UNSECURED PROMISSORY
NOTE (this “Note”)
$5,400,000 September 15, 2008 (the “Note
Date”)
FOR VALUE RECEIVED , Grubb
& Ellis Apartment REIT Holdings, LP, a Virginia limited
partnership (“ Borrower ”), unconditionally
promises to pay NNN Realty Advisors, Inc., a Delaware corporation
(“ Lender ”), in the manner and at the place
hereinafter provided, the principal amount of Five Million Four
Hundred Dollars ($5,400,000).
Borrower also promises to pay
interest on the unpaid principal amount hereof from the Note Date
until paid in full at a rate per annum equal to the Interest Rate
(capitalized terms used herein and not otherwise defined herein
shall have the meanings provided in Schedule A attached
hereto), provided that any principal amount not paid when due and,
to the extent permitted by applicable law, any interest not paid
when due, in each case whether at stated maturity, declaration,
acceleration, demand or otherwise (both before as well as after
judgment), shall bear interest payable upon demand at a rate per
annum equal to the Default Interest Rate. Interest on this Note
shall be payable in arrears on the first day of each month
beginning on the Commencement Date, each date on which an
installment of principal is due and payable hereunder, upon any
prepayment of this Note (to the extent accrued on the amount being
prepaid) and at maturity. All computations of interest shall be
made by Lender on the basis of a 365-day year, for the actual
number of days elapsed in the relevant period (including the first
day but excluding the last day). In no event shall the interest
rate payable on this Note exceed the maximum rate of interest
permitted to be charged under applicable law.
1. Maturity Date
. The outstanding principal amount of the Note, and any accrued
but unpaid interest thereon, shall be automatically due and payable
on the Maturity Date; provided , that Borrower may not make
any payment of the principal of this Note in whole or in part on
any date on which there is any principal amount outstanding under
the Loan (as such term is defined below) .
2. Payments . All
payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day
funds at the office of Lender located at 1551 N. Tustin Avenue,
Suite 300, Santa Ana, California 92705, or at such other place
as Lender may direct. Whenever any payment on this Note is stated
to be due on a day that is not a Business Day (as defined herein),
such payment shall instead be made on the next Business Day and
such extension of time shall be included in the computation of
interest payable on this Note. Each payment made hereunder shall be
credited first to interest then due and the remainder of such
payment shall be credited to principal, and interest shall
thereupon cease to accrue upon the principal so credited. Each of
Lender and any subsequent holder of this Note agrees, by its
acceptance hereof, that before disposing of this Note or any part
hereof the Lender and any subsequent holder of this Note will
mutually agree on the amount of all principal payments previously
made hereunder and of the date to which interest hereon has been
paid; provided , however , that the failure to make a
notation of any payment made on this Note shall not limit or
otherwise affect the obligation of Borrower hereunder with respect
to payments of principal or interest on this Note. “
Business Day ” means any day other than a Saturday,
Sunday or legal holiday under the laws of the State of California
or any other day on which banking institutions located in such
state are authorized or required by law or other governmental
action to close.
3. Prepayments .
Borrower shall have the right at any time and from time to time on
or prior to the Maturity Date to prepay the principal of this Note
in whole or in part, without premium or penalty; provided ,
that Borrower may not make any payment of the principal of this
Note in whole or in part on any date on which there is any
principal amount outstanding under the Loan (as such term is
defined below) . Any
prepayment hereunder shall be accompanied by the payment of accrued
interest on the principal amount of this Note being prepaid to the
date of prepayment.
4. Covenants .
Borrower covenants and agrees that until this Note is paid in full
it will:
(a) promptly
provide to Lender financial and operational information with
respect to Borrower or any of its subsidiaries as Lender may
reasonably request;
(b) promptly
after the occurrence of an Event of Default (as defined herein) or
an event, act or condition that, with notice or lapse of time or
both, would constitute an Event of Default, provide Lender with a
certificate of the chief executive officer, chief financial officer
or general partner(s) of Borrower specifying the nature thereof and
Borrower’s proposed response thereto; and
(c) not
merge or consolidate with any other Person (as defined herein), or
sell, lease or otherwise dispose of all or any substantial part of
its property or assets to any other Person.
“ Person ” means
any individual, partnership, limited liability company, joint
venture, firm, corporation, association, bank, trust or other
enterprise, whether or not a legal entity, or any government or
political subdivision or any agency, department or instrumentality
thereof.
5. Representations and
Warranties . Borrower hereby represents and warrants to
Lender that:
(a) it is a
duly organized and validly existing corporation in good standing
under the laws of the jurisdiction of its organization and has the
corporate power and authority to own and operate its properties, to
transact the business in which it is now engaged and to execute and
deliver this Note;
(b) this
Note constitutes the duly authorized, legally valid and binding
obligation of Borrower, enforceable against Borrower in accordance
with its terms;
(c) all
consents and grants of approval required to have been granted by
any Person in connection with the execution, delivery and
performance of this Note have been granted;
(d) the
execution, delivery and performance by Borrower of this Note do not
and will not violate any law, governmental rule or regulation,
court order or agreement to which it is subject or by which its
properties are bound or the charter documents or bylaws of
Borrower;
(e) there is
no action, suit, proceeding or governmental investigation pending
or, to the knowledge of Borrower, threatened against Borrower or
any of its subsidiaries or any of their respective assets which, if
adversely determined, would have a material adverse effect on the
business, operations, properties, assets, condition (financial or
otherwise) or prospects of Borrower and its subsidiaries, taken as
a whole, or the ability of Borrower to comply with its obligations
hereunder; and
(f) the
proceeds of the loan evidenced by this Note shall be used by
Borrower for the purpose of acquiring real property.
6.
Events of Default . The occurrence of any
of the following events shall constitute an “ Event of
Default ”:
(a) failure
of Borrower to pay any Installment Payment or interest thereon due
under this Note within five business days after the date due, or
failure of Borrower to pay any principal, interest or other amount
due under this Note when otherwise due, whether at stated maturity,
declaration, acceleration, demand or otherwise; or
(b) failure
of Borrower to perform or observe any other term, covenant or
agreement to be performed or observed by it pursuant to this Note;
or
(c) any
representation or warranty made by Borrower to Lender in connection
with this Note shall prove to have been false in any material
respect when made; or
(d) any
order, judgment or decree shall be entered against Borrower
decreeing the liquidation, dissolution or split-up of Borrower;
or
(e) suspension of the usual business activities of Borrower or
the complete or partial liquidation of Borrower’s business;
or
(f) (i) a
court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Borrower in
