outstanding Default Loans (and unpaid interest thereon), (v)
the Members shall execute all amendments to fictitious name, limited liability
company or similar certificates necessary to effect the withdrawal of the
selling Member from the Company and, if applicable, the termination of the
Company, (vii) if Acquisition is the selling Member, AmREIT SCA shall use its
commercially reasonable efforts to secure the release (without releasing any
claim the Company may have against the applicable guarantor) of outstanding
Affiliate Guarantees executed by Acquisition or an Affiliate of Acquisition, if
any; provided, that an entity acceptable to Acquisition in its reasonable
discretion shall, pursuant to an agreement in form and content reasonably
acceptable to Acquisition, indemnify Acquisition and/or its Affiliates, as the
case may be, for any claims that arise under such outstanding Affiliate
Guarantees for events occurring after the close of the sale of Acquisition’s
Company Interest if AmREIT SCA is not able to procure any such release and
(viii) if AmREIT SCA is the selling Member, Acquisition shall use its
commercially reasonable efforts to secure the release (without releasing any
claim the Company may have against the applicable guarantor) of outstanding
Affiliate Guarantees executed by AmREIT SCA, AmREIT Ltd., AmREIT or one or more
Affiliates any of the foregoing provided, that an entity acceptable to AmREIT
SCA in its reasonable discretion shall, pursuant to an agreement in form and
content reasonably acceptable to AmREIT SCA, indemnify AmREIT SCA, AmREIT Ltd.,
AmREIT and/or the applicable Affiliates of the foregoing, as the case may be,
for any claims that arise under such outstanding Affiliate Guarantees for events
occurring after the close of the sale of AmREIT SCA’s Company Interest if
Acquisition is not able to procure any such release.

     

     

    
      
         

      

      
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    (d) Notwithstanding
anything to the contrary set forth herein, in the event that prior in time to
the delivery of a Property Sale Exercise Notice under Section 8.6, any Offer
Notice shall be delivered or the purchasing Member shall have instituted an
action for specific performance pursuant to Section 8.5(c), the delivery of such
Offer Notice or the institution of such action for specific performance shall
supersede the delivery of any Transfer Notice or Property Sale Exercise Notice
and the rights under this Section 8.5 shall supersede the rights under Section
8.6 of this Agreement.

     

    (e) The
purchasing Member may, at its option, cause the selling Member’s Company
Interest to be acquired by one or more of purchasing Member’s designees;
provided that any such assignment of the purchasing Member’s rights hereunder
for purposes of accomplishing such purchase by any such designee shall not
relieve the purchasing Member of any obligation or liability with respect
thereto.

     

    (f) Each
Member agrees that it shall be reasonable and cooperate with the other Member,
including, without limitation, executing any documents which may be reasonably
required, in order to consummate the transactions contemplated by this Section
8.5.

     

    SECTION 8.6. Project Sale Option.

     

    (a) Subject
to the terms and conditions of Article VIII of this Agreement, at any time
following the Lockout Date, either Member (“Transferor”) shall have the right to
effect the provisions of this Section 8.6 as hereinafter provided, by delivering
written notice (the “Property Sale Exercise Notice”) to the other Member
(“Transferee”) (i) of its intention to effect the provisions of this Section
8.6, (ii) designating an amount (the “Estimated Purchase Price”) that shall be
Transferor’s estimate of the all cash purchase price an unaffiliated third party
would pay for the Property in a bona fide arm’s length sale, and (iii)
designating the Transferor Purchase Price, subject to
adjustments.  For the purposes hereof, the “Transferor Purchase Price”
shall be the amount that Transferor would receive (without regard to any Default
Loans) if the Property was sold at the Estimated Purchase Price, the remainder
of the Company Assets were sold at their Fair Market Value and, after the
payment of all debts and liabilities of the Company, the proceeds were
distributed among the Members in accordance with the provisions of Section
10.2.  Any disputes as to the Transferor Purchase Price shall be
resolved by the Accountant.  The Members agree to promptly provide the
Accountant with all information necessary to resolve such dispute and shall
instruct the Accountant to resolve such dispute as expeditiously as
possible.

     

    (b) Upon
receipt of the Property Sale Exercise Notice given pursuant to Section 8.6(a)
hereof, Transferee shall have the right to purchase the entire Company Interest
of Transferor for cash at a price equal to the Transferor Purchase
Price.  Within thirty (30) days following receipt of the Property Sale
Exercise Notice (unless Transferee disputes the Transferor Purchase Price
determination, then within thirty (30) days of the date such dispute is finally
resolved by the Accountant), Transferee shall deliver to Transferor notice that
it agrees to purchase the entire Company Interest of Transferor for cash at a
price equal to the Transferor Purchase Price (“Property Sale Acceptance Notice”)
or that it does not agree to purchase the entire Company Interest of Transferor
for cash at a price equal to the Transferor Purchase Price (“Property Sale
Rejection Notice”).  The failure of Transferee to deliver either a
Property Sale Acceptance Notice or a Property Sale Rejection Notice within such
thirty (30) day period shall be deemed to be the delivery of a Property Sale
Rejection Notice.

     

    (c) If
Transferee shall deliver the Property Sale Acceptance Notice, within five (5)
Business Days after delivery by Transferee of the Property Sale Acceptance
Notice, Transferee shall deposit in cash an amount equal to the greater of (I)
Two Hundred Fifty Thousand Dollars ($250,000) and (II) an amount equal to five
percent (5%) of the Transferor Purchase Price (the “Downpayment”) with the
Escrow Agent.  If Transferee shall fail to deliver the Downpayment
within such five (5) Business Day period, the Property Sale Acceptance Notice
shall be deemed revoked and Transferee shall be deemed to have delivered the
Property Sale Rejection Notice.  The charges of the Escrow Agent shall
be a Company expense.  The Escrow Agent shall hold the Downpayment in
an interest bearing account pursuant to a written agreement among Transferor,
Transferee and the Escrow Agent, which agreement shall be satisfactory to such
parties in the exercise of their respective reasonable discretion and shall
provide, among other things, that the Escrow Agent shall not commingle the
Downpayment with any other funds.  In the event of a closing pursuant
to the terms of this subsection 8.6(c), the Downpayment, together with any
interest earned thereon, shall be credited against the Transferor Purchase
Price.  If Transferee shall default in any of its obligations under
this subsection 8.6(c), the Property Sale Acceptance Notice shall be deemed
revoked, Transferee shall be deemed to have delivered the Property Sale
Rejection Notice and the Downpayment, and any interest thereon, shall be paid to
Transferor by the Escrow Agent promptly following written request therefor as
Transferor’s sole and exclusive remedy (other than as set forth in Section
6.7).  If Transferor shall default in any of its obligations under
this subsection 8.6(c), the Downpayment, and any interest earned thereon, shall
be returned to Transferee promptly following written request therefor, and
Transferee shall have all other remedies available to it at law or in equity
(including, without limitation, an action for specific
performance).  Upon deposit by Transferee of the Downpayment with the
Escrow Agent as aforesaid, (i) a binding contract shall be deemed to exist
between Transferor and Transferee with respect to the sale and purchase of
Transferor’s Company Interest, and (ii) the closing shall be held at the
principal place of business of the Company (or, at either Member’s election,
pursuant to escrow arrangement acceptable to each Member in the exercise of
their reasonable judgment) on a Business Day selected by Transferee not less
than thirty (30) days and not more than one hundred twenty (120) days from
Transferor’s receipt of the Property Sale Acceptance
Notice.  Transferee shall pay the Transferor Purchase Price (less the
Downpayment and any interest earned thereon) by wire transfer of immediately
available federal funds to an account designated in writing by
Transferor.

     

    At the
closing of the sale of Transferor’s Company Interest pursuant to this Section
8.6(c), (A) Transferor shall deliver to Transferee or its designee an assignment
of all of Transferor’s Company Interest, which assignment shall be free and
clear of all legal and equitable claims (other than the legal and equitable
claims, if any, of Transferee pursuant to this Agreement) and all liens and
encumbrances (other than liens and encumbrances under Financing Documents that
shall remain in full force and effect following the closing) and (B) Transferee
shall deliver to Transferor an assumption of Transferor’s obligations under this
Agreement arising from and after the date of such assignment.  At the
closing, Transferor and Transferee shall execute an agreement acceptable to
Transferor and Transferee in the exercise of their reasonable judgment whereby
(X) the Members shall represent and warrant to each other with respect to only
that each is duly organized, validly existing, has the necessary corporate power
and authority to consummate the subject transactions and requires no consents
which have not been obtained and (Y) Transferor shall represent to Transferee
that Transferor is the owner of its Company Interest free and clear of all liens
and encumbrances (other than liens and encumbrances under Financing Documents
that shall remain in full force and effect following the closing) and that the
Transfer is being made free and clear of all legal and equitable claims (other
than the legal and equitable claims of Transferee pursuant to this
Agreement).  Each party shall pay their own costs and expenses in
connection with the conveyance of Transferor’s Company Interest to
Transferee.  Any transfer, deed, documentary stamp or other similar
tax due in connection with a Transfer of Transferor’s Company Interest pursuant
to this Section 8.6(c) shall be paid fifty percent (50%) by Transferor and fifty
percent (50%) by Transferee.  In addition, at the closing, (i)
Transferor and Transferee shall execute an agreement acceptable to Transferor
and Transferee in the exercise of their reasonable judgment whereby Transferee
shall indemnify, defend and save Transferor from and against responsibility for
all debts, obligations, liabilities, costs, expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) and claims with
respect to the Company accruing from and after the closing date and Transferor
shall indemnify, defend and save Transferee from and against responsibility for
all debts, obligations, liabilities, costs, expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) and claims against the
Company arising from Transferor’s fraud, gross negligence or willful misconduct
occurring prior to the closing, (ii) the Accountants shall close the books of
the Company as of the closing date, and all items of the Company’s income and
expense shall be apportioned in calculating Net Cash Flow as of 11:59 p.m. of
the day preceding the closing date, (iii) Net Cash Flow earned through the day
preceding the closing date and Net Proceeds of a Capital Transaction received
prior to closing shall be distributed in accordance with the provisions of
Article IV, which provisions shall survive the closing pursuant hereto for
purposes of making or correcting any closing adjustments, (iv) the purchase
price to be paid by Transferee shall be (x) increased by the aggregate amount of
all Additional Capital Contributions made by Transferor in the period between
the date of the Property Sale Exercise Notice and the closing date (excluding
Additional Capital Contributions made for payment of ordinary operating
expenses), (y) decreased by any amounts of Net Proceeds of a Capital Transaction
received by the Company during the period between the date of the Property Sale
Exercise Notice and the closing date and distributed to Transferor pursuant to
the terms hereof and (z) adjusted to account for, and fully repay, all
outstanding Default Loans (and unpaid interest thereon), (v) the Members shall
execute all amendments to fictitious name, limited liability company or similar
certificates necessary to effect the withdrawal of Transferor from the Company
and, if applicable, the termination of the Company and (vii) Transferee shall
use commercially reasonable efforts to secure the release (without releasing any
claim the Company may have against the applicable guarantor) of outstanding
Affiliate Guarantees executed by Transferor or an Affiliate of Transferor (or by
AmREIT, AmREIT Ltd. or an Affiliate either if AmREIT SCA is the Transferor), if
any; provided, that an entity acceptable to Transferor in its reasonable
discretion shall, pursuant to an agreement in form and content reasonably
acceptable to Transferor, indemnify Transferor and/or its Affiliates or AmREIT
or its Affiliates if AmREIT SCA is the Transferor, as the case may be, for any
claims that arise under such outstanding Affiliate Guarantees for events
occurring after the close of the sale of Transferor’s Company Interest if
Transferee is not able to procure any such release.

     

     

    
      
         

      

      
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    (d) If
Transferee shall deliver, or be deemed to deliver, a Property Sale Rejection
Notice, Transferor is hereby authorized to accept on behalf of the Company an
offer for the purchase of the Property meeting the following criteria (a
“Property Sale Offer”):

     

    (i) The
Property Sale Offer shall be an unconditional bona fide arm’s length offer from
a third party unrelated either to Transferor or to any Affiliate of
Transferor;

     

    (ii) The
Property Sale Offer shall be an all cash offer for the purchase of fee simple
title to the entire interest of the Company in the Property in an amount not
less than ninety-five percent (95%) of the Estimated Purchase
Price;

     

    (iii) The
Property Sale Offer shall provide for the Closing for the purchase of the
Property not sooner than thirty (30) days nor later than one hundred twenty
(120) days after the date of delivery or deemed delivery by Transferee of a
Property Sale Rejection Notice;

     

    (iv) The
Property Sale Offer shall require the purchaser thereunder to make an earnest
money deposit in an amount not less than the lesser of (x) Five Hundred Thousand
Dollars ($500,000) and (y) five percent (5%) of the purchase price therefor,
which shall be forfeited as liquidated damages in the event of such purchaser’s
default;

     

    (v) The
Property Sale Offer shall require the entire purchase price for the Property to
be due and payable to the Company by wire transfer of immediately available
federal funds at the closing of the sale of the Property and no portion of the
purchase price shall be deferred; and

     

    (vi) The
Property Sale Offer shall contain commercially reasonable terms and
conditions.

     

    Transferor
shall be authorized to accept a Property Sale Offer for and on behalf of the
Company and to execute all such documents on behalf of the Company as shall be
required in order to close and consummate the sale of the Property pursuant to
the terms and provisions of such Property Sale Offer.  Any third party
dealing with the Company shall be entitled to rely upon the aforesaid
authorization.  The parties hereto acknowledge and agree that for
purposes of determining whether a sale of all of the Property is for at least
ninety-five percent (95%) of the Estimated Purchase Price, the Estimated
Purchase Price shall be adjusted to the date of the offer for such sale to
reflect changes in circumstances such as changes in the composition of Company
Assets and distributions and liabilities consistent with the methodology used to
compute the Estimated Purchase Price.  If Transferee shall dispute
whether the Property is being sold for a purchase price that is at least
ninety-five percent (95%) of the Estimated Purchase Price (as adjusted),
Transferee shall deliver a written notice of such dispute to Transferor within
five (5) Business Days following receipt of the applicable Property Sale
Offer.  Any such dispute shall be resolved by the
Accountant.

     

    (e) Notwithstanding
anything to the contrary set forth herein, in the event that prior in time to
the delivery of an Offer Notice under Section 8.5, any Property Sale Exercise
Notice shall be delivered or Transferee shall have instituted an action for
specific performance pursuant to Section 8.6(c), the delivery of such Property
Sale Exercise Notice or the institution of such action for specific performance
shall supersede the delivery of any Transfer Notice or Offer Notice and the
rights under this Section 8.6 shall supersede the rights under Section 8.5 of
this Agreement.

     

    (f) If
Transferee elects to purchase Transferor’s Company Interest, it may, at its
option, cause Transferor’s Company Interest to be acquired by one or more of its
designees; provided that any such assignment of Transferee’s rights hereunder
for purposes of accomplishing such purchase by any such designee shall not
relieve Transferee of any obligation or liability with respect
thereto.

     

    (g) Each
Member agrees that it shall (and shall cause its Affiliates to) be reasonable
and cooperate with the other Member including without limitation, executing any
documents which may be reasonably required, in order to consummate the
transactions contemplated by this Section 8.6.

     

    SECTION 8.7. ERISA.

     

    (a) AmREIT
SCA acknowledges that it has been advised that Acquisition or an Affiliate of
Acquisition is a collective investment fund, as described in Section IV (e) of
PRCE 91-38 (the “Fund”), which holds the assets of one or more employee benefit
plans or retirement arrangements which are subject to ERISA and/or Section 4975
of the Code (each a “Plan”), and with respect to which JPM is the Trustee and
that, as a result, Acquisition may be prohibited by law from engaging in certain
transactions.

     

    (b) Acquisition
hereby represents and warrants to AmREIT SCA that, as of the date hereof, there
are no employers or employee organizations which maintain one or more Plans
whose assets are invested in the Fund and which represent an aggregate interest
in excess of ten percent (10%) of the total interests in the Fund (each, a “10%
Plan”).

     

    (c) In the
event that the Fund notifies AmREIT SCA in writing that a Plan may become a 10%
Plan, AmREIT SCA will, within 10 days of such notification, inform the Fund in
writing as to whether it is able to make the following representations: AmREIT
SCA is not a “party in interest” (as defined in Section 3(14) of ERISA) or a
“disqualified person” (as defined in Section 4975 of the Code) (each a “Party in
Interest”) with respect to such 10% Plan or, if AmREIT SCA is
a Party in Interest, that:

     

    (i) neither
AmREIT SCA nor any “affiliate” (as defined in Section V(c) of PTCE 84-14) of
AmREIT SCA has exercised the authority to either:  (A) appoint or
terminate JPM as the qualified professional asset manager (as defined in Section
V(a) of PTCE 84-14, “QPAM”) of the assets invested in the Fund of the 10% Plan
with respect to which AmREIT SCA or its “affiliate” is a Party in Interest; or
(B) negotiate the terms of the management agreement with JPM, including renewals
or modifications thereof, on behalf of such 10% Plan; and

     

    (ii) neither
AmREIT SCA nor any entity Controlling, or Controlled by, or under common Control
with, AmREIT SCA owns a ten percent (10%) or more interest (within the meaning
of PTCE 84-14, “10% Interest”) in JPM or J.P. Morgan Chase &
Co.

     

    (d) Thereafter,
if based on the representations made by AmREIT SCA in subsection (c) of this
Section, such Plan becomes a 10% Plan, AmREIT SCA represents and warrants that,
during the time AmREIT SCA is a member of the Company, neither AmREIT SCA nor
its “affiliate” will exercise the authority to either: appoint or terminate JPM
as the QPAM of the assets invested in the Fund of such 10% Plan or negotiate the
terms of the management agreement with JPM, including renewals or modifications
thereof, on behalf of such 10% Plan and neither AmREIT SCA nor any entity
Controlling, or Controlled by, or under common Control with, AmREIT SCA will own
a 10% Interest in JPM or J.P. Morgan Chase & Co.

     

     

    
      
         

      

      
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    SECTION 8.8. VCOC.  As long as no other exception to holding
plan assets under the Plan Asset Regulations is available to the Company, the
Company shall conduct its affairs in such manner that the Company shall qualify
as a “venture capital operating company” (“VCOC”) within the meaning of
Department of Labor regulations set forth at 29 C.F.R. Section 2510.3-101 or any
successor to such regulation (the “Plan Asset Regulations”) and relevant
authority interpreting the Plan Asset Regulations.  In furtherance of
the foregoing, the Company (i) hereby establishes the 90-day period commencing
on November 1st of each year as its annual valuation period, (ii) shall (A) on
the date the Company first makes an investment (other than a short-term
investment of funds pending long-term commitment) and (B) thereafter, on one day
during each annual valuation period, have at least fifty percent (50%) of its
assets (valued at cost) invested in “operating companies” within the meaning of
the Plan Asset Regulation, including REOCs which invest in real estate which is
managed or developed, and with respect to which the Company has the right to
substantially participate in the management of such operating companies to the
extent required to maintain the Company’s status as a VCOC under the Plan Asset
Regulations, and (iii) in the ordinary course of business shall participate in
the management of such operating companies to the extent required to maintain
its status as a VCOC.  The Members consent and agree to take such
action as is necessary to maintain the Company’s VCOC status and consent and
agree not to take any action that could prevent the Company from maintaining its
VCOC status.

     

    SECTION 8.9. Bankruptcy or Dissolution of
a Member.  Upon the occurrence of a Bankruptcy Event or any
other occurrence with respect to a Member of any event which under the Delaware
Act causes the Member to cease to be a member of a limited liability company (a
“Withdrawal Event”), the Member affected by such Withdrawal Event shall, unless
the other Member shall otherwise consent within ninety (90) days of such
Withdrawal Event, be deemed to have withdrawn as a Member on the expiration of
such ninety (90) day period.  In the event that a Member is deemed to
have withdrawn from the Company pursuant to this Section 8.8, then such Member
(a “Withdrawn Member”) shall continue to have the rights of an assignee of its
Company Interest which was not admitted as a Member and shall not be entitled to
participate in the management of the Company or to vote, approve or consent to
any matter for which the vote, approval or consent of any Members is
required.  Unless the Members (other than the Withdrawn Member)
otherwise agree, the Company shall not terminate or dissolve upon the occurrence
of a Bankruptcy Event or any other occurrence which under the Act causes a
Member to cease to be a member of the Company.  No Member shall
withdraw or retire from the Company without the prior consent of the other
Members, except in connection with a Transfer of its entire Company Interest in
accordance with the terms of this Agreement.  In furtherance of the
foregoing, each Member hereby waives any and all rights such Member may have to
withdraw and/or resign from the Company pursuant to Section 18-603 of the
Delaware Act and hereby waives any and all rights such Member may have to
receive the fair value of such Member’s Company Interest upon such resignation
and/or withdrawal pursuant to Section 18-604 of the Delaware Act, and such
Member shall continue to hold its Company Interest in accordance with the
provisions hereof.

     

    ARTICLE IX

     

    BROKERS

     

    SECTION 9.1. Brokers.  Each
Member represents and warrants to the other Member that it has not dealt with
any real estate broker or finder in connection with the formation of the Company
or the transactions contemplated herein except for Transwestern Property Company
SW GP, L.L.C. d/b/a Transwestern Commercial Services, and AKF Properties, d/b/a
Fox Properties, both of which acted as brokers in the acquisition of the
Property.  Each Member agrees to indemnify and hold harmless the other
Member and the Company from and against any actions, claims or demands for any
commissions or fees and all Indemnified Losses arising from a breach of the
foregoing representation and warranty.

     

    ARTICLE X

     

    TERMINATION

     

    SECTION 10.1. Dissolution.  Except as hereinafter
provided to the contrary, the Company shall be dissolved and its business wound
up upon the happening of any of the following events, whichever shall first
occur:

     

    (a) The sale,
condemnation or other disposition of all or substantially all of the Property
and the Company Assets and the receipt of all consideration therefor except that
if non-monetary consideration is received upon such disposition the Company
shall not be dissolved pursuant to this clause until such consideration is
converted into money or money equivalent;

     

    (b) At any
time that there are no Members; provided that the Company shall not be dissolved
if within ninety (90) days after the occurrence of the event that terminated the
continued membership of the last remaining Member, the personal representative
of the last remaining Member agrees in writing to continue the Company and to
the admission of such personal representative or its nominee or designee to the
Company as a Member effective as of the occurrence of the event that terminated
the continued membership of the last remaining Member; or

     

    (c) The
occurrence of any event, other than those referred to in paragraph (b), which
causes dissolution of a limited liability company under the Delaware Act, unless
the Members agree to continue the Company pursuant to the Delaware
Act.

     

    SECTION 10.2. Termination.  Notwithstanding
any other provision of this Agreement, in all cases of dissolution of the
Company, the business of the Company shall be wound up and the Company
terminated as promptly as practicable thereafter, and each of the following
shall be accomplished:

     

    (a) The
Liquidating Member shall cause to be prepared (i) statements setting forth the
assets and liabilities of the Company as of the date of dissolution and as of
the date of complete liquidation, a copy of such statements shall be furnished
to all of the Members and (ii) a report in reasonable detail of the manner or
disposition of assets.

     

    (b) The
property and assets of the Company shall be liquidated by the Liquidating Member
as promptly as possible, but in an orderly and businesslike and commercially
reasonable manner.  The Liquidating Member may, in the exercise of its
business judgment and if commercially reasonable, determine to defer the sale of
all or any portion of the property and assets of the Company if deemed necessary
or appropriate to realize the fair market value of any such property or
assets.

     

    (c) The
proceeds of sale and all other assets of the Company shall be applied and
distributed as follows and in the following order of priority:

     

    (i) To the
payment of (x) the debts and liabilities of the Company (including any
outstanding amounts due on any recourse indebtedness encumbering the Property,
or any part thereof) and (y) the expenses of liquidation.

     

    (ii) To the
setting up of any reserves which the Liquidating Member shall determine in its
commercially reasonable judgment to be reasonably necessary for contingent,
unliquidated or unforeseen liabilities or obligations of the Company or the
Members arising out of or in connection with the Company.  Such
reserves may, in the commercially reasonable discretion of the Liquidating
Member, be paid over to a national bank or national trust company selected by
the Members and authorized to conduct business as an escrow agent to be held by
such bank or trust company as escrow agent for the purposes of disbursing such
reserves to satisfy the liabilities and obligations described above, and at the
expiration of such period distributing any remaining balance as provided in
clause (iv) below.

     

    (iii) To the
Members in accordance with the provisions of Section 4.3; provided, however,
that no distribution shall be made that creates or increases a Capital Account
deficit for any Member which exceeds such Member’s obligation (deemed or actual)
to restore such deficit, determined as follows:  Distributions shall
first be determined tentatively pursuant to Section 4.3 without regard to the
Member’s Capital Account, and then the allocation provisions of Section 5 shall
be applied tentatively as if such tentative distributions had been
made.  The actual distribution to such Member pursuant to this Section
10.2(c)(iii) shall be equal to (x) in the case of a Member that has no deficit
Capital Account after such tentative distributions and allocations have been
made, the tentative distribution to such Member, and (y) in the case of a Member
that has a deficit Capital Account after such tentative distributions and
allocations are made, the tentative distribution to such Member less the amount
of the deficit.

     

    (iv) The
balance, if any, to the Members, in accordance with and to the extent of the
Members’ ending positive Capital Account balances, after giving effect to all
contributions, distributions and allocations for all periods, including, without
limitation, any allocations of Profits or Losses from any Capital Transactions
causing or resulting in the dissolution and termination of the
Company.

     

    Distributions
pursuant to the preceding clauses (iii) and (iv) shall be made by the end of the
Fiscal Year during which the dissolution of the Company occurs (or, if later,
within ninety (90) days of such dissolution).  To the fullest extent
permitted by applicable law, the Members hereby waive any rights to
distributions under Section 18-604 of the Delaware Act.

     

    (d) The
Liquidating Member shall cause the filing of the Certificate of Cancellation
pursuant to Section 18-203 of the Delaware Act and shall take all such other
actions as may be necessary to terminate the Company.

     

     

    
      
         

      

      
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    SECTION 10.3. Liquidating Member.

     

    (a) The term
“Liquidating Member” shall mean (i) the Managing Member in the case of a
termination of the Company pursuant to clause (a) of Section 10.1 hereof, (ii)
Acquisition in the case of a termination of the Company pursuant to clause (c)
of Section 10.1 hereof if AmREIT SCA shall be the Member causing the termination
event pursuant to said clause, (iii) AmREIT SCA in the case of a termination of
the Company pursuant to clause (c) of Section 10.1 hereof if Acquisition shall
be the Member causing the termination event pursuant to said clause, and (iv)
the last remaining Member (or its personal representative or nominee) in the
case of a termination of the Company pursuant to clause (b) of Section 10.1
hereof.

     

    (b) Without
limiting the foregoing, the Liquidating Member shall, upon the dissolution and
upon completion of the winding up of the affairs of the Company, file
appropriate certificate(s) to such effect in the proper governmental office or
offices under the Delaware Act as then in effect.  Notwithstanding the
foregoing, each Member, upon the request of the Liquidating Member, shall
promptly execute, acknowledge and deliver all such documents, certificates and
other instruments as the Liquidating Member shall reasonably request to
effectuate the proper dissolution and termination of the Company, including the
winding up of the business of the Company.

     

    SECTION 10.4. No
Redemption.  The Company may not acquire, by purchase,
redemption or otherwise any Company Interest of any Member.

     

    SECTION 10.5. Governance.  Notwithstanding a dissolution
of the Company, until the termination of the business of the Company, the
affairs of the Members, as such, shall continue to be governed by this
Agreement.  The Liquidating Member shall be subject to the same
restrictions on transactions with related parties or involving conflicts of
interest as applied prior to the dissolution of the Company, including but not
limited to the consent requirements set forth herein of any such
transaction.  The Liquidating Member shall also be required to perform
its duties under this Agreement using the same standard of care that would be
required of the Liquidating Member if the Liquidating Member was acting as the
Managing Member.

     

    SECTION 10.6. Return of Capital.  No
Member shall have any right to receive the return of its Capital Contribution or
to seek or obtain partition of assets of the Company, other than as provided in
this Agreement.

     

    ARTICLE XI

     

    MISCELLANEOUS

     

    SECTION 11.1. Further Assurances.  Each Member
agrees to execute, acknowledge, deliver, file, record and publish such further
reasonable certificates, amendments to certificates, instruments and documents,
and do all such other reasonable acts and things as may be required by law, or
as may be required to carry out the intent and purposes of this Agreement so
long as any of the foregoing do not materially increase any Member’s obligations
hereunder or materially decrease any Member’s rights hereunder.

     

    SECTION 11.2. Notices.  All notices, demands, consents,
approvals, requests or other communications which any of the parties to this
Agreement may desire or be required to give hereunder (collectively, “Notices”)
shall be in writing and shall be given by personal delivery or facsimile or
United States registered or certified mail (postage prepaid, return receipt
requested) addressed as hereinafter provided, provided, however, that any Notice
given by facsimile shall also be given by personal delivery or United States
registered or certified mail.  Except as otherwise specified herein,
the time period in which a response to any notice or other communication must be
made, if any, shall commence to run on the earliest to occur of (a) if by
personal delivery, the date of receipt, or attempted delivery, if such
communication is refused; (b) if given by facsimile, the date on which such
facsimile is transmitted and confirmation of delivery thereof is received; and
(c) if sent by mail (as aforesaid), the date of receipt or attempted delivery,
if such mailing is refused.  Until further notice, notices and other
communications under this Agreement shall be addressed to the parties listed
below as follows:

     

    (i) If to the
Company or Acquisition, to:

     

    
      	
              Shadow
      Creek Ranch Town Center Acquisition LLC

              c/o
      J.P. Morgan Investment Management Inc.

              245
      Park Avenue

              New
      York, New York 10167

              Attention:  Temra
      Wollman

              Fax
      Number:  (212) 648-2266

               

              with
      a copy to:

               

              c/o
      J.P. Morgan Investment Management Inc.

              P.O.
      Box 5005

              New
      York, New York 10163-5005

            
	
               

              with
      a copy to:

               

            
	
              Stroock
      & Stroock & Lavan LLP

              180
      Maiden Lane

              New
      York, New York  10038

              Attention:  Steven
      Moskowitz, Esq.

              Fax
      Number:  (212) 806-6006

            

    

    

    (ii) If to the
Company or AmREIT SCA, to:

     

    
      	
              8
      Greenway Plaza, Suite 1000

              Houston,
      Texas  77046

              Attention:  Tenel
      H. Tayar

              Fax
      Number:  (713) 850-0498

               

              with
      a copy to:

               

              Mayer,
      Brown LLP

              700
      Louisiana St., Suite 3400

              Houston,
      Texas 77002

              Attention:  Neil
      Wasserstrom, Esq.

              Fax
      Number:  (713) 238-4888

            

    

     

     

    
      
         

      

      
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    Any
Member may designate another addressee (and/or change its address) for Notices
hereunder by a Notice given pursuant to this Section.  Copies of all
Notices required to be sent by a Member to the Company under the terms of this
Agreement shall also be sent to each Member in accordance with the terms
hereof.

     

    SECTION 11.3. Governing Law.  This Agreement, the
rights and obligations of the parties hereto, and any claims or disputes
relating thereto shall be governed by and construed in accordance with the laws
of the State of Delaware (but not including the choice of law rules
thereof).

     

    SECTION 11.4. Captions.  All titles or captions contained
in this Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend, or describe the scope of this Agreement or
the intent of any provision hereof.

     

    SECTION 11.5. Pronouns.  All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, and neuter,
singular and plural, as the identity of the party or parties may
require.

     

    SECTION 11.6. Successors and Assigns.  This
Agreement shall be binding upon the parties hereto and their respective
executors, administrators, legal representatives, heirs, successors and
permitted assigns, and shall inure to the benefit of the parties hereto and,
except as otherwise provided herein, their respective executors, administrators,
legal representatives, heirs, successors and permitted assigns.

     

    SECTION 11.7. Extension Not a Waiver.  Except as
otherwise expressly provided herein, no delay or omission in the exercise of any
power, remedy or right herein provided or otherwise available to a Member or the
Company shall impair or affect the right of such Member or the Company
thereafter to exercise the same.  Any extension of time or other
indulgence granted to a Member hereunder shall not otherwise alter or affect any
power, remedy or right of any other Member or of the Company, or the obligations
of the Member to whom such extension or indulgence is granted.

     

    SECTION 11.8. Construction.  None of the provisions of
this Agreement shall be for the benefit of or enforceable by any creditor of the
Company or any third party.  No Member shall be obligated personally
for any debt, obligation or liability of the Company solely by being a Member of
the Company.  Without the consent of all the Members, the Company
shall not do business in or otherwise have contact with any jurisdiction other
than Delaware and Texas if such would result in any Member being obligated
personally for any debt, obligation or liability of the Company solely by reason
of being a Member of the Company and exercising its rights under this Agreement
and the Delaware Act.

     

    SECTION 11.9. Severability.  In case any one or more of
the provisions contained in this Agreement or any application thereof shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and other
application thereof shall not in any way be affected or impaired
thereby.

     

    SECTION 11.10. Consents.  Except as otherwise expressly
provided herein, any consent or approval to any act or matter required under
this Agreement must be in writing and shall apply only with respect to the
particular act or matter to which such consent or approval is given, and shall
not relieve any Member from the obligation to obtain the consent or approval, as
applicable, wherever required under this Agreement to any other act or
matter.  Unless otherwise provided herein, any consent required to be
delivered hereunder shall be delivered within ten (10) days of request
therefor.  Failure to grant consent within such ten (10) day period
(or other period provided herein) shall, unless otherwise provided herein, be
deemed denial of such consent.

     

    SECTION 11.11. Entire Agreement.  This Agreement
contains the entire agreement between the parties relating to the subject matter
hereof and all prior agreements relative hereto which are not contained herein
are terminated.  Amendments, variations, modifications or changes
herein may be made effective and binding upon the parties by, and only by, the
setting forth of same in a document duly executed by each party, and any alleged
amendment, variation, modification or change herein which is not so documented
shall not be effective as to any party.

     

    SECTION 11.12. Consent to Jurisdiction.  Any
action, suit or proceeding in connection with this Agreement may be brought
against any Member or the Company in a court of record of the State of New York,
County of New York, or of the United States District Court for the Southern
District of New York, each Member and the Company hereby consenting and
submitting to the jurisdiction thereof; and service of process may be made upon
any Member or the Company, by certified or registered mail, at the address to be
used for the giving of notice to such Member under Section 11.2.  Each
Member hereby appoints CT Corporation System, 1633 Broadway, New York, New York
10019 as its agent for service of process.  Nothing herein shall
affect the right of any Member to commence legal proceedings or otherwise to
proceed against any other Member or the Company in any other jurisdiction or to
serve process in any manner permitted by applicable law.  In any
action, suit or proceeding in connection with this Agreement, each Member and
the Company hereby waives trial by jury, and any claim that New York County or
the Southern District of New York is an inconvenient forum.

     

    SECTION 11.13. Counterparts.  This
Agreement may be executed in any number of counterparts, and each such
counterpart will for all purposes be deemed an original, and all such
counterparts shall constitute one and the same instrument.

     

    SECTION 11.14. Tax
Election.  The Members shall take all actions necessary to
cause the Company to be treated as a partnership for federal, state and, if
applicable, local income tax purposes including, without limitation, making all
elections necessary for such purpose under any applicable Check The Box
Regulations.

     

    SECTION 11.15. Costs.  All costs incurred by the Members or the
Company in connection with the preparation, negotiation, execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereunder shall be paid by the Company.

     

    SECTION 11.16. Representations and
Warranties.

     

    (a) Acquisition
represents and warrants as follows as of the date hereof:

     

    (i) Acquisition
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware.

     

    (ii) The
execution and delivery of this Agreement and all other documents, instruments
and agreements to be executed in connection with the transactions contemplated
by this Agreement (the “Transaction Documents”) have been duly and validly
authorized by all necessary actions of Acquisition, and shall constitute the
legal, valid and binding obligations of Acquisition enforceable against
Acquisition in accordance with the terms hereof and thereof except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
liquidation, receivership, moratorium or other similar laws related to or
affecting the enforcement of creditors’ rights generally or by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.

     

    (iii) No
consent, waiver, approval or authorization of or notice to any other Person
(including any governmental entity) is required to be made, obtained or given by
Acquisition in connection with the execution and delivery of this Agreement or
any other Transaction Document except for those which have been heretofore
obtained.

     

     

    
      
         

      

      
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    (iv) Neither
the execution or delivery of this Agreement nor any other Transaction Document
does or will, with or without the giving of notice, lapse of time or both, (i)
violate, conflict with or constitute a default under any term or provision of
(A) any agreement to which Acquisition is a party or by which it is bound, or
(B) any judgment, decree, order, statute, injunction, rule or regulation of a
governmental entity applicable to Acquisition, or by which it or its assets or
properties are bound, or (ii) result in the creation of any lien or encumbrance
upon Acquisition or its assets.

     

    (v) For
purposes of the Investment Company Act of 1940, as amended, Acquisition is
counted as one investor in the Company.

     

    (b) AmREIT SCA
Representations.  AmREIT SCA represents and warrants as follows
as of the date hereof:

     

    (i) AmREIT
SCA is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Texas.

     

    (ii) The
execution and delivery of this Agreement and all other Transaction Documents
have been duly and validly authorized by all necessary actions of AmREIT SCA and
shall constitute the legal, valid and binding obligations of AmREIT SCA
enforceable against AmREIT SCA in accordance with the terms hereof and thereof
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or other similar laws
related to or affecting the enforcement of creditors’ rights generally or by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.

     

    (iii) No
consent, waiver, approval or authorization of or notice to any other Person
(including any governmental entity) is required to be made, obtained or given by
AmREIT SCA in connection with the execution and delivery of this Agreement or
any other Transaction Document except for those which have been heretofore
obtained.

     

    (iv) Neither
the execution or delivery of this Agreement nor any other Transaction Document
does or will, with or without the giving of notice, lapse of time or both, (i)
violate, conflict with or constitute a default under any term or provision of
(A) any agreement to which AmREIT SCA is a party or by which it is bound, or (B)
any judgment, decree, order, statute, injunction, rule or regulation of a
governmental entity applicable to AmREIT SCA or by which AmREIT SCA or its
assets or properties are bound, or (ii) result in the creation of any lien or
encumbrance upon AmREIT SCA or its assets.

     

    (v) The
members of AmREIT SCA are AmREIT Ltd. and ARIC.  The sole member of
AmREIT Ltd. is AmREIT Corp.  The sole member of ARIC is
AmREIT.  The sole member of AmREIT Corp is AmREIT.

     

    (vi) AmREIT
SCA has delivered to Acquisition true and complete copies of the engineering and
environmental reports with respect to the Property in the possession of AmREIT
SCA or its Affiliates.

     

    (vii) Neither
the purchaser nor, to AmREIT SCA’s knowledge, the seller is in default or has
breached any of its respective obligations, representations, warranties or
covenants under the Purchase Agreement.  To AmREIT SCA’s knowledge,
the representations and warranties set forth in the Purchase Agreement, if made
on and as of the date hereof, are true and correct in all material
respects.  For purposes of the immediately preceding sentence, all
references to “AmREIT SCA’s knowledge” or words of similar import shall be
deemed to include the knowledge of AmREIT SCA hereunder as well as the knowledge
of ARIC as “purchaser” under the Purchase Agreement.

     

     

    
      
         

      

      
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    SECTION 11.17. Right to Participate; Right of First
Offer.

     

    (a) If (x)
with respect to Acquisition, Acquisition or another Affiliated entity for which
J.P. Morgan Investment Management Inc. is then acting as agent or independent
advisor in connection with the Adjacent Property Acquisition or (y) with respect
to AmREIT SCA, AmREIT Ltd., AmREIT or any of their respective Affiliates (such
party, the “Adjacent Property Offeror”), shall, at any time AmREIT SCA or an
Affiliate thereof is a Member hereunder, desire to purchase, ground lease or
otherwise control any property adjacent to the Property and known as Pearland
Town Center South (CBL development) on the southwest corner, Silverlake Village
South on the southeast corner and The Crossing at 518 South on the northeast
corner (an “Adjacent Property Acquisition”), the Adjacent Property Offeror shall
(and shall cause its applicable Affiliate to) provide prior written notice
thereof to the other Member (the “Adjacent Property Offeree”) prior to entering
into or negotiating any such arrangements with respect thereto.  Such
notice shall contain a reasonably detailed description of the proposed Adjacent
Property Acquisition, the proposed ownership structure, projected returns,
management and voting rights and such other material details as shall allow the
Adjacent Property Offeree to adequately analyze the proposed Adjacent Property
Acquisition.  The Adjacent Property Offeror agrees to promptly provide
the Adjacent Property Offeree with such additional information as shall be
reasonably requested by the Adjacent Property Offeree with respect to a proposed
Adjacent Property Acquisition.  Each Member covenants and agrees that
if the Members fail to reach agreement with respect to the Adjacent Property
Offeree’s participation in such Adjacent Property Acquisition, the Adjacent
Property Offeror shall be prohibited from acquiring the property subject to such
proposed Adjacent Property Acquisition while the Adjacent Property Offeror
remains a Member of the Company.

     

    (b) If AmREIT
SCA, AmREIT Ltd., AmREIT or any of their respective Affiliates (such party, the
“Applicable AmREIT Entity”) shall, at any time AmREIT SCA, AmREIT Ltd., AmREIT
or any of their respective Affiliates is a Member hereunder, desire to purchase,
ground lease or otherwise control any property within a one-half mile radius of
the Property (a “Competing Property Acquisition”), AmREIT SCA shall (and shall
cause the Applicable AmREIT Entity to) provide prior written notice thereof to
Acquisition prior to entering into or negotiating any such arrangements with
respect thereto.  Such notice shall contain a reasonably detailed
description of the proposed Competing Property Acquisition, the proposed
ownership structure, projected returns, management and voting rights and such
other material details as shall allow Acquisition to adequately analyze the
proposed Competing Property Acquisition.  AmREIT SCA agrees to
promptly provide Acquisition with such additional information as shall be
reasonably requested by Acquisition with respect to a proposed Competing
Property Acquisition.  AmREIT SCA covenants and agrees that
Acquisition (or any Acquisition Entity designated by Acquisition) shall have the
exclusive right, for forty-five (45) days following receipt of such notice, to
negotiate with the Applicable AmREIT Entity to participate in such Competing
Property Acquisition.  If Acquisition and the Applicable AmREIT Entity
shall reach agreement with respect to Acquisition’s participation in such
Competing Property Acquisition, Acquisition and the Applicable AmREIT Entity
shall enter into such documents and instruments as may be necessary to evidence
such agreement.  AmREIT SCA and Acquisition covenant and agree to
negotiate in good faith with respect thereto.  If Acquisition and the
Applicable AmREIT Entity fail to reach agreement with respect to Acquisition’s
participation in such Competing Property Acquisition, the Applicable AmREIT
Entity may acquire the property subject to such proposed Competing Property
Acquisition with or without a joint venture partner on substantially the same
terms offered to Acquisition.

     

    (c) The
failure of either Member to comply with its obligations under this Section 11.17
shall constitute a Material Default of such Member.

     

    SECTION 11.18. Limitation of
Liability.  Notwithstanding anything to the contrary
contained in this Agreement, but subject to the terms of the immediately
succeeding sentence, no recourse shall be had for the payment of any loans or
other payments due or for any other claim under this Agreement or based on the
failure of performance or observance of any of the terms and conditions of this
Agreement against any Member (for the avoidance of doubt, including the Managing
Member), any Affiliate of any Member, AmREIT, any Affiliate of AmREIT or any
principal, partner, member, manager, shareholder, controlling person, officer,
director, agent or employee of any of the aforesaid Persons or any of their
respective assets other than such Member’s interest in the Company or assets of
the Company to which such Member is entitled under any rule of law, statute or
constitution, or by the enforcement of any assessment or penalty, or otherwise,
nor shall any of such Persons be personally liable for any contributions, loans,
payments or claims, or personally liable for any deficiency judgment based
thereon or with respect thereto, it being expressly understood that the sole
remedies of the Company or any other Member with respect to such amounts and
claims shall be against such interest in the Company and the assets of the
Company to which such Member is entitled and as otherwise expressly set forth in
this Agreement, and that all such liability of the aforesaid Persons, except as
expressly provided in this Section 11.18, is expressly waived and released as a
condition of, and as consideration for, the execution of this Agreement and the
admission of each Member to the Company.  Notwithstanding the terms of
the immediately preceding sentence, nothing contained in this Agreement
(including, without limitation, the provisions of this Section 11.18), (i) shall
constitute a waiver of any obligation of a Member under this Agreement, (ii)
shall be taken to prevent recourse to and the enforcement against such Member’s
Company Interest and the assets of the Company to which such Member is entitled
for all of the respective liabilities, obligations, and undertakings of the
aforesaid Persons contained in this Agreement, (iii) shall be taken to limit or
restrict any action or proceeding against any of the aforesaid Persons which
does not seek damages or a money judgment or does not seek to compel payment of
money (or the performance of obligations which would require the payment of
money) by any of the aforesaid Persons, or (iv) a waiver of any contractual
obligations of any of the aforesaid Persons pursuant to contracts and agreement
between any such Person, and the Company including, without limitation, Managing
Member Affiliate Agreements.

     

    SECTION 11.19. Company
Name.  If, at any time, the Company name shall include the
name of, or any trade name used by, a Member or any of its Affiliates, neither
the Company nor any other Member shall acquire any right, title or interest in
or to such name or trade name.

     

    SECTION 11.20. Ownership of Company
Property.  The interest of each Member in the Company shall
be personal property for all purposes.  All real and other property
owned by the Company shall be deemed owned by the Company as Company
property.  No Member, individually, shall have any direct ownership of
such property and title to such property shall be held in the name of the
Company.

     

    SECTION 11.21. Time of the Essence.  Except as
otherwise expressly provided in this Agreement, time shall be of the essence
with respect to all time periods set forth in this Agreement.

     

    SECTION 11.22. Status Reports.  Recognizing that each
Member may find it necessary from time to time to establish to third parties,
such as accountants, banks, mortgagees, prospective transferees of their Company
Interest, or the like, the then current status of performance of the Property
and the Company hereunder, each Member shall, within ten (10) Business Days
following the written request of another Member made from time to time, furnish
a written statement on the status of the following:

     

    (a) that this
Agreement is unmodified and in full force and effect (or if there have been
modifications, that the Agreement is in full force and effect as modified and
stating the modifications);

     

    (b) stating
whether or not to the best knowledge of such certifying Member (i) the other
Member in the Company is in default in keeping, observing or performing any of
the terms contained in this Agreement and, if in default, specifying each such
default (limited to those defaults of which the certifying Member has
knowledge), and (ii) there has occurred an event that with the passage of time
or the giving of notice, or both, would ripen into a default hereunder on the
part of such other Member (limited to those events of which the certifying
Member has knowledge); and

     

    (c) to the
best of the knowledge and belief of the Member making such statement, with
respect to any other matters as may be reasonably requested by the other
Member.

     

    Such
statement may be relied upon by such other Member and any other Person for whom
such statement is requested, but no such statement shall operate as a waiver as
to any default or other matter as to which the Member executing it did not have
actual knowledge.

     

     

    
      
         

      

      
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    SECTION 11.23. Disposition of Documents.  All
documents and records of the Company, including, without limitation, all
organizational documents, financial records, Key Documents, vouchers, canceled
checks, and bank statements shall be delivered to Acquisition upon termination
of the Company if Acquisition is then a Member, and otherwise to
AmREIT.  Upon request of any Member, copies of all such documents and
records shall be provided to such Member.  The Member holding such
documents and records shall retain them for a period of at least three (3) years
after the termination of the Company and shall make copies thereof available to
the other Member during such period.

     

    SECTION 11.24. Waiver of Partition.  Except as
otherwise expressly provided for in this Agreement, no Member shall, either
directly or indirectly, take any action to require partition or appraisement of
the Company or any of its assets or properties or cause the sale of any Company
assets or property, and notwithstanding any provisions of applicable law to the
contrary, each Member (for itself and its legal representatives, successors and
assigns) hereby irrevocably waives any and all right to partition, or to
maintain any action for partition, or to compel any sale with respect to its
interest in, or with respect to, any assets or properties of the Company, except
as expressly provided in this Agreement.

     

    SECTION 11.25. Calculation of Days.  The provisions
of this Agreement relative to number of days shall be deemed to refer to
calendar days, unless otherwise specified.  When the date for
performance of any monetary obligation of any Member falls on a non-business
day, such obligation need not be performed until the next-following Business
Day.

     

    SECTION 11.26. Disclosure.  Notwithstanding any terms or
conditions in this Agreement to the contrary, but subject to restrictions
reasonably necessary to comply with federal or state securities laws, any person
may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transaction and all materials of any kind
(including opinions or other tax analyses) that are provided relating to such
tax treatment and tax structure.  For the avoidance of doubt, this
authorization is not intended to permit disclosure of the names of, or other
identifying information regarding, the participants in the transaction, or of
any information or the portion of any materials not relevant to the tax
treatment or tax structure of the transaction.

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties hereto have duly executed this Limited Liability
Company Agreement as of the day and year first above written.

     

    
      	
              SHADOW
      CREEK RANCH TOWN CENTER ACQUISITION LLC,

              a
      Delaware limited liability company

            
	 
      
	
              By:Commingled
      Pension Trust Fund (Strategic Property) of JPMorgan Chase Bank, N.A., its
      sole member

            
	 
      
	
              By:JPMorgan
      Chase Bank, N.A., as Trustee

               

               

              By:

              Name:  Robert
      Curran

              Title:  Vice-President

            
	 
      
	
               

              AMREIT
      SHADOW CREEK ACQUISITION, LLC, a Texas limited liability
      company

               

               

            
	
              By:__________________________

              Name:

              Title:

            
	 
      

    

    

    

    

    AmREIT
Real Estate Investment Corporation joins this Agreement solely for the purposes
of Section 6.6(d)

    

    

    AMREIT
REAL ESTATE INVESTMENT

    CORPORATION,
a Texas corporation

    

    

    By:           __________________________

    Name:

    Title:

    

    
      
         

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    

    EXHIBIT
A

     

    IRR
CALCULATION

     

    This
Exhibit describes the internal rate of return calculation contemplated by the
limited liability company agreement (the “Agreement”) to which this Exhibit is
attached and of which this Exhibit forms a part.  Except as otherwise
indicated in this Exhibit, each capitalized term used herein shall have the
meaning given to the same elsewhere in the Agreement.

     

    Section
1  CERTAIN
DEFINITIONS.

     

    (i)           “Contributions”
means the sum of all contributions made or deemed made under the Agreement by
the Members to the Company (as described in Sections 2.1 and 2.2 of the
Agreement, and as may be adjusted pursuant to the terms of Section 2.3 of the
Agreement), on or after Time 0.  If an escrow is used, Contributions
shall be deemed made on the date deposited into escrow.

     

    (ii)           “Distributions”
to a Member means all distributions made or deemed made to the Members under
Section 4.2, 4.3 and subsection 10.2(c) of the Agreement on or after Time
0.

     

    (iii)           “IRR
Rate” means the “8.25% IRR Rate” or the “12% IRR Rate,” as
applicable.  “8.25% IRR Rate” means 8.25% per annum and “12% IRR Rate”
means 12% per annum.

     

    (iv)           “Time
0” means the Effective Date.

     

    Section
2  ASSUMPTIONS.

     

    For the
purpose of performing the future value calculations described in this
Exhibit:

     

    (a)           Periods.  All
calculations shall be based on calendar month periods (each, a “Calendar
Month”), the first of which shall be the calendar month in which Time 0
occurs.

     

    (b)           Distributions.  All
Distributions will be considered to have been made at the end of the Calendar
Month in which they were actually made; and each Distribution in a particular
Calendar Month will be increased by an amount equal to the interest accruing on
such Distribution at the applicable IRR Rate, for the period commencing on the
date such Distribution is actually made through the last day of the Calendar
Month in which the same is made.

     

    (c)           Contributions.  All
Contributions will be considered to have been made at the end of the Calendar
Month in which they were actually made; and each Contribution will be increased
by an amount equal to the interest accruing on such Contribution at the
applicable IRR Rate, for the period commencing on the date such Contribution is
actually made through the last day of the Calendar Month in which the same is
made.

     

    SECTION
3                                DEFINITION AND CALCULATION
OF IRR DEFICIENCY.

     

    With
respect to the applicable IRR Rate, the “IRR Deficiency” as of any particular
date means the amount by which (1) the future value as of such date at such IRR
Rate of all Contributions made on or before such date (which shall include both
such Contributions themselves and a monthly compounded return on such
Contributions using the applicable IRR Rate), exceeds (2) the future value (as
of such date) at the applicable IRR Rate of all Distributions (excluding,
however, any Distribution to be made on such date with respect to which such
calculation is being made) made on or before such date (which shall include both
such Distributions themselves and a monthly compounded return on such
Distributions using the applicable IRR Rate).  Accordingly, (i) the
“8.25% IRR Deficiency” is the IRR Deficiency using the 8.25% IRR Rate and (ii)
the “12% IRR Deficiency” is the IRR Deficiency using the 12% IRR
Rate.  An example of this calculation is attached hereto as Schedule
1.

     

    

    
      
         

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    SCHEDULE
1

     

    

    SAMPLE IRR DEFICIENCY
CALCULATION

    
      
         

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    EXHIBIT
B

     

    LEASE REQUEST
FORM

     

    
      
         

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    EXHIBIT
C

     

    FORM OF MANAGEMENT
AGREEMENT

     

    

    
      
         

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    EXHIBIT
D

     

    LAND

     

    
      
         

      

      
         

        
          

        

      

      
        Table of Contents

      

    

    EXHIBIT
E

     

    LEASING AND PROPERTY
GUIDELINES

     

    (“SEE
ITEMS SET FORTH IN SECOND SENTENCE OF SECTION 7.8(A)”)

    
      
         

      

      
         

        
          

        

      

      
        Table of Contentsleaseagreement22908.htm

    
      

    

    LEASE
AGREEMENT

    
      

      THIS
LEASE AGREEMENT (the "Lease") is made and entered into this 29th day of Feb, 08,
between Hill Street, LLC, (the"
Landlord"), and Subaqueous Services
LLC (the" Tenant").

      

      WITNESSETH:

      

      FOR GOOD
AND VALUABLE CONSIDERATION; the receipt, adequacy, and sufficiency of which is
hereby acknowledged, Landlord and Tenant intending to be legally bound, hereby
agree as follows:

      

      ARTICLE
I:

      DEFINITIONS AND FUNDAMENTAL
PROVISIONS

      

      
        	
                1.1

              	
                Addresses:

              	
                Landlord

              	
                Tenant

              
	
                 
      

              	 
      	
                P.O.
      Box 1851

              	
                12250
      Fuqua

              
	 
      	 
      	
                Bainbridge,
      GA 39818

              	
                Houston,
      Texas, 77034

              

      

      

      1.2         
  Common
Areas: Those areas, facilities, improvements, equipment, and
installations which are from time to time designated by Landlord for the
nonexclusive use or benefit of Landlord and Tenants of the site, their
employees, agents, customers, licensees and Invitees.

      

      1.3        
   Lease
Term: One Lease Period commencing on the Rental Commencement Date and
expiring at 5:00 P.M. (EST) on 12/30/10 The first
(I*) Lease period shall consist of 34 consecutive months
plus the partial month, if any, caused by the Rental Commencement Date failing
on other than the first day of a calendar month.

      

      
        	
                1.4

              	
                Rent:

              	 	 
      	 	 
      
	
                 
      

              	 
      	 	 
      	 	 
      
	 
      	
                Lease
      Period

              	 	
                Rent

              	 	
                Monthly
      Rent

              
	 
      	
                34 Months

              	 	
                $15750

              	 	
                $15750.00 Rent $945 Sales Tax Plus $2000 Utilities
      & $150 Security Total
$18,904

              

      

      

      **
Applicable sales tax apply **

      

      
        	
                1.5

              	
                Permitted Use: Tenant shall use
      the Premises solely for:

              	
                Warehouse and office plus, upland and rear bridge
      storage and waterfront

              
	
                 

              	 	
                 

              

      

      
        	
                1.6
      

              	
                Premises:
      1
      Warehouse and office @

              	
                1901 Hill
      Street

              	 
	
                 

              	 	 	 

      

      
        	
                1.7

              	Rental
      Commencement Date:	
                2/29/2008

              	
                 

              
	
                 

              	 	 	 

      

      

      ARTICLE
II

      DEMISE OF
PREMISES

      

      2.1          
 Lease:
Landlord hereby leases and demises to Tenant the Preraises together with the
nonexclusive right to use the Common Areas subject to the Rules and
Regulation,

      

      2.2          
 Acceptance
of Premises: by Tenant: agrees to accept the Premises in an "AS-IS,
WHERE-IS" condition as tendered by Landlord. Tenant agrees that no
representations with respect to the conditions of the Premises and no promises
to decorate, alter, repair, or improve, the Premises have been made by Landlord.
Promptly upon the tender of possession of the Premises by Landlord to Tenant,
Tenant shall commence and thereafter diligently pursue to completion all of
Tenant's Work in the Premises in strict accordance with plans and specifications
previously approved by Landlord.

      

      2.3           
Early
Access: Tenant shall be permitted access to the Premises prior to the
Rental Commencement Date for the purpose of installing fixtures or for any other
purpose permitted by Landlord. Such early entry will be at Tenant's sole risk
and subject to all the terms and provisions of this Lease as though the Rental
Commencement Date had occurred, except for the payment of Minimum Rent which
shall commence on the Rental Commencement Date; it being specifically agreed and
understood that Tenant shall pay all charges for temporary water, heating,
cooling and lighting from the date upon which Tenant is notified the Premises
are available for Tenant's work (or from the date when Tenant commences to
perform its work, if earlier) in the Premises until the Rental Commencement
Date. Landlord shall have the right to impose such additional conditions on
Tenant's early entry as Landlord, in it sole discretion, deems appropriate, and
Landlord shall have the further right to require that Tenant execute an early
entry agreement containing such coalitions prior to Tenant's early entry into
the Premises.

      

      2.4          
 Surrender
of Premises: At the expiration, or earlier termination, of the Lease
Term, Tenant shall surrender the Premises to Landlord in a good and broom-clean
condition, reasonable wear and tear excepted. Tenant shall promptly repair any
damage to the Premises caused by the removal of any furniture, trade fixtures,
or other personal property, permitted to be removed by Tenant from the
Premises.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      ARTICLE
III

      RENT AND OTHER
CHARGES

      

      3.1       
    Minimum
Rent: Except for the Prepaid Minimum Rent paid Tenant upon Tenant's
execution of this Lease, Tenant hereby covenants to pay Minimum Rent, in
advance, on a monthly basis on the first day of each calendar month during the
Lease Term, without demand, deduction, or setoff whatsoever; it being
specifically agreed and understood that the covenants of Tenant to pay Minimum
Rent, Additional Rent, and all other Rent set forth in this Lease, are separate
and distinct covenants of Tenant, not contingent upon the performance of any
other terms or conditions of this Lease. Minimum Rent for any partial calendar
month during the Lease Term shall be prorated on a per diem basis.

      

      3.2     
      Utilities:
Tenant shall promptly pay all charges for utilities and other services furnished
to the Premises whether by Landlord or the applicable utility
company.

      

      3.3        
   Security
Deposit: Tenant has concurrently with the execution of this Lease
deposited with the Landlord the Security Deposit which shall serve as security
for the full performance of every term and provision of this Lease by Tenant.
Landlord may apply all or any part of the Security Deposit to cure any default
by Tenant hereunder, and Tenant shall promptly restore to the Security Deposit
all amounts so applied upon invoice. If Tenant stall fully perform each term and
provision of this Lease, any portion of the Security Deposit which has not been
appropriated by Landlord In accordance with (he provisions hereof shall be
returned to Tenant, without interest, within thirty (30) days after the
expiration of the Lease Term.

      

      ARTICLE
IV

      PERMITTED
USAGE

      

      4.1         
  Use:
Tenant shall use, occupy and operate in the whole of the Premises solely for the
Permitted Use and for no other purpose whatsoever. Tenant shall not, without
Landlord's prior written consent, keep anything within the Premises, or use the
Premises for any purpose which increases the Insurance premium cost or
invalidates any insurance policy carried on the Premises, and Tenant shall pay
as Rent the amount of any such increase promptly upon demand by
Landlord.

      

      4.2           Hazardous
Substances.  Tenant shall not generate, store, treat, dispose
of, install or otherwise use any hazardous substances on, in, under, or in any
way related to, the Premises, or cause or permit any such generation, storage,
treatment, disposal, installation or other use with respect thereto. Tenant
shall fully indemnify and hold Landlord harmless from any liability, damage,
cost or expense that Landlord might otherwise suffer from Tenant's failure
to fully comply with the terms and provisions of this Section.

      

      ARTICLE
V

      ALTERATION REPAIR AND
MAINTENANCE

      

      5.1        
   Alteration
By Tenant: Tenant shall not make any alterations (including, but not
limited to alterations to the exterior, signs and/or utility lines or system
within or serving the Premises), nor secure any fixture or apparatus, to the
premises without Landlord's prior written approval, and Tenant shall promptly
remove upon order from landlord any decoration or alteration made or installed
upon the Premises without Landlord's written consent, landlord's approval of the
plans, specifications, and working drawings for Tenant's alterations shall
create no responsibility of liability on the part of Landlord for their
completeness, design sufficiency, or compliance with all laws, rules and
regulations of governmental agencies or authorities, to include The American
With Disabilities Act. Landlord shall have the right to run utility lines,
pipes, condult, wire, ductwork, or sprinkler systems, where necessary, through,
in, or beneath, the Premises, and maintain same in a manner which does not
unduly interfere with Tenant's use thereof. All alterations, fixtures,
betterments, and improvements, made to, or installed upon, the Premises shall
remain upon the Premises, and shall become Landlord's property upon the
expiration or earlier termination of this Lease, unless Landlord shall require
Tenant to restore the Premises to its original condition.

      

      5.2          
 Repairs
by Tenant: Tenant shall keep by routine maintenance, repair, end
replacement, at its sole cost and expense, the interior of the Premises,
together with and ail doors and windows of the Premises, and all electrical,
plumbing, heating, ventilating, air conditioning, sprinkler systems, and any
other mechanical installations serving the Premises or located therein whether
or not in or under the floor slab or on the roof of the Premises, in good
condition and working order. Tenant agrees to employ a suitable contractor
approved by Landlord to perform Tenant's obligations for maintenance of the
heating, cooling and ventilating units of the Premises, including at least
semi-annual inspections and cleaning of the system together with such servicing
as each such inspection shall disclose, or as shall otherwise be reasonably
required by landlord. In the event Tenant fails to perform its maintenance,
repair, or replacement obligations as provided herein, Landlord may, at its
option, perform such remedial action on behalf of Tenant, and Tenant agrees to
pay to Landlord, as Additional Rent, the cost thereof plus fifteen (15.0%)
percent overhead, promptly upon demand by Landlord.

      

      5.3        
   Liens:
Tenant hereby indemnifies Landlord against, and shall keep the Premises and the
site free from liens for any work performed, material furnished, or obligations
incurred, by or on behalf of Tenant and shall discharge or bond any lien filed
within ten (10) days after filing,

      

      5.4       
    Signs and
Displays: Tenant shall not place or have pieced and maintained on or
within the Premises any sign, awning or advertising, visible from the exterior
of the Premises not first approved in writing by Landlord.

      

      ARTICLE
VI

      CASUALTY AND
CONDEMNATION

      

      6.1          
 Casualty:
Landlord shall have the right, upon (30) days prior written notice to Tenant, to
terminate this Lease in the event (i) the Premises is damaged by fire or other
casualty to the extent of more than ten (10.%) percent of the replacement cost
thereof, (ii) the Building is damaged by fire or other casualty to the extent of
then (10.0%) percent or more of the replacement cost thereof, (iii) any damage
to the Premises cannot, in Landlord's sole discretion, be repaired within ninety
(90) days of the date of such damage. or (iv) the Premises is damaged or
destroyed during the last thirty (30%) percent of the Lease term, or during any
renewal or extension term of this Lease. If Landlord should elect to repair or
rebuild the Premises because of any damage or destruction, Tenant shall replace
all work and improvements originally installed or preformed by Tenant at
Tenant’s expense.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      6.2         
  Condemnation:
If the whole of the Premises, or so much thereof as to render the balance
unusable by Tenant, shall be taken under power of eminent domain, or otherwise
transferred to lieu thereof, or if any part of the Site is taken an its
continued operation is not in Landlord’s sole opinion, economical, this Lease
shall automatically terminate as of the date possession is taken by the
condemning authority. No award for any total or partial taking shall be
apportioned, and Tenant hereby unconditionally assigns to Landlord any award
which may be made in such taking or condemnation. In the event of a partial
taking which does not result in the termination of this Lease, Minimum Rental
shall be apportioned according to the part of the Premises remaining usable by
Tenant.

      

      ARTICLE
VII

      INSURANCE AND
INDEMNIFICATION

      

      7.1        
   Insurance:
Tenant shall maintain at its sole expenses, commencing upon the date Tenant
takes possession of the Premises and containing throughout the Lease Term,
commercial liability insurance covering the Premises in a combined single limit
amount of not less than $1,000,000.00 naming Landlord and any mortgagee(s) of
the Property as additional insureds therunder. Tenant shall also keep in force,
at its sole expense, fire and extended coverage insurance for the full
replacement value of Tenant’s improvements and Tenant’s property, including, but
not limited to, inventory, trade fixtures, furnishings and other personal
property naming Landlord and mortgage (s) of the Property as additional insureds
thereunder. The fire and extended coverage insurance maintained by Tenant shall
be written so as to provide that the insurer waives all right of recovery by way
of subrogatlon against Landlord in connection with any loss or damage covered by
the policy (Tenant for itself, its successors and assigns, hereby waives any
right of recovery against Landlord, its successors or assigns, by virtue of any
casualty to the Premises). In addition, Tenant shall keep in force Workman’s
Compensation or similar insurance to the extent required by law. Tenant shall
delivery said insurance policies or certificates thereof to Landlord within ten
(10) days of the commencement of the Lease Term; Landlord having the right, at
its sole discretion, to approve the insurance carrier utilized by Tenant in
connection with the Premises. Should Tenant fail to effect the insurance called
for herein, Landlord may, at his sole option, procure said insurance and pay the
requisite premiums, in which event, Tenant shall pay to Landlord, as Additonal
rent, immediately upon demand, all sums so expended plus fifteen (15.0%) percent
as overhead. Each insurer under the policies required hereunder shall agree by
endorsement of the policy, or by independent instrument furnished to landlord,
that it will give Landlord at least fifteen (15) days prior written notice
before any policy or policies affecting the Premises shall be altered or
canceled.

      

      7.2         
  Indemnification:
Tenant hereby agrees to indemnify and hold Landlord, and any mortgagee(s) of the
Property, harmless from any and all claims, damages, liabilities or expenses
arising out of (a) Tenant’s use of the Premises, (b) any and all claims arising
from any breach or default in the performance of any obligations of Tenant, (c)
any act, omission or negligence of Tenant, its agents, employees, invitees or
contractors. Tenant further releases Landlord from liability for any damages
sustained by Tenant or any other person claiming by, through, or under, Tenant
due to the Premises, or any part thereof, or any appurtenances thereto, becoming
out of repair, or due to the happening of any accident, including, without
limitation, any damage caused by water, know, windstorm, tornado, gas, steam,
electrical wiring, sprinkler system, plumbing, heating and air conditioning
apparatus, and from any acts or omissions of co-tenants or other occupants.
Landlord shall not be liable for any damage to or loss of Tenant’s personal
property, inventory, fixtures or improvements, from any cause whatsoever, except
the affirmative acts of proven negligence of Landlord, and then only to the
extent not covered by insurance to be obtained by Tenant in accordance with
Section 7.1.

      

      ARTICLE
VIII

      DEFAULT AND
REMEDIES

      

      8.1        
   Events of
Default: In the event Tenant (i) fails to pay all or any portion of any
sum due from Tenant hereunder or pursuant to any exhibit hereto within five (5)
days following the giving of written notice; (ii) fails to cease all conduct
prohibited hereby immediately upon receipt of written notice from Landlord;
(iii) fails to take actions in accordance with the provisions of written notice
from Landlord to remedy Tenant’s failure to perform any of the terms, covenants
and conditions of this Lease; (iv) fails to conduct business in the Premises as
herein required; (v) commits an act in violation of this lease which landlord
has previously notified Tenant to cease more than once in any Lease year; (vi)
becomes bankrupt, insolvent or files any debtor proceeding, takes or has taken
against Tenant any petition of bankruptcy; takes action or has action taken
against Tenant for the appointment of a receiver for all or a portion of
Tenant’s assets, files a petition for a corporate reorganization; makes an
assignment for the benefit of creditors, or in any other manner Tenant’s
interest hereunder shall pass to another by operation of law (any or all of the
occurrences in this subsection being deemed a deficit on account of bankruptcy
of the purposes hereof and such default on account of bankruptcy shall apply to
and include any guarantor of this Lease); (vii) commits waste to the Premises;
(viii) is otherwise in breach of Tenant’s obligations hereunder and shall not
have cured without further notice to Tenant, terminate Tenant’s right to
possession of the premises and without terminating this lease re-enter and
resume possession of the Premises, with or without resort to process of any
court, either by force or otherwise. Notwithstanding such re-entry by Landlord,
Tenant hereby indemnifies and holds Landlord harmless from any and all loss or
damage which Tenant may know by reason of the termination of this lease
and/or Tenant’s right to possession of the Premises now shall such re-entry
abrogate Tenant’s agreement to pay Rent for the full Lease Term. Following
re-entry of the premises by Landlord, Tenant shall continue to pay all Rent as
it becomes due under the terms of this Lease, or at Landlord’s option, all Rent
for this balance of the Lease Term shall be deemed immediately due and payable
by Tenant to Landlord, together with all other expenses incurred by Landlord in
regaining possession; it being understood that Landlord shall have no
obligations to mitigate Tenant’s damages by reletting the
Premises.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      8.2        
   Rights
and Remedies: The various rights and remedies herein granted to landlord
shall be cumulative and in addition to any other rights or remedies which
Landlord may be entitled to at law or in equity. The exercise of one of more
rights or remedies of Landlord shall not impair Landlord’s right to exercise any
other right or remedy. In all events, Landlord shall have the right, upon notice
to Tenant, to cure any breach by Tenant, at Tenant’s sole cost and expense, and
Tenant shall reimburse Landlord for such costs and expenses plus fifteen (15.0%)
percent as overhead, immediately demand.

      

      ARTICLE
IX

      ASSIGNMENT AND
SUBLETTING

      

      9.1        
   Assignment
and Subletting: Tenant may not sublet the Premises without the express
prior written consent of Landlord. Any proposed assignee or sublessee or its
business in subject to compliance with additional requirements of the law
(including related regulations) commonly known as the “Americans with
Disabilities Act” beyond those requirements which are applicable to the tenant
desiring to assign or sublease.

      

      ARTICLE
X

      ATTORNMENT AND
SUBORDINATION

      

      10.1      
   Attornment:
Tenant shall attom and be bound to any of Landlord’s successors under all the
terms, convenants and conditions of this Lease for the balance of the lease
Term, as renewed or extended.

      

      10.2        
 Subordination:
This Lease is, and shall be subordinate to the lien of any mortgage, security
deed, deed of trust, or the lien resulting from any and all advances to be made
under such Mortgages and all renewals, medications, extensions, consolidations,
and replacements thereof. The aforesaid provisions shall be self-operative, and
no further instrument of subordination shall be required to evidence such
subordination. Tenant covenants, and agrees to execute and deliver, upon demand,
such further instrument or instruments subordinating this Lease on the foregoing
basis to the lien of any such Mortgages as shall be requested by Landlord and
any mortgagee(s) of the Property. Tenant hereby irrevocably appoints Landlord
the attorney-in-fact of Tenant to execute and deliver such instruments if Tenant
has failed to do so within ten (10) days after being requested to do
so.

      

      ARTICLE
XI

      MISCELLANEOUS

      

      11.1        
 Attorney’s
Fees: Tenant shall pay reasonable attorney’s fees incurred by Landlord in
the enforcement of any of the terms, covenants, or provisions of this
Lease.

      

      11.2          Late
Charges: All rent not paid when due shall bear interest at the highest
legal rate not to exceed eighteen percent (18.0%) per annom calculated from the
due date of such Rent. Tenant shall, in addition, pay as Additional Rent a fee
of $50.00 for processing of each and every late payment.

      

      11.3          Time of
Essence: TIME IS OF THE ESSENCE OF THIS LEASE.

      

      11.4          Holding
Over: If Tenant holds over at the end of the lease Term without the
written consent of Landlord, Tenant shall be deemed a tenant-at-sufferance and
Tenant shall pay to landlord, during each month of such holdover period, as
liquidated damages, a sum equal to double the highest amount of Rent paid by
Tenant to landlord during any month of the lease Term; provided, however
acceptance of Rent by Landlord shall not be interpreted as a grant of permission
for Tenant to continue in possession of the Premises.

      

      11.5          Severability:
In the event of any provision of this Lease to any extent shall be deemed
invalid or unenforceable, the remainder of this Lease shall not be affected
thereby, and the Lease and the remaining provisions thereof shall be valid and
enforceable to the fullest extent permitted by law.

      

      11.6          Waiver:
No waiver by landlord of any provision of this Lease shall be deemed to be a
waiver of any other provision hereof or of any subsequent breach by Tenant of
the same provision. Landlord’s consent to, or approval of, any act by Tenant
shall not be a deemed to render unnecessary the obtaining of Landlord’s consent
to, or approval of, any subsequent act. No agreement by Landlord to accept
Tenant’s surrender of the Premises shall be valid unless in writing from
landlord.

      

      11.7          Right of
Entry: Landlord shall have free access to the Premises at all reasonable
times to inspect the Premises and to make such repairs, addition, improvements,
changes or alterations to the Premises, as Landlord may elect

      

      11.8          Successors
and Assigns: Except as otherwise provided herein, this Lease shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, executors, successors and assigns.

      

      11.9          Headings,
captions and References: The Article and Section Captions contained in
this Lease are for convenience only and do not in any way limit or amplify any
terms of provisions hereof. The use of the terms “hereof” and “herein” shall
refer to this Lease as a whole, except where noted otherwise.

      

      11.10        Survival
of Obligations: The provisions of this Lease with respect to any
obligation of Tenant, including, without limitation, any indemnities of Tenant
contained in this lease, and Tenant’s covenant to pay rent, shall specifically
survive the expiration or earlier termination of this Lease.

      

      11.11        Representations:
Tenant acknowledges that neither Landlord nor Landlord’s agents, employees, or
contractors have made any representations or promises with respect to the
Premises, or this lease, except as expressly set forth herein.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      11.12        Landlord’s
Liability: In the event of any alleged default of Landlord, Tenant shall
not seek to secure any claim for damages of indemnification by any attachment,
levy, judgment, garnishment or other security proceedings against any property
of the Landlord other than Landlord’s equity in the Property. It being agreed
and understood, however, that the maximum recovery by Tenant against Landlord
Shall be in an amount equal to the lesser of (i) the net worth of Tenant as of
the date of Tenant’s claim against Landlord, or (ii) Landlord’s equity interest
in the Property. Landlord as sued herein, shall include any assignee or other
successor of the original landlord or its successors or assigns.

      

      11.13        Jurisdiction:
The laws of the State of Florida shall govern the interpretation,
validity, performance, and enforcement of this Lease.

      

      11.14       Tenant,
at Tenant’s expense, shall comply with all laws, rules, orders, ordinances,
directions, regulations, and requirements of federal, state, county and
municipal authorities, now in force or which may hereafter be in force.
Including, but not limited to, The Americans with Disabilities Act, which shall
impose any duty upon Landlord or Tenant with respect to the use occupation or
alteration of the Premises.

      

      11.15        Estopped
Certificates: Within ten (10) days after written request by Landlord,
Tenant shall execute acknowledge, and delivery to Landlord, or to such other
party as may be designated by Landlord, a certificate stating that this Lease is
in full force and effect and has not been modified, supplemented or amended in
any way, except as indicated in such certificate; that all conditions and
agreements hereunder to be performed by Landlord have been satisfied or
performed, except as set forth in said certificate; that Tenants is not in
default in the payment of Rent or any of the other obligations required of
Tenant hereunder; and that Tenant has paid Rent as of the date set forth in the
certificate.

      

      11.16        Entire
Agreement: This Lease constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and no subsequent
amendment or agreement shall be binding upon either party unless it is signed by
each party. The submission of this Lease shall not constitute an offer to lease
by Landlord and this Lease shall not be binding unless and until it is signed by
Landlord and Tenant.

      

      11.17        Exhibits
and Addenda: All exhibits and addenda attached to this Lease are by this
reference incorporated into this Lease. Insofar as such exhibits or addenda
conflict with any of the terms or provisions contained in the text of this
Lease, the terms and provisions of such exhibit or addenda shall govern and
control.

      

      IN
WITNESS WHEREOF, the parties hereto have executed this Lease under seal the day
and year first above written.

      

      
        	 
      	 	
                Landlord

              
	
                Illegible

              	 	
                Hill
      Street, LLC

              
	
                Witness

              	 	 
      
	 
      	 	
                By:
      /s/ N.D. Redmond. Ja.

              
	 
      	 	
                Printed
      Name: N.D. Redmond. Ja.

              
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	
                Date:
      2-28-08

              
	 
      	 	 
      
	 
      	 	
                TENANT

              
	 
      	 	
                Subaqueous Services
      LLC

              
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	
                By:
      /s/ James L.
      Rose

              
	
                Illegible

              	 	
                Printed
      Name: James L. Rose

              
	
                Witness

              	 	 
      
	 
      	 	
                Date:
      FEB 28,
    2008

              

      

      

      
        	
                 
      

              	
                ·

              	
                Office
      Includes use of existing office furniture, fixtures, and equipment
      including the use of the phone
system

              

      

      

      
        	
                 
      

              	
                ·

              	
                Any
      maintenance and repair exceeding $1000.00 to be lessor responsibility.
      Lessor to maintain A/C, Heat and Plumbing
100%

              

      

      

      
        	
                 
      

              	
                ·

              	
                Lessee
      accepts the waterfront in its as is condition. No repairs or improvements
      on the waterfront will be the responsibility of
  lessor.

              

      

      

      
        	
                 
      

              	
                ·

              	
                However,
      Lessee may make any such repairs and Improvements at its option and
      expense. In additions, if Lessee determines that any such repairs or
      improvements are necessary for its operations, but is unwilling to pay for
      any such repairs or improvements, then, in such event, and in addition to
      all other early Lease cancellation rights of Lessee herein, Lessee may
      terminate the Lease Agreement effective at the end of the then current
      month, without further obligation or
liability.

              

      

      

      
        	
                 
      

              	
                ·

              	
                All
      improvements must have prior approval of
lessor

              

      

      

      
        	
                 
      

              	
                ·

              	
                Lease
      can be TERMINATED AND CANCELED by either Lessee or Lessor with 6 months
      written notice. There would be no further obligation of either party after
      that termination date.

              

      

      

      
        	
                 
      

              	
                ·

              	
                Utilities
      will be included in the rental amount each month at a flat rate of
      $2000.00

              

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                ·

              	
                Lessee
      to show lessor as additional insured on their General Liability Insurance
      Policy.

              

      

      

      
        	
                 
      

              	
                ·

              	
                Lessor
      to have full access to property for inspection of activities as it relates
      to the property.

              

      

      

      
        	
                 
      

              	
                ·

              	
                Any
      improvements or alterations to be lessee’s sole responsibility and must
      have pre approval of lessor

              

      

      

      
        	
                 
      

              	
                ·

              	
                Gate
      at 1901 Hill Street will have shared use by other tenants; all keys must
      be logged by each tenant for lessor and lessee
  information.

              

      

      

      
        	
                 
      

              	
                ·

              	
                Rent
      to have annual increase of 5% effective January 1st
      of each year.

              

      

      

      
        	
                 
      

              	
                ·

              	
                If
      available lessee has option to lease upstairs second floor of office
      building and/or North waterfront of Ford building for an additional $2000
      each.

              

      

      

      
        	
                 
      

              	
                ·

              	
                Rent
      is due no later than the 10th
      of each month in advance.

              

      

      

      

      
        	
                
                  /s/
      James L. Rose

                

              	 	
                
                  /s/
      N.D. Redmond. Ja.

                

              
	
                James
      L. Rose

              	 	
                Lessor

              
	
                Executive
      Vice President Atlantic Seaboard and Caribbean Orion Marine
      Group

              	 	
                Hill
      Street, LLC N.D. Redmond, Jr.

              
	
                February
      28, 2008

              	 	
                2/28/08

              

      

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      
        
          	
                  Feb
      28 2008 5:17PM

                	
                  Pallet
      Consultants

                	
                  1-904-353-0712

                	
                  p.8

                

        

        
          

           

        

        
          	
                  
                    ACORD.    CERTIFICATE
      OF LIABILITY INSURANCE

                  

                	
                  
                    OP
      ID KP

                  

                  
                    ORION
      - 2

                  

                	
                  
                    DATE
      (MM/DD/YYYY)

                  

                  
                    02/28/08

                  

                

        

        
          	
                  PRODUCER
        

                   

                  Taylor
      Johnson Group 

                  1081  19th
      Street,   Suite  300 

                  
                    Virginia
      Beach VA 23451

                  

                  
                    Phone:
      757-468-6100     Fax:
      757-468-9917

                  

                	
                  
                    THIS
      CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO
      RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND,
      EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES
      BELOW.

                  

                
	
                  
                    INSURERS
      AFFORDING COVERAGE

                  

                	
                  
                    NAIC#

                  

                
	
                  
                    INSURED

                  

                	
                  
                    INSURER
      A:

                  

                	
                  
                    Fireman’s
      Fund Insurance Co.

                  

                	
                  
                    21873

                  

                
	
                  Orion
      Construction LP 

                  Subaqueous
      Services,   LLC

                  12550
      Fuqua 

                  
                    Houston
      TX  77034

                  

                	
                  
                    INSURER
      B:

                  

                	
                  
                    United
      States Fid & Guar Co

                  

                	 
      
	
                  
                    INSURER
      C:

                  

                	
                  
                    Signal
      Mutual Indemnity Assoc.

                  

                	 
      
	
                  
                    INSURER
      D:

                  

                	 
      	 
      
	
                  
                    INSURER
      E:

                  

                	 
      	 
      

        

        
          	
                  
                    COVERAGES

                  

                
	
                  
                    THE
      POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED
      ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT,
      TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH REPSECT TO WHICH
      THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY
      THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
      CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE REDUCED BY
      PAID CLAIMS

                  

                
	
                  
                    INSRD

                  

                  
                    LTR

                  

                	
                  
                    ADDL

                  

                  
                    INSRD

                  

                	
                  
                    TYPE
      OF INSURANCE

                  

                	
                  
                    POLICY
      NUMBER

                  

                	
                  
                    POLICY
      EFFECTIVE DATE (MM/DD/YYYY)

                  

                	
                  
                    POLICY
      EXPIRATION DATE (MM/DD/YYYY)

                  

                	
                  
                    LIMITS

                  

                
	 
      	 
      	
                  
                    GENERAL
      LIABILITY

                  

                	 
      	 
      	 
      	
                  
                    EACH
      OCCURENCE

                  

                	
                  
                    $
      1000000

                  

                
	
                  
                    A

                  

                	 	
                  
                    S
      COMMERCIAL GENERAL
      LIABILITY

                  

                	
                  
                    OML 
      99050051

                  

                	
                  
                    01/01/08

                  

                	
                  
                    07/01/08

                  

                	
                  
                    DAMAGE
      TO RENTED PREMISES (Ea. occurrence)

                  

                	
                  
                    $
      1000000

                  

                
	 
      	 
      	
                  
                    ££ CLAIMS
      MADE     S
      OCCUR

                  

                	 
      	 
      	 
      	
                  
                    MED
      EXP (Any one person)

                  

                	
                  
                    $
      5000

                  

                
	 
      	 
      	
                  
                    S
      Pollution Sudden

                  

                	 
      	 
      	 
      	
                  
                    PERSONAL
      & ADV INJURY

                  

                	
                  
                    $
      1000000

                  

                
	 
      	 
      	
                  
                    S Incl
      Contractual

                  

                	 
      	 
      	 
      	
                  
                    GENERAL
      AGGREGATE

                  

                	
                  
                    $
      2000000

                  

                
	 
      	 
      	
                  
                    GEN’L
      AGGREGATE LIMIT APPLIES PER:

                  

                	 
      	 
      	 
      	
                  
                    PRODUCTS
      – COMP/OP  AGG

                  

                	
                  
                    $
      1000000

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £
      POLICY     S
      PROJECT     £
      LOC

                  

                	
                   
      

                	
                   
      

                	
                   
      

                	
                   
      

                	
                   
      

                

        

        
          	
                   

                	
                   
      

                	
                  
                    AUTOMOBILE
      LIABILITY

                  

                	
                   
      

                	
                   

                	 
      	
                  
                    COMBINED
      SINGLE LIMIT (Ea accident)

                  

                	
                  
                    $

                  

                
	
                   

                	
                    
      

                	
                  
                    £ ANY
      AUTO

                  

                	
                   
      

                   

                   

                	 
      	 
      	
                  
                    BODILY
      INJURY (Per person)

                  

                	
                  
                    $

                  

                
	
                  
                    £ ANY
      OWNED AUTO

                  

                
	
                  
                    £
      SCHEDULED AUTOS

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £ HIRED
      AUTOS

                  

                	
                   
      

                   

                	 
      	 
      	
                  
                    BODILY
      INJURY (Per accident)

                  

                	
                  
                    $

                  

                
	
                  
                    £
      NON-OWNED AUTOS

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £

                  

                	 
      	 
      	 
      	
                  
                    PROPERTY
      DAMAGE (Per accident

                  

                	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £

                  

                	
                   
      

                	 
      	 
      
	
                   
      

                	
                   
      

                	
                  
                    GARAGE
      LIABILITY

                  

                	 
      	
                  
                     

                  

                	 
      	
                  
                    AUTO
      ONLY-EA ACCIDENT

                  

                	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £ ANY
      AUTO

                  

                	 
      	 
      	 
      	
                  
                    OTHER
      THAN AUTO ONLY:

                  

                	
                  
                    EA
      ACC

                  

                	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £

                  

                	
                   
      

                	 
      	 
      	
                  
                    AGG

                  

                	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	
                  
                    EXCESS/UMBRELLA
      LIABILITY

                  

                	
                  
                     

                  

                	
                  
                     

                  

                	 
      	
                  
                    EACH
      OCCURRENCE

                  

                	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £
      OCCUR     £ CLAIMS
      MADE

                  

                	 
      	 
      	 
      	
                  
                    AGGREGATE

                  

                	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	 
      	 
      	 
      	 
      	 
      	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £
      DEDUCTIBLE

                  

                	 
      	 
      	 
      	 
      	
                  
                    $

                  

                
	
                   
      

                	
                   
      

                	
                  
                    £
      RETENTION    $

                  

                	
                     
      

                	
                   
      

                	 
      	
                   
      

                	
                  
                    $

                  

                

        

        
          	
                  
                    B

                     

                  

                	
                  
                    WORKERS
      COMPENSATION AND EMPLOYERS LIABILITY

                  

                  
                     

                  

                  
                    ANY
      PROPRIETOR/PARTNER/

                    EXECUTIVE
      OFFICER/MEMBER EXCLUDED?

                  

                  
                     

                  

                  
                    If
      yes, describe under SPECIAL PROVISIONS below.

                  

                  
                     

                  

                	
                  
                    D274W00421

                  

                	
                  
                    10/01/07

                  

                	
                  
                    10/01/08

                  

                	
                  
                    S WC
      STATUTORY LIMITS £
      OTHER

                  

                	 
      
	
                  
                    E.L
      EACH ACCIDENT

                  

                	
                  
                    $
      1,000,000

                  

                
	
                  
                    E.L.
      DISEASE – EA EMPLOYEE

                  

                	
                  
                    $
      1,000,000

                  

                
	
                  
                    E.L.
      DISEASE – POLICY LIMIT

                  

                	
                  
                    $
      1,000,000

                  

                
	
                  
                    C

                  

                	
                  
                    OTHER

                  

                  
                    USL&H/JONES
      ACT

                  

                	
                  
                    #19100

                  

                	
                  
                    10/01/07

                  

                	
                  
                    10/01/08

                  

                	
                  
                    Bach
      Oaou       10,000,000

                  

                

        

        
          	
                  
                    DESCRIPTION
      OF OPERATIONS/LOCATIONS/VEHICLES/EXCLUSIONS ADDED BY ENDORSMENT/SPECIAL
      PROVISIONS

                  

                  
                    Hills
      Street, LLC is additional insured with regard to general liability only
      for property at 1901 Hill Street, Jacksonville,
  FL.

                  

                
	
                  
                    CERTIFICATE
      HOLDER

                  

                	
                  
                    CANCELLATION

                  

                
	
                  
                    HILLSTR   
      

                     

                     

                  

                  
                    Hill
      Street, LLC

                  

                  
                    Post
      Office Box 1851

                  

                  
                    Bainbridge
      GA 39818

                  

                	
                  
                    SHOULD
      ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION
      DATE THEREOF, THE ISSUING INSURER WILL ENDEAVOR TO MAIL  30  DAYS NOTICE TO
      THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO DO SO SHAL IMPOSE
      NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR
      REPRESENTITIVES.

                  

                
	 
      	
                  
                    AUTHORIZED
      REPRESENTITIVE

                  

                  
                    /S/
      Michael Peuris

                  

                
	
                  
                    ACCORD
      25 (2001/08)

                  

                	
                  
                    ©
      ACORD CORPORATION 1988

                  

                

        

         

      

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      IMPORTANT

      

      If the
certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A
statement on this certificate does not confer rights to the certificate holder
in lieu of such endorsement(s).

      

      If
SUBROGATION IS WAIVED, subject to the terms and conditions of the policy,
certain policies may require an endorsement. A statement on this certificate
does not confer rights to the certificate holder in lieu of such
endorsement(s).

      

      

      DISCLAIMER

      

      The
Certificate of Insurance on the reverse side of this form does not constitute a
contract between the issuing insurer(s), authorized representative or producer,
and the certificate holder, nor does it affirmatively or negatively amend,
extend or alter the coverage afforded by the policies listed
thereon.

    

     

     

    9

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