Exhibit 10.4
CONSTRUCTION LOAN AGREEMENT
BETWEEN
CAMPUS CREST AT DENTON, LP,
a Delaware limited partnership
AND
AMEGY MORTGAGE COMPANY, L.L.C. d/b/a Q-10 Amegy Mortgage Capital,
a Texas limited liability company
Loan No. 99-10-71209

 

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Table of Contents

              ARTICLE I: DEFINITIONS     1  
1.01
  Advance     1  
1.02
  Application for Advance     1  
1.03
  Appraisal     1  
1.04
  Approved Budget     1  
1.05
  Assignment of Construction Contracts     2  
1.06
  Assignment of Permits and Licenses     2  
1.07
  Assignment of Purchase Contracts     2  
1.08
  Assignment of Rights to Plans and Specifications     2  
1.09
  Availability of Utilities Letter     2  
1.10
  Borrower’s Equity     2  
1.11
  Closing Date     2  
1.12
  Completion Date     2  
1.13
  Compliance Letter     2  
1.14
  Construction Contract     3  
1.15
  Contractor     3  
1.16
  Current Survey     3  
1.17
  Deed of Trust     3  
1.18
  Depository Bank     3  
1.19
  Design Professional     3  
1.20
  Engineering Reports     3  
1.21
  Event of Default     3  
1.22
  Force Majeure     4  
1.23
  Governmental Authority     4  
1.24
  Governmental Requirements     5  
1.25
  Guarantor     5  
1.26
  Guaranty Agreement     5  
1.27
  Improvements     5  
1.28
  Inspecting Engineers     5  
1.29
  Inspection Certificate     5  
1.30
  Land     5  
1.31
  Letters of Credit     5  
1.32
  Loan     5  
1.33
  Loan Documents     5  
1.34
  Master Plan     5  
1.35
  Note     6  
1.36
  Operating Account     6  
1.37
  Phases     6  
1.38
  Plans     6  
1.39
  Property     6  
1.40
  Purchase Contracts     6  
1.41
  Supervision Professional     6  
1.42
  TCEQ     6  
1.43
  Title Company     6  
1.44
  Title Insurance Policy     6  

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1.45
  Title Underwriter     6  
1.46
  Other Terms     6   ARTICLE II: ADVANCES BY LENDER     7  
2.01
  Use of Loan Proceeds     7  
2.02
  Procedure for Advances     7  
2.03
  Requirements for Subsequent Advances     10  
2.04
  Conditions to Subsequent Advances     11  
2.05
  Completion of Improvements     12  
2.06
  No Waiver     13  
2.07
  Conditions Precedent for the Benefit of Lender     13  
2.08
  Subordination     13  
2.09
  Operating Account     13  
2.10
  Letters of Credit     13   ARTICLE III: REPRESENTATIONS AND WARRANTIES OF
BORROWER     15  
3.01
  Representations and Warranties     15  
3.02
  Survival of Representations and Warranties     16  
3.03
  Inducement to Lender     16   ARTICLE IV: COVENANTS AND AGREEMENTS OF BORROWER
    16  
4.01
  Compliance with Governmental Requirements     16  
4.02
  The Construction Contract     17  
4.03
  Construction of the Improvements and Supervision     17  
4.04
  Correction of Construction Defects     17  
4.05
  Storage of Materials     17  
4.06
  Inspection of the Property     18  
4.07
  Notices by Governmental Authority, Fire and Casualty Losses, Etc.     18  
4.08
  Application of Advances     18  
4.09
  Direct Disbursement and Application by Lender     18  
4.10
  Costs and Expenses     18  
4.11
  Change Orders     18  
4.12
  No Liability of Lender     18  
4.13
  No Conditional Sale Contracts, Etc.     19  
4.14
  Defense of Action     19  
4.15
  Assignment of Construction Contract     19  
4.16
  Assignment of Plans     20  
4.17
  Payment of Claims     21  
4.18
  Inspections     21  
4.19
  Indemnity     21  
4.20
  Lender’s Action for its Own Protection Only     22   ARTICLE V: RIGHTS AND
REMEDIES OF LENDER     22  
5.01
  Rights of Lender     22  
5.02
  Cessation of Advances     23  
5.03
  Funds of Lender     23  
5.04
  No Waiver or Exhaustion     23   ARTICLE VI: GENERAL TERMS AND CONDITIONS    
23  
6.01
  Notices     23  
6.02
  Entire Agreement and Modifications     23  
6.03
  Severability     24  

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6.04
  Election of Remedies     24  
6.05
  Form and Substance     24  
6.06
  No Third Party Beneficiary     24  
6.07
  Borrower In Control     24  
6.08
  Number and Gender     24  
6.09
  Captions     24  
6.10
  Applicable Law     24  
6.11
  Multiple Counterparts     24  

Exhibits:
Exhibit “A” — Description of Land
Exhibit “B-1” — Draw Request
Exhibit “B-2” — Draw Request Certification
Exhibit “B-3” — AIA Form of Application of Advance
Exhibit “B-4” — Contractor Draw Certification
Exhibit “C-1” — Initial Approved Budget
Exhibit “C-2” — Budget Revision Request Form
Exhibit “C-3” — Budget Revision Request Certification
Exhibit “D-1” — Assignment of Builder Takedown Contracts (Intentionally Omitted)
Exhibit “D-2” — Assignment of Construction Contracts
Exhibit “D-3” — Assignment of Unit Purchase Contract (Intentionally Omitted)
Exhibit “D-4” — Assignment of Right of Reimbursement (District Receivables)
(Intentionally Omitted)
Exhibit “D-5” — Assignment of Rights to Plan and Specifications
Exhibit “E” — Form of Compliance Letter
Exhibit “F” — Affidavit of Commencement
Exhibit “G-1” — Partial Waiver and Release of Lien
Exhibit “G-2” — Final Waiver and Release of Lien
Exhibit “H” — Affidavit and Certificate of Completion
Exhibit “I-1” — Affidavit of Bills Paid
Exhibit “I-2” — Owner’s Affidavit of Bills Paid
Exhibit “J” — List of Tenant Leases (Intentionally Omitted)

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CONSTRUCTION LOAN AGREEMENT
     THIS CONSTRUCTION LOAN AGREEMENT (“Agreement”) dated November 16, 2010 is
made by and between AMEGY MORTGAGE COMPANY, L.L.C. d/b/a Q-10 Amegy Mortgage
Capital, a Texas limited liability company (“Lender”), and CAMPUS CREST AT
DENTON, LP, a Delaware limited partnership (“Borrower”).
     Borrower has applied to Lender for a loan for the purposes hereinafter
described concerning the Land (hereinafter defined) described on Exhibit “A”
attached hereto and made a part hereof for all purposes; and Lender is willing
to make such loan upon the terms and conditions herein set forth in
consideration of the mutual covenants and agreements herein contained, Borrower
and Lender agree as follows:
ARTICLE 1: DEFINITIONS
     For purposes of this Agreement, the following terms shall have the
respective meanings assigned to them.
     1.01 Advance . The term “Advance” shall mean a disbursement by Lender of
any of the proceeds of the Loan.
     1.02 Application for Advance . The term “Application for Advance” shall
mean a written application by Borrower (and such other parties as Lender may
require) to Lender utilizing (i) the Draw Request form, a copy of which is
attached hereto as Exhibit “B-1”, (ii) the Draw Request Certification to be
signed by Borrower, a copy of which is attached hereto as Exhibit “B-2”,
(iii) the American Institute of Architects’ Forms G-702 and G-703, copies of
which are attached hereto as Exhibit “B-3” and (iv) the Contractor Draw Request
Certification to be signed by the Contractor, a copy of which is attached hereto
as Exhibit “B-4” and if requested by Lender, a Contractor’s Affidavit of Bills
Paid described in Section 2.05(b), all accompanied by such schedules,
certificates, affidavits, releases, waivers, statements, invoices, bills, and
other documents as Lender may reasonably request.
     1.03 Appraisal . The term “Appraisal” shall mean a written appraisal of the
Land and Improvements in form and substance and prepared by an appraiser
acceptable to Lender. The Appraisal shall comply and be in conformity with the
regulatory requirements for federally chartered national banks.
     1.04 Approved Budget . The term “Approved Budget” shall mean a budget or
cost itemization prepared by Borrower and approved by Lender specifying the cost
by item of (a) Land acquisition or refinance and closing costs related thereto,
(b) all labor, materials, and services necessary for the construction of the
Improvements in accordance with the Plans and all Governmental Requirements, and
(c) all other expenses anticipated by Borrower incident to the development of
the Property, and the construction of Improvements. The Approved Budget will
show total costs of all items and proposed allocation of Advances and Borrower’s
Equity to such items. The initial Approved Budget is attached hereto as Exhibit
“C-1” and incorporated herein by reference. The Approved Budget may be amended
by Borrower, from time to time, with the prior written consent of Lender, which
consent will not be unreasonably withheld or delayed. It is contemplated by
Borrower and Lender that the Approved

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Budget shall be amended, as construction of the Improvements is undertaken by
Borrower and Loan proceeds are used for payment of portions of the cost of
construction. In connection with said amendments, Borrower shall have the right
to reallocate savings and/or surplus on a particular line item of the Approved
Budget to one or more other line items without Lender’s prior written consent;
provided that any use of the “Contingency” line item shall require Lender’s
prior approval. A copy of the Budget Revision Request Form and Budget Revision
Request Certification to be utilized by Borrower for amendment of the Approved
Budget are attached hereto as Exhibit “C-2” and Exhibit “C-3”, respectively.
Lender hereby agrees not to unreasonably withhold its consent to any budget line
item reallocation request and to use good faith efforts to respond to any such
request within five (5) Business Days after Borrower’s request.
     1.05 Assignment of Construction Contracts . The term “Assignment of
Construction Contracts” shall collectively mean one or more collateral
assignments in the form attached hereto as Exhibit “D-2” and incorporated herein
for all purposes, executed by Borrower and acknowledged by the general
contractor, assigning the construction contract with the general contractor to
Lender.
     1.06 Assignment of Permits and Licenses . The term “Assignment of Permits
and Licenses” shall mean a collateral assignment in form and substance
acceptable to Lender, executed by Borrower to Lender, assigning all permits,
licenses and other agreements affecting the Property and/or necessary or
desirable for the ownership, use and operation thereof, as and if same shall
come into existence.
     1.07 Assignment of Purchase Contracts . [Intentionally deleted.]
     1.08 Assignment of Rights to Plans and Specifications . The term
“Assignment of Rights to Plans and Specifications” shall mean a collateral
assignment in form attached hereto as Exhibit “D-5” and incorporated herein for
all purposes of Borrower’s rights with respect to the Plans, duly executed by
Borrower and acknowledged by Design Professional.
     1.09 Availability of Utilities Letter . The term “Availability of Utilities
Letter” shall mean a letter or letters or other evidence, in form and substance
acceptable to Lender, to be completed by parties acceptable to Lender certifying
that the Property, when the Improvements are completed, will have adequate
rights and means of access to all water, storm and sanitary sewer facilities,
gas, cable t.v., telephone, and electric service necessary for the intended use
of the Property and adequate pedestrian and vehicular access to one or more
dedicated public streets.
     1.10 Borrower’s Equity . The term “Borrower’s Equity” shall mean the amount
of Borrower’s cash equity investment in the Land and the Improvements as
reasonably calculated from time to time by Lender. Borrower’s Equity shall be at
least equal to the total cost shown on the Approved Budget less the proceeds of
the Loan, but will in no event be less than $7,785,789.00. The amount of
Borrower’s Equity required may be increased in the event additional funding is
required pursuant to the terms of Section 2.02 of this Agreement.
     1.11 Closing Date . The term “Closing Date” shall mean the date of the
execution and delivery of this Agreement by Borrower and Lender.
     1.12 Completion Date . The term “Completion Date” shall mean twelve months
from the effective date hereof, or such earlier date on which Borrower is
required to deliver space to tenants under

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any lease agreements.
     1.13 Compliance Letter . The term “Compliance Letter” shall mean a letter
to be delivered to Lender upon approval of the Plans, and at any time that there
shall be a change or modification in the Plans, in form or substance
satisfactory to Lender, completed by the Design Professional, certifying that
the Improvements, when completed as designed, including such changes and
modifications, will be in compliance with all applicable Governmental
Requirements of each Governmental Authority having jurisdiction over the
Property [including but not limited to Section 404 of the Federal Clean Water
Act,] and in compliance with the conditions which must be satisfied to maintain
any permits for the Improvements. An acceptable form of Compliance Letter is
attached hereto as Exhibit “E” and made a part hereof for all purposes.
     1.14 Construction Contract . The term “Construction Contract” shall mean
all contracts executed between Borrower and each Contractor for the rendering of
services or furnishing of materials in connection with the completion of
Improvements.
     1.15 Contractor . The term “Contractor” shall mean each “original
contractor” (as defined in Section 53.001 of the Texas Property Code, as amended
from time to time), with whom Borrower contracts for the construction of any of
the Improvements or any other work with respect to the Property. All Contractors
under any Construction Contract exceeding ten percent (10%) of the amount of the
Approved Budget shall be bonded with payment and performance bonds in accordance
with Lender’s reasonable requirements unless waived by Lender based upon
Lender’s review of the Contractor’s financial condition. The term “Contractor”
shall not include CAMPUS CREST CONSTRUCTION, INC.
     1.16 Current Survey . The term “Current Survey” shall mean an on-the ground
survey of the Land (and Improvements, if applicable) dated within ninety days of
the date such survey is required to be furnished pursuant to any provision of
this Agreement, performed by a surveyor duly licensed as such in the State of
Texas, in form and substance acceptable to Lender and Title Company such that
the Title Company may amend the Title Insurance Policy under procedural rule P-2
to delete the standard pre-printed exception concerning areas and boundary, save
“shortages in area”.
     1.17 Deed of Trust . The term “Deed of Trust” shall mean the deed of trust
securing the payment of the Note and the payment and performance of all
obligations specified in said deed of trust and this Agreement, and evidencing a
valid and enforceable first priority lien on the Property.
     1.18 Depository Bank . The term “Depository Bank” shall mean Amegy Bank
National Association.
     1.19 Design Professional . The term “Design Professional” shall mean the
architect, designer, draftsman, engineer or other professional selected by the
Borrower and approved in writing by Lender, who is responsible for the creation
of the Plans.
     1.20 Engineering Reports . The term “Engineering Reports” shall mean all
soil analysis reports, construction and mechanical feasibility reports and plans
and such other reports of engineers and others regarding improvement and site
development of the Land as shall be reasonably required by Lender.

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     1.21 Event of Default . The term “Event of Default” shall mean:

  (a)   A default under or failure by Borrower to comply with any of the terms
or conditions, or breach of any covenant or warranty specified herein or in any
other Loan Document and the expiration of any cure period as follows: (i) ten
(10) days after notice from Lender, for any default under any term, covenant or
condition of any of the Loan Documents (excepting the default for failure to pay
the Debt as described in subsection 10(a) of the Security Instrument) which
default can be cured by the payment of a sum of money and (ii) thirty (30) days
after notice from Lender in the case of any other default, provided that if such
default cannot reasonably be cured within such thirty (30) day period and
Borrower shall have commenced to cure such default within such thirty (30) day
period and thereafter diligently and expeditiously proceeds to cure the same,
such thirty (30) day period shall be extended for so long as it shall require
Borrower in the exercise of due diligence to cure such default, it being agreed
that no such extension shall be for a period in excess of sixty (60) days;    
(b)   The cessation of the construction of the Improvements for more than thirty
(30) consecutive days (excluding Force Majeure events) without the written
consent of Lender;     (c)   A failure of any of the materials supplied for the
construction of the Improvements to comply with the Plans or any Governmental
Requirements and such failure is not cured within thirty (30) days after written
notice from Lender of such default;     (d)   A reasonable determination by
Lender that construction of the Improvements will not be completed on or before
the Completion Date.

     Notwithstanding anything contained herein to the contrary, Borrower shall
have all grace periods and notice and curative rights as provided in the Note
prior to Lender declaring an Event of Default; provided however, during any such
grace periods and notice and curative rights periods, Lender shall have no
obligation to make Advances.
     1.22 Force Majeure . The term “Force Majeure” shall mean occurrence beyond
the control of the party affected, including, but not limited to, acts of God or
of the public enemy; expropriation or confiscation of facilities or property;
compliance with any order or request of any Governmental Authority or person
purporting to act therefor, adversely affecting the supply, availability or use
of materials or labor; acts of war, public disorders, rebellion, sabotage,
fires, explosions, floods, storms, or breakdowns; riots, strikes or other
concerted acts of workmen, whether direct or indirect, or any other causes
whether or not of the class or kind specifically named above, not within the
reasonable control of the party affected and which, by the exercise of
reasonable diligence, said party is unable to prevent or avoid; provided,
however, that any claim for an extension of time or excused non-performance as a
result of such occurrence shall be made by written notice to Lender, claiming
such extension or excused non-performance and delivered not more than thirty
days after the commencement of such occurrence.
     1.23 Governmental Authority . The term “Governmental Authority” shall mean
the United

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States of America, the State, the County, the TCEQ, the City, Municipal Utility
District, Road Utility District, or any other political subdivision in which the
Property is located, and any other political subdivision, agency, district,
department, commission, board, bureau, court or instrumentality which now or
hereafter has jurisdiction or extra territorial jurisdiction over Lender,
Borrower, Contractor or any part of the Property (including, but not limited to,
platting, zoning, utilities and site development or construction on the
Property).
     1.24 Governmental Requirements . The term “Governmental Requirements” shall
mean all applicable laws, ordinances, orders, rules, and regulations of any
Governmental Authority applicable to Borrower or the Property.
     1.25 Guarantor . The term “Guarantor” shall mean CAMPUS CREST COMMUNITIES,
INC., a Maryland corporation.
     1.26 Guaranty Agreement . The term “Guaranty Agreement” shall mean any
guaranty agreement executed by the Guarantor from time to time, to guarantee
payment of the Loan and performance of the Loan Documents.
     1.27 Improvements . The term “Improvements” shall mean all site and
building improvements (including, but not limited to, the clearing, grading,
paving, and appurtenances directly related thereto), buildings, utility
improvements, drainage improvements, landscaping, amenities, infrastructures and
all other facilities and on-site and off-site improvements to the Property, the
construction of which is required to properly develop the Land in accordance
with the Master Plan, the Plans and the Approved Budget.
     1.28 Inspecting Engineers . The term “Inspecting Engineers” shall mean the
inspecting or consulting engineers or other third party inspectors retained by
Lender for the purpose of making the inspections contemplated hereunder.
     1.29 Inspection Certificate . The term “Inspection Certificate” shall mean
a certificate issued by the Inspecting Engineers approving, among other matters,
soils test, Plans (including, without limitation, systems, structural details,
and compliance with any local, state or federal laws), construction cost
breakdown, progress schedules and contracts with the Contractor and major
subcontractors.
     1.30 Land . The term “Land” shall mean the land described on Exhibit “A”
attached hereto and incorporated herein by reference for all purposes.
     1.31 Letters of Credit . The term “Letters of Credit” shall mean one or
more standby letters of credit issued by Depository Bank for the benefit of
Borrower in favor of a Governmental Authority or other beneficiary to assure
completion of the development and furnishing of the Property.
     1.32 Loan . The term “Loan” shall mean the financing evidenced by the Loan
Documents.
     1.33 Loan Documents . The term “Loan Documents” shall mean this Agreement,
the Deed of Trust, the Note, and such other instruments evidencing, securing, or
pertaining to the Loan as shall, from time to time, be executed and delivered by
Borrower, any guarantor of the Loan, or any other party, to Lender pursuant to
this Agreement.

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     1.34 Master Plan . The term “Master Plan” shall mean collectively, the
various related materials provided to the Lender by Borrower with regard to the
construction of Improvements on the Property. Such Master Plan shall include
appropriate budgets, construction schedules, draw schedules, plans,
specifications, list of construction contracts, construction timeline and other
particulars, in form and content, as required by Lender. Any component of the
Master Plan may be amended from time to time by Borrower, upon Lender’s prior
written consent. Except for the Initial Advance, no Loan proceeds shall be
advanced until Borrower submits and Lender approves the Master Plan.
     1.35 Note . The term “Note” shall mean the promissory note from Borrower to
Lender dated of even date herewith in the amount of $17,167,000.00 and
evidencing the Loan.
     1.36 Operating Account . The term “Operating Account” shall mean an
Operating Account established by Borrower with Depository Bank which shall be
the exclusive operating and deposit account used by Borrower in connection with
the Property.
     1.37 Phases . [Intentionally deleted.]
     1.38 Plans . The term “Plans” shall mean, if any, architectural,
structural, electrical, plumbing, heating, ventilation, air conditioning,
sprinkler system, topography, on-site utilities, off-site utilities,
landscaping, road and parking plans and specifications, all certified as such by
the Design Professional, if any, preparing the same. The Plans shall be approved
in writing by Lender, and Borrower and, if applicable, all necessary
Governmental Authorities for the construction of the Improvements. With respect
to any Plans for Improvements costing more than $100,000.00, Lender reserves the
right to have an independent architect or engineer of its choice review the
Plans so submitted and to provide a written report thereon to Lender prior to
the acceptance or rejection of the Plans by Lender, the cost of which shall be
borne by Borrower. Lender shall have the right to require reasonable changes in
the Plans.
     1.39 Property . The term “Property” shall mean the Land together with the
Improvements and all other property constituting the “Property,” as described in
the Deed of Trust.
     1.40 Purchase Contracts . [Intentionally deleted.]
     1.41 Supervision Professional . The term “Supervision Professional” shall
mean the architect, engineer, construction consultant or other third party
selected by the Borrower and approved in writing by Lender to supervise the
construction of the Improvements on behalf of the Borrower. Borrower is required
to hire and direct the Supervision Professional until completion of the
Improvements. Lender hereby approves Campus Crest Development, Inc. as the
Supervision Professional hereunder.
     1.42 TCEQ . The term “TCEQ” shall mean the Texas Commission on
Environmental Quality or its successors.
     1.43 Title Company . The term “Title Company” shall mean Chicago Title
Insurance Company.
     1.44 Title Insurance Policy . The term “Title Insurance Policy” shall mean
the mortgagee

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title insurance policy or title policy binder on interim construction, issued by
the Title Company, naming Lender as the insured party, in the amount of the
Loan, insuring or committing to insure that the Deed of Trust constitutes a
valid first priority lien covering the Property, and subject only to exceptions
approved by Lender.
     1.45 Title Underwriter . The “Title Underwriter” shall mean Chicago Title
Insurance Company.
     1.46 Other Terms . Other terms used, but not defined, herein shall have the
meaning assigned to such term as provided in the Deed of Trust. The term
“construction” as used herein shall also include renovation of existing
Improvements and the development of infrastructure improvements of the Land.
ARTICLE 2: ADVANCES BY LENDER
     2.01 Use of Loan Proceeds . Advances shall be made from time to time at the
request of Borrower in accordance with the terms of this Agreement. Advances
shall be made only for:

  (a)   an “Initial Advance” at closing for costs of acquisition of the Property
(or for refinance of such acquisition costs) and for other items approved by
Lender and shown on the Approved Budget;     (b)   labor, materials (stored on
the Property in accordance with the requirements of this Agreement) and services
for the construction of Improvements on the Property approved by Lender and in
accordance with the Plans and the Approved Budget (the “Construction
Allocation”); and     (c)   other items approved by Lender and shown on the
Approved Budget which may include costs associated with the development of the
Property which are not included in the Initial Advance and Construction
Allocation such as architectural and engineering fees, tenant improvements
costs, interest, property taxes, insurance, leasing commissions, title and
recording fees, and loan fees (the “Non Construction Allocation”).

     2.02 Procedure for Advances .

  (a)   Subject to the terms of this Agreement, the amount of each Advance for
the Construction Allocation shall not exceed a sum calculated by multiplying the
Construction Allocation portion of the Loan amount times the percentage of
completion of the Improvements less the total aggregate amount of funds
previously disbursed under such Loan for the Construction Allocation, less
applicable Retainage, provided however, that the total amount advanced shall
never exceed the original principal amount of the Note. Percentage of completion
of the Improvements shall be determined in the reasonably discretion of the
Lender.     (b)   Subject to the terms of this Agreement, the amounts available
for the Non Construction Allocation shall be advanced, but only to the extent
that such

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      charges have been incurred, or that the Borrower is otherwise entitled to
payment on account of such items as provided for in the Approved Budget or
otherwise in accordance with the Loan Documents.     (c)   Each Application for
Advance shall be made in writing, signed by the Borrower, and shall be
accompanied by a certificate prepared by the Borrower, or at Lender’s election,
Borrower’s Supervision Professional, which certificate shall state the
percentage of completion of the Improvements and the services and/or materials
to be paid for therefrom. Upon approval of such certificate by the Lender, the
Advance shall be made. Prior to approval by Lender, the Lender shall be entitled
to make any and all inspections and require further documentation from Borrower,
all as Lender may deem necessary in order to substantiate and determine the
percentage of completion of such Improvements. Lender may retain, at Borrower’s
cost, the Inspecting Engineers to complete said inspections and to review the
Master Plan and the Plans, prior to approval. Borrower agrees to pay to the
Lender the actual cost of each inspection made by the Lender, its employees,
agents, or contractors.     (d)   Advances shall be made after construction of
the Improvements (“Work”) has commenced and shall be made for Work done
preceding the date of request upon Lender’s receipt of an Affidavit of
Commencement in the form provided on Exhibit “F” attached hereto and made a part
hereof for all purposes. Application for Advance shall be filed no more often
than twice monthly, shall be filed at least ten working days before the date
upon which an Advance is desired, shall be certified by the Supervision
Professional, if any, and Borrower, and (if required by Lender) approved by the
Inspecting Engineers, shall specify which contractors, subcontractors/suppliers
are being paid out of said Advance and in what amounts, making reference to
specific line items on the Approved Budget, and shall contain such information
as Lender reasonably may request. Lender, at its discretion, may require a
Compliance Letter and/or an Inspection Certificate prior to approving any
Application for Advance. The amount of each Advance of the Construction
Allocation under the Loan shall be the amount which the Contractor has earned
under the Construction Contract, as approved by Lender, less amounts for which
sums have been previously advanced, less the Retainage as more fully described
in subparagraph (e) hereinafter and such amount shall be advanced under the Loan
on behalf of Borrower and shall be delivered directly to Borrower. Lender shall
not be required to advance funds if in the good faith opinion of Lender (i) the
Work is not being completed in a timely and good and workmanlike manner, in
accordance with the Plans, (ii) Borrower fails to promptly pay for any labor or
materials relating to the Work, or (iii) the portion of the Loan then remaining
unadvanced will not be sufficient to complete the Work in accordance with the
Master Plan and the Approved Budget, whereupon no additional Advances will be
due Borrower unless and until Borrower at its sole cost performs a sufficient
portion of the Work so that such portion of the Loan then remaining unadvanced
(including the Borrower Deposit as such term is defined in Subsection 1.10
hereinabove) is determined by Lender to be sufficient to so complete the Work.
In such latter event, Lender may also require

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      Borrower to provide evidence of availability of additional funds to make
up such deficiency and/or may require that the additional funds be held by
Lender as part of the Borrower Deposit, to be funded in accordance with the
terms hereof. Notwithstanding the foregoing, completion of the Work for which an
Advance is requested and the amount of each Advance shall be determined in the
reasonable discretion of Lender. Borrower shall utilize all Advances made to it
by Lender only for the payment of the costs itemized in the Approved Budget as
amended from time to time. Anything to the contrary contained in this Section
notwithstanding, in the event that Borrower is required to deposit balancing
funds with Lender hereunder and the Property is thereafter completed with
subsequent savings that, had they occurred prior to the requirement of the
balancing funds, would have rendered all or a portion of such deposit to be
unnecessary, Borrower shall be entitled to a reimbursement of the funds
deposited equal to the lesser of (a) the amount of such subsequent savings or
(b) the amount of the balancing funds deposit.     (e)   Lender may, at its
election, retain the statutory 10% Retainage from each Advance relating to
construction of Improvements hereunder in order to allow Borrower to fully
comply with Section 53.101 of the Texas Property Code for the payment of
mechanics, materialmen, subcontractors, contractors and artisans or others
entitled to liens against the Property for work done or materials supplied (the
“Retainage”), such Retainage to be held until thirty days after the date the
Lender has received the following: (1) a substantial completion certificate
executed by Inspecting Engineers, the Supervision Professional, Contractor and
Borrower, (2) evidence that all Governmental Requirements have been satisfied,
including if applicable, but not limited to, delivery to Lender of certificates
of occupancy permitting the Improvements to be legally occupied, (3) evidence
that no mechanic’s or materialmen’s liens or other encumbrances have been filed
and remain in effect against the Property, (4) final lien releases or waivers by
Contractor, and all subcontractors, materialmen, and other parties who have
supplied labor, materials, or services for the construction of the Improvements,
or who otherwise might be entitled to claim a contractual, statutory, or
constitutional lien against the Property, and (5) issuance by the Title Company
of an endorsement to the mortgagee title policy deleting the mechanic’s lien and
pending disbursements exceptions and recertifying the survey deletion
endorsement, at which time, such retained sums shall be disbursed by Lender to
Borrower and then by Borrower to contractors, suppliers, artisans, and others
entitled thereto. In the event that Lender does not retain the statutory 10%
Retainage from each Advance relating to construction of Improvements, it is
agreed that Borrower, upon request by Lender, shall provide the Lender with
proof in form and content satisfactory to the Lender that such statutory
Retainage requirement is being complied with by Borrower. At the Lender’s
discretion, upon notice to Borrower, the Lender may withhold such Retainage from
each such Advance in a special account of Borrower established for that purpose
for the use and benefit of those entitled thereto. Notwithstanding anything
contained in this Agreement to the contrary, Lender shall not withhold Retainage
on materials, soft costs, payments to subcontractors

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      whose work has been completed and who have furnished a final lien waiver
and release, and any Construction Contract for which payment and performance
bonds acceptable to Lender have been obtained. Notwithstanding anything
contained herein to the contrary, Lender shall retain five percent (5.00%) of
each Advance in lieu of the statutory ten percent (10%) Retainage, and Borrower
shall not be required to provide Lender with proof that such statutory Retainage
requirement is being complied with by Borrower.     (f)   All Advances hereunder
shall be made directly to Borrower, provided if an Event of Default has
occurred, the Lender at its option may make Advances directly to Borrower’s
contractors, subcontractors, suppliers and artisans for work done, or other
person entitled thereto, or jointly to Borrower and the applicable third party,
or Lender may elect to make one or more Advances through the title company, at
Borrower’s expense.     (g)   Any provision in the Loan Documents to the
contrary notwithstanding, Lender shall have no obligation to make any Advance
hereunder or under any of the Loan Documents if, as a result of such Advance,
Lender would be in violation of any applicable federal or state statute, law,
regulation, or interpretation thereof, whether effective or prospective,
regarding lending limits imposed upon Lender, including but not limited to the
Garn-St. Germain Depository Institutions Act of 1982, the Federal Reserve Act
and applicable interpretive letters issued by the Office of the Comptroller of
the Currency.     (h)   Any provision hereof or in the Loan Documents to the
contrary notwithstanding, the total of the Advances for the Improvements
hereunder shall not exceed the lesser of (1) $17,167,000.00; (2) an amount equal
to seventy percent (70%) of the appraised value of the Property on an “as
completed” basis, as set forth in the Appraisal; or (3) an amount equal to
seventy percent (70%) of Borrower’s costs expended on the Land and Improvements
on items included in the Approved Budget, exclusive of any developer fees not
included in the Approved Budget.     (i)   The initial Approved Budget does
contain a line item for $751,698.00 in Development Fees, such fees may be funded
through Application for Advance as follows:

  (1)   Twenty-five percent (25%) to be funded at Borrower’s request with the
Initial Advance;     (2)   Fifty percent (50%) to be funded monthly based on a
straight line basis at Borrower’s request as Advances are made on the Loan; and
    (3)   The balance equal to twenty-five percent (25%) to be funded at
Borrower’s request after the project certificate of occupancy has been issued by
the City of Denton, Texas.

     2.03 Requirements for Subsequent Advances . Prior to Lender funding
additional Advances

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subsequent to the Initial Advance funding on the Closing Date, Borrower shall
have provided Lender with the following:

  (a)   Executed originals of all of the Loan Documents;     (b)   All required
Title Insurance Policies;     (c)   Evidence from Borrower of Borrower’s Equity
in the project;     (d)   Satisfactory evidence the Borrower has established the
Operating Account with Depository Bank. All Advances made subsequent to closing
shall be funded into such account;     (e)   Executed original of the
Availability of Utilities Letter;     (f)   Building permits for the
construction of the Improvements, except that Lender agrees to Advance for
Borrower to obtain Letters of Credit or to pay soft costs prior to receipt of
said building permits;     (g)   Adequate evidence of appropriate zoning for the
intended usage of the Property;     (h)   Final Plans of the proposed
Improvements;     (i)   If required by the Governmental Authority, a copy of the
final recorded subdivision plat;     (j)   The Appraisal in form and substance
satisfactory to Lender indicating a fair market value in compliance with the
limitations of Section 2.02(h) of this Agreement;     (k)   Borrower and the
general contractor shall have executed and delivered the Assignment of
Construction Contract;     (l)   Borrower and the Design Professional shall have
executed and delivered the Assignment of Rights to Plans and Specifications;    
(m)   Borrower shall have executed and delivered the Assignment of Permits and
Licenses;     (n)   Satisfactory evidence of the compliance by Borrower with all
insurance requirements provided in the Deed of Trust;     (o)   Receipt and
approval by Lender of the Master Plan;     (p)   If required in writing by
Lender, receipt and approval of an attorney’s opinion rendered by Borrower’s
counsel in form and substance satisfactory to Lender;

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  (q)   Receipt and approval by Lender of the Compliance Letter;     (r)   Fully
executed copy of the Affidavit of Commencement in form of the affidavit attached
hereto as Exhibit “F” and made a part hereof for all purposes;     (s)   Receipt
and approval by Lender of all change orders affecting the Work; and     (t)  
Satisfactory evidence with regard to adequate parking.

     2.04 Conditions to Subsequent Advances . As a condition precedent to each
Advance subsequent to the Closing Date, and, in addition to all other
requirements herein, Borrower must satisfy the following requirements and, if
required by Lender, deliver to Lender evidence of such satisfaction:

  (a)   There shall then exist no Event of Default or any condition or event
which, with the giving of notice and/or passing of time, would constitute an
Event of Default;     (b)   The representations and warranties made in this
Agreement and all Loan Documents shall be true and correct on and as of the date
of each Advance, with the same effect as if made on that date;     (c)  
Borrower will procure and deliver to Lender, if required by Lender, releases or
waivers of mechanic’s liens in form of the Partial Waiver and Release attached
hereto as Exhibit “G-1” and made a part hereof for all purposes, and receipted
bills showing payment of all parties who have furnished materials or services or
performed labor of any kind in connection with the construction of any of the
Improvements;     (d)   The Title Insurance Policy shall, if available under
local rules, be endorsed and extended to cover each Advance with no additional
title exceptions objectionable to Lender; and     (e)   Borrower shall be
required to furnish Lender an acceptable “slab” or “forms” survey prior to
disbursement of the first Advance following the completion of all foundation and
slab work for the Improvements. All surveys are to be satisfactory to Lender in
all respects, and are to include among other things, encroachments, building
set-back lines, public access and flood plain disclosures, and must be dated,
signed and stamped by a surveyor licensed by the State of Texas.

     2.05 Completion of Improvements . Construction of the Improvements shall be
completed on or before the Completion Date. Within forty-five days after
completion, Borrower must provide to Lender the following:

  (a)   If Borrower has provided title insurance coverage during the
construction period by purchase of an title policy binder on interim
construction, Borrower shall provide Lender, at time of completion, a mortgagee
title policy with no exceptions except those approved by Lender. If Borrower has
already provided a

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      mortgagee title policy, Borrower shall provide an endorsement of said
policy deleting the mechanic’s lien and pending disbursements exceptions, and
recertifying the survey deletion endorsement;     (b)   Borrower shall provide
Lender, at time of completion and final funding, those affidavits, releases and
certificates in form of the exhibits attached hereto as follows:

     
Final Waiver and Release of Lien:
  Exhibit “G-2”
Affidavit of Certificate of Completion:
  Exhibit “H”
Contractor’s Affidavit of Bills Paid:
  Exhibit “I-1”
Owner’s Affidavit of Bills Paid:
  Exhibit “I-2”

  (c)   The final plat or replat, if any, must be recorded if not previously
recorded;     (d)   Receipt of certificates of occupancy where and when
available from the Governmental Authorities;     (e)   Receipt of a hazard and
general liability insurance policy meeting the requirements of the Deed of
Trust; and     (f)   An “as built” survey in a form satisfactory to Lender in
all respects, which shall include among other things, encroachments, building
set-back lines, public access and flood plain disclosures, and must be dated,
signed and stamped by a surveyor licensed by the State of Texas.

     2.06 No Waiver . No Advance shall constitute a waiver of any condition
precedent to the obligation of Lender to make any further Advance or preclude
Lender from thereafter declaring the failure of Borrower to satisfy such
condition precedent to be an Event of Default.
     2.07 Conditions Precedent for the Benefit of Lender . All conditions
precedent to the obligation of Lender to make any Advance are imposed hereby
solely for the benefit of Lender, and no other party may require satisfaction of
any such condition precedent or be entitled to assume that Lender will refuse to
make any Advance in the absence of strict compliance with such conditions
precedent. All requirements of this Agreement may be waived by Lender, in whole
or in part, at any time.
     2.08 Subordination . Lender shall not be obligated to make, nor shall
Borrower be entitled to, any Advance until such time as Lender shall have
received, to the extent reasonably requested by Lender, subordination agreements
from the general contractor and the Design Professional, subordinating to the
lien of the Deed of Trust any lien, claim, or charge they may have against
Borrower or the Property.
     2.09 Operating Account . The Operating Account shall be maintained by
Borrower at all times during the term of the Loan. The Operating Account shall
be, and by execution hereof is, pledged to secure the Loan. All net revenues
generated by Borrower in connection with the Land not required to be applied to
the principal balance of the Loan shall be deposited in the Operating Account.
     2.10 Letters of Credit . It is contemplated by Borrower and Lender that
Borrower, or one or

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more of its affiliates, may desire to apply for and obtain one or more Letters
of Credit from Depository Bank. In the event that any such party applies for a
Letter of Credit with Depository Bank and is approved, at Borrower’s request,
Lender may consent to same and in such event will reserve an amount of Loan
proceeds to cover any potential advances that may be made under the Letter of
Credit to the beneficiary thereunder. Any such approval by Lender will be at
Lender’s sole discretion but will not be unreasonably withheld, and the
aggregate amount of Loan proceeds to cover any potential advances under the
Letters of Credit will not exceed $500,000.00 at any one time. Borrower agrees
to execute any and all documents reasonably deemed necessary by Lender in
connection with Letter of Credit transactions, including amendments to this
Agreement, amended Approved Budgets, additional security agreements and other
collateral documents. In the event a Letter of Credit contemplated by the terms
of this section is presented to Depository Bank and drafted upon, Borrower
agrees that Lender shall, without the consent of Borrower, advance Loan proceeds
to repay the Depository Bank for advances under the Letter of Credit. Lender
will not be required to release its collateral securing the Loan until such time
as all obligations of the Depository Bank under any Letters of Credit have
expired or been terminated, and until the Note is paid in full. The expiration
dates of any such Letters of Credit shall not exceed twelve months from date of
issuance, and shall not extend past the Scheduled Maturity Date as defined in
the Note, as may be extended from time to time. Borrower shall also pay to
Lender or to Depository Bank (but not to both of them) at the time a Letter of
Credit is issued by Depository Bank pursuant to the terms of this section, a
letter of credit fee equal to two percent (2%) of the face amount of each Letter
of Credit. If the Note matures prior to expiration of the Letter of Credit, then
at the time of issuance of the Letter of Credit, the Borrower shall deposit with
Depository Bank in a controlled account the principal necessary to fund the
Letter of Credit upon any draw on the Letter of Credit.
     Borrower shall be irrevocably and unconditionally obligated to reimburse
Lender for any amounts to be paid by Lender upon any drawing under any Letter of
Credit issued by Depository Bank for the benefit of Borrower, without
presentment, demand, protest or other formalities of any kind. All such amounts
paid by Lender and remaining unpaid by the Borrower shall bear interest at the
Applicable Interest Rate as such term is used and defined in the Note. The
Borrower’s obligations under this paragraph shall be absolute and unconditional
under any and all circumstances and irrespective of any set-off, counterclaim or
defense to payment which the Borrower may have or have had against Lender or the
beneficiary of a Letter of Credit issued by Depository Bank pursuant to the
request of Borrower.
     Borrower further irrevocably and unconditionally agrees with Lender that
Lender shall not be responsible for, and Borrower’s reimbursement obligation in
respect of any Letter of Credit shall not be affected by, among other things,
the validity or genuineness of documents or any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among Borrower, the beneficiary
of any Letter of Credit or any financing institution or other party or any
claims or defenses whatsoever of any of the Borrower or any of its affiliates
against the beneficiary of any Letter of Credit. Lender shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit. Borrower irrevocably and unconditionally agrees that any action taken or
omitted by Lender or Depository Bank under or in connection with each Letter of
Credit and the related drafts and documents, if done without gross negligence or
willful misconduct, shall be binding upon Borrower and shall not put Lender
under any liability to Borrower.
     Lender and Depository Bank shall be entitled to rely, and shall be fully
protected in relying upon, any letter of credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram,

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telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accounts and other experts selected by Lender.
     EXCEPT FOR LENDER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES TO INDEMNIFY AND HOLD HARMLESS LENDER AND
ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES FROM AND AGAINST ANY AND ALL
CLAIMS AND DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH LENDER MAY
INCUR (OR WHICH MAY BE CLAIMED AGAINST LENDER BY ANY PERSON WHATSOEVER) BY
REASON OF OR IN CONNECTION WITH THE ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER
OF OR PAYMENT OR FAILURE TO PAY UNDER ANY LETTER OF CREDIT OR ANY ACTUAL OR
PROPOSED USE OF ANY LETTER OF CREDIT, INCLUDING, WITHOUT LIMITATION, ANY CLAIMS,
DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH LENDER MAY INCUR BY REASON
OF OR ON ACCOUNT OF LENDER ISSUING ANY LETTER OF CREDIT WHICH SPECIFIES THAT THE
TERM “BENEFICIARY” INCLUDED THEREIN INCLUDES ANY SUCCESSOR BY OPERATION OF LAW
OF THE NAMED BENEFICIARY, BUT WHICH LENDER DOES NOT REQUIRE THAT ANY DRAWING BY
SUCH SUCCESSOR BENEFICIARY BE ACCOMPANIED BY A COPY OF A LEGAL DOCUMENT,
SATISFACTORY TO LENDER, EVIDENCING THE APPOINTMENT OF SUCH SUCCESSOR
BENEFICIARY.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF BORROWER
     3.01 Representations and Warranties . Borrower hereby, and upon submission
of each Application for Advance and acceptance of each Advance, represents and
warrants as follows:

  (a)   All representations and warranties made by Borrower under the Deed of
Trust are true and correct;     (b)   No claims for unpaid bills for the
supplying of labor, materials, or services for the construction of the
Improvements shall have been recorded in the mechanic’s lien or other
appropriate records in the county where the Property is located, or if such
claims are made, Borrower has bonded the liens in accordance with Chapter 53 of
the Texas Property Code. Except as previously disclosed in writing to Lender, as
of this date no work of any kind or nature, however incidental, has been
performed by any party on behalf of Borrower with regard to the preparation of
the Property for construction of the contemplated Improvements or construction
of the Improvements themselves. Except as previously disclosed in writing to
Lender, no materials have been delivered to the Property on behalf of Borrower.
Except as previously disclosed in writing to Lender, the Borrower on the date
hereof, has made no verbal or written contract or arrangement of any kind the
performance of which by the other party thereto would give rise to a lien on the
Property which on the date hereof is superior to the liens created under any of
the Loan Documents and/or liens transferred to the Lender thereunder. Borrower
shall not cause or allow any liens to be placed on the Property without the
approval of the Lender;

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  (c)   No litigation or proceedings have been, to the best of Borrower’s
knowledge, threatened against the Property or the Borrower (i) which would
materially and adversely affect the enforceability or priority of the Loan
Documents, or (ii) which would materially and adversely affect the ability of
Borrower to complete the Improvements or the ability of Borrower to perform its
obligations pursuant to and as contemplated by the terms of this Agreement and
the Loan Documents;     (d)   The Approved Budget presents a full and complete
representation of all costs, expenses and fees which Borrower expects to pay or
anticipates becoming obligated to pay to complete the construction of the
Improvements;     (e)   To the best of Borrower’s knowledge: (i) all consents,
licenses and permits and all other authorizations or approvals required to
complete the construction of the Improvements in accordance with the Plans have
been or can be obtained during the course of the construction in time to
complete the construction on or before the Completion Date; (ii) all laws,
ordinances, regulations, restrictive covenants and requirements of all
Governmental Authorities (including, building, health, fire, water, use, zoning
laws, environmental and similar laws, codes, ordinances, rules and regulations)
relating to the construction of the Improvements and operation of the Property
have been or can be complied with; and (iii) all permits and licenses required
for the operation of the Property which cannot be obtained until construction of
the Improvements is completed can be obtained if the Property is completed in
accordance with the Plans. The Plans have been approved by all Governmental
Authorities or, to the best of Borrower’s knowledge, will be approved when
required during the course of the construction of the Improvements in time to
complete the construction on or before the Completion Date. To the best of
Borrower’s knowledge, construction of the Improvements and operation of the
Property will not be delayed or impeded by virtue of any Governmental
Requirements. To the best of Borrower’s knowledge, upon completion of the
construction of the Improvements, the Property will comply with all Governmental
Requirements; and     (f)   When completed in accordance with the Plans, no
portion of the Improvements will encroach upon any adjacent property, building
line, setback line, side yard line, or any recorded or visible easement (or
other easement of which Borrower is aware or has reason to believe may exist)
with respect to the Property. Upon completion of Improvements, the Property will
have adequate rights of access to dedicated public streets and roads and will
have (or when the Improvements are completed in accordance with the Master Plan
will have) adequate rights and means of access to all water, sanitary sewer and
storm drainage facilities necessary for the intended use of the Property; all
public roads necessary for adequate ingress and egress to the Property have been
completed with the necessary rights-of-way therefor having been acquired by the
appropriate Governmental Authority, and all necessary steps having been taken by
Borrower and such Governmental Authority to assure the completion, construction
and installation thereof before or by the applicable Completion Date.

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     3.02 Survival of Representations and Warranties . Borrower agrees that all
representations and warranties in this Agreement will be true in all material
respects at the date of the first Advance and at all times thereafter until the
Loan is repaid in full. Each Application for Advance shall constitute a
reaffirmation that the representations and warranties are true and correct in
all material respects at such time.
     3.03 Inducement to Lender . The representations and warranties contained in
the Loan Documents are made by Borrower as an inducement to Lender to make the
Loan and Borrower understands that Lender is relying on the truth and accuracy
of such representations and warranties.
ARTICLE 4: COVENANTS AND AGREEMENTS OF BORROWER
     Borrower hereby covenants and agrees as follows:
     4.01 Compliance with Governmental Requirements . Borrower shall timely
comply with all Governmental Requirements and deliver to Lender evidence
thereof. Borrower assumes full responsibility for the compliance of the Plans
and the Property with all Governmental Requirements and with sound construction
and engineering practices and, notwithstanding any approvals by Lender, Lender
shall have no obligation or responsibility whatsoever for the Plans or any other
matter incident to the Property or the construction of the Improvements.
     4.02 The Construction Contract . Borrower shall not become a party to any
contract in excess of $50,000.00 for the performance of any Work on the Property
or for the supplying of any labor, materials, or services for the construction
of the Improvements except upon such terms and with such parties as shall be
approved in writing by Lender. Lender’s approval of any contractor or contract
may be conditioned upon such contractor providing a payment and performance bond
for all or part of the work to be undertaken under the contract. Borrower may
retain an affiliated construction company to act as general contractor; in such
case, all approval rights of Lender and rights to require bonding of Lender
shall be for subcontractors and suppliers. The general contractor must agree in
writing that all liens of the general contractor are subordinate to the lien of
the Deed of Trust. The general contractor must agree in writing that no change
orders to the Plans for which Lender’s consent is required hereunder, shall be
effective without the prior written approval of Lender. No approval by Lender of
any Construction Contract or change orders thereto shall make Lender responsible
for the adequacy, form, or content of such Construction Contracts or change
orders. Upon written request by Lender, Borrower shall supply Lender with a list
of all original contractors and all second and subsequent tier contractors and
suppliers, and their respective addresses and telephone numbers, and information
with respect to the portion of such contracts completed and sums owed to such
contractors and suppliers. If requested by Lender, Borrower will cause all
subcontractors whose contract prices exceeds ten percent (10%) of the amount of
the Approved Budget, as provided in Section 1.15 herein to provide a performance
bond and a payment bond of such character, issued by companies, on forms and in
such penal sum in connection with the construction of the Improvements, as
Lender shall designate. Unless waived by Lender, all such bonds shall name
Lender as co-obligee.
     4.03 Construction of the Improvements and Supervision . The construction of
the Improvements shall commence no later than ninety days from the date hereof
and shall be prosecuted with diligence and continuity, in a good and workmanlike
manner, and in accordance with sound building

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and engineering practices, all applicable Governmental Requirements and the
Plans, if any. Except for Force Majeure events, Borrower shall not permit
cessation of work for a period in excess of thirty days without the prior
written consent of Lender and shall complete construction of the Improvements on
or before the Completion Date. The construction of the Improvements will be
prosecuted by Borrower with diligence and continuity and Borrower will complete
the same in substantial accordance with the Plans, free and clear of liens, or
claims for liens, for material supplied and for labor or services performed in
connection with the construction of the Improvements, and in compliance with all
applicable Governmental Requirements, restrictive covenants, set back lines and
without encroachment into any existing easements which affect the Property.
Borrower shall hire and direct the Supervision Professional at all times prior
to completion of Improvements in a manner reasonably satisfactory to Lender.
     4.04 Correction of Construction Defects . Borrower shall correct or cause
to be corrected (a) any material defect in the Improvements, (b) any material
departure in the construction of the Improvements from the Plans or Governmental
Requirements, or (c) any encroachment by any part of the Improvements or any
other structure located on the Property on any building line, easement, property
line, or restricted area.
     4.05 Storage of Materials . Borrower shall cause all materials supplied
for, or intended to be utilized in, the construction of the Improvements, but
not affixed to or incorporated into the Improvements or the Property, to be
stored on the Property, with adequate safeguards, as required by Lender, to
prevent loss, theft, damage, or commingling with other materials or projects.
     4.06 Inspection of the Property . Borrower shall permit Lender and any
Governmental Authority, and their agents and representatives, to enter upon the
Property and any location where materials intended to be utilized in the
construction of the Improvements are stored for the purpose of inspection of the
Property and such materials at all reasonable times.
     4.07 Notices by Governmental Authority, Fire and Casualty Losses, Etc.
Borrower shall timely comply with and promptly furnish to Lender true and
complete copies of any official notice or claim by any Governmental Authority
pertaining to the Property. Borrower shall promptly notify Lender of any fire or
other casualty or any notice or taking of eminent domain action or proceeding
affecting the Property.
     4.08 Application of Advances . Borrower shall disburse all Advances for
payment of costs and expenses specified in the Approved Budget, and for no other
purpose.
     4.09 Direct Disbursement and Application by Lender . Upon the occurrence
and during the continuance of an Event of Default, or any event or condition
which, with the giving of notice and/or passing of time, would constitute an
Event of Default, Lender shall have the right, but not the obligation, to
disburse and directly apply the proceeds of any Advance to the satisfaction of
any of Borrower’s obligations hereunder. Any Advance by Lender for such purpose,
shall be part of the Loan and shall be secured by the Loan Documents. Upon the
occurrence and during the continuance of an Event of Default, Borrower hereby
authorizes Lender to hold, use, disburse, and apply the Loan and proceeds of the
Borrower Deposit for payment of costs of construction of the Improvements,
expenses incident to the Loan and the Property, and the payment or performance
of any obligation of Borrower hereunder. Borrower hereby assigns and pledges the
proceeds of the Loan and proceeds of the Borrower Deposit to

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Lender for such purposes. Upon the occurrence and during the continuance of an
Event of Default, Lender may advance and incur such expenses hereunder as Lender
reasonably deems necessary for the completion of construction of the
Improvements and to preserve the Property, and any other security for the Loan,
and such expenses, even though in excess of the amount of the Loan, shall be
secured by the Loan Documents, and be payable to Lender upon demand. Lender may
disburse any portion of any Advance at any time, and from time to time, to
persons other than Borrower for the purposes specified in this Section 4.09
irrespective of the provisions of Section 2.03 hereof, and the amount of
Advances to which Borrower shall thereafter be entitled shall be correspondingly
reduced.
     4.10 Costs and Expenses . Borrower shall pay when due all costs and
expenses required by this Agreement, including, without limitation, (a) all fees
and expenses of the Inspecting Engineers, (b) all reasonable fees and expenses
of counsel of Lender related to the Loan Documents, the construction of
Improvements or protecting the interests of Lender in the Property, (c) all
title insurance downdates/endorsements and title examination charges, including
premiums for the Title Insurance Policies, (d) all premiums for the insurance
policies required under the Deed of Trust, and (e) all other reasonable costs
and expenses payable to third parties incurred by Lender in connection with the
consummation of the transactions contemplated by this Agreement.
     4.11 Change Orders . Borrower shall not make any change order to the Plans
or any other change order with respect to the Approved Budget, which
individually exceeds $50,000 or in the aggregate with all other previously
approved change orders exceeds $250,000, without the prior written consent of
Lender, which consent will not be unreasonably withheld or delayed.
     4.12 No Liability of Lender . Lender shall have no liability, obligation,
or responsibility whatsoever with respect to the construction of the
Improvements except to advance the Loan proceeds pursuant to this Agreement.
Lender shall not be obligated to inspect the Property or the construction of the
Improvements, nor be liable for the performance or default of Borrower, the
Inspecting Engineers, the Contractor, or any other party, or for any failure to
construct, complete, protect, or insure the Improvements, or for the payment of
costs of labor, materials, or services supplied for the construction of the
Improvements, or for the performance of any obligation of Borrower whatsoever.
Nothing, including without limitation any Advance or acceptance of any document
or instrument, shall be construed as a representation or warranty, express or
implied, to any party by Lender.
     4.13 No Conditional Sale Contracts, Etc. No materials, equipment, or
fixtures shall be supplied, purchased, or installed for the construction or
operation of the Improvements pursuant to security agreements, conditional sale
contracts, lease agreements, or other arrangements or understandings whereby a
security interest or title is retained by any party or the right is reserved or
accrues to any party to remove or repossess any materials, equipment, or
fixtures intended to be utilized in the construction or operation of the
Improvements.
     4.14 Defense of Action . Lender may (but shall not be obligated to)
commence, appear in, or defend any action or proceeding purporting to affect the
Loan, the Property, or the respective rights and obligations of Lender and
Borrower pursuant to this Agreement. Lender may (but shall not be obligated to)
pay all necessary expenses, including reasonable attorneys’ fees and expenses
incurred in connection with such proceedings or actions, which Borrower agrees
to repay to Lender upon demand.
     4.15 Assignment of Construction Contract . As additional security for the
payment of the

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Loan, Borrower hereby transfers and assigns to Lender all of Borrower’s rights
and interest, but not its obligations, in, under, and to the construction
contract with the general contractor upon the following terms and conditions:

  (a)   Borrower represents and warrants that the copy of such construction
contract it has furnished to Lender is a true and complete copy thereof and that
Borrower’s interest therein is not subject to any claim, setoff, or encumbrance.
    (b)   Neither this assignment nor any action by Lender shall constitute an
assumption by Lender of any obligations under the construction contract, and
Borrower shall continue to be liable for all obligations of Borrower thereunder,
Borrower hereby agreeing to perform all of its obligations under the
construction contract. Borrower agrees to indemnify and hold Lender harmless
against and from any loss, cost, liability, or expense (including, but not
limited to, reasonable attorneys’ fees) resulting from any failure of Borrower
to so perform.     (c)   Upon the occurrence and during the continuance of an
Event of Default, Lender shall have the right at any time (but shall have no
obligation) to take in its name or in the name of Borrower such action as Lender
may at any time determine to be necessary or advisable to cure any default under
the construction contract or to protect the rights of Borrower or Lender
thereunder. Lender shall incur no liability if any action so taken by it or in
its behalf shall prove to be inadequate or invalid, and Borrower agrees to hold
Lender free and harmless against and from any loss, cost, liability or expense
(including, but not limited to, reasonable attorneys’ fees) incurred in
connection with any such action.     (d)   Borrower hereby irrevocably
constitutes and appoints Lender as Borrower’s attorney-in-fact, in Borrower’s
name or in Lender’s name, to enforce all rights of Borrower under the
construction contract during the continuance of an Event of Default. The
power-of-attorney granted hereby is a power coupled with an interest and is
irrevocable.     (e)   Prior to an Event of Default, Borrower shall have the
right to exercise its rights as owner under the construction contract, provided
that Borrower shall not cancel or amend the construction contract or do or
suffer to be done any act which would impair the security constituted by this
assignment without the prior written consent of Lender.     (f)   This
assignment shall inure to the benefit of Lender, its successors and assigns,
including any purchaser upon foreclosure of the Deed of Trust, any receiver in
possession of the Property, and any legal entity formed by or on behalf of
Lender which assumes Lender’s rights and obligations under this Agreement.

     4.16 Assignment of Plans . As additional security for the payment of the
Loan, Borrower hereby transfers and assigns to Lender all of Borrower’s right,
title, and interest in and to the Plans and hereby represents and warrants to
and agrees with Lender as follows:

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  (a)   Borrower has delivered to Lender a complete and accurate description of
the Plans.     (b)   The Plans are complete and adequate for the construction of
the Improvements and there have been no modifications thereof except as
described in such description.     (c)   Lender may use the Plans for any
purpose relating to the Improvements, including but not limited to inspections
of construction and the completion of the Improvements.     (d)   Lender’s
acceptance of this assignment shall not constitute approval of the Plans by
Lender. Lender has no liability or obligation whatsoever in connection with the
Plans and no responsibility for the adequacy thereof or for the construction of
the Improvements contemplated by the Plans. Lender has no duty to inspect the
Improvements, and if Lender should inspect the Improvements, Lender shall have
no liability or obligation to Borrower arising out of such inspection. No such
inspection nor any failure by Lender to make objections after any such
inspection shall constitute a representation by Lender that the Improvements are
in accordance with the Plans or constitute a waiver of Lender’s right thereafter
to insist that the Improvements be constructed in accordance with the Plans.    
(e)   This assignment shall inure to the benefit of Lender, its successors and
assigns, including any purchaser upon foreclosure of the Deed of Trust, any
receiver in possession of the Property, and any legal entity formed by or on
behalf of Lender which assumes Lender’s rights and obligations under this
Agreement.

     4.17 Payment of Claims . Borrower shall promptly pay or cause to be paid
when due all costs and expenses incurred in connection with the Property and the
construction of the Improvements, and Borrower shall keep the Property free and
clear of any liens, charges, or claims other than the lien of the Deed of Trust
and other liens approved in writing by Lender. Notwithstanding anything to the
contrary contained in this Agreement, Borrower (a) may contest the validity or
amount of any claim of any contractor, consultant, architect, or other person
providing labor, materials, or services with respect to the Property, (b) may
contest any tax or special assessment levied by any Governmental Authority, and
(c) may contest the enforcement of or compliance with any Governmental
Requirements, and such contest on the part of Borrower shall not be an Event of
Default hereunder and shall not release Lender from its obligations to make
Advances hereunder; provided, however, that during the pendency of any such
contest, Borrower shall furnish to Lender and Title Company an indemnity bond
with corporate surety satisfactory to Lender and Title Company or other security
acceptable to them in an amount equal to the amount being contested plus a
reasonable additional sum to cover possible costs, interest, penalties, and
attorney’s fees, and provided further that Borrower shall pay any amount
adjudged by a court of competent jurisdiction to be due, with all costs,
interest, penalties and attorney’s fees thereon, before such judgment becomes a
lien on the Property.
     4.18 Inspections . If required by Lender, Inspecting Engineers shall make
periodic inspections of the Property during the course of construction in order
to certify to Lender that at the time an Application for Advance is made:
(a) the amount requested is in proportion to the Work completed;

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(b) that all Work has been performed in a workmanlike manner; (c) the Work
performed is substantially in accordance with the Plans; and (d) there are
sufficient funds remaining to complete the Improvements. The Inspecting
Engineers must be satisfied that the Improvements are in compliance with
reasonable fire, safety and health standards, in addition to standards imposed
by law or regulation. All defects in the Improvements disclosed by an
engineering report, and violations of zoning, building, environmental, health,
safety or other governmental or regulatory rules, laws, codes or regulations are
to be corrected if in Lender’s reasonable judgment such defects or violations
affect marketability or usage of the Property or the value of the Property for
loan purposes.
     4.19 Indemnity . BORROWER SHALL INDEMNIFY AND DEFEND LENDER AGAINST, AND
SHALL HOLD LENDER HARMLESS FROM ANY AND ALL LOSSES, DAMAGES (WHETHER GENERAL,
PUNITIVE OR OTHERWISE), LIABILITIES, CLAIMS, CAUSES OF ACTION (WHETHER LEGAL,
EQUITABLE OR ADMINISTRATIVE), JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES
(INCLUDING ATTORNEYS’ FEES) WHICH LENDER MAY SUFFER OR INCUR AS A DIRECT OR
INDIRECT CONSEQUENCE OF: (A) LENDER’S PERFORMANCE UNDER THIS AGREEMENT OR UNDER
ANY OF THE OTHER LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION LENDER’S EXERCISE
OR FAILURE TO EXERCISE ANY RIGHTS, REMEDIES OR POWERS IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; (B) BORROWER’S FAILURE TO PERFORM
ANY OF BORROWER’S OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION, ANY FAILURE OF ANY
REPRESENTATION OR WARRANTY OF BORROWER TO BE TRUE AND CORRECT AND ANY FAILURE BY
BORROWER TO SATISFY ANY CONDITION; (C) ANY CLAIM OR CAUSE OF ACTION OF ANY KIND
BY ANY PERSON OR ENTITY TO THE EFFECT THAT LENDER IS IN ANY WAY RESPONSIBLE OR
LIABLE FOR ANY ACT OR OMISSION BY BORROWER, WHETHER ON ACCOUNT OF ANY THEORY OF
DERIVATIVE LIABILITY OR OTHERWISE; (D) ANY ACT OR OMISSION BY BORROWER, ANY
CONTRACTOR, SUBCONTRACTOR OR MATERIAL SUPPLIER, ENGINEER, ARCHITECT OR OTHER
PERSON OR ENTITY, EXCEPT LENDER, WITH RESPECT TO ANY OF THE PROPERTY; (E) THE
CONSTRUCTION OR OTHER WORK CONTEMPLATED HEREIN; (F) THE OPERATION OR MAINTENANCE
OF THE PROPERTY; AND (G) ANY OTHER ACTION OR INACTION BY, OR MATTER WHICH IS THE
RESPONSIBILITY OF BORROWER, EXCEPT FOR ANY SUCH CLAIM, INJURY, DAMAGE, LOSS OR
LIABILITY CAUSED SOLELY BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF LENDER
OR ITS AGENTS OR EMPLOYEES. LENDERS’ RIGHT OF INDEMNITY SHALL NOT BE DIRECTLY OR
INDIRECTLY LIMITED, PREJUDICED, IMPAIRED OR ELIMINATED IN ANY WAY BY ANY FINDING
OR ALLEGATION THAT LENDER’S CONDUCT IS ACTIVE, PASSIVE OR SUBJECT TO ANY THEORY
OF ANY KIND, CHARACTER OR NATURE FOR ANY ACT OR OMISSION BY BORROWER OR ANY
OTHER PERSON OR ENTITY EXCEPT LENDER. NOTWITHSTANDING THE FOREGOING, BORROWER
SHALL NOT BE OBLIGATED TO INDEMNIFY LENDER WITH RESPECT TO ANY INTENTIONAL TORT
OR ACT OF GROSS NEGLIGENCE WHICH LENDER IS PERSONALLY DETERMINED BY THE JUDGMENT
OF A COURT OF COMPETENT JURISDICTION (SUSTAINED ON APPEAL, IF ANY) TO HAVE
COMMITTED. BORROWER SHALL PAY ANY INDEBTEDNESS ARISING UNDER SAID INDEMNITY TO
LENDER PROMPTLY UPON DEMAND BY LENDER. THIS INDEMNITY SHALL SURVIVE

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THE PAYMENT OF ALL AMOUNTS PAYABLE PURSUANT TO THE LOAN DOCUMENTS. PAYMENT BY
LENDER SHALL NOT BE A CONDITION PRECEDENT TO THE OBLIGATIONS OF BORROWER UNDER
THIS INDEMNITY.
     4.20 Lender’s Action for its Own Protection Only . The authority herein
conferred upon Lender, and any action taken by Lender, to inspect the Property,
to procure waivers or sworn statements, to approve contracts, subcontracts and
purchase orders, and to approve Plans, will be exercised and taken by Lender for
Lender’s protection only and may not be relied upon by Borrower for any purposes
whatever; and Lender shall not be deemed to have assumed any responsibility to
Borrower with respect to any such action herein authorized or taken by Lender or
with respect to the proper construction of the Improvements on the Property,
performance of contracts, subcontracts or purchase orders by any contractor,
subcontractor or material supplier, or prevention of mechanics’ liens from being
claimed or asserted against any of the Property. Any review, investigation or
inspection conducted by Lender, or any architectural or engineering consultants
retained by Lender to verify independently Borrower’s satisfaction of any
conditions precedent to Advance under this Agreement, Borrower’s performance of
any of the covenants, agreements and obligations of Borrower under this
Agreement, or the validity of any representations and warranties made by
Borrower hereunder (regardless of whether the party conducting such review,
investigation or inspection shall have discovered that any of such conditions
precedent were not satisfied or that any such covenants, agreements or
obligations were not performed or that any such representations or warranties
were not true), shall not affect (or constitute a waiver by Lender of) (a) any
of Borrower’s representations and warranties under this Agreement or Lender’s
reliance thereon or (b) Lender’s reliance upon any certifications of Borrower or
the Contractor required under this Agreement or any other facts, information or
reports furnished to Lender by Borrower hereunder.
ARTICLE 5: RIGHTS AND REMEDIES OF LENDER
     5.01 Rights of Lender . Upon the occurrence and during the continuance of
an Event of Default, Lender shall have the right, in addition to any other right
or remedy of Lender, but not the obligation, in its own name or in the name of
Borrower, to enter into possession of the Property; to perform all work
necessary to complete the construction of the Improvements substantially in
accordance with the Master Plan and Governmental Requirements, and to employ
watchmen and other safeguards to protect the Property. Borrower hereby appoints
Lender as the attorney-in-fact of Borrower, with full power of substitution, and
in the name of Borrower, if Lender elects to do so, upon the occurrence of an
Event of Default, to (a) use such sums as are necessary, including any proceeds
of the Loan and of the Borrower Deposit, make such changes or corrections in the
Plans, and employ such architects, engineers, and contractors as may be required
for the purpose of completing the construction of the Improvements substantially
in accordance with the Master Plan, and the Governmental Requirements,
(b) execute all applications and certificates in the name of Borrower which may
be required for completion of construction of the Improvements, (c) endorse the
name of Borrower on any checks or drafts representing proceeds of the insurance
policies, or other checks or instruments payable to Borrower with respect to the
Property, (d) do every act with respect to the construction of the Improvements
which Borrower may do, and (e) prosecute or defend any action or proceeding
incident to the Property. The power-of-attorney granted hereby is a power
coupled with an interest and is irrevocable. Lender shall have no obligation to
undertake any of the foregoing actions, and if Lender should do so, it shall
have no liability to Borrower for the sufficiency or adequacy of any such
actions taken by Lender.

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     5.02 Cessation of Advances . Upon the occurrence and during the continuance
of an Event of Default, or any event or condition which, with the giving of
notice and/or passing of time, would constitute an Event of Default, the
obligation of Lender to disburse the Loan proceeds and proceeds of the Borrower
Deposit and all other obligations of Lender hereunder shall, at Lender’s option,
immediately terminate.
     5.03 Funds of Lender . Any funds of Lender used for any purpose referred to
in this Article V, shall constitute Advances secured by the Loan Documents and
shall bear interest at the rate specified in the Note to be applicable after
default thereunder.
     5.04 No Waiver or Exhaustion . No waiver by Lender of any of its rights or
remedies hereunder, in the other Loan Documents, or otherwise, shall be
considered a waiver of any other or subsequent right or remedy of Lender; no
delay or omission in the exercise or enforcement by Lender of any rights or
remedies shall ever be construed as a waiver of any right or remedy of Lender;
and, no exercise or enforcement of any such rights or remedies shall ever be
held to exhaust any right or remedy of Lender.
ARTICLE 6: GENERAL TERMS AND CONDITIONS
     6.01 Notices . All notices, demands, requests, and other communications
required or permitted hereunder shall be in writing and shall be given in
accordance with the requirements for notices under the Deed of Trust.
     6.02 Entire Agreement and Modifications . THE LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AND AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO
THE TRANSACTIONS ARISING IN CONNECTION WITH THE LOAN AND SUPERSEDE ALL PRIOR
WRITTEN OR ORAL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE UNDERSIGNED IN
CONNECTION THEREWITH. NO PROVISION OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
MAY BE MODIFIED, WAIVED, OR TERMINATED EXCEPT BY INSTRUMENT IN WRITING EXECUTED
BY THE PARTY AGAINST WHOM A MODIFICATION, WAIVER, OR TERMINATION IS SOUGHT TO BE
ENFORCED.
     6.03 Severability . In case any of the provisions of this Agreement shall
for any reason be held to be invalid, illegal, or unenforceable, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.
     6.04 Election of Remedies . Lender shall have all of the rights and
remedies granted in the Loan Documents and available at law or in equity, and
these same rights and remedies shall be cumulative and may be pursued
separately, successively, or concurrently against Borrower, any guarantor of the
Loan, or any property covered under the Loan Documents, at the sole discretion
of Lender. The exercise or failure to exercise any of the same shall not
constitute a waiver or release thereof or of any other right or remedy, and the
same shall be nonexclusive.
     6.05 Form and Substance . All documents, certificates, insurance policies,
and other items required under this Agreement to be executed and/or delivered to
Lender shall be in form and substance satisfactory to Lender.

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     6.06 No Third Party Beneficiary . This Agreement is for the sole benefit of
Lender and Borrower and is not for the benefit of any third party.
     6.07 Borrower In Control . In no event shall Lender’s rights and interests
under the Loan Documents be construed to give Lender the right to control, or be
deemed to indicate that Lender is in control of, the business, management or
properties of Borrower or the daily management functions and operating decisions
made by Borrower.
     6.08 Number and Gender . Whenever used herein, the singular number shall
include the plural and the singular, and the use of any gender shall be
applicable to all genders. The duties, covenants, obligations, and warranties of
Borrower in this Agreement shall be joint and several obligations of Borrower,
and of each party of Borrower if more than one.
     6.09 Captions . The captions, headings, and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit, amplify,
or modify the terms and provisions hereof.
     6.10 Applicable Law . This Agreement shall be governed by and construed in
accordance with the internal laws of the State where the Property is located
without reference to conflict of laws rules.
     6.11 Multiple Counterparts . This Agreement may be executed in multiple
counterparts, and each counterpart hereof executed by any party shall be deemed
an original and shall as to such party constitute one and the same instrument
with all other counterparts hereof executed, regardless of whether the same or
any other counterpart hereof is executed by any other party or by a person
intended to be or who becomes a party hereunder.

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     EXECUTED AND DELIVERED on the date first recited.

             
 
  BORROWER:
 
           
 
  CAMPUS CREST AT DENTON, LP, a
Delaware limited partnership
 
           
 
  By:   Campus Crest GP, LLC, a
Delaware limited liability company,
its general partner
 
           
 
      By:   /s/ Donald L. Bobbitt, Jr.
 
           
 
          Donald L. Bobbitt, Jr., Manager
 
           
 
           
 
  LENDER:
 
           
 
  AMEGY MORTGAGE COMPANY, L.L.C.
d/b/a Q10 Amegy Mortgage Capital, a
Texas limited liability company
 
           
 
  By:   /s/ Don Hickey
 
       
 
      Don Hickey, Senior Vice President -
Commercial Real Estate Lending

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