PROMISSORY NOTE (Fixed — Yield Maintenance/Hyperamortization)
Exhibit
10.6
MS Loan No. 05-23686
PROMISSORY NOTE
(Fixed — Yield Maintenance/Hyperamortization)
(Fixed — Yield Maintenance/Hyperamortization)
| $15,675,000.00 | Houston, Texas | |
| December 12, 2005 |
FOR VALUE RECEIVED AMREIT LAKE HOUSTON, LP, a Texas limited partnership, as maker, having its
principal place of business at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (“Borrower”),
hereby unconditionally promises to pay to the order of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MORTGAGE CAPITAL INC., a New
York corporation, as payee, having an address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (“Lender”), or at such other place as the holder hereof may from time to time
designate in writing, the principal sum of FIFTEEN MILLION SIX HUNDRED SEVENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($15,675,000.00), in lawful money of the United States of America with interest
thereon to be computed from the date of this Note at the Applicable Interest Rate (defined below)
in accordance with the terms of this Note.
ARTICLE 1: Payment Terms
▇▇▇▇▇▇▇▇ agrees to pay sums under this Note in installments as follows:
(a) on the date hereof, a payment of interest only with respect to the period commencing on
the date hereof and ending on, and including, the last day of the month in which this Note is
executed;
(b) beginning on the first day of February, 2006 and on the first day of each calendar month
thereafter (each a “Payment Date”) up to and including the first day of January, 2016 (the
“Anticipated Repayment Date”) payments of interest only based on the Applicable Interest Rate (as
defined below) accrued on the outstanding principal balance;
(c) (i) a constant payment of Ninety One Thousand Four Hundred Seventy-Five and No/100
Dollars ($91,475.10) on the first day of each calendar month following the Anticipated Repayment
Date up to and including the first day of December, 2035; each of the payments to be applied as
follows: (A) first, to the payment of interest (without adjustment for Accrued Interest (defined
below)) computed at the Initial Interest Rate; and (B) the balance toward the reduction of the
principal balance; and
(ii) a payment of an amount equal to the Excess Cash Flow (as defined in the certain Cash
Management Agreement (the “Cash Management Agreement”), dated as of the date hereof, by and among
Borrower, Amreit Realty Investment Corporation, and Lender) for the preceding month, to be applied
toward the reduction of the principal balance; and
(d) the balance of the principal sum and all interest thereon (including, without
limitation, all Accrued Interest) on January 1, 2036 (the “Maturity Date”).
ARTICLE 2: Interest
The term “Applicable Interest Rate” as used in this Note shall mean (a) from the date hereof
through and including the day immediately prior to the Anticipated Repayment Date, a rate of
interest equal to five and seventy-five hundredths percent (5.75%) per annum (the “Initial
Interest Rate”), and (b) from the Anticipated Repayment Date through and including the Maturity
Date, a rate of interest (the “Adjusted Interest Rate”) equal to five percentage points (5.0%)
above the greater of (i) the Initial Interest Rate or
(ii) the Treasury Rate. “Treasury Rate”
shall mean the yield calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. government
securities/Treasury constant maturities for the week ending prior to the Anticipated Repayment
Date, of U.S. Treasury constant maturities with maturity dates (one longer and one shorter) most
nearly approximating the Maturity Date. In the event Release H.15 is no longer published, Lender
shall select a comparable publication to determine the Treasury Rate. Lender shall notify Borrower
of the amount and the basis of determination of the Adjusted Interest Rate, which shall be
conclusive and binding on Borrower absent manifest error.
Interest on the principal sum of this Note shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by (b) a daily rate
based on a three hundred sixty (360) day year (that is, the Applicable Interest Rate or the
Default Rate, as then applicable, divided by 360) by (c) the outstanding principal balance.
Interest due on the outstanding principal balance computed at the Adjusted Interest Rate and
not paid pursuant to paragraph (c) of Article 1 above (“Accrued Interest”) shall be added to the
outstanding principal balance and shall earn interest at the Adjusted Interest Rate, to the extent
permitted by applicable law.
ARTICLE 3: Default and Acceleration
Borrower covenants and agrees that if (a) any payment required hereunder (other than the
payment due on the Maturity Date) is not paid prior to the fifth (5th) day after the same is due,
or (b) the entire Debt (defined below) is not paid on or before the Maturity Date or (c) any other
Event of Default (as defined in the Security Instrument (defined below)) shall continue to exist
after giving effect to all applicable grace periods, then at the option of Lender (i) the whole of
the principal sum of this Note, (ii) interest, default interest, late charges and other sums, as
provided in this Note, the Security Instrument or the Other Security Documents (as defined in the
Security Instrument), (iii) all other monies agreed or provided to be paid by Borrower in this
Note, the Security Instrument or the Other Security Documents, (iv) all sums advanced pursuant to
the Security Instrument to protect and preserve the Property (defined below) and the lien and the
security interest created thereby, and (v) all sums advanced and costs and expenses incurred by
Lender in connection with the Debt or any part thereof, any renewal, extension, or change of or
substitution for the Debt or any part thereof, or the acquisition or perfection of the security
therefor, whether made or incurred at the request of Borrower or Lender (all the sums referred to
in (i) through (v) above shall collectively be referred to as the “Debt”) shall without notice
become immediately due and payable. Whenever any payment to be made under this Note, the Security
Instrument or under any Other Security Document shall be stated to be due on a day
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which is not a Business Day (hereinafter defined), the due date thereof shall be the Business Day
immediately preceding such day. For purposes hereof, the term “Business Day” shall mean any day
other than a Saturday, Sunday or any other day on which banks in New York, New York are not open
for business.
ARTICLE 4: Default Interest
▇▇▇▇▇▇▇▇ agrees that upon the occurrence of an Event of Default, Lender shall be entitled to
receive and Borrower shall pay interest on the entire unpaid principal sum at a per annum rate
equal to the lesser of (a) five percent (5%) plus the Applicable Interest Rate or (b) the maximum
interest rate which Borrower may by law pay (the “Default Rate”). The Default Rate shall be
computed from the occurrence of the default giving rise to such Event of Default (without regard
to any notice or grace period) until the earlier of the date upon which the Event of Default is
cured or the date upon which the Debt is paid in full. Interest calculated at the Default Rate
shall be deemed part of the Debt, and shall be deemed secured by the Security Instrument. This
clause, however, shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of
the occurrence of any Event of Default.
ARTICLE 5: Late Charge
If any monthly installment payable under this Note is not paid prior to the fifth (5th) day
after the applicable Payment Date, Borrower shall pay to Lender upon demand an amount equal to the
lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by applicable law
to defray the expenses incurred by ▇▇▇▇▇▇ in handling and processing the delinquent payment and to
compensate Lender for the loss of the use of the delinquent payment and the amount shall be
secured by the Security Instrument and the Other Security Documents.
ARTICLE 6: Prepayment
(a) The principal balance of this Note may not be prepaid in whole or in part prior to the
earlier of the second annual anniversary of the securitization of the Loan or the beginning of the
sixth Loan Year (defined below). At any time after the earlier of the second annual anniversary of
the securitization of the Loan or the beginning of the sixth Loan Year, the principal balance of
this Note may be prepaid in whole, but not in part, upon not less than sixty (60) days prior
written notice to Lender specifying the date on which prepayment is to be made (the “Prepayment
Date”) which date must be a Payment Date and upon payment of:
(i) all accrued interest to and including the Prepayment Date;
(ii) all other sums due under this Note, the Security Instrument and all Other Security
Documents; and
(iii) the Prepayment Consideration (defined below).
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Notwithstanding anything to the contrary herein, provided no Event of Default exists, in the
event of any prepayment which occurs (i) in whole during the four (4) months prior to the
Anticipated Repayment Date or (ii) in whole or in part in connection with a prepayment resulting
from the application of insurance proceeds or condemnation awards pursuant to Sections 3.3 and 3.6
of the Security Instrument or changes in tax and debt credit pursuant to Section 7.3 (a) or (b) of
the Security Instrument, no Prepayment Consideration shall be due in connection therewith, but in
each instance Borrower shall be required to pay all other sums due hereunder, and no principal
amount repaid may be reborrowed.
(b) The Prepayment Consideration shall equal an amount equal to the greater of (i) one
percent (1%) of the principal balance of this Note being prepaid, or (ii) the product of (A) the
ratio of the amount of the principal balance of this Note being prepaid (after subtracting the
scheduled principal payment on such Prepayment Date) over the outstanding principal balance of
this Note on the Prepayment Date (after subtracting the scheduled principal payment on such
Prepayment Date), multiplied by (B) the present value as of the Prepayment Date of the remaining
scheduled payments of principal and interest from the Prepayment Date through the Anticipated
Repayment Date (including any balloon payment) determined by discounting such payments at the
Discount Rate (as hereinafter defined) less the amount of the outstanding principal balance of
this Note on the Prepayment Date (after subtracting the scheduled principal payment on such
Prepayment Date). The “Discount Rate” is the rate which, when compounded monthly, is equivalent to
the Treasury Rate (as hereinafter defined), when compounded semi-annually. The “Treasury Rate” is
the yield calculated by the linear interpolation of the yields, as reported in Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S. government
securities/Treasury constant maturities for the week ending prior to the Prepayment Date, of U.S.
Treasury constant maturities with maturity dates (one longer and one shorter) most nearly
approximating the Anticipated Repayment Date. (In the event Release H.15 is no longer published,
Lender shall select a comparable publication to determine the Treasury Rate.) Lender shall notify
Borrower of the amount and the basis of determination of the required prepayment consideration.
(c) “Loan Year” as used in this Note shall mean each 365 or 366, if applicable, day period
after the first day of the first calendar month after the date of this Note (or the date of this
Note if it is dated the first day of a calendar month).
(d) If any notice of prepayment is given under this Article 6, the principal balance of this
Note and the other sums required under this prepayment section shall be due and payable on the
Prepayment Date. Lender shall not be obligated to accept any prepayment of the principal balance of
this Note unless it is accompanied by all sums due in connection therewith. Notwithstanding
anything contained in this Article 6 to the contrary, provided no Event of Default exists, no
Prepayment Consideration shall be due in connection with a complete or partial prepayment resulting
from the application of insurance proceeds or condemnation awards pursuant to Sections 3.3 and 3.6
of the Security Instrument or changes in tax and debt credit pursuant to Section 7.3(a) or (b) of
the Security Instrument, but Borrower shall be required to pay all other sums due hereunder.
(e) If a Default Prepayment (defined below) occurs, Borrower shall pay to Lender the entire
Debt, including, without limitation, the following amounts:
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(i) if the Default Prepayment occurs prior to the time when prepayment of the principal
balance of this Note is permitted, an amount equal to the sum of (A) the present value of the
interest payments which would have accrued on the principal balance of this Note (outstanding as
of the date of such Default Prepayment) at the Applicable Interest Rate from the date of such
Default Prepayment to the first date prepayment is permitted pursuant to this Note discounted at a
rate equal to the Treasury Rate except that such Treasury Rate shall be based on the U.S. Treasury
constant maturity most nearly approximating the date upon which prepayment is first permitted
pursuant to this Note, and (B) the Prepayment Consideration calculated as of the first date
prepayment is permitted pursuant to this Note; and
(ii) if the Default Prepayment occurs at a time when prepayment of the principal balance of
this Note is permitted, the Prepayment Consideration.
For purposes of this Note, the term “Default Prepayment” shall mean a prepayment of the
principal amount of this Note made after the occurrence and during the continuance of any Event of
Default or an acceleration of the Maturity Date under any circumstances, including, without
limitation, a prepayment occurring in connection with reinstatement of the Security Instrument
provided by statute under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory right to redeem or
prevent foreclosure, any sale in foreclosure or under exercise of a power of sale or otherwise.
ARTICLE 7: Security
This Note is secured by that certain Deed of Trust and Security Agreement dated the date
hereof in the principal sum of $15,675,000 given by Borrower to (or for the benefit of) Lender
covering the fee simple estate of Borrower in certain premises located in ▇▇▇▇▇▇ County, State of
Texas, and other property, as more particularly described therein (collectively, the “Property”)
and intended to be duly recorded in said County (the “Security Instrument”), and by the Other
Security Documents.
ARTICLE 8: Loan Charges
(a) This Note, the Security Instrument and the Other Security Documents are subject to the
express condition that at no time shall Borrower be obligated or required to pay interest on the
principal balance due hereunder at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which Borrower is permitted
by applicable law to contract or agree to pay. If by the terms of this Note, the Security
Instrument and the Other Security Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of such maximum rate, the
Applicable Interest Rate or the Default Rate or any other
consideration that constitutes interest
under applicable law, as the case may be, shall be deemed to be immediately reduced to such maximum
rate and all previous payments in excess of the maximum rate shall be deemed to have been payments
in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed
to be paid to Lender for the use, forbearance, or detention of the Debt, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full
stated term of the Note until payment in full so that the rate or amount of
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interest on account of the Debt does not exceed the Maximum Lawful Rate (as defined below) of
interest from time to time in effect and applicable to the Debt for so long as the Debt is
outstanding.
(b) It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times
to comply strictly with the applicable Texas law governing the maximum rate or amount of interest
payable on this Note (or applicable United Stated federal law to the extent that it permits Lender
to contract for, charge, take, reserve or receive a greater amount of interest than under Texas
law). If the applicable law is ever judicially interpreted so as to render usurious any amount (i)
contracted for, charged, taken, reserved or received pursuant to this Note, any of the other Loan
Documents or any other communications or writing by or between Borrower and Lender related to the
transaction or transactions that are the subject matter of the Loan Documents, (ii) contracted for,
charged or received by reason of Lender’s exercise of the option to accelerate the maturity of this
Note, or (iii) Borrower will have paid or Lender will have received by reason of any voluntary
prepayment by Borrower of this Note, then it is Borrower’s and Lender’s express intent that all
amounts charged in excess of the Maximum Lawful Rate shall be automatically cancelled, ab
initio, and all amounts in excess of the Maximum Lawful Rate theretofore collected by Lender
shall be credited on the principal balance of this Note (or, if this Note has been or would thereby
be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan
Documents immediately be deemed reformed and the amounts thereafter collectible hereunder and
thereunder reduced, without the necessity of the execution of any new document, so as to comply
with the applicable law, but so as to permit the recovery of the fullest amount otherwise called
for hereunder and thereunder; provided, however, if this Note has been paid in full before the end
of the stated term of this Note, then ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ agree that Lender shall, with reasonable
promptness after ▇▇▇▇▇▇ discovers or is advised by Borrower that interest was received in an amount
in excess of the Maximum Lawful Rate, either refund such excess interest to Borrower and/or credit
such excess interest against this Note then owing by borrower to Lender. In no event shall the
provisions of Chapter 346 of the Texas Finance Code (which regulates certain revolving credit loan
accounts and revolving triparty accounts) apply to this Note. Not-withstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender
to accelerate the maturity of any interest that has not accrued at the time of such acceleration or
to collect unearned interest at the time of such acceleration.
(c) As used herein, the term “Maximum Lawful Rate” shall mean the maximum lawful rate
of interest which may be contracted for, charged, taken, received or reserved by Lender in
accordance with the applicable laws of the State of Texas (or applicable United States federal law
to the extent that it permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law), taking into account all Charges (as herein defined) made
in connection with the transaction evidenced by this Note and the other Loan Documents. As used
herein, the term “Charges” shall mean all fees, charges and/or any other things of value, if any,
contracted for, charged, received, taken or reserved by Lender in connection with the transactions
relating to this Note and the other Loan Documents, which are treated as interest under applicable
law.
(d) To the extent that Lender is relying on Chapter 303 of the Texas Finance Code to
determine the Maximum Lawful Rate payable on this Note, Lender will utilize the weekly
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ceiling from time to time in effect as provided in such Chapter 303, as amended. To the extent
United States federal law permits Lender to contract for, charge, take, receive or reserve a
greater amount of interest than under Texas law, Lender will rely on United States federal law
instead of such Chapter 303 for the purpose of determining the
Maximum Lawful Rate. Additionally,
to the extent permitted by applicable law now or hereafter in effect, Lender may, at its option and
from time to time, utilize any other method of establishing the Maximum Lawful Rate under such
Chapter 303 or under other applicable law by giving notice, if required, to Borrower as provided by
applicable law now or hereafter in effect.
ARTICLE 9: Waivers
Borrower and all others who may become liable for the payment of all or any part of the Debt
do hereby severally waive presentment and demand for payment, notice of dishonor, protest and
notice of protest and non-payment and all other notices of any kind, except for notices expressly
provided for in this Note, the Security Instrument or the Other Security Documents. No release of
any security for the Debt or extension of time for payment of this Note or any installment hereof,
and no alteration, amendment or waiver of any provision of this Note, the Security Instrument or
the Other Security Documents made by agreement between Lender or any other person or party shall
release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of
Borrower, and any other person or entity who may become liable for the payment of all or any part
of the Debt, under this Note, the Security Instrument or the Other Security Documents. No notice
to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the
right of Lender to take further action without further notice or demand as provided for in this
Note, the Security Instrument or the Other Security Documents. If Borrower is a partnership,
corporation or limited liability company, the agreements contained herein shall remain in full
force and effect, notwithstanding any changes in the individuals or entities comprising Borrower,
and the term “Borrower,” as used herein, shall, to the extent permitted by applicable law, include
any alternate or successor entity, but any predecessor entity, and its partners or members, as the
case may be, shall not thereby be released from any liability incurred prior to the date of such
change. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any
prohibition or restriction on transfers of interests in Borrower which may be set forth in the
Security Instrument or any Other Security Document.)
ARTICLE 10: Waiver of Trial By Jury
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY
OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS
NOTE, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS
OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
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ARTICLE 11: Exculpation
(a) Notwithstanding anything to the contrary contained in this Note, the Security Instrument
or any Other Security Document (but subject to the provisions of subsections (b), (c) and (d) of
this Article 11), Lender shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in this Note or the Security Instrument by any action or
proceeding wherein a money judgment or any deficiency judgment or other judgment establishing any
personal liability shall be sought against Borrower or any principal, director, officer, employee,
beneficiary, shareholder, partner, member, trustee, agent or affiliate of Borrower or any person
owning, directly or indirectly, any legal or beneficial interest in Borrower, or any successors or
assigns of any of the foregoing (collectively, the “Exculpated Parties”), except that Lender may
bring a foreclosure action, action for specific performance or other appropriate action or
proceeding to enable Lender to enforce and realize upon this Note, the Security Instrument, the
Other Security Documents, and the interest in the Property, the Rents (as defined in the Security
Instrument) and any other collateral given to Lender to secure this Note; provided, however,
subject to the provisions of subsections (b), (c) and (d) of this Article 11, that any judgment in
any such action or proceeding shall be enforceable against Borrower only to the extent of
▇▇▇▇▇▇▇▇’s interest in the Property, in the Rents and in any other collateral given to Lender to
secure this Note. ▇▇▇▇▇▇, by accepting this Note and the Security Instrument, agrees that it shall
not, except as otherwise provided in this Article 11, sue for, seek or demand any deficiency
judgment against Borrower or any of the Exculpated Parties, in any such action or proceeding, under
or by reason of or under or in connection with this Note, the Security Instrument or the Other
Security Documents. The provisions of this Article 11 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Note, the Security Instrument
or the Other Security Documents delivered to Lender; (ii) impair the right of Lender to name
Borrower as a party defendant in any action or suit for judicial foreclosure and sale under the
Security Instrument; (iii) affect the validity or enforceability of any indemnity, guaranty, master
lease or similar instrument made in connection with this Note, the Security Instrument, or the
Other Security Documents; (iv) impair the right of Lender to obtain the appointment of a receiver;
(v) impair the enforcement of the Assignment of Leases and Rents executed in connection herewith;
(vi) impair the right of Lender to enforce the provisions of Section 12.2 of the Security
Instrument or of Section 3.12(e) of the Security Instrument; or (vii) impair the right of Lender to
obtain a deficiency judgment or other judgment on the Note against Borrower if necessary to fully
realize the security granted by the Security Instrument or to commence any other appropriate action
or proceeding in order for Lender to exercise its remedies against the Property.
(b) Notwithstanding the provisions of this Article 11 to the contrary, Borrower shall be
personally liable to Lender for the Losses (as defined in the Security Instrument) Lender incurs
due to: (i) fraud or intentional misrepresentation by Borrower or any of the Exculpated Parties in
connection with the Loan; (ii) the gross negligence or willful misconduct of Borrower; (iii) the
removal or disposal of any portion of the Property after an Event of Default; (iv) Borrower’s
misapplication, misappropriation or conversion of Rents received by Borrower after the occurrence
of an Event of Default; (v) Borrower’s misapplication, misappropriation or conversion of tenant
security deposits or Rents collected more than one (1) month in advance which are not delivered to
Lender for application to the Loan; (vi) the misapplication, misappropriation or conversion of
insurance proceeds or condemnation awards; (vii) Personal
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Property (as defined in the Security Instrument) of the Borrower taken from the Property by or on
behalf of Borrower or any of the Exculpated Parties and not replaced with Personal Property of the
same utility and of the same or greater value; (viii) any act of arson by Borrower or any of the
Exculpated Parties; (ix) any fees or commissions paid by Borrower after the occurrence of an Event
of Default to any Exculpated Party in violation of the terms of this Note, the Security Instrument
or the Other Security Documents; (x) failure to pay charges for labor or materials or other charges
that can create liens on any portion of the Property; (xi) any security deposits, advance deposits
or any other deposits collected under leases with respect to the Property not being delivered to
Lender upon a foreclosure of the Property or action in lieu thereof, except to the extent any such
security deposits were applied in accordance with the terms and conditions of the applicable Leases
(as defined in the Security Instrument) prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof; (xii) any failure by Borrower to permit on-site
inspections of the Property as required by the Security Instrument and/or the Other Security
Documents; (xiii) any failure of Borrower to appoint a new property manager upon the request of
Lender as required by the terms of the Security Instrument and/or the Other Security Documents;
(xiv) Borrower’s material breach of, or failure to comply with, the representations, warranties and
covenants contained in Articles 5.8(b), 5.19 and/or 12 of the Security Instrument; (xv) Borrower’s
failure to provide financial information to Lender as required by Section 3.12 of the Security
Instrument; and/or (xvi) any failure by Borrower to comply with any provisions of Section 4.2 (e),
(f), (g), (i), (j), (k), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w), (x), (y), (z),
(aa), (bb), (cc), (dd), (ee), (ff), (gg), (hh), or (ii) of the Security Instrument.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue recourse liability
against Borrower as set forth in subsection (a) above as to Borrower SHALL BECOME NULL AND VOID
and shall be of no further force and effect and the Debt shall be fully recourse to Borrower in
the event that: (i) the first full monthly payment of principal and interest under this Note is
not paid when due; (ii) Borrower fails to comply with any provision of Section 4.2 (a), (b), (c),
(d), (h) and (aa) of the Security Instrument; (iii) Borrower defaults under Article 8 of the
Security Instrument; (iv) Borrower files a voluntary petition under the U.S. Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law; (v) an affiliate, officer, director or
representative which controls Borrower, directly or indirectly, files, or joins in the filing of,
an involuntary petition against Borrower under the U.S. Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition against Borrower from any person or entity; (vi) Borrower files an
answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed
against it, by any other person or entity under the U.S. Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors
for any involuntary petition from any person or entity; (vii) any affiliate, officer, director or
representative which controls Borrower consents to or acquiesces in or joins in an application for
the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of the
Property; or (viii) Borrower makes an assignment for the benefit of creditors, or admits, in
writing or in any legal proceeding, its insolvency or inability to pay its debts as they become
due.
(d) Nothing herein shall be deemed to be a waiver of any right which Lender may have under
Section 506(a), 506(b), 1111(b) or any other provision of the U.S. Bankruptcy Code to file a claim
for the full amount of the indebtedness secured by the Security Instrument or to
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require that all collateral shall continue to secure all of the indebtedness owing to Lender
in accordance with this Note, the Security Instrument and the Other Security Documents.
ARTICLE 12: Authority
Borrower (and the undersigned representative of Borrower, if any) represents that Borrower
has full power, authority and legal right to execute and deliver this Note, the Security
Instrument and the Other Security Documents and that this Note, the Security Instrument and the
Other Security Documents constitute valid and binding obligations of Borrower.
ARTICLE 13: Governing Law
This Note shall be governed, construed, applied and enforced in accordance with the laws of
the state in which the Property is located without reference or giving effect to any choice of law
doctrine.
ARTICLE 14: Notices
All notices required or permitted hereunder shall be given as provided in the Security
Instrument.
ARTICLE 15: Incorporation By Reference
All of the terms, covenants and conditions contained in the Security Instrument and the Other
Security Documents are hereby made part of this Note to the same extent and with the same force as
if they were fully set forth herein.
ARTICLE 16: Miscellaneous
(a) Wherever pursuant to this Note it is provided that Borrower pay any costs and expenses,
such costs and expenses shall include, but not be limited to, reasonable legal fees and
disbursements of Lender, whether with respect to retained firms, the reimbursement for the
expenses of in-house staff, or otherwise. Borrower shall pay to Lender on demand any and all
expenses, including legal expenses and reasonable attorneys’ fees, incurred or paid by ▇▇▇▇▇▇ in
enforcing this Note, whether or not any legal proceeding is commenced hereunder, together with
interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses
are paid by Borrower.
(b) This Note may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by
an agreement in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
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(c) If Borrower consists of more than one person or party, the obligations and
liabilities of each person or party shall be joint and several.
(d) Whenever used, the singular number shall include the plural, the plural number shall
include the singular, and the words “Lender” and “Borrower” shall include their respective
successors, assigns, heirs, executors and administrators.
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has duly executed this Note as of the day and year first above
written.
| Borrower: | ||||||||
| AMREIT LAKE HOUSTON, LP, | ||||||||
| a Texas limited partnership | ||||||||
| By: | AmREIT Lake Houston GP, Inc., | |||||||
| a Texas corporation, | ||||||||
| Its general partner | ||||||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
|
|||||||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇ | |||||||
| Title: | Vice President | |||||||
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