exv10w4






Exhibit 10.4




EXECUTION VERSION




Amended and Restated

Operating Agreement




of



HSRE-Campus Crest I, LLC



(a Delaware limited liability company)



DATED: AS OF OCTOBER 19, 2010




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE	 	Page
	ARTICLE 1 ORGANIZATION
	 	 	1	 
	 
	 	 	 	 
	1.1 Definitions and Construction
	 	 	1	 
	1.2 Formation
	 	 	2	 
	1.3 Name
	 	 	2	 
	1.4 Members
	 	 	2	 
	1.5 Registered Office and Agent
	 	 	2	 
	1.6 Principal Office
	 	 	2	 
	1.7 Term
	 	 	3	 
	1.8 Foreign Qualification
	 	 	3	 
	 
	 	 	 	 
	ARTICLE 2 PURPOSE AND POWER
	 	 	3	 
	 
	 	 	 	 
	2.1 Principal Purpose
	 	 	3	 
	2.2 Other Purposes
	 	 	3	 
	2.3 Additional Properties
	 	 	3	 
	2.4 Non-Competition and Right of First Opportunity
	 	 	4	 
	2.5 Powers
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 3 CONTRIBUTIONS BY MEMBERS; FINANCING
	 	 	4	 
	 
	 	 	 	 
	3.1 Initial Contributions
	 	 	4	 
	3.2 Capital Contributions for Acquisition and/or Development of Additional Properties
	 	 	4	 
	3.3 Pre-Construction Funding for Development Projects, and Pre-Development
Costs; Pre-Acquisition Costs for Acquisition Properties
	 	 	5	 
	3.4 Funding for a Development Project
	 	 	6	 
	3.5 Construction Loans/Acquisition Loans
	 	 	8	 
	3.6 Failure to Fund Required Amount
	 	 	8	 
	3.7 Operating Deficits; Necessary Cost Loans and Necessary Cost Capital
Contributions
	 	 	11	 
	3.8 Obligations of Campus Crest Guarantor
	 	 	13	 
	3.9 Organizational Legal Expenses
	 	 	13	 
	3.10 Statesboro Construction Loan/DSCR
	 	 	13	 
	 
	 	 	 	 
	ARTICLE 4 DISTRIBUTIONS TO MEMBERS
	 	 	16	 
	 
	 	 	 	 
	4.1 Distribution of Net Cash Flow
	 	 	16	 
	4.2 Timing of Distributions/Prohibition against Reinvesting Proceeds
	 	 	17	 
	4.3 Withholding
	 	 	17	 
	4.4 Clawback
	 	 	17	 
	4.5 Other Compensation
	 	 	18	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	ARTICLE	 	Page
	ARTICLE 5 MANAGEMENT
	 	 	18	 
	 
	 	 	 	 
	5.1 Management of Company Affairs
	 	 	18	 
	5.2 Major Decisions
	 	 	21	 
	5.3 Property Management Agreement
	 	 	24	 
	5.4 Notice of Certain Developments
	 	 	24	 
	5.5 Annual Business Plan and Operating Budget
	 	 	24	 
	5.6 Development of Project
	 	 	25	 
	5.7 Rights of HSRE
	 	 	26	 
	5.8 Meetings of the Members
	 	 	27	 
	5.9 REIT Related Provisions
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 6 TRIGGERING EVENTS; REMEDIES
	 	 	28	 
	 
	 	 	 	 
	6.1 Campus Crest Triggering Event
	 	 	28	 
	6.2 Remedies for Campus Crest Triggering Event
	 	 	29	 
	6.3 HSRE Triggering Event
	 	 	29	 
	6.4 Remedies for HSRE Triggering Event
	 	 	30	 
	6.5 Replacement of Campus Crest as Day-to-Day Manager; Executive Committee
Changes upon
	 	 	30	 
	6.6 Other Remedies for Breach
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 7 INDEMNIFICATION
	 	 	31	 
	 
	 	 	 	 
	7.1 General
	 	 	31	 
	7.2 Insurance
	 	 	32	 
	7.3 Approval of Payments
	 	 	32	 
	7.4 Indemnification by Member
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 8 ACCOUNTING; REPORTING
	 	 	33	 
	 
	 	 	 	 
	8.1 Fiscal Year
	 	 	33	 
	8.2 Accounting Method
	 	 	33	 
	8.3 Determination and Allocation of Profits and Losses
	 	 	33	 
	8.4 Returns
	 	 	33	 
	8.5 Financial Statements and Reports to Members
	 	 	33	 
	8.6 Books and Records
	 	 	34	 
	8.7 Information; Cooperation with HSRE
	 	 	34	 
	8.8 Banking
	 	 	35	 
	 
	 	 	 	 
	ARTICLE 9 SALE OF PROPERTIES; PURCHASE OPTION
	 	 	35	 
	 
	 	 	 	 
	9.1 Right to Initiate Sale of Properties
	 	 	35	 
	9.2 Initiation and Elections
	 	 	35	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	ARTICLE	 	Page
	9.3 Failure of Non-Initiating Member to Exercise Purchase Option; Marketing
of Properties
	 	 	36	 
	9.4 Releases; Consents
	 	 	37	 
	9.5 Liabilities; Indemnity
	 	 	38	 
	9.6 Purchase of Initiating Member Interest; Closing
	 	 	38	 
	9.7 Purchase of Loans
	 	 	39	 
	9.8 Remedies for Noncompliance
	 	 	39	 
	9.9 Assignees
	 	 	39	 
	9.10 Limitation on Competing Options
	 	 	39	 
	9.11 Expenses/Fees
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 10 TRANSFER OF MEMBERSHIP INTERESTS
	 	 	40	 
	 
	 	 	 	 
	10.1 General Prohibition
	 	 	40	 
	10.2 Permitted Transfers
	 	 	40	 
	10.3 Involuntary Transfers
	 	 	41	 
	10.4 Dissolution or Termination of Members
	 	 	41	 
	10.5 Status of Assignor and Assignee
	 	 	41	 
	10.6 Admission Requirements
	 	 	41	 
	10.7 Effective Assignment
	 	 	42	 
	10.8 Cost of Admission
	 	 	42	 
	 
	 	 	 	 
	ARTICLE 11 DISSOLUTION
	 	 	42	 
	 
	 	 	 	 
	11.1 Dissolution
	 	 	42	 
	11.2 Events of Withdrawal
	 	 	43	 
	11.3 No Voluntary Withdrawal
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 12 LIQUIDATION
	 	 	44	 
	 
	 	 	 	 
	12.1 Liquidation
	 	 	44	 
	12.2 Priority of Payment
	 	 	44	 
	12.3 Liquidating Distributions
	 	 	44	 
	12.4 No Restoration Obligation
	 	 	45	 
	12.5 Timing
	 	 	45	 
	12.6 Liquidating Reports
	 	 	45	 
	12.7 Certificate of Dissolution
	 	 	45	 
	 
	 	 	 	 
	ARTICLE 13 GENERAL PROVISIONS
	 	 	45	 
	 
	 	 	 	 
	13.1 Amendment
	 	 	45	 
	13.2 Authorized Representatives
	 	 	46	 
	13.3 Arbitration
	 	 	46	 
	13.4 Unregistered Interests
	 	 	47	 
	13.5 Waiver of Dissolution Rights
	 	 	47	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	ARTICLE	 	Page
	13.6 Waiver of Partition Right
	 	 	47	 
	13.7 Waivers Generally
	 	 	48	 
	13.8 Notice
	 	 	48	 
	13.9 Other Business of Members
	 	 	48	 
	13.10 Partial Invalidity
	 	 	49	 
	13.11 Entire Agreement
	 	 	49	 
	13.12 Benefit
	 	 	49	 
	13.13 Binding Effect
	 	 	49	 
	13.14 Further Assurances
	 	 	49	 
	13.15 Headings
	 	 	49	 
	13.16 Governing Law
	 	 	49	 
	13.17 Limited Liability of Member
	 	 	49	 
	13.18 Counterparts
	 	 	50	 
	13.19 Confidential Information
	 	 	50	 






EXHIBITS:




A. DEFINITIONS

B. UNITED STATES INCOME TAX MATTERS

C. LIST OF REVIEW ITEMS

D. INITIAL CAPITAL CONTRIBUTIONS

E. FUNDING CONDITIONS

F. FORM OF DEVELOPMENT AGREEMENT

G. FORM OF PROPERTY MANAGEMENT AGREEMENT

H. NON-COMPETITION AND RIGHT OF FIRST OPPORTUNITY AGREEMENT

I. FORM OF FINANCIAL STATEMENTS

J. FORM OF CONSTRUCTION STATUS REPORTS

K. FORM OF ACQUISITION BUDGET AND DEVELOPMENT BUDGET

L. FORM OF COMPLETION AND COST OVERRUN GUARANTY

M. FORM OF ADDITIONAL PROJECT SCHEDULE

N. FORM OF SERVICES AGREEMENT

O. FORM CONSTRUCTION AGREEMENT




SCHEDULES:




1. Schedule of Pool One Projects

2. Schedule of HSRE Capital Contributions & Distributions to HSRE




-iv-









 





AMENDED AND RESTATED

OPERATING AGREEMENT

OF




HSRE-CAMPUS CREST I, LLC




     This AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”) of HSRE-CAMPUS CREST I, LLC,
a Delaware limited liability company (the “Company”) is made as of the 19th day of
October, 2010, by and between, HSRE-CAMPUS CREST IA, LLC, a Delaware limited liability company
(“HSRE”), and CAMPUS CREST VENTURES III, LLC, a Delaware limited liability company (“CAMPUS
CREST”).



R E C I T A L S:




     WHEREAS, prior to the execution of this Agreement, the internal affairs of the Company were
governed by that certain Operating Agreement of the Company, dated as of November 7, 2008, by and
between the Members, as amended by (i) that certain First Amendment to the Operating Agreement of
the Company, dated as of November 12, 2009, (ii) that certain Second Amendment to the Operating
Agreement of the Company, dated as of March 26, 2010, (iii) that certain Third Amendment to the
Operating Agreement of the Company, dated as of September 12, 2010; and (iv) that certain Fourth
Amendment to the Operating Agreement of the Company, dated as of October 6, 2010 (as amended, the
“Original Agreement”);



     WHEREAS, prior to the execution of this Agreement, the Members entered into that certain
Purchase and Sale Agreement, dated as of March 26, 2010, by and among the Members and the other
parties thereto, pursuant to which HSRE agreed to sell, and Campus Crest agreed to purchase, a
48.8% interest in the Company, such that HSRE shall own a 50.1% interest in the Company and Campus
Crest shall own a 49.9% interest in the Company; and



     WHEREAS, in connection with the foregoing, the Members desire to enter into this Agreement in
order to amend and restate the Original Agreement in its entirety, all pursuant to the terms and
conditions hereinafter set forth.



     NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties intending to be legally bound hereby agree as follows:



ARTICLE 1




ORGANIZATION



     1.1 Definitions and Construction. Terms used in this Agreement with initial capital
letters have the meanings specified in the Recitals to this Agreement, and in Exhibit A attached
hereto. Unless the context of this Agreement otherwise clearly requires, (a) references to the
plural include the singular, and references to the singular include the plural, (b) references
to any



 









 




gender include the other genders, (c) the words “include”, “includes” and “including” do not
limit the preceding terms or words and shall be deemed to be followed by the words “without
limitation”, (d) the term “or” has the inclusive meaning represented by the phrase “and/or”, (e)
the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement, (f) the terms
“day” and “days” mean and refer to calendar day(s) and (g) the terms “year” and “years” mean and
refer to calendar year(s). Unless otherwise set forth herein, references in this Agreement to (i)
any document, instrument or agreement (including this Agreement) (A) includes and incorporates all
exhibits, schedules and other attachments thereto, (B) includes all documents, instruments or
agreements issued or executed in replacement thereof and (C) means such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to
time in accordance with its terms and in effect at any given time, (ii) a particular Law (as
hereinafter defined) means such Law as amended, modified, supplemented or succeeded, from time to
time and in effect at any given time, and (iii) a specific Section of a Law shall be deemed to
refer also to the corresponding provision(s) of succeeding Law. All Section and Exhibit references
herein are to Sections and Exhibits of this Agreement, unless otherwise specified. This Agreement
shall not be construed as if prepared by one of the parties hereto, but rather according to its
fair meaning as a whole, as if all parties hereto had prepared it.




     1.2 Formation. The Company was formed on October 16, 2008, by filing the Certificate
with the Delaware Secretary of State pursuant to the Act. The rights and obligations of the
Members shall be as provided in the Act except as otherwise expressly provided in this Agreement.
The Members agree to execute such certificates or documents and to do such filings and recordings
and all other acts, including the filing or recording of any amendments to the Certificate and any
assumed name filings in the appropriate offices in the States of Delaware and any other applicable
jurisdictions as may be required to comply with applicable law.



     1.3 Name. The name of the Company shall continue to be “HSRE-CAMPUS CREST I, LLC”.
The business of the Company will be conducted under such name, as well as any other name or names
as the Members may from time to time determine.



     1.4 Members. The Members of the Company are HSRE and Campus Crest. No Additional
Member shall be admitted except as otherwise permitted herein.



     1.5 Registered Office and Agent. The Company’s initial registered agent and office in
the State of Delaware shall continue to be The Corporation Trust Company, Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware 19801. The Company may subsequently change its registered
office or registered agent in Delaware in accordance with the Act.



     1.6 Principal Office. The Company’s principal office shall continue to be at the
offices of Campus Crest located at c/o Campus Crest Group, LLC, 2100 Rexford Road, Suite 414,
Charlotte, North Carolina, 28211. The Company’s principal office may be relocated from time to
time as the Members may determine.



2









 





     1.7 Term. The Company shall continue to be effective from the date the Certificate
was filed with the Delaware Secretary of State and will continue until its Dissolution as provided
herein.



     1.8 Foreign Qualification. The Company shall make all filings and take such other
action to the extent required from time to time to do business or to have any Subsidiaries do
business in the jurisdictions where the Properties are located.



ARTICLE 2




PURPOSE AND POWER



     2.1 Principal Purpose. The business and principal purpose of the Company is to,
directly or indirectly, develop, redevelop, own, operate, manage, lease, finance and sell or
otherwise dispose of the Properties, subject to and in accordance with the terms and conditions set
forth in this Agreement.



     2.2 Other Purposes. The Company may engage in activities related or incidental to its
principal purpose. In addition, as provided in the Act, the Company is subject to other applicable
Laws which govern or limit the conduct of a particular business or activity.



     2.3 Additional Properties. The Members intend, subject to satisfaction of the Funding
Conditions, to acquire, develop, redevelop/reposition, operate, manage, lease and sell or otherwise
dispose of student housing properties in separate pools, each of which shall be held, directly or
indirectly, in a separate limited liability company (each such limited liability company of which
the Company is the first, being referred to herein as a “Portfolio Company”). Subject to the
satisfaction of the Funding Conditions, the Company shall commence development of student housing
properties pursuant to the terms of this Agreement until the Pool Cutoff Date for the Company. The
Members hereby agree that subject to satisfaction of the Funding Conditions for each Property
(including, without limitation, the Approval by HSRE of the construction schedule for such
Property), the initial pool of Properties to be held by the Company shall consist of those
Properties set forth on Schedule 1 attached hereto. After the Pool Cutoff Date for the Company, a
second Portfolio Company shall be formed, which shall continue to acquire, develop,
redevelop/reposition, operate, manage, lease and sell or otherwise dispose of student housing
properties pursuant to the terms of an operating agreement in the form of this Agreement. The
second Portfolio Company shall continue to commence construction of student housing properties
until the Pool Cutoff Date for the second Portfolio Company. After the Pool Cutoff Date for the
second Portfolio Company, the Members may agree to form subsequent Portfolio Companies pursuant to
the same provisions and processes outlined in this Section 2.3. Each individual Property
acquired by the Company, or by any subsequent Portfolio Company, shall be acquired in each case by
a special purpose entity that shall in turn be wholly owned by the Company or subsequent Portfolio
Company, unless otherwise agreed to by the Members. Each special purpose entity shall be a limited
liability company or limited partnership (i) organized under the laws of the State of Delaware and
qualified to transact business in the state in which the particular property is located or (ii)
organized under the laws of the state in which
the particular property is located, unless the use of an entity formed in another jurisdiction
would



3









 




avoid taxes that would otherwise be incurred by the Company or the subsequent Portfolio
Company.




     2.4 Non-Competition and Right of First Opportunity. Prior to the execution of this
Agreement, Campus Crest Group, LLC, a North Carolina limited liability company and Affiliate of
Campus Crest (“Campus Crest Group”), and Harrison Street Real Estate Capital, LLC, a Delaware
limited liability company and Affiliate of HSRE, entered into that certain Non-Competition and
Right of First Opportunity Agreement, dated as of November 7, 2008 (the “Non-Competition and Right
of First Opportunity Agreement”), under which, among other things, HSRE and/or its Affiliates have
the right to provide the equity capital for projects proposed to be acquired or developed by Campus
Crest and its Affiliates.



     2.5 Powers. The Company has all of the powers granted to a limited liability company
under the Act, as well as all powers necessary or convenient to achieve its purposes and to further
its business.



ARTICLE 3




CONTRIBUTIONS BY MEMBERS; FINANCING



     3.1 Initial Contributions. Prior to the date hereof, each Member has made an initial
Capital Contribution to the Company in cash or property, set forth opposite such Member’s name on
Exhibit D. In addition to the foregoing, subject to the satisfaction of the Funding
Conditions for each Property, Campus Crest shall assign, or cause to be assigned, to the applicable
Property Owning Subsidiaries of the Company all of its rights, title and interest in and to the
lease agreement or purchase and sale agreement for each Property and the limited liability company
or limited partnership interest in such Property Owning Subsidiary.



     3.2 Capital Contributions for Acquisition and/or Development of Additional Properties.
In the event the Funding Conditions for the acquisition of an Additional Property or development
of a Development Project have been satisfied (or waived, in writing, by each Member), then each
Member shall be obligated to make Mandatory Capital Contributions in an amount equal to (i) the
Mandatory Capital Limit, multiplied by (ii) such Member’s Participating Percentage. Mandatory
Capital Contributions shall be funded, pari passu, in proportion to the Members’ respective
Participating Percentages. Capital calls for Mandatory Capital Contributions (“Capital Calls”)
shall be made by Campus Crest, in writing, pursuant to a written notice setting forth (in addition
to other items required under Section 3.4(d) for Development Projects): (i) the general
purpose of the Capital Call, (ii) the aggregate dollar amount of the Capital Call, and (iii) the
date on which payment shall be due (“Due Date”), which date shall be no less than five (5) days
after the date of receipt of notice of such Capital Call. Capital Calls for the acquisition of an
Additional Property shall be made following the satisfaction of the Funding Condition for the
acquisition of such Property at such time(s) as Campus Crest shall reasonably determine is
necessary to close the applicable transaction. Capital Calls relating to Development Projects
shall be funded in accordance with Section 3.4 below. For the purposes of confirming
each Member’s respective Capital Contribution and Capital Account balances with respect to the
acquisition of an Additional Property or the development of a Development Project, the



4









 




Members
hereby agree to complete and execute an Additional Project Schedule in the form attached hereto as
Exhibit M.




     3.3 Pre-Construction Funding for Development Projects, and Pre-Development Costs;
Pre-Acquisition Costs for Acquisition Properties.




     (a) Pre-Construction Funding. Prior to the satisfaction of the Funding Conditions for
a Development Project, all pre-construction costs and expenditures (“Pre-Development Costs”)
shall be funded by Campus Crest or an Affiliate thereof, and HSRE shall not be required to
contribute to the Company any portion of such costs. Such Pre-Development Costs shall not
be considered a loan or Capital Contribution to the Company by Campus Crest or its
Affiliates for any purpose hereunder, and neither Campus Crest nor its Affiliates shall be
entitled to reimbursement of such amounts unless and until (i) HSRE has Approved such
Development Project and (ii) all Funding Conditions for such Development Project have been
satisfied. In the event the Funding Conditions are met, the Pre-Development Costs funded by
HSRE and Campus Crest shall be trued up at closing of the construction loan for the
Development Project, so that HSRE and Campus Crest each fund such Pre-Development Costs in
accordance with their respective Participating Percentages. Within ten (10) days after the
Funding Conditions for the Development Project are satisfied (or such other date Approved by
HSRE and Campus Crest), Campus Crest shall transfer and assign (or cause to be transferred
and assigned) to the Company (or a Subsidiary thereof) one hundred percent (100%) of the
ownership interests with respect to the Development Project held by Campus Crest and/or its
Affiliates, including, without limitation, any contractual rights with respect to the
acquisition, design, construction, development, operation, management and/or leasing of the
Development Project (collectively, the “Contributed Property Interests”). In connection
with the acquisition of such Contributed Property Interests, the Company or Subsidiary shall
assume (or take subject to) those liabilities encumbering the Contributed Property
Interests, but only to the extent Approved by the Executive Committee.




     (b) Pre-Acquisition Costs. With regard to proposed acquisitions of Acquisition
Properties, prior to the delivery by HSRE to Campus Crest of written notice of the approval
of its investment committee of a proposed acquisition (“IC Approval Notice”), all costs and
earnest money deposits related to such proposed acquisition (“Pre-Acquisition Costs”) shall
be borne and funded by Campus Crest or an Affiliate thereof, and neither HSRE nor the
Company shall bear any such Pre-Acquisition Costs, except as provided below. Following the
delivery of an IC Approval Notice by HSRE to Campus Crest, which notice shall include a
statement that the Pre-Acquisition Due Diligence Budget has been Approved by HSRE, all
Pre-Acquisition Costs (including those incurred prior to the delivery of the Approval Notice
and included in the Pre-Acquisition Due Diligence Budget) shall be borne fifty percent (50%)
by Campus Crest and fifty percent (50%) by HSRE. The Members hereby agree that the
expenditure of
any Pre-Acquisition Costs in excess of the applicable line item set forth in the
Pre-Acquisition Due Diligence Budget shall constitute a Major Decision requiring the
Approval of the Executive Committee. In the event HSRE delivers an IC Approval Notice to
Campus Crest with respect to a proposed acquisition, and the Company closes



5









 






on such proposed
acquisition, the Pre-Acquisition Costs funded by HSRE and Campus Crest shall be trued up at
the closing of such transaction, so that HSRE and Campus Crest each fund such
Pre-Acquisition Costs in accordance with their Participating Percentages. In the event HSRE
delivers an IC Approval Notice to Campus Crest with respect to a proposed acquisition, and
the Company does not close on such proposed acquisition, then the Company shall deliver
written notice to the Members that such transaction has been terminated (“Acquisition
Termination Notice”), which notice shall include (i) an itemized list of the Pre-Acquisition
Costs, and (ii) the amount required to be funded by each Member to cause the Pre-Acquisition
Costs to be trued up and borne in accordance with the applicable ratio set forth in this
Section 3.3(b) (i.e., 50/50). Each Member shall be obligated to fund as a Mandatory
Capital Contribution the amount owed, if any, within four (4) Business Days after the
receipt of such Acquisition Termination Notice. Any amount funded in excess of a Member’s
share of Pre-Acquisition Costs shall be reimbursed as soon as practicable following delivery
of the Acquisition Termination Notice.



     3.4 Funding for a Development Project.




     (a) Timing/Completion Date. The Members shall be obligated to make their respective
Mandatory Capital Contributions for a Development Project when and as called by Campus Crest
in accordance with Section 3.4(d) and Section 3.4(e).




     (b) In Balance Requirement; Cost Overrun and Completion Guaranty.




     (i) Notwithstanding anything to the contrary contained in this Agreement, HSRE
shall not be required to fund a Mandatory Capital Contribution at any time when a
Development Project is not “In Balance” (as defined under the Development Agreement)
on the Due Date of such Mandatory Capital Contribution as a result of Excess Project
Costs for which Developer is responsible to fund pursuant to the Development
Agreement. The Developer and/or the Campus Crest Guarantor shall be jointly and
severally liable to fund all Cost Overruns (as determined pursuant to and as
provided in the Development Agreement and the Completion and Cost Overrun Guaranty
Agreement). Any amounts funded by the Developer and/or the Campus Crest Guarantor
for Cost Overruns or other amounts under the Development Agreement and other amounts
required to be funded by the Developer under the Development Agreement or the
Completion and Cost Overrun Guaranty, as the case may be, shall not be reimbursed by
the Company to the payor except as provided in the Development Agreement and/or
Completion and Cost Overrun Guaranty and shall not be deemed loans to the Company or
Capital Contributions for any purpose hereunder (or under the Related Party
Agreements).




     (ii) Notwithstanding anything to the contrary contained in this Agreement, in
the event that the Developer and/or Campus Crest Guarantor fund any Cost Overruns
and the Reimbursement Conditions are satisfied, then Developer and/or Campus Crest
Guarantor, as applicable, shall be entitled to a



6









 






reimbursement from the Company
equal to the Reimbursement Amount. For the purposes hereof, the Reimbursement
Conditions shall be deemed to be satisfied upon compliance with or satisfaction of
the conditions of subsection (1) of the definition of Reimbursement Conditions under
the Development Agreement. The payment of the Reimbursement Amount shall be paid to
the Developer and/or Campus Crest Guarantor, as applicable, as set forth in
Section 4.1(a)(ii).




     (c) Application of Capital Contributions for Development Projects. Each Member
authorizes Campus Crest to apply its Mandatory Capital Contribution to the payment of all
charges, costs and expenses incurred by the Company in connection with the construction of a
Development Project, and the payment of any fees pursuant to the Development Agreement all
subject to and in accordance with the Development Budget. Notwithstanding the foregoing, any
funding for Cost Overruns shall be applied only to the Cost Overrun which gave rise to the
need for such funds.




     (d) Funding Procedures for Development Projects. Subject to Section 3.4(e),
which requires a shorter notice and contribution period with respect to emergency
situations, not less than five (5) days prior to the Due Date for any Capital Calls for a
Development Project, as a condition of the obligation of the Members to fund their
respective Mandatory Capital Contributions, Cost Overruns and any Required Amount (as
defined herein), Campus Crest shall have delivered to the Members the following documents
and materials relating to such disbursements:




     (i) A disbursement request executed by Campus Crest (“Request for Advance”)
specifying each Member’s Required Amount. Each Request for Advance shall include:
(i) a breakdown of any unfunded Budgeted Project Costs to which said Required Amount
relates, (ii) a breakdown of any concurrent application (i.e., any application made
within the same construction draw cycle) of net cash receipts of the Company, or of
proceeds of the Required Amount to the payment of unfunded Budgeted Project Costs,
(iii) a good faith determination of whether the Development Project is on schedule
or if not, an estimate of any delays in the schedule, (iv) a good faith projection,
based on information then available to Campus Crest, of future Unfunded Excess
Project Costs and future unfunded Budgeted Project Costs, as applicable, and (v) a
statement by Campus Crest as to whether or not the Development Project is In
Balance, including appropriate detail and analysis, and (if the Development Project
is not In Balance) setting forth the category and amount of any amount that would
need to be made to cause the Development Project to be In Balance.




     (ii) A certification to the Members, as of the date of the applicable request
for disbursement, that: (1) the payment which is the subject of the Request
for Advance is not inconsistent with, and will be applied in accordance with,
the requirements of the Construction Loan; and (2) to the knowledge of Campus Crest,
no Event of Default, or condition or event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default, exists under the
terms of this Agreement concerning the Development Project in question or the



7









 






Construction Loan (except any default thereunder that would be cured by the
application of all or any portion of the funds which are the subject of the Request
for Advance in question); and




     (iii) All relevant back-up materials to evidence the expenditures set forth in
such draw request, as reasonably requested by the Member, in writing, including,
without limitation, timesheets, invoices, disbursements, and any and all other
documents required to be delivered to the lender under the Construction Loan as
conditions to draws thereunder simultaneously with the delivery of such documents to
said lender.




     (e) Emergency Funding. Notwithstanding Section 3.1 which provides that the Due
Date for a Capital Call shall not be less than five (5) days after the date of receipt of
notice of such Capital Call, if a Request for Advance is for the purpose of funding any
amount necessary to prevent or ameliorate an emergency that will result in substantial
damage to the Development Project or bodily injury to any Person at or about the Development
Project as reasonably determined by Campus Crest, then each Member will be required to fund
its Required Amount immediately upon receipt of the applicable disbursement request or
Capital Call notice.



     3.5 Construction Loans/Acquisition Loans. Campus Crest shall be responsible for
obtaining, on behalf of the Company and/or the applicable Subsidiary, a Construction Loan for each
Development Project or an Acquisition Loan for each Property to be acquired by the Company for a
minimum amount of eighty percent (80%) of the total construction costs (including hard and soft
costs, acquisition costs and due diligence expenses) in the case of a Development Project or eighty
percent (80%) of the total acquisition costs (including due diligence expenses) in the case of an
Acquisition Property to be acquired by the Company, as the case may be. Each Construction Loan or
Acquisition Loan and any agreements and documents pertaining thereto shall be subject to the
Approval of HSRE. In the event Campus Crest is unable to obtain a non-recourse Construction Loan
or Acquisition Loan with the foregoing terms, Campus Crest shall, subject to the Approval of HSRE
(which consent may not be unreasonably conditioned, delayed or withheld), cause Campus Crest to
guaranty repayment of such loan and/or any other obligations imposed by the lender.



     3.6 Failure to Fund Required Amount.




     (a) Failure to Fund. If any Member (a “Defaulting Member”) fails to fund, in full, any
amount required to be funded pursuant to Sections 3.2, 3.3 and
3.4(a) hereof (each, a “Required Amount”), by the required Due Date, any Member that
has fully funded its Required Amount (the “Contributing Member”) by the required Due Date
shall have the right, but shall not be obligated, to fund the Defaulting Member’s
Required Amount that was not funded (the “Default Amount”), and shall have the right to
exercise remedies, as set forth below.




     (b) Member Loans. The Contributing Member may fund all or any portion of the Default
Amount as a “Member Loan,” which shall be treated as loaned by the



8









 






	 	 	Contributing Member to
the Defaulting Member, and in turn, contributed by the Defaulting Member to the Company.
Any such Member Loan shall bear interest at an annual rate of which is the higher of (i)
fourteen percent (14%) per annum or (ii) five hundred (500) basis points over the Prime
Rate, adjusting when and as the Prime Rate adjusts. Until such time as a Member Loan has
been repaid in full by the Defaulting Member, all Distributions pursuant to this Agreement
that would otherwise be paid to the Defaulting Member shall instead be paid directly to the
Contributing Member. The amount paid to the Contributing Member pursuant to the preceding
sentence shall be deemed to have first been distributed by the Company to the Defaulting
Member pursuant to this Agreement, and then paid by the Defaulting Member to the
Contributing Member, and shall be applied first against accrued but unpaid interest owing
with respect to the Member Loan and then in reduction of the principal balance thereof.
Each Member Loan shall be due and payable in full upon the earlier of one (1) year from the
date advanced or the dissolution of the Company.






     (c) Security for Member Loan. Until such time as a Member Loan has been repaid in full
by the Defaulting Member, all Distributions pursuant to this Agreement that would otherwise
be paid to the Defaulting Member shall instead be paid directly to the Contributing Member.
Such amounts shall be deemed distributed by the Company to the Defaulting Member pursuant to
this Agreement and then paid by the Defaulting Member to the Contributing Member and shall
be applied first against accrued but unpaid interest owing with respect to the Member Loan
and then in reduction of the principal balance thereof. In order to secure the repayment of
any and all Member Loans made on behalf of a Defaulting Member, the Defaulting Member hereby
grants a security interest in favor of the Contributing Member in and to all Distributions
(including, without limitation, liquidation proceeds and any other cash proceeds and
interest and principal on any loans made to the Company by the Defaulting Member) to which
the Defaulting Member may be entitled under this Agreement, and hereby irrevocably appoints
the Contributing Member, and any of the Contributing Member’s representatives, agents,
officers or employees, as such Defaulting Member’s attorney(s)-in-fact, with full power to
prepare, execute, acknowledge, and deliver, as applicable, all documents, instruments,
and/or agreements memorializing and/or securing such Member Loan(s), including, without
limitation, such Uniform Commercial Code financing and continuation statements, mortgages,
pledge agreements and other security instruments as may be reasonably appropriate to perfect
and continue the security interest in favor of such Contributing Member. Upon repayment in
full of the Member Loan, any and all documents evidencing such security interest may be
discharged or terminated without any action on
the part of such Contributing Member or such Contributing Member’s representatives,
agents, officers or employees.




     (d) Maturity of Member Loan. If, upon the maturity of a Member Loan (taking into
account any agreed upon extensions thereof), any principal thereof and/or accrued interest
thereon remains outstanding, then the Contributing Member may elect any one (1) of the
following options: (A) to renew such Member Loan pursuant to the terms and provisions of
Section 3.6(b), (B) to institute legal (or other) proceedings against the Defaulting
Member for repayment of such loan which may include, without



9









 






limitation, foreclosing against
the security interest granted above, or (C) to contribute all or any portion of such
outstanding principal of, and accrued interest on, such Member Loan (or portion thereof) to
the capital of the Company in the manner described in Section 3.6(e) below in
satisfaction of such Member Loan. If (C) is elected, (i) the Defaulting Member shall be
deemed to have received a Distribution equal to the amount of the outstanding principal
amount of the Member Loan so contributed (plus the accrued and unpaid interest thereon),
(ii) the Capital Account and the unreturned Capital Contributions of the Defaulting Member
shall be reduced by such amount, (iii) the Defaulting Member shall then be deemed to have
repaid the outstanding principal of such Member Loan (plus the accrued and unpaid interest
thereon), and (iv) the Capital Account and the Capital Contributions of the Contributing
Member shall be increased by the amount of the Member Loan (plus the accrued and unpaid
interest thereon). Failure of the Contributing Member to give written notice to the
Non-Contributing Member within thirty (30) days after maturity shall be deemed to constitute
an election to renew such Member Loan for an additional term of one hundred eighty (180)
days on the terms set forth herein.




     (e) Capital Contribution of Default Amount/Dilution. Instead of making a Member Loan,
the Contributing Member may fund all or any portion of the Default Amount as a Capital
Contribution. Upon any such contribution by the Contributing Member, (i) the Participating
Percentage of the Defaulting Member shall be decreased by the Dilution Percentage, and (ii)
the Participating Percentage of the Contributing Member shall be increased by the reduction
in the Dilution Percentage of the Defaulting Member. The “Dilution Percentage” shall equal
the amount expressed in percentage points calculated based upon the following formula:
Dilution Percentage = 110% x the quotient of (x) the Default Amount divided by (y) the
total unreturned Capital Contributions of all Members (including the Default Amount
contributed by the Contributing Member). The respective percentage interest of the
Defaulting Member in each level of priority distributions under Section 4.1 shall be
adjusted in the same proportion as the adjustment made to the Member’s respective
Participating Percentage. Any adjustments to the Participating Percentages pursuant to this
Section 3.6(e) shall be rounded to the nearest one one-hundredth of one percentage
point (.01%). To illustrate, if (i) the Participating Percentages and unreturned Capital
Contributions of HSRE and Campus Crest were 90% and 9,000, and 10% and $1,000, respectively,
(ii) a Mandatory Contribution of $100 was required to be made by the Members on a 90/10
basis, (iii) Campus Crest failed to fund
its $10 share, and (ii) HSRE funded its 90% share (i.e., $90) as well as Campus Crest’s
10% share (i.e., $10), then the Dilution Percentage would be 0.11% (i.e., 110% x 10/10,100),
and the Participating Percentage of Campus Crest would be reduced from 10% to 9.89%, while
the Participating Percentage of HSRE would be increased from 90% to 90.11%. In addition,
the unreturned Capital Contributions of each Member would be deemed to be equal to its
revised Participating Percentage, multiplied by the total unreturned Capital Contributions
of the Members.




     (f) Member Default. In addition, in the event a Contributing Member elects not to fund
the Default Amount as a Member Loan, the Default Amount shall bear interest at the same rate
that would apply in the case of a Member Loan until paid, and



10









 






the Company shall withhold and
offset any Distributions that would otherwise be made to the Defaulting Member against the
Default Amounts and accrued interest thereon, until the Default Amount plus all accrued and
unpaid interest thereon has been paid. The failure of Campus Crest or HSRE to fund its
required share of any Required Amount, in full, by the required Due Date shall constitute a
Campus Crest Triggering Event or HSRE Triggering Event, respectively, as provided in
Section 6.1(a) and Section 6.3(a), respectively, unless such default is
cured within the time periods provided therein, and shall be subject to the remedies set
forth in Article 6.




     (g) Enforceability of Provisions. THE MEMBERS ACKNOWLEDGE AND AGREE THAT, UNDER THE
CIRCUMSTANCES EXISTING AS OF THE DATE HEREOF, THE REMEDIES PROVIDED FOR IN THIS SECTION
3.6 ARE FAIR AND REASONABLE AND DO NOT CONSTITUTE A FORFEITURE OR PENALTY. THE MEMBERS
FURTHER ACKNOWLEDGE AND AGREE THAT THEY HAVE BEEN PROVIDED WITH THE OPPORTUNITY TO CONSULT
WITH INDEPENDENT COUNSEL WITH RESPECT TO THE PROVISIONS OF THIS SECTION 3.6 AND
AGREE AND COVENANT NOT TO CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY SUCH REMEDY AS A
PENALTY, FORFEITURE OR OTHERWISE IN ANY COURT OF LAW OR EQUITY AND/OR ARBITRATION (OR
OTHERWISE).



     3.7 Operating Deficits; Necessary Cost Loans and Necessary Cost Capital Contributions.




     (a) The Members hereby agree that notwithstanding anything in this Agreement to the
contrary, if either Campus Crest or HSRE reasonably determines that the available funds of
the Company (including unfunded Mandatory Capital Contributions) are insufficient to pay any
Necessary Costs (as hereinafter defined) and such deficiency is not caused by a Member
failing to make a Mandatory Capital Contribution, such Member (the “Funding Member”) shall
have the right, but not the obligation, to make an Necessary Cost Capital Contribution to
the Company (“Necessary Cost Capital Contribution”) in an amount sufficient to pay such
Necessary Costs without the Approval of any other Member; provided, however, that nothing
contained in this Section 3.7 shall entitle any Member or the Campus Crest Guarantor
to make
Necessary Cost Capital Contributions in lieu of their respective obligations to fund
any Required Amount, including without limitations, Cost Overruns under this Agreement, the
Development Agreement or the Completion and Cost Overrun Guaranty. Any Member making a
Necessary Cost Capital Contribution shall give ten (10) days written notice (“Necessary
Contribution Notice”) to the other Members prior to each Necessary Cost Capital
Contribution, unless immediate funding is necessary to prevent or ameliorate an emergency
that will result in substantial damage to the Development Project and/or Property or bodily
injury to any Person at or about the Development Project and/or Property as reasonably
determined by the Funding Member, in which case the Funding Member shall give such notice to
the other Members promptly following such Necessary Cost Capital Contribution. Each
Necessary Contribution Notice shall set forth the amount of any Necessary Cost Capital
Contribution, the due date such



11









 






Necessary Cost Capital Contribution was made (or the date
made in the case of an emergency funding), and the purpose of such Necessary Cost Capital
Contribution.




     (b) Within ten (10) days after receipt of the Necessary Contribution Notice, the Member
not initiating the Necessary Cost Capital Contribution (i.e., Campus Crest or HSRE, as the
case may be) (the “Non-Funding Member”) shall have the right, but not the obligation, to
fund an amount up to its Participating Percentage of the Necessary Cost Capital
Contribution.




     (c) If the Non-Funding Member funds any portion of such amount within ten (10) days
after receipt of the Necessary Contribution Notice, then (i) such funded amount shall be
distributed to the Funding Member if the Funding Member funds more than its Participating
Percentage of the total amount funded by both Members, and (ii) the amounts funded by both
Members (reduced by any amount reimbursed to the Funding Member under Section
3.7(c)(i)) shall be treated as Capital Contributions, subject to Section 3.7(d)
below.




     (d) In the event a Non-Funding Member does not fully fund its Participating Percentage
of the Necessary Cost Capital Contribution within ten (10) days from the date of the
Necessary Contribution Notice, then that portion of the Funding Member’s Necessary Cost
Capital Contribution constituting the Excess Amount (as defined below) shall constitute a
loan to the Company (“Necessary Cost Loan”), which loan shall bear interest at an annual
rate which is the higher of (i) fourteen percent (14%) per annum and (ii) five hundred
(500) basis points over the Prime Rate, adjusting when and as the Prime Rate adjusts, and
shall be repaid prior to any Distributions under Article 4 or Article 12.
For purposes hereof, the “Excess Amount” shall mean (i) the total Necessary Cost Capital
Contribution funded by the Funding Member (reduced by any amount reimbursed to the Funding
Member under Section 3.7(c)(i)), minus (i) the Equity Portion. The Equity Portion
means (i) the quotient of (x) the amount (if any) funded by the Non-Funding Member, divided
by (y) the Participating Percentage of the Non-Funding Member, multiplied by (ii) the
Participating Percentage of the Funding Member. To illustrate, if the Participating
Percentages of HSRE and Campus Crest were ninety
percent (90%) and ten percent (10%), respectively, and HSRE funded a Necessary Cost
Capital Contribution of $100 and Campus Crest timely funded only $5, then (x) such $5 would
be distributed to HSRE under Section 3.7(c)(i), (y) the $5 funded by Campus Crest
would constitute a Necessary Cost Capital Contribution, and (z) $45 of the amount funded by
HSRE would be treated as an Necessary Cost Capital Contribution. The remaining $50 funded
by HSRE would be treated as a Necessary Cost Loan.




     (e) For purposes hereof, the term “Necessary Costs” shall mean any amount in excess of
the costs required to be funded under Sections 3.2, 3.3, and 3.4
hereof, including without limitation, an expenditure which a Member reasonably determines in
good faith to be needed to preserve the physical integrity, safety and value of a Property,
including, without limitation, an expenditure which a Member, in good faith, determines to
be necessary to (i) to address health or safety concerns of Tenants, (ii) to pay
maintenance, taxes or insurance on a Property, (iii) to pay, or discharge any liens or



12









 






encumbrances on the Project other than loans or encumbrances that are not otherwise in
default, or create a default, under a Construction Loan, and/or (iv) to cure or otherwise
avoid any default occurring under any agreement entered into by the Company or which would
otherwise be binding upon the Properties in any respect (including, without limitation, any
construction or loan documents, Leases, management agreements or other agreements binding
upon the foregoing parties); provided, however, that in no event shall the payment of any
fees to a Member or its Affiliate be deemed a Necessary Cost.



     3.8 Obligations of Campus Crest Guarantor. The Campus Crest Guarantor shall have the
obligation to guarantee the completion of a Development Project and Cost Overruns with respect to a
Development Project as set forth in the Completion and Cost Overrun Guaranty Agreement attached
hereto and incorporated herein by reference as Exhibit L.



     3.9 Organizational Legal Expenses. In the event the Funding Conditions are satisfied,
the Company will pay the legal expenses incurred by HSRE and Campus Crest with respect to
negotiation and preparation of this Agreement, including, without limitation, any documents
attached as exhibits hereto up to a cap of $85,000 for the legal expenses owed to HSRE’s counsel
and $27,500 for the legal expenses owed to Campus Crest’s counsel (including local counsel retained
by Campus Crest); provided, however, that in the event either Member’s legal costs shall exceed the
cap, but the other Member’s legal fees are below its applicable cap, then the Company shall pay the
portion of the Member’s legal expenses in excess of the cap up to the aggregate of the caps of both
Members. Except as provided above, any legal expenses in excess of a Member’s respective cap shall
be borne by the Member whose counsel exceeded the cap. In the event the Funding Conditions are not
satisfied, then each Member shall be liable for its own legal expenses related to the Properties
and this Agreement. The Company shall pay any and all legal, accounting, loan, brokers and similar
fees and expenses incurred in connection with the closing of the purchase, lease and financing of
the Properties and shall allocate such costs among the Properties as determined by the Members.



     3.10 Statesboro Construction Loan/DSCR.




     (a) Year 1 DSCR. The PrivateBank and Trust Company (the “Statesboro Lender”), the
lender of the construction loan (the “Statesboro Loan”) for the Development Project located
in Statesboro, Georgia (the “Statesboro Property”), has required a debt service covenant
pursuant to Section 7.26 of the Construction Loan Agreement (the “Statesboro Loan
Agreement”) between the Statesboro Lender and Campus Crest at Statesboro, LLC, the Property
Owning Subsidiary that owns the Statesboro Property (the “Statesboro Owner”). Under this
covenant, on August 15, 2010, the Statesboro Property must achieve a Projected Debt Service
Coverage Ratio (as defined in the Statesboro Loan Agreement) of not less than 1.00 to 1.00;
provided, however, that the definition of Debt Service (as defined in the Statesboro Loan
Agreement) for purposes of Section 7.26 of the Statesboro Loan Agreement only shall mean
during any Quarter (as defined in the Statesboro Loan Agreement), the actual interest
payments on the Statesboro Loan that are due and payable during such Quarter (the “Year 1
DSCR”).



13









 






     (b) Failure of the Statesboro Property to Comply with Year 1 DSCR/Campus Crest Funding
Obligation. In the event the Statesboro Property fails to comply with the Year 1 DSCR, then
Campus Crest shall be obligated to fund one hundred percent (100%) of any pay-down of the
Statesboro Loan and/or other amounts offered as a solution by the Statesboro Lender
(including, without limitation, posting of letters of credit) to cure the default, if any,
resulting from such failure to comply with the Year 1 DSCR (any such amount, the “Pay-Down
Amount”). In addition, Campus Crest shall also be obligated to fund one hundred percent
(100%) of all other amounts owed under the Statesboro Loan Agreement or other related loan
documents and associated expenses of the Company, the Statesboro Owner and HSRE as a result
of the failure to comply with the Year 1 DSCR (collectively, the “Other Amounts”). The
obligation of Campus Crest to fund the Pay-Down Amount and the Other Amounts shall be a
“Required Amount” under this Agreement, and the failure to fund any Pay-Down Amount or any
Other Amounts shall be a Campus Crest Triggering Event under Section 6.1(e) of this
Agreement. Campus Crest and the Campus Crest Guarantor shall be jointly and severally
liable to fund the Pay-Down Amount and Other Amounts.




     (c) Treatment of Campus Crest Funding of the Pay-Down Amount and the Other Amounts.
To the extent Campus Crest funds any Pay-Down Amount pursuant to this Section 3.10,
such funding shall be treated as a direct capital contribution by Campus Crest of preferred
equity (the “CC Preferred Equity”) to the Statesboro Owner. The return to be paid to Campus
Crest on the CC Preferred Equity shall be equal to the non-default interest rate on the
Statesboro Loan and the CC Preferred Equity shall not have a stated maturity date. The
return component of the CC Preferred Equity shall be paid by the Statesboro Owner to Campus
Crest first, prior to any distributions of Net Cash Flow to the Company, and the capital
contribution component of the CC Preferred Equity shall be repaid by the Statesboro Owner to
Campus Crest only out of the Capital Proceeds derived by the Statesboro Owner from the sale
or refinancing of the Statesboro Property or from the receipt by the Statesboro Owner of the
Earn-Out Proceeds (as defined in the
Statesboro Loan Agreement) pursuant to Section 3.9 of the Statesboro Loan Agreement,
first, after all amounts owed to other lenders and third parties (other than the Members or
their Affiliates) have been paid. Campus Crest shall receive no capital account credit or
any distribution or reimbursement right for the Other Amounts funded. Campus Crest and HSRE
hereby agree to enter into and execute any and all documentation the parties reasonably
determine to be necessary to properly memorialize the funding of the CC Preferred Equity
under this clause (c), including, without limitation, an amendment to the operating
agreement of the Statesboro Owner, if necessary.



     (d) Failure of Campus Crest to Fund the Pay-Down Amount and/or the Other Amounts. In
the event Campus Crest fails to fund any portion of any Pay-Down Amount or any Other Amounts
when due (after written notice from HSRE or the Company and a ten (10) day cure period for
Campus Crest to make any such payment), then HSRE shall have the right to fund any portion
of such Pay-Down Amount and/or Other Amounts, in accordance with this clause (d), in the
following manner (it being agreed that in the event the solution offered by the Statesboro
Lender involves any HSRE guaranty of the Statesboro Loan, HSRE shall be deemed to have
funded any portion of





14









 












the Statesboro Loan it has guaranteed for proposes of this Agreement
including this clause (d)):




     (i) HSRE can elect to fund such amount as a “Member Loan” from HSRE to Campus
Crest pursuant to Section 3.6(b) of this Agreement, except that the interest
rate shall be equal to twenty percent (20%) per annum. Such loan and accrued
interest shall be repaid out of distributions that would otherwise be made to Campus
Crest under this Agreement; or




     (ii) HSRE can elect to fund such amount as a preferred equity investment (the
“HSRE Preferred Equity”) in the Company (at the same interest rate as a Necessary
Cost Loan pursuant to Section 3.7(d) of this Agreement), and cause Campus
Crest’s Capital Account to be reduced and HSRE’s Capital Account to be increased, on
a corresponding dollar-for-dollar basis equal to the HSRE Preferred Equity funded
(and the Participating Percentage and the respective percentage interest of Campus
Crest in each level of priority distributions under Section 4.1 of this
Agreement shall be adjusted in the same proportion as the adjustment made to Campus
Crest’s Participating Percentage). To illustrate, if HSRE’s and Campus Crest’s
total Capital Contributions to the Company were $27,000,000 and $3,000,000,
respectively (i.e., 90/10 percentages), and the required Pay-Down Amount was
$1,000,000 and Campus Crest failed to fund such amount, then HSRE would have the
right to (i) fund the $1,000,000 as a Member Loan to Campus Crest (at an interest
rate of 20% per annum), or (ii) fund the $1,000,000 as HSRE Preferred Equity, and
cause the Capital Accounts to be adjusted accordingly (resulting in HSRE’s Capital
Account being $28,000,000 and Campus Crest’s Capital Account being $2,000,000).
HSRE’s and Campus Crest’s Participating Percentages would also
be adjusted accordingly, to 93.33% and 6.67%, respectively. Campus Crest’s
percentage in each level of priority distributions under Section 4.1 of this
Agreement would also be reduced proportionately (i.e., by 33%, the same percentage
reduction as the reduction in its Participating Percentage).




     (iii) In the Event HSRE elects to make a HSRE Preferred Equity contribution
under clause (d)(ii) above, then Campus Crest shall have the right, within thirty
days (30) from the date HSRE notifies Campus Crest in writing that HSRE has made the
HSRE Preferred Equity contribution, to cure its default by funding the amount
necessary to repay to HSRE the accrued and unpaid return on, and the return of, the
HSRE Preferred Equity. If Campus Crest cures in this manner, Campus Crest’s Capital
Account shall be increased by 50% of the amount funded by Campus Crest and HSRE’s
Capital Account shall be decreased, on a corresponding dollar-for-dollar basis by
50% of the amount funded by Campus Crest under this clause (d)(iii) (and the
Participating Percentage and the respective percentage interest of Campus Crest and
HSRE in each level of priority distributions under Section 4.1 shall be
adjusted in the same proportion as the adjustment made to their respective
Participating Percentage under this clause (d)(iii)).




15











 






     (e) In the event the Statesboro Property fails to comply with the Year 1 DSCR and
the Statesboro Lender does not permit the Company or the Statesboro Owner to pay down the
Statesboro Loan to cure such default and or Campus Crest or HSRE elects not to fund the
Pay-Down Amount and/or Other Amounts, resulting in a partial or complete loss of the
Statesboro Property by the Company (whether through foreclosure or otherwise), then the
amount of HSRE’s unreturned Capital Contributions in the Statesboro Property will be treated
as a Member Loan by HSRE to Campus Crest, secured by Campus Crest’s rights to distributions
from the Company.




     (f) In the event the Statesboro Property fails to comply with the Year 1 DSCR and the
Statesboro Lender does not permit the Company or the Statesboro Owner to pay down the
Statesboro Loan to cure such default and/or Campus Crest or HSRE elects not to fund the
Pay-Down Amount and/or Other Amounts, and the Statesboro Lender does not foreclose, but the
Statesboro Loan terms are modified in a manner which results in an economic loss to HSRE
(including without limitation, an increase in interest rate, sweep of cash flow to pay down
principal or issuance of a membership interest or right to cash flow to the Statesboro
Lender), then any such economic loss suffered by HSRE shall be treated as a Member Loan from
HSRE to Campus Crest, secured by Campus Crest’s rights to distributions from the Company.



ARTICLE 4




DISTRIBUTIONS TO MEMBERS



     4.1 Distribution of Net Cash Flow.




     (a) Operating Cash Flow, if any, shall be applied and distributed on a quarterly basis
in the following order of priority:




     (i) First, to the Members in proportion to and to the extent of the outstanding
principal amount of, and any accrued but unpaid interest on, any Necessary Cost
Loans made by the Members pursuant to Section 3.7 (interest on such loans
being paid prior to principal);




     (ii) Second, to the Developer and the Campus Crest Guarantor, as applicable, to
the extent of the Reimbursement Amount, if any, as set forth in Section
3.4(b)(ii); and




     (iii) Thereafter, the balance, to the Members, pro rata, in proportion to and
in accordance with their respective Participating Percentages.




     (b) Capital Proceeds, if any, shall be applied and distributed in the following order
of priority:




     (i) First, to the Members in proportion to and to the extent of the outstanding
principal amount of, and any accrued but unpaid interest on, any



16









 






Necessary Cost Loans made by the Members pursuant to Section 3.7
(interest on such loans being paid prior to principal);




     (ii) Second, to the Members, pro rata, in proportion to and to the extent of
the Net Invested Capital balances of such Member; and




     (iii) Thereafter, the balance, to the Members, pro rata, in proportion to and
in accordance with their respective Participating Percentages.



     4.2 Timing of Distributions/Prohibition against Reinvesting Proceeds. Operating Cash
Flow shall be distributed to the Members within fifteen (15) days following the close of each
calendar quarter, and any Capital Proceeds shall be distributed within thirty (30) days after
receipt thereof, unless otherwise Approved by the Executive Committee. Any Operating Cash Flow and
Capital Proceeds with respect to a particular Property shall not be reinvested, contributed to any
other Subsidiary, or used or reserved for payment of any costs or expenses relating to any Property
other than the Property which generated such Operating Cash Flow or Capital Proceeds without the
Approval of the Executive Committee. The foregoing priorities of application of Net Cash Flow are
for the benefit of the Members only and not for the benefit of any third party or creditor of the
Company or of any Member, and neither the Company nor any Member shall be liable or responsible to
any third party or creditor of the Company or of any Member for any deviation from such priorities.



     4.3 Withholding. If required by either (i) the Code or (ii) by the laws of any State
or local government of the United States, the Company and each of its Subsidiaries will withhold
any required amount from Distributions to a Member or Distributions to the Company or a Subsidiary,
as the case may be, for payment to the appropriate taxing authority. Any amount so withheld from
either Member will be treated as a Distribution by the Company to such Member. Each Member agrees
to timely file any agreement that is required by any taxing authority in order to avoid any
withholding obligation that would otherwise be imposed on the Company.



     4.4 Clawback. If upon the sale or other disposition of each Property (or upon the
disposition of HSRE’s interest in any such Property, pursuant to Article 9 hereof or otherwise),
HSRE has not received Distributions in an amount which results in HSRE receiving an 11% Internal
Rate of Return with respect to HSRE’s Capital Contributions made with respect to such Property and
all previously sold or disposed of Properties (not taking into account any loans made to the
Company or either Member by HSRE or Campus Crest and interest and principal payments received by
the Member thereon, including, without limitation, Necessary Cost Loans (the amount of the
shortfall shall be referred to herein as the “Distribution Shortfall”)), then Campus Crest shall be
obligated to contribute to the Company the lesser of: (i) the aggregate amount of Distributions
received by Campus Crest at any time, and (ii) the Distribution Shortfall. Any such payment
required by Campus Crest shall be made promptly with three (3) business days following the
applicable Distribution (including, Operating Cash Flow, if necessary) and such payment obligation
of Campus Crest shall be added to the Campus Crest Required Amount for all purposes hereunder. Any
amount contributed to the Company by Campus Crest under this Section 4.4 shall be
immediately distributed to HSRE and



17









 




shall not be treated as a Capital Contribution or loan by
Campus Crest hereunder; provided however, HSRE shall have the right to cause the Company to (A) offset the amount of such required payment by Campus Crest against
the Distribution which would otherwise be made to Campus Crest and (B) distribute directly such
amount to HSRE.




     4.5 Other Compensation. Except as otherwise expressly provided in this Agreement and
in the Property Management Agreement, the Construction Agreement or the Development Agreement, or
with the written Approval of all Members, no Member or Affiliate of a Member will be entitled to
any salary or other form of compensation for services rendered to the Company.



ARTICLE 5




MANAGEMENT



     5.1 Management of Company Affairs.




     (a) General. Subject to the provisions of this Agreement, the Members shall be
responsible for the management of the Company’s business and affairs. Except as otherwise
provided herein, any action taken by HSRE or Campus Crest in accordance with the terms of
this Agreement shall constitute the act of and serve to bind the Company. Subject to the
limitations set forth herein, Campus Crest shall be responsible for the day-to-day
management of the Company’s business and affairs, shall be entitled to execute agreements on
behalf of the Company that will serve to bind the Company and shall devote such time and
effort to the Company as is appropriate in light of all facts and circumstances; provided,
however, that notwithstanding any other provision hereof, all decisions and actions
described in Section 5.2 shall require the Approval of the Executive Committee. In
addition, notwithstanding Section 5.5 and the limitations of the Annual Business
Plan and Annual Operating Budget for the Properties, Campus Crest shall have the authority
at any time or from time to time in an emergency situation to take any action on behalf of
the Company without obtaining the prior Approval of any Member if such action is, in Campus
Crest’s reasonable judgment, necessary or advisable to preserve or protect the assets of the
Company from imminent physical damage or to prevent injury to any Person. Neither Campus
Crest nor HSRE shall be liable to the Company or any Member for any act or omission
performed or omitted pursuant to authority granted by this Agreement; provided
that such limitation of liability shall not apply to the extent the act or omission
was attributable to fraud, gross negligence, or willful misconduct.




     (b) Responsibilities of Campus Crest. Without limiting the generality of
Section 5.1(a) above, the responsibilities of Campus Crest shall include, but are
not limited to, all of the following:




     (i) oversee the performance of the TRS, Developer, General Contractor and the
Property Manager in the performance of their respective responsibilities under the
Development Agreements, Construction Agreements and Property Management Agreements;



18









 






     (ii) use reasonable efforts to satisfy the Funding Conditions for the
acquisition and development of each Property;




     (iii) sourcing and securing the potential acquisition of Properties and
Development Projects;




     (iv) oversee the development of a Development Project and negotiate and
administer, on behalf of the Company, all contracts of the Company and its
Subsidiaries;




     (v) liase with local authorities on matters relating to the Properties;




     (vi) implement all Major Decisions Approved by the Executive Committee;




     (vii) supervise the operation of the Properties in a prudent manner and
establish appropriate marketing programs for the Properties, subject to the Annual
Business Plan and Operating Budget;




     (viii) establish and maintain a sound financial accounting system for the
Company and each of its Subsidiaries;




     (ix) institute and maintain adequate internal fiscal controls for the Company,
its Subsidiaries and each Property through commonly accepted budgeting, accounting
procedures and timely financial reporting in a manner consistent with the Annual
Business Plan and Annual Operating Budget;




     (x) cause the TRS and Property Manager to conform the operations of each
Property to and comply with all applicable Laws (including those pertaining to
licensing and customs); and take all steps necessary to ensure that all licenses and
certificates necessary to operate each Property is maintained at all times, without
interruption;




     (xi) cause the Property Manager to, consistent with the terms of the Leases and
prudent practices, endeavor to maintain the Properties as a reasonably safe and
secure environment, promptly notify the Company and HSRE of any security risks or
issues related to any Property that become known to Campus Crest, and attempt to
rectify or remedy promptly such risks or issues to the extent Company funds are
available for such purpose; and




     (xii) with respect to each Development Project, during the final thirty (30)
days of each construction warranty, whether or not falling within the term of the
Development Agreement and notwithstanding the expiration of the term of the
Development Agreement, use commercially reasonable efforts to cause the General
Contractor (and if appropriate, the Architect or another consultant) to conduct an
inspection of all systems, components and other work covered by such



19









 







construction warranty period, so as to identify and file any and all potential
claims thereunder.




     (c) Material Change in Control. If a Campus Crest Material Change in Control
(as defined below) occurs, Campus Crest shall send Notice thereof to HSRE within ten (10)
days after such occurrence (the failure to send such Notice being a material breach of this
Agreement). In the event of a Campus Crest Material Change in Control, HSRE shall have the
right as of the date which is thirty (30) days after the date of the Campus Crest Material
Change in Control (the “Campus Crest Change in Control Effective Date”) to pursue any of the
remedies set forth in Section 6.2; provided, however, if a Campus Crest Material
Change in Control occurs under clause (B) below and HSRE Approves such Campus Crest Material
Change in Control prior to the Campus Crest Change in Control Effective Date, no Campus
Crest Triggering Event shall be deemed to have occurred. For purposes of this Agreement, a
Campus Crest Material Change in Control shall be deemed to have occurred only if there is a
change in Control of any one or more of the following entities: (A) Campus Crest, (B) Campus
Crest Properties, LLC, a North Carolina limited liability company, (C) Campus Crest Group,
(D) the Campus Crest Guarantor and/or (E) Campus Crest Communities, Inc., a Maryland
corporation.




     (d) Related Party Matters. Campus Crest shall not employ, or permit any other
Person to employ any funds or assets of the Company in any manner other than for the
exclusive benefit of the Company. Except as Approved by the Executive Committee, the
Company shall not pay fees or any other amounts to Campus Crest or any Affiliate as
consideration for the performance of its duties as such. Campus Crest may designate one or
more of its Affiliates, agents or employees to carry out its duties and responsibilities,
provided, however, such delegation shall in no manner diminish (or be deemed to diminish),
or relieve (or be deemed to relieve) Campus Crest of any obligations of Campus Crest
hereunder. Each Member shall have the right to submit a proposal to the Company and the
other Members to provide services that would otherwise be provided for the Company by a
third party. However, except for the Property Management Agreement, Construction Agreement
and the Development Agreement, no Member (or its Affiliates) shall receive any fees or
compensation from the Company (or any Subsidiary) (including, without limitation, for the
performance of any services relating to the development, operation, renovation, maintenance,
sale, financing, or refinancing of the Properties), unless the terms and documentation with
respect to such services have been Approved in advance by HSRE and Campus Crest. With
respect to any Related Party Agreement (as defined below), the Member who is not a party to
such Related Party Agreement (or whose Affiliate is not a party to such Related Party
Agreement) shall have the unilateral right to exercise and enforce any and all of the
Company’s rights under such Related Party Agreement. For purposes hereof, the term “Related
Party Agreement” shall mean any contract or agreement between the Company (or a Subsidiary)
and a Member (or an Affiliate of such Member) including, without limitation, any agreement
for the performance of any services with respect to the Properties or the sale or
refinancing of the Properties.



20









 





     5.2 Major Decisions. Notwithstanding the other provisions of this Agreement, neither
Campus Crest nor any manager, officer, employee or agent thereof shall have the authority on behalf
of the Company or any Subsidiary to take any action, make any decision, expend any sum or suffer
any obligation if to do so would constitute a Major Decision without first obtaining the Approval
of the Executive Committee. For these purposes, each of Campus Crest and HSRE shall from time to
time designate their respective Member representatives, each of whom shall be authorized to act on
behalf of such Member (all four appointed individuals shall be referred to herein as the “Executive
Committee”). The two (2) individuals initially authorized to act on behalf of Campus Crest shall
be Michael S. Hartnett and Ted W. Rollins. The two (2) individuals initially authorized to act on
behalf of HSRE shall be Stephen Gordon and Christopher Merrill. Any representative appointed to
the Executive Committee shall have the right to propose a Major Decision. The representatives of
Campus Crest and HSRE shall meet either by teleconference (upon the agreement of Campus Crest and
HSRE) or at the principal office of the Company (or at such other location as Campus Crest and HSRE
may agree upon) on the request of any Member upon seven (7) business days’ prior written notice to
(i) all of the individuals then authorized to act on behalf of the other Member and (ii) all of the
parties that are to receive notice under Section 13.8 on behalf of such Member. Any and
all decisions of the Executive Committee shall require the approval of not less three (3) of the
four (4) members of the Executive Committee. The failure of Campus Crest or HSRE to participate in
any such meeting after confirmation of receipt of notice whether by teleconference or otherwise,
shall be deemed to constitute the written approval of such Person of the proposed Major Decision.
Any matters independently constituting Major Decisions shall be deemed approved by the Executive
Committee pursuant to this Section 5.2 if included in a Budget approved by the Executive
Committee in accordance with this Section 5.2. As used herein, “Major Decision” means any
decision proposed by a Member or member of the Executive Committee to do or take any of the
following actions:




     (a) Any Capital Event;




     (b) The adoption of (or Approval of any modifications to) the Annual Business Plan or
Annual Operating Budget;




     (c) Entering into, modifying or enforcing the rights of the Company under any Material
Contracts (as defined below). For purposes of this agreement, a Material Contract shall
mean any written agreement relating to (i) any Major Decision, or (ii) the development,
operation, maintenance, management, lease (excluding tenant leases), or marketing of all or
any portion of the Properties and/or any other asset of the Company, if (i) the services for
such contract are not provided for in the Annual Operating Budget, or (ii) such contract
requires the approval of the Owner under the Property Management Agreement, Construction
Agreement, Development Agreement or other Related Party Agreement or (iii) the contract or
agreement obligates the Company to make aggregate payments in excess of Twenty-Five Thousand
Dollars ($25,000). Notwithstanding the foregoing, change orders made by the General
Contractor where Owner’s consent is not required pursuant to the terms and conditions of the
Development Agreement shall not constitute a Major Decision hereunder;



21









 






     (d) The acquisition of any real or personal property other than as set forth in the
Annual Operating Budget and entering into any material license agreement, reciprocal
easement agreement, conditions, covenants and restrictions, or other similar agreements or
easements materially affecting any portion of the Properties or title thereto other than as
set forth in the Review Items Approved by HSRE in connection with a Development Project;




     (e) After receipt by Campus Crest of the IC Approval Notice, all decisions and actions
of the Company with respect to Entitlements, changes in zoning and governmental approvals
with respect to a Property other than as set forth in the Review Items Approved by HSRE in
connection with a Development Project;




     (f) (i) The creation, assumption, incurring or consent to or release of any charge,
mortgage, deed of trust, pledge, encumbrance, lien or security interest of any kind upon any
property or assets of the Company; (ii) any interest rate “swap” agreement or similar
interest rate hedge or interest rate protection agreement; (iii) any loan, guaranty,
accommodation, endorsement or any other extension or pledge of credit to any Person; and
(iv) the documentation in connection with the foregoing and the exercise of any rights and
remedies with respect thereto;




     (g) Distribution of Operating Cash Flow less frequently than quarterly or Capital
Proceeds other than promptly within thirty (30) days receipt thereof;




     (h) Other than with respect to Bradley Arant Boult Cummings LLP and Easley, Endres,
Parkhill & Brackendorff, P.C. (which firms shall be deemed Approved by the Executive
Committee as of the date of this Agreement), appointing or replacing attorneys (other than
the appointment of attorneys to handle eviction or collection matters with respect to the
Properties), accountants, management consultants, bankers, engaging agents, architects,
engineers, environmental consultants or other independent contractors;




     (i) Establishing working capital and other reserves by or on behalf of the Company or
any Subsidiary (to the extent not set forth in the Annual Operating Budget), and determining
the amount of distributable Net Cash Flow;




     (j) Changing accounting policies, or approving, publishing or distributing, other than
to an existing or prospective lender or purchaser, audited or unaudited accounts of the
Company or any Subsidiary except to the extent required by Law or in the ordinary course of
business with respect to the preparation of consolidated information for the financial
statements of the parent or Affiliates of Campus Crest;




     (k) Any decisions and actions with respect to any tax matters, including, without
limitation, tax elections and other actions taken by Campus Crest in its capacity as tax
matters partner for the Company to the extent permitted by Law;



22









 






     (l) Permit the Company to take any action, or refrain from taking any action which, or
the effect of which, would constitute or result in the occurrence of a REIT Prohibited
Transaction (as defined below);




     (m) Review and Approve to file all tax returns of the Company and/or its Subsidiaries
within fifteen (15) days of receipt thereof;




     (n) Indemnifying and advancing expenses in relation to any claim for indemnification to
any Member, Affiliate, agent, advisor, contractor, co-venturer, co-partner, co-shareholder
or investee company, partnership or other entity except to the extent permitted under
Article 7, the Property Management Agreement, Construction Agreement, Development
Agreement and/or any other Related Party Agreement;




     (o) The settlement, compromise, submission to arbitration or any other form of dispute
resolution, or abandonment of any claim, cause of action, liability, debt or damages, due or
owing to or from the Company, the enforcement or defense of suits, legal proceedings,
administrative proceedings, arbitration or other forms of dispute resolutions, and the
incurring of legal expenses, where the amount involved is reasonably expected to exceed
Twenty Five Thousand Dollars ($25,000);




     (p) (i) The filing or the consent by answer or otherwise to the filing of a petition
for relief or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium
or other similar law of any jurisdiction, (ii) the convening of a meeting of creditors or
the making or proposing of any arrangement or composition with, or any assignment for the
benefit of, its creditors, or the pursuing of any similar procedure under any applicable
Law, or (iii) the admission in writing of the inability to pay, or the refusal generally to
pay, debts as they become due;




     (q) Except to the extent provided herein, the issuance of additional Membership
Interests to an existing Member or other Person, voting rights, rights to Distributions,
warrants, options, securities convertible into Membership Interests or other rights to
acquire ownership interests in the Company or any Subsidiary; and the admission of any
Person as a Member in the Company or as a holder of equity of a Subsidiary;




     (r) Any merger, reorganization, recapitalization or similar transaction involving the
Company or any Subsidiary;




     (s) The formation of any Subsidiary and the ownership structure of Subsidiary, and the
terms and provisions of the organizational documents and governing agreements of such
entity;




     (t) Changing the name of the Company or any Subsidiary, other than as required by Law,
or changing the registered office or, registered agent of the Company;



23









 






     (u) Upon the liquidation of the Company, the appointment of one or more Persons to act
as the liquidator of the Company, and if Campus Crest, HSRE or any Affiliate thereof shall
be appointed as liquidator of the Company, all acts and deeds taken thereby in the
furtherance of the liquidation of the Company;




     (v) Subject to Section 13.19, the disclosure of confidential information
relating to financial matters, other than to existing or prospective lenders or purchasers
Approved by HSRE and Campus Crest; and the disclosure of confidential information relating
to the Members; and any publicity, media communications or other public announcements with
respect to the Company or the Properties (other than with respect to routine public
relations and communications made by each Property in the ordinary course of business); and




     (w) Any decision requiring the Approval of the Company or its subsidiaries under the
Development Agreement or any other Related Party Agreement; and



          Approval of the Executive Committee shall be evidenced by either the execution of a writing by
the required number of members of the Executive Committee or by a writing executed by an officer of
each of HSRE and Campus Crest, with any such writing being signed in counterparts.




     5.3 Property Management Agreement. Prior to the date hereof, the Company or the
Property Owning Subsidiaries owning the Properties have entered into a Property Management
Agreement with the Property Manager in the form attached hereto as Exhibit G. The Members
hereby Approve The Grove Student Properties, Inc. as the Property Manager.



     5.4 Notice of Certain Developments. Each Member shall promptly notify the other
Member after such Member receives notice or has knowledge thereof, of (i) a default or alleged
default by the Company or a Property Owning Subsidiary under any material contract to which it is a
party; (ii) a default or alleged default by the Property Manager or Developer, Campus Crest or any
Affiliate of any such party under any Property Management Agreement, Construction Agreement or
Development Agreement; (iii) any threatened or pending litigation or investigation concerning the
Company or the Properties of which such Member has actual knowledge; or (iv) any act concerning the
Company, the Properties or any Subsidiary which constituted or would constitute a violation of Law.
The Members shall keep one another informed on a reasonably current basis concerning any such
matter of which Notice is required to be given.



     5.5 Annual Business Plan and Operating Budget.




     (a) Campus Crest shall prepare for the Approval of the Executive Committee, no later
than November 1 of each Fiscal Year (except for the 2010 Fiscal Year, no later than March
31, 2010), the Annual Business Plan for each Property for the next Fiscal Year, which shall
include the following:




     (i) A narrative description of any activity proposed to be undertaken;



24









 






     (ii) A detailed operating budget (“Annual Operating Budget”), including
schedules of projected Operating Cash Flow and projected sources and uses of funds
for such Fiscal Year, all projected operating costs and capital expenditures and
administrative expenses, and a schedule of projected operating income or deficits,
as the case may be;




     (iii) A leasing plan indicating, among other things, recommendations for
achieving market rentals for Leases and minimum acceptable terms for Leases at the
Properties;




     (iv) A description of proposed construction, including projected dates for
commencement and completion and capital expenditure requirements; and




     (v) Such other information, including a description of plans, contracts,
agreements, governmental approvals and other matters, as may be necessary or
reasonably in order to inform the Executive Committee of all matters relevant to the
development, operation, management and/or sale of the Properties or any portion
thereof, and to otherwise allow the Executive Committee to make an informed decision
with respect to the approval of the Annual Business Plan and Annual Operating
Budget.




     (b) If the Executive Committee does not approve an Annual Operating Budget for any
Fiscal Year prior to the commencement of such Fiscal Year, then, until the Executive
Committee shall agree upon an Annual Operating Budget for such year, the Annual Operating
Budget in effect for the immediately preceding Fiscal Year shall constitute the Annual
Operating Budget for such Fiscal Year, except that (i) any items or portions of the Annual
Operating Budget for such Fiscal Year upon which the Executive Committee agrees shall be
substituted for the corresponding items in the preceding year’s Annual Operating Budget,
(ii) with respect to all items of cost and expense that are not within the discretion of the
Company (including, for example, debt service, real property taxes, utilities, costs of
compliance with governmental requirements, contractually required increases and all
expenditures required under the Management Agreement or any Lease), the actual amount of
each such item shall be substituted for the amount of such item set forth in the preceding
year’s Annual Operating Budget, and (iii) with respect to items of operating costs and
expenses that are within the discretion of the Company and which have not been authorized in
accordance with the terms of this Agreement, each such item of operating cost or expense
shall be not more than one hundred five percent (105%) of the amount of such items set forth
in the preceding year’s Annual Operating Budget; and (iv) the Annual Operating Budget shall
not include non-recurring capital expenditures in the prior year’s budget.



     5.6 Development of Project.




     (a) Delivery of Review Items. Without limiting the generality of Section
5.1(b) above, Campus Crest shall submit to HSRE or their authorized designees such
agreements, studies and other information or due diligence items (collectively, the



25









 






“Review Items”) as may be reasonably requested by HSRE in order for HSRE to adequately
evaluate a subject Development Project (which Review Items may include, without limitation,
those items described in Exhibit C hereto).




     (b) Limitations on Authority. Except as provided in Section 3.3(a),
the Company shall not make any expenditures of Company funds with respect to the development
of any Property, unless and until the Funding Conditions with respect to such Property have
been met. In the event the Funding Conditions for a Development Project have been satisfied
and subsequently there are any material changes in the Plans and Specifications for an
approved Development Project from that reflected by the Review Items previously submitted by
Campus Crest to, and Approved by, the Executive Committee, Campus Crest shall be required to
re-submit the modified or corrected Review Items to the Executive Committee, and to obtain
updated Approval prior to making any further expenditures relative to said Development
Project.




     (c) Development Agreement; Property Management Agreement; and Completion and Cost
Overrun Guaranty.




     (i) Prior to the date hereof, the Company, the applicable Property Owning
Subsidiary and the Developer entered into a Development Agreement in the form
attached hereto as Exhibit F. Immediately after the satisfaction of the
Funding Conditions set forth on Exhibit E with respect to each Development
Project, the Company, the applicable Property Owning Subsidiary and the Developer
shall enter into a Development Agreement in the form attached hereto as Exhibit
F (the completion of any blanks shall be subject to the Approval of the
Executive Committee) with respect to such Property. The obligations of the
Developer shall be guaranteed by the Campus Crest Guarantor to the extent provided
for under the Development Agreement and/or Completion and Cost Overrun Guaranty.




     (ii) Concurrently with the closing of an Additional Property, the Company or
the Property Owning Subsidiary owning the such Property shall enter into the
Property Management Agreement with the Property Manager in the form attached hereto
as Exhibit G (completion of which shall be subject to HSRE Approval). The
property management fee shall be equal to the sum of (i) three percent (3%) of gross
revenue and (ii) three percent (3%) of net operating income, unless otherwise agreed
to by the Members and as set forth in the applicable Property Management Agreement.



     5.7 Rights of HSRE. Notwithstanding any other provision hereof, (i) HSRE has the
right to propose from time to time any Major Decision and (ii) Campus Crest shall, at the written
request of HSRE, promptly bring to all the Members for their consideration and Approval such
proposed Major Decisions and any other proposed action that Campus Crest is authorized or required
to propose to the Members for Approval hereunder or under the Act.



26









 





     5.8 Meetings of the Members. The Company shall have quarterly meetings of the Members
at such time as shall be determined by the Members for the purpose of the transaction of any
business as may come before such meeting or discussing issues concerning the business of the
Company which may be raised by a Member. Special meetings of the Members, for any purpose or
purposes, may be called by either Member at any time. Meetings of the Members shall be held by
teleconference or otherwise at such place as shall be agreed to by the Members. Written notice
stating the place, day and hour of the meeting, indicating that it is being issued by or at the
direction of the person or persons calling the meeting, stating the purpose or purposes for which
the meeting is called shall be delivered no fewer than ten (10) nor more than sixty (60) days
before the date of the meeting. Campus Crest shall be responsible for conducting and directing
meetings of the Members unless such meeting has been called by HSRE, in which case HSRE shall be
responsible for conducting and directing such meeting.



     5.9 REIT Related Provisions.




     (a) The Members recognize that each Member is owned directly or indirectly by a real
estate investment trust (each a “Parent REIT”) and a real estate investment trust must
comply with a number of restrictions under the Code to maintain its status as a real estate
investment trust (“REIT”) under Section 856 of the Code. Each Member acknowledges that it
has examined the books and records associated with the Property and has determined that the
current operational structure of the Property would allow each Parent REIT to qualify as a
REIT. In the event either Member desires to modify the structural operations of the
Properties or take any action not provided for under an applicable Annual Business Plan or
Annual Operating Budget, it will present such proposed modification to the Executive
Committee. If either Member determines that the proposed modification (x) would cause any
of the income derived by the Company to fail to qualify as “rents from real property” or as
other qualifying income under Section 856(c)(2) of the Code or (y) would otherwise cause a
Parent REIT to fail to qualify as a REIT under the Code, such modification shall not occur
without the Executive Committee’s Approval. Without limiting the generality of the
foregoing, neither Member shall modify the structure currently utilized to provide at the
Property if either Member determines that it would cause the Company to derive
“impermissible tenant service income” within the meaning of Section 856(d)(3) of the Code
without first presenting such proposed modification to the Executive Committee and obtaining
the Executive Committee’s Approval.




     (b) The Company will explore alternatives to providing such services including, but not
limited to, providing any such services through a “Taxable REIT Subsidiary” (“TRS”) of the
Parent REITs or an independent contractor (as defined in Code Section 856(d)(3)) from whom
neither the Company nor the Parent REITs derive any income, directly or indirectly. In this
regard, the Members hereby agree that if requested by either Member, the Company will form a
wholly owned subsidiary that will elect to be a TRS for the purposes of (i) providing any
services to the tenants of the Properties that could potentially cause any income from the
Properties to be impermissible tenant services income and/or (ii) operating any retail
activities undertaken at the Property. Upon the acquisition or development of an Additional
Property, the



27









 






Company (or a Property Owning Subsidiary) and the TRS shall enter into a services
agreement (the “Services Agreement”) in substantially the same form to be attached hereto as
Exhibit N following the date of this Agreement and upon the review and approval of
both Members, whereby the TRS shall perform such services as set forth in the Services
Agreement.



ARTICLE 6




TRIGGERING EVENTS; REMEDIES



     6.1 Campus Crest Triggering Event. Each of the following shall constitute a Campus
Crest Triggering Event:




     (a) Any material failure by Campus Crest to perform its obligations under this
Agreement that is not cured to HSRE’s reasonable satisfaction within fifteen (15) days after
Notice of breach by HSRE regarding monetary default and within forty (40) days after Notice
of breach by HSRE regarding non-monetary default (provided that such cure period for a
non-monetary default by Campus Crest shall be extended for an additional period, not
exceeding an additional ninety (90) days, so long as Campus Crest is diligently pursuing the
cure of such default during such extended cure period);




     (b) Any material breach of a representation, warranty or covenant (i) by the Property
Manager under the Property Management Agreement so long as the Property Manager is an
Affiliate of Campus Crest; (ii) by the Developer under the Development Agreement, so long as
the Developer is an Affiliate of Campus Crest; (iii) by Campus Crest or its Affiliates under
the Non-Competition and Right of First Opportunity Agreement; (iv) by the General Contractor
under the Construction Agreement so long as the General Contractor is an Affiliate of Campus
Crest or (v) by Campus Crest or its Affiliates under any Related Party Agreement, in each
case in the event such material breach is not cured within any applicable grace period under
the applicable contractual agreement;




     (c) The failure by Campus Crest to obtain the Approval of HSRE prior to taking any
action requiring the Approval of HSRE hereunder; provided, however, that a Campus Crest
Triggering Event shall not be deemed to have occurred if Campus Crest fails to obtain the
Approval of HSRE prior to taking any action requiring HSRE Approval and such action is
ultimately Approved by HSRE after such action is taken;




     (d) RESERVED;




     (e) The failure by Campus Crest to fund, in full, any Required Amount under Article
3 including any grace period provided therein;




     (f) Any transfer or encumbrance of Campus Crest’s Membership Interest in the Company or
any portion thereof or any direct or indirect interest therein not permitted



28









 






herein without the Approval of HSRE; provided, however, that in the event that such
transfer or encumbrance does not cause any material harm to HSRE, Campus Crest shall have
the right to cure such breach to HSRE’s reasonable satisfaction within fifteen (15) days of
Notice of breach by HSRE;




     (g) Any Material Change in Control not Approved by HSRE under Section 5.1(c);
and




     (h) Any act of willful misconduct or fraud by Campus Crest concerning its obligations
under this Agreement or any act of willful misconduct or fraud by the Developer concerning
its obligations under the Development Agreement, the General Contractor concerning its
obligations under the Construction Agreement or by the Property Manager concerning its
obligations under the Property Management Agreement or by any Affiliate of Campus Crest
under any other Related Party Agreement.



     6.2 Remedies for Campus Crest Triggering Event. In addition to the remedies set forth
herein, upon the occurrence of a Campus Crest Triggering Event, and at any time thereafter after
the applicable period for cure has lapsed, if any, HSRE may, at its option, exercise any one or
more of the following remedies without the Approval of any other Member:




     (a) Cause the Company to market and sell the Properties to a third party for such
prices and on such terms as HSRE deems appropriate, without the need for Approval of Campus
Crest and without any right on the part of Campus Crest to purchase any of the Properties;




     (b) Dissolve the Company;




     (c) Exercise, in its sole discretion, the Company’s right to terminate (or otherwise
enforce any other remedy with respect to) the Property Management Agreement, the
Construction Agreement, the Development Agreement or any other Related Party Agreement
between the Company or any Subsidiary and Campus Crest, or any Affiliate of Campus Crest;




     (d) Replace Campus Crest as the Member vested with day-to-day management control of the
affairs of the Company as set forth in Section 5.1 pursuant to Section 6.5;
and




     (e) In the case of a Campus Crest Triggering Event under Section 6.1(h) by
Campus Crest only, purchase the Membership Interest of Campus Crest for an amount equal to
the Net Invested Capital of Campus Crest.



     6.3 HSRE Triggering Event. Each of the following shall constitute an HSRE Triggering
Event:




     (a) Any material failure by HSRE to perform its obligations under this Agreement that
is not cured to Campus Crest’s reasonable satisfaction within fifteen (15) days after Notice
of breach by Campus Crest regarding monetary default and within forty



29









 






(40) days after Notice of breach by Campus Crest regarding a non-monetary default
(provided that such cure period for a non-monetary default shall be extended for an
additional period, not exceeding an additional ninety (90) days, so long as HSRE as the case
may be, is diligently pursuing the cure of such default during such extended cure period);




     (b) The failure to fund, in full, any Required Amount under Article 3;




     (c) Any transfer or encumbrance of HSRE’s Membership Interest in the Company or any
portion thereof or any direct or indirect interest therein not permitted herein without the
Approval of Campus Crest; provided, however, that in the event that such transfer or
encumbrance does not cause any material harm to Campus Crest, HSRE shall have the right to
cure such breach to Campus Crest’s reasonable satisfaction within fifteen (15) days of
Notice of breach by Campus Crest; and




     (d) Any act of willful misconduct or fraud by HSRE concerning its obligations under
this Agreement.



     6.4 Remedies for HSRE Triggering Event. Upon the occurrence of a HSRE Triggering
Event, and at any time thereafter, after the applicable period for cure has lapsed, if any, Campus
Crest may, at its option, exercise any one or more of the following remedies without the Approval
of any other Member:




     (a) Cause the Company to market and sell any or all of the Properties to a third party
for such prices and on such terms as Campus Crest deems appropriate, without the need for
approval of HSRE and without any right on the part of HSRE to purchase any of the
Properties;




     (b) Dissolve the Company; or




     (c) In the case of a HSRE Triggering Event under Section 6.3(d) by HSRE only,
purchase the Membership Interest of HSRE for an amount equal to the Net Invested Capital of
HSRE.



     6.5 Replacement of Campus Crest as Day-to-Day Manager; Executive Committee Changes upon.




     (a) In the event a Campus Crest Triggering Event, HSRE may elect, by delivery of ten
(10) days prior written notice thereof to Campus Crest, to replace Campus Crest as the
Member vested with day-to-day management control of the affairs of the Company or to admit
an Affiliate of HSRE in such capacity, effective as of the date of the occurrence of such
Campus Crest Triggering Event or Event of Withdrawal as hereinafter defined (the “Conversion
Date”). In the event HSRE exercises its rights under this Section 6.5(a), Campus
Crest or its successor-in-interest, as the case may be, shall promptly upon demand of HSRE
execute and deliver to the Company all documents that may be necessary or appropriate, in
the opinion of counsel of the Company, to effect the transfer of management control of the
day-to-day affairs of the Company and Campus



30









 






Crest shall remain liable for all liabilities, duties and obligations of Campus Crest
arising prior to such transfer of rights. From and after the Conversion Date (whether or
not such conversion election is made by HSRE), Campus Crest shall have no rights to
participate in the management and affairs of the Company. In addition, upon the occurrence
of a Campus Crest Triggering Event, HSRE shall have the right, by delivery of written notice
thereof to Campus Crest, to direct all Executive Committee members previously appointed by
Campus Crest to immediately resign as Executive Committee members as of the date of
occurrence of the Campus Crest Triggering Event and after the Campus Crest Conversion Date,
(i) Campus Crest shall have no right to appoint any Executive Committee Members, (ii) HSRE
shall have the right to appoint all Executive Committee Members, (iii) HSRE shall have the
right to reduce the size of the Executive Committee to any number it desires in its sole and
absolute discretion, and (iv) Campus Crest shall have no right to vote on any Major
Decisions or other matters relating to the Company or otherwise make any decisions on behalf
of the Company, including, without limitation, exercising any right to sell the Properties
pursuant to Article 9. Notwithstanding anything in this Section 6.5 to the
contrary, Campus Crest shall retain the right to receive distributions of the Company
Operating Cash Flow and Capital Proceeds pursuant to Article 4 herein.




     (b) If HSRE terminates Campus Crest’s management rights as provided above, HSRE shall
be entitled to provide and perform, or retain another Person to provide and perform, the
facilities, personnel and services formerly performed by Campus Crest (or its Affiliate) and
HSRE or such Person shall be entitled to a reasonable rate of compensation for such services
and to reimbursement for all expenses reasonably incurred in connection therewith,
including, without limitation, the cost of facilities, supplies and personnel acquired, used
or retained exclusively for the Company and an allocable portion of HSRE’s or such Person’s
general and administrative expenses to reflect the value of shared facilities, supplies and
personnel.



     6.6 Other Remedies for Breach. The rights and remedies of the Members set forth in
this Agreement are neither mutually exclusive nor exclusive of any right or remedy provided by law,
in equity or otherwise. Subject to the dispute resolution provisions of Section 13.3, the
Members agree that all legal remedies (such as monetary damages), other than punitive damages as
well as all equitable remedies (such as specific performance) will be available for any breach or
threatened breach of any provision of this Agreement.



ARTICLE 7




INDEMNIFICATION



     7.1 General. The Company shall, but only to the extent of its assets, indemnify and
hold harmless each Member and each of their Affiliates and employees and the employees, officers,
agents and members of the Executive Committee of the Company, from and against any loss, liability,
expense, damage or injury suffered or sustained by him, her or it by reason of any acts, omissions
or alleged acts or omissions arising out of his, her or its activities within the scope of the
authority conferred on the respective Members, or the Person so appointed by this



31









 




Agreement or by law, including any judgment, award, settlement, reasonable attorneys’ fees and
other costs or expenses incurred in connection with the defense of any actual or threatened action,
proceeding or claim, and provided that the acts, omissions or alleged acts or omissions upon which
such actual or threatened action, proceedings or claims are based were not performed or omitted to
be performed in bad faith and did not constitute gross negligence or willful misconduct. The
Company shall have the right to assume the defense in any action or claim with respect to which
indemnification is claimed hereunder.




     7.2 Insurance. The indemnification provisions of this Article 7 do not limit
the right of a Member or other Person to recover under any insurance policy maintained by the
Company or a third party. If a Person is or may be entitled to receive a payment under any such
insurance policy, (i) the insurance coverage shall be such Person’s first recourse and the Company
shall be obligated to make payment under this Article 7 only to the extent that the claim
is not fully covered by insurance, and (ii) to the extent that the Company makes any payment under
this Article 7, it shall be subrogated to the claims of such Person under the applicable
insurance policies. If, with respect to any liability against which indemnification is due under
Section 7.1, any Member or other Person receives an insurance policy payment which,
together with any indemnification payment made by the Company, exceeds the amount of such
liability, then such Member or other Person will immediately repay such excess to the Company.



     7.3 Approval of Payments. Prior to making any payment or advance under Section
7.1, the Company shall give notice to all Members of the proposed payment and shall provide the
Members with such information as they may request to assess the Company’s obligation to make such
payment. If either Member objects to such payment within ten (10) days after receipt of such
notice, the Company shall submit the issue to arbitration under Section 13.3 and shall make
payment to the claimant only to the extent that the arbitrators determine payment to be due or that
the Members subsequently agree. As a condition to the right to indemnification under this
Agreement, each Person otherwise entitled to indemnification must execute and deliver to the
Company a written agreement to be bound by the decision of the arbitrator with respect to any claim
for indemnification. Such Person shall be a party to any such arbitration proceedings, whether or
not such person elects to appear therein.



     7.4 Indemnification by Member. If the Company is made a party to any litigation or
otherwise incurs any loss or expense as a result of or in connection with any Member’s personal
obligations or liabilities unrelated to Company business, such Member shall indemnify and reimburse
the Company for all such loss and expense incurred, including reasonable attorneys’ fees. The
liability of any Member pursuant to this Section 7.4 may be assessed against such Member’s
interest in the Company, including such Member’s right to receive Net Cash Flow, and any other
Distributions or payments from the Company; provided, however, the liability of a Member under this
Section 7.4 shall not be limited to such Member’s interest in the Company, but shall also
be enforceable against such Member personally. Nothing herein contained shall be deemed to imply
that any Person shall be a third party beneficiary of the terms of this Section 7.4 (which
terms shall inure solely to the benefit of the Company and the respective Members, as expressly set
forth in this Section 7.4).



32









 





ARTICLE 8




ACCOUNTING; REPORTING



     8.1 Fiscal Year. For income tax and accounting purposes, the Fiscal Year of the
Company will end on December 31 in each year (unless otherwise required by the Code).



     8.2 Accounting Method. For income tax purposes, the Company will use the accrual
method of accounting (unless otherwise required by the Code). For financial reporting purposes,
financial statements of the Company are required to be prepared in accordance with the Generally
Accepted Accounting Principles under U.S. Standards (“GAAP”). Campus Crest acknowledges that the
financial statements of HSRE will be required to be reported in accordance with GAAP, and hereby
agrees to promptly make available to HSRE (and cause the accountants for the Company to deliver)
any and all information relating to the Company, including without limitation books and records,
working papers and financial accounts, which may be requested by HSRE to cause the financial
statements of HSRE to be prepared in accordance with the provisions hereof. Any such costs, as
well as reasonable costs incurred by HSRE, including reasonable fees of the accountants of HSRE, to
adjust financial reports received by the Company to be prepared in accordance with the provisions
hereof, shall be borne by the Company.



     8.3 Determination and Allocation of Profits and Losses. For each Fiscal Year, Profits
and Losses of the Company will be determined and allocated to the Members as provided in
Exhibit B.



     8.4 Returns. Campus Crest will, at the Company’s expense, cause the preparation and
timely filing of all tax returns required to be filed by the Company and any Subsidiary pursuant to
the Code, as well as all other tax returns required in each jurisdiction in which the Company or
any Subsidiaries is required to file a tax return, all of which shall be subject to Approval of the
Executive Committee as described in Section 5.2 hereof. Campus Crest shall deliver a Form
K-1 to each of the Members, along with any other information relating to the Company in order for
the Members to file their respective tax returns by March 15 of each taxable year. Campus Crest
shall deliver copies of all tax returns to HSRE for its prior Approval, which delivery shall be
made no later than forty-five (45) days following the end of each tax fiscal year.



     8.5 Financial Statements and Reports to Members. The Company shall prepare and
provide financial statements and reports to each Member as follows:




     (a) Monthly Financial Statements. Campus Crest shall prepare an unaudited
balance sheet of the Company as of the end of each month of each Fiscal Year and unaudited
operating statements, and statements of cash flow for each calendar month showing the
Company’s results for the month and the year to date and compared to the applicable budget
set forth in the then approved Annual Business Plan and Annual Operating Budget. Each such
financial statement shall be prepared in accordance with GAAP (or such other accounting
principles Approved by HSRE) consistently applied and



33









 






shall be certified to be true and correct to the best of Campus Crest’s knowledge and
belief. Copies shall be furnished to the Members within twenty (20) days after the end of
each calendar month. A form of such financial statement is attached hereto as Exhibit
I.




     (b) Annual Financial Statements. If requested by HSRE, Campus Crest shall, at
the Company’s expense, engage a firm of independent certified public accountants which is
Approved by HSRE, in which case the independent certified public accountants shall within
sixty (60) days after the end of each Fiscal Year (i) render their opinion on the balance
sheet of the Company as of the end of each Fiscal Year, and on the Company’s statements of
income and cash flow for each Fiscal Year, as prepared by Campus Crest, and (ii) render
their report on the computations of Net Cash Flow for each Fiscal Year made by Campus Crest
and as to whether distributions thereof during such Fiscal Year were in accordance with
Sections 4.1 hereof. There shall be no requirement that an audit be performed with
respect to the Company, unless so requested by a Member, in which case the costs and
expenses of such audit shall be borne by the Company. Notwithstanding the foregoing, HSRE
shall have the right at any time to cause the Company to cease using an independent
accounting firm to prepare the foregoing financial statements, in which case such statements
shall be prepared by Campus Crest’s internal accounting department.




     (c) Monthly Status Report. Campus Crest shall prepare (or cause the Property
Manager or Developer, as the case may be, to prepare) and distribute to the Members not less
often than monthly a status report on the Properties which shall contain as appropriate (i)
a description of the status of construction of the Properties in a form attached hereto as
Exhibit J, (ii) occupancy rates and impending lease expirations, (iii) a summary of
rental rates being charged, and (iv) any material deviations or expected deviations from all
Development Budgets and the Annual Business Plan and Operating Budget for each Property and
an explanation thereof.



     8.6 Books and Records. Campus Crest shall keep or cause to be kept complete and
accurate books and records with respect to the Company’s business and the accounts of the Members
in which shall be entered all matters relating to the business and operations of the Company,
including all income, expenditures, assets and liabilities thereof. The books and records of the
Company will be maintained at the Company’s principal office.



     8.7 Information; Cooperation with HSRE.




     (a) Each Member shall have complete and unrestricted access to the books and records of
the Company and Subsidiaries and to all information and documents relating to the Company or
its affairs, including the right to copy any or all thereof. A Member wishing to exercise
the right of access shall be required to give Campus Crest reasonable notice and to conduct
its examination during normal business hours in a manner that does not unreasonably
interfere with the operation of Campus Crest’s or the Company’s business, but shall be
subject to no other procedures, requirements or conditions. Campus Crest shall not be
entitled to keep any information related to the Company confidential from the Members. A
Member need not state the purpose of any



34









 






request for information. The information available to the Members shall include,
without limitation, all information relating to the development of a Development Project or
operation of a Property or the Company’s financial affairs under this Agreement, the
Property Management Agreement, the Construction Agreement, the Development Agreement and any
other Related Party Agreements.




     (b) Without limiting the generality of Section 8.7(a), the Members hereby agree
that the Company and Campus Crest shall cooperate with HSRE or its designees or
representatives in delivering to the foregoing parties any information and documents
requested by such parties.



     8.8 Banking. The Company shall establish one or more bank or financial accounts for
the Company and for each Subsidiary. Campus Crest may authorize one or more individuals to sign
checks on and withdraw funds from such bank or financial accounts, and may place such limitations
and restrictions on such authority as HSRE shall Approve.



ARTICLE 9




SALE OF PROPERTIES; PURCHASE OPTION



     9.1 Right to Initiate Sale of Properties. At any time after the twelve (12) month
anniversary of the Substantial Completion Date of the last Property to be developed by the Company
(the “Buy/Sell Trigger Date”), either Campus Crest or HSRE (the “Initiating Member”) shall have the
right to initiate the provisions of this Article 9 with respect to any one or more of the
Properties owned by the Company, by delivering written notice (a “Buy/Sell Notice”) to the other
Member (the “Non-Initiating Member”) setting forth a price (the “Buy/Sell Price”) for such
Property(ies) (the “Buy/Sell Property”). The Members further agree that in the event HSRE and
Campus Crest and/or their Affiliates shall establish one or more other Portfolio Companies, the
buy/sell provisions set forth in the operating agreement of such Portfolio Companies shall be the
same as set forth in this Agreement.



     9.2 Initiation and Elections.




     (a) The Non-Initiating Member shall have a period of forty-five days after the receipt
of the Buy/Sell Notice (the “Exercise Period”) within which to notify the Initiating Member
in writing (the “Reply Notice”) whether the Non-Initiating Member, in its sole discretion,
shall either (x) buy the Initiating Member’s interest in the Buy/Sell Property for cash
pursuant to Section 9.2(b) below (“Purchase Option”), or (y) consent to the sale of
the Buy/Sell Property (or its interest in the Buy/Sell Property) to the Initiating Member at
one hundred percent (100%) of the Buy/Sell Price or to a third party for a cash purchase
price (before deduction of Selling Expenses) not less than ninety-five percent (95%) of the
Buy/Sell Price set forth in the Buy/Sell Notice (“Sale Option”).




     (b) If the Non-Initiating Member timely gives the Reply Notice electing the Purchase
Option, the purchase price for the Initiating Member’s interest in the Buy/Sell Property
(the “Initiating Member Purchase Price”) shall be equal to the amount which



35









 






would be distributed under Section 4.1 to the Initiating Member if (i) the
Buy/Sell Property were sold in a hypothetical sale for a net price equal to the Buy/Sell
Price, less Selling Expenses, (ii) all of the Company’s (or the applicable Subsidiary’s)
liabilities with respect to the Buy/Sell Property were paid, in full, (iii) rents, taxes and
other similar items with respect to the Buy/Sell Property were pro-rated, (iv) the
applicable Subsidiary was liquidated, and (v) the remaining proceeds were distributed in
accordance with Section 4.1. For purposes hereof, Selling Expenses shall mean
transfer taxes, survey and title charges, state deed fees, recording fees to clear title,
documentary fees and taxes, if incurred and other closing costs customarily incurred by the
seller for property that is the subject of this Agreement and apportioned to the seller in
accordance with local customs. If the Non-Initiating Member is HSRE, Campus Crest shall
promptly provide HSRE with all information regarding the Company which is reasonably
available to Campus Crest and necessary to calculate the Initiating Member Purchase Price.
If the Non-Initiating Member timely gives the Reply Notice electing the Purchase Option
above, the Non-Initiating Member shall be conclusively deemed to have agreed to purchase,
and the Initiating Member shall be conclusively deemed to have agreed to sell, the interest
of the Initiating Member in the Buy/Sell Property at the Initiating Member Purchase Price.




     (c) If the Non-Initiating Member timely gives the Reply Notice electing the Sale
Option, the Non-Initiating Member shall be deemed to have irrevocably consented to the sale
of the Buy/Sell Property for a cash price equal to or greater than ninety-five percent (95%)
of the price set forth in the Buy/Sell Notice (it being acknowledged that such proceeds
shall be distributed in accordance with Section 4.1 hereof), or if the Initiating
Member elects to purchase the interest of the Non-Initiating Member in the Buy/Sell
Property, to sell its interest in the Buy/Sell Property to the Initiating Member for a
purchase price based on one hundred percent (100%) of the Buy/Sell Price calculated pursuant
to Section 9.3 below. If the Non-Initiating Member fails to give a Reply Notice
prior to the expiration of the Exercise Period, it shall be conclusively presumed that the
Non-Initiating Member has properly elected the Sale Option.



     9.3 Failure of Non-Initiating Member to Exercise Purchase Option; Marketing of
Properties.




     (a) If the Initiating Member delivers a Buy-Sell Notice and the Non-Initiating Member
elects (or is deemed to have elected) the Sale Option, then the Initiating Member shall have
the obligation to either (i) during the one hundred eighty (180) day period (“Sale Period”)
following the exercise or deemed exercise of the Sale Option to take all steps reasonably
necessary to complete the sale of the Buy/Sell Property to a third party for a cash price
equal to or greater than ninety-five percent (95%) of the Buy/Sell Price and on terms deemed
satisfactory to the Initiating Member in its sole discretion; provided, however, that in no
event shall the Initiating Member have the right to execute on behalf of the Company any
contract or documentation imposing personal liability on any Member or Affiliate thereof or
indemnifying the purchaser for any breaches of covenants, representations or warranties of
the Company beyond one year after the date of sale or the expiration of the relevant statute
of limitations, as applicable, or (ii) during the sixty (60) day period following the
exercise or deemed exercise of the Sale Option to



36









 






deliver written notice to the Non-Initiating Member stating its intention to purchase
the interest of the Non-Initiating Member in the Buy/Sell Property for a cash price (the
“Non-Initiating Member Purchase Price”) equal to the amount which would be distributed under
Section 4.1 to the Non-Initiating Member if the Buy/Sell Property was sold at one
hundred percent (100%) of the price set forth in the Buy/Sell Notice (and all of the
Company’s liabilities with respect to the Buy/Sell Property were paid, in full, and rents,
taxes and other similar items were pro-rated, and the Company was liquidated).




     (b) If the Initiating Member delivers written notice to the Non-Initiating Member
electing to purchase the interest the Non-Initiating Member in the Buy/Sell Property, upon
delivery of such notice, the Initiating Member shall be obligated to purchase the interest
the Non-Initiating Member in the Buy/Sell Property and the Non-Initiating Member shall be
obligated to sell its interest in the Buy/Sell Property to the Initiating Member for a cash
price equal to the Non-Initiating Member Purchase Price.




     (c) Any marketing of the Buy/Sell Property shall be done in a commercially reasonable
manner, and in the event the Initiating Member causes the Company or the Members to enter
into any term sheet, letter of intent or contract for the sale of the Buy/Sell Property, any
such document shall include customary confidentiality provisions requiring the third party
to keep information regarding the Company confidential and prohibiting the disclosure of any
information relating to the Company to any person other than its attorneys, advisors,
representatives and lenders.



     9.4 Releases; Consents.




     (a) If any Member properly elects to purchase the other Member’s respective ownership
interest in the Buy/Sell Property or the Membership Interest of the other Member, and the
selling Member(s) or any of its Affiliates (including the Developer) is a guarantor or an
indemnitor of any obligations of the Company or its Subsidiaries with respect to the
Buy/Sell Property or is otherwise personally liable thereon (“Recourse Obligations”), a
condition precedent to the closing shall be that the purchasing Member shall obtain a
release of all such Recourse Obligations, except for Recourse Obligations that arise out of
acts or events which occur simultaneously with or prior to the Selling Member’s transfer of
its ownership interest in the Buy/Sell Property or its Membership Interest, as the case may
be, to the purchasing Member; or if such a release is obtainable only with the payment of
money by any Member, the purchasing Member shall fully indemnify the selling Member and its
Affiliates with respect to any such obligations. Any such indemnity by the purchasing
Member shall be secured by its right to all Distributions by the Company (both with respect
to the purchased Membership Interest and with respect to all other Membership Interests of
the purchasing Member and its Affiliates). The purchasing Member and the selling Member
shall both use their reasonable best efforts to obtain any such releases without the payment
of money. A condition precedent to the closing shall also be that the Company shall have
obtained the consent of any lenders or other third parties required under applicable
documentation to which the Company is a party. The purchasing Member and the selling Member
shall



37









 






both use their reasonable best efforts to obtain any such consents to the transactions
contemplated by this Article 9.




     (b) The Members further acknowledge and agree that if any Member properly elects to
purchase the other Member’s respective ownership interest in the Buy/Sell Property or the
Membership Interest of the other Member(s) and (a) the selling Member or any of its
Affiliates (including the Developer) are owed any fees under a Property Management
Agreement, Construction Agreement, Development Agreement or any other Related Party
Agreement and/or are entitled to reimbursement for any Pre-Development Costs under this
Agreement, then a condition precedent to the closing shall be that the Company pay to the
selling Member any such costs and fees under such agreements up to and through the closing
of such transaction; provided, however, that reimbursement for Pre-Development Costs shall
be made only if the Member entitled to such reimbursement agrees, in writing, not to acquire
the Development Project(s) to which such Pre-Development Costs relate (either on its own or
with a third party).



     9.5 Liabilities; Indemnity. If a Member’s Membership Interest is purchased by another
Member pursuant to any provision of this Article 9, the purchasing Member shall indemnify,
defend and hold the selling Member, its directors, officers, shareholders, partners, members,
managers, employees and agents, or any of them harmless from any and all claims, demands, actions,
losses, liabilities, costs, or expenses (including reasonable attorneys’ fees) arising out of or in
connection with all obligations or liabilities of the Company, whether or not incurred or accrued
while the selling Member was a Member or after the date of consummation of the purchase and sale of
the selling Member’s Membership Interest, such liability to be capped at the sale price for the
Membership Interest sold by the amount of proceeds received by the selling Member to the purchasing
Member.



     9.6 Purchase of Initiating Member Interest; Closing. In the event a Member properly
elects to purchase the other Member’s respective ownership interest in the Buy/Sell Property or the
Membership Interests of the other Member under this Article 9, the closing of the sale
shall be consummated on a date selected by the purchasing Member (“Buy-Out Closing Date”), which
date shall be not less than thirty (30) days and not more than one hundred eighty (180) days after
the exercise of by the purchasing Member of its right to purchase the other Member’s respective
ownership interest in the Buy/Sell Property or the other Member’s Membership Interest.
Notwithstanding the foregoing, if as of the Buy-Out Closing Date, the purchasing Member has not
received any applicable permits and/or approvals required from third parties, including any
existing lender of the Company or of the Property Owning Subsidiaries, as a condition to the
purchase and sale of the selling Member’s Membership Interest to the purchasing Member, the Buy-Out
Closing Date may be extended by the purchasing Member to not less than ten (10) days after the date
of receipt of all such required permits and approvals but in no event beyond one hundred twenty
(120) days after the exercise of the right to purchase. At the closing, the purchasing Member
shall pay the applicable purchase price by wire transfer of immediately available funds to the
account or accounts designated by the selling Member, or by certified bank check. At the closing,
the selling Member shall execute and deliver assignments, instruments of conveyance or other
instruments appropriate to convey the entire membership interest of the selling Member to the
purchasing Member, and shall deliver to the purchasing




38











 




Member such evidence as the purchasing Member may reasonably request showing that the
membership interest being sold is owned free and clear of any and all claims, liens and
encumbrances of any kind or nature.




     9.7 Purchase of Loans. If there shall be any outstanding loans due from the Company
to the selling Member or any Affiliate thereof (which is not also an Affiliate of the purchasing
Member), such loans, including accrued and unpaid interest, shall be purchased at par or otherwise
repaid in full by the purchasing Member on the Buy-Out Closing Date. The selling Member shall
deliver and endorse without recourse to the purchasing Member each note or other instrument
evidencing such loans and all documents securing such loans.



     9.8 Remedies for Noncompliance. The requirements or obligations, if any, of any
Member to sell or purchase an interest in the Buy/Sell Property in accordance with the provisions
of this Article 9 shall be enforceable, without limitation, by an action for specific
performance, with the same force and effect and at least to the same extent as is permitted at law
or in equity for the specific performance of a contract relating to the purchase of real property
or an interest therein. In the case of a Member obligated to purchase an interest in a Buy/Sell
Property pursuant to this Article 9 who fails to effect such purchase in accordance with
the terms hereof (a “Defaulting Purchaser”), if an order for specific performance against the
Defaulting Purchaser is not enforceable due to the lack of funds or credit by the Defaulting
Purchaser or the selling Member elects not to pursue such an order, the selling Member may elect to
pursue any other remedy at law or in equity and, in addition, the selling Member (herein, the
“Non-Defaulting Party”) shall have the right to purchase the Membership Interest of the Defaulting
Purchaser, the closing of which shall occur on any date so designated by the Non-Defaulting Party,
and the purchase price being equal to the amount the Defaulting Purchaser would have received if
the Properties were sold at a price equal to (i) ninety percent (90%) of the Buy/Sell Price, less
(ii) Selling Expenses, and all of the Company’s liabilities were paid, in full, rents, taxes and
other similar items were pro-rated, and the Company was liquidated and the proceeds of such sale
were distributed in accordance with Section 4.1 hereof. In addition, the Defaulting
Purchaser shall reimburse the Non-Defaulting Party for legal fees and other costs reasonably
incurred by the Non-Defaulting Party in evaluating and responding to the Buy/Sell Notice and
subsequent notices and documents provided under Section 9.3.



     9.9 Assignees. For purposes of this Article 9, any elections made by or on
behalf of each Member under this Article 9 shall bind any assignee of any such Member; and
all references in this Article 9 to a Member shall include all Affiliates of such Member
and, except as provided above, all persons to which such Member has transferred or assigned any
portion of his Membership Interest in the Company.



     9.10 Limitation on Competing Options. The Members hereby agree that during the period
of time commencing on the date a Buy/Sell Notice is delivered by an Initiating Member to the
Non-Initiating Member and ending on the earlier of the last date upon which the closing of the sale
of the Properties or the Membership Interest of the selling Member was required to have been
consummated under this Article 9, no Member shall have the right to deliver a competing
Buy/Sell Notice under this Article 9.



39









 





     9.11 Expenses/Fees. Unless otherwise set forth in the Buy-Sell Notice, all
miscellaneous title charges, escrow fees, recording fees and transfer taxes shall be paid by the
party who is customarily responsible for such charges and the parties shall prorate items of income
and expense, in accordance with local custom and practice.



ARTICLE 10




TRANSFER OF MEMBERSHIP INTERESTS



     10.1 General Prohibition. Except as set forth herein, a Member may not sell,
transfer, encumber, pledge or assign all or any part of its Membership Interest (referred to herein
as a “Transfer”) without the prior written consent of all of the other Members, which consent may
be granted or withheld in each Member’s sole and absolute discretion. In order for an assignee to
constitute a substituted or additional Member, the conditions set forth in Section 10.6
must be satisfied.



     10.2 Permitted Transfers. Notwithstanding the provisions of Section 10.1, but
subject to this Section 10.2 and Section 10.6 below, a Member may Transfer all or
any part of its Membership Interest without the consent of any other Member to any of the following
(“Permitted Transferees”):




     (a) a general or limited partnership in which the assigning Member or persons
Controlling the assigning Member are the sole or managing general partner(s) or Control the
sole or managing general partner;




     (b) a corporation Controlled by the assigning Member or persons Controlling the
assigning Member;




     (c) a trust, the sole trustee of which is Controlled by the assigning Member or persons
Controlling the assigning Member on the date hereof, and the beneficiaries of which are
members of the Immediate Family of the assigning Member or of one or more of its owners on
the date hereof;




     (d) a limited liability company Controlled by the assigning Member or persons
Controlling the assigning Member; or




     (e) as otherwise permitted under this Agreement.


Notwithstanding anything in this Section 10.2 to the contrary, a Member may not assign all
or part of its Membership Interest if such assignment would (i) be to a Person that is not an
“accredited investor” (as defined by Rule 501 promulgated under the Securities Act of 1933), (ii)
result in the Company not qualifying for an exemption from the registration requirements of the
federal or any applicable state securities laws, (iii) subject the Company to withholding
obligations to any Member under the Foreign Investment in Real Property Tax Act of 1980, as
amended, (iv) cause any rent received by the Company under a lease to constitute related party
rents under Section 856(d)(2)(B) or (v) result in the violation of or a default under any term or
provision of any agreement to which the Company or any of its assets is bound.







40









 








     10.3 Involuntary Transfers. In the event any Member shall be adjudged Bankrupt (such
Member being referred to herein as a “Bankrupt Member”), the personal representative or trustee (or
successor-in-interest) of the deceased, insane or incompetent Member or Bankrupt Member shall be an
assignee of such Member’s Membership Interest having the rights set forth in Section 10.5
and shall not become an additional or substituted Member unless and until the conditions set forth
in Section 10.6 are satisfied; and any such Member’s estate (or successor-in-interest)
shall be liable for all of its obligations as a Member.



     10.4 Dissolution or Termination of Members. In the event of the dissolution of a
Member that is a partnership, limited liability company or a corporation or the termination of a
Member that is a trust, the successors-in-interest of the dissolved or terminated Member shall, for
the purposes of winding up the affairs of the dissolved or terminated Member, have the rights of an
assignee of such Member’s Membership Interest, as described in Section 10.5, and shall not
become additional or substituted Members unless and until the conditions set forth in Section
10.6 are satisfied.



     10.5 Status of Assignor and Assignee. The assignor of a Membership Interest shall
remain liable for all obligations of the assignor under this Agreement unless the other Members
unanimously approve the release of the assignor. Until the provisions of Section 10.6(b), (c)
and (d) are satisfied with respect to any such assignee, such assignee shall not be a Member
but shall be an assignee having the rights described in this Section 10.5. Any Person who
acquires all or any portion of the Membership Interest of a Member in the Company in any manner
(including pursuant to a transfer permitted by Section 10.2), shall not be a Member of the
Company unless and until the conditions of Section 10.6 are satisfied. Unless and until
such conditions are satisfied, such Person shall, to the extent of the Membership Interest
acquired, be entitled only to the transferor Member’s rights, if any, in the Profits, Losses,
Operating Cash Flow, Capital Proceeds and other distributions to the Members pursuant to this
Agreement, subject to the liabilities and obligations of transferor Member hereunder; but such
Person shall have no right to participate in the management of the business and affairs of the
Company and shall be disregarded in determining whether the approval, consent or any other action
has been given or taken by the Members. Any such assignee shall have the same right, subject to
the same limitations, as the transferor Member had under the provisions of this Article 10
to assign its Membership Interest as a Member (including the right to assign such Membership
Interest to any person to which such Member could have assigned its Membership Interest pursuant to
Section 10.2), but any such further assignee shall have only the rights set forth in this
Section 10.5 and shall not become an additional or substituted Member of the Company unless
and until the conditions of Section 10.6 have been satisfied.



     10.6 Admission Requirements. No assignee of all or any portion of a Member’s
Membership Interest or any other person shall be admitted as an additional or substituted Member of
the Company unless and until:




     (a) such admission has been Approved in writing by all Members having the right to
Approve such transfer hereunder, which approval may be given or withheld in the sole
discretion of each Member;



41









 






     (b) such assignment is made in writing, signed by the assigning Member (or its
successor) and accepted in writing by the assignee, and a duplicate original of such
assignment has been delivered to the non-transferring Member;




     (c) the Company has received an opinion of counsel as contemplated by Section
10.1 or each Member has waived this requirement; and




     (d) the assignee executes and delivers to the Company and each other Member a written
agreement in form reasonably satisfactory to the Member and each Member, pursuant to which
such assignee agrees to be bound by and confirms the obligations, representations and
warranties contained in this Agreement.



     10.7 Effective Assignment. In the event an assignment is made in accordance with this
Agreement, unless otherwise required by the Code:




     (a) the effective date of such assignment shall be the date the written instrument of
assignment is received and approved by all of the non-assigning Members;




     (b) the Company and the non-assigning Members shall be entitled to treat the assignor
of the assigned Membership Interest as the absolute owner thereof in all respects and shall
incur no liability for allocations of Profits or Losses and distributions of Operating Cash
Flow or Capital Proceeds made in good faith to such assignor until such time as the written
instrument of assignment has been actually received and approved by the other Members and
recorded in the books of the Company; and




     (c) any Profits and Losses shall be allocated between the assignor and the assignee of
the assigned Membership Interest in the manner described in Exhibit B.



     10.8 Cost of Admission. The cost of processing and perfecting an admission
contemplated by this Article 10 (including reasonable attorneys’ fees incurred by the
Company) shall be borne by the party seeking admission as a Member to the Company.



ARTICLE 11




DISSOLUTION



     11.1 Dissolution. Dissolution of the Company will occur upon the happening of any of
the following events:




     (a) Upon the sale or other disposition of substantially all of the assets of the
Company and its Subsidiaries;




     (b) An Event of Withdrawal of Campus Crest (as defined in Section 11.2),
unless the Company is continued as provided in Section 11.2;




     (c) The mutual agreement of Campus Crest and HSRE to dissolve the Company; or



42









 






     (d) The election of HSRE to dissolve the Company after a Campus Crest Triggering Event
as provided in Section 6.2, or the election of Campus Crest to dissolve the Company
after an HSRE Triggering Event as provided in Section 6.4.



     11.2 Events of Withdrawal. An Event of Withdrawal of a Member occurs when any of the
following occurs:




     (a) With respect to any Member that is a corporation, upon filing of articles of
dissolution of the corporation;




     (b) With respect to any Member that is a partnership or a limited liability company,
upon dissolution of such entity;




     (c) With respect to any Member who is an individual, upon either the death of the
individual or the entry by a court of competent jurisdiction of an order adjudicating the
individual to be incompetent to manage such individual’s person or estate;




     (d) With respect to any Member that is a trust, upon termination of the trust;




     (e) With respect to any Member that is an estate, upon final distribution of the
estate’s Membership Interest;




     (f) With respect to any Member, the bankruptcy or insolvency of the Member; or




     (g) Any other event which terminates the continued membership of a Member in the
Company.



     Within 30 days following the occurrence of any Event of Withdrawal with respect to a Member,
such Member (or his representative) must give Notice of the date and the nature of such event to
the Company. The purpose of this Notice is to enable the remaining Members to continue the Company
if such remaining Members desire to avoid a Dissolution and liquidation of the Company. Any Member
failing to give such Notice will be liable in damages for the consequences of such failure as
otherwise provided in this Agreement. Upon the occurrence of an Event of Withdrawal, such Member
will cease to have any management rights under this Agreement and such Member’s Membership Interest
will be deemed transferred to such Member’s transferee or other successor in interest (which
Person, unless already a Member in such capacity, will have only the limited rights of a transferee
as set forth in Section 10.5, unless and until admitted as a Substitute Member).



     11.3 No Voluntary Withdrawal. Each Member agrees that such Member will not
voluntarily withdraw from the Company (whether by resignation, retirement or withdrawal) except for
permissible Transfers under this Agreement. Any such attempted voluntary withdrawal shall be void
and of no effect.



43









 





ARTICLE 12




LIQUIDATION



     12.1 Liquidation. Upon Dissolution of the Company, the Company will immediately
proceed to wind up its affairs and liquidate. As soon as possible following the occurrence of a
Dissolution event, the Company will file a statement of intent to dissolve with the Delaware
Secretary of State pursuant to the Act. Campus Crest or if Campus Crest shall no longer be the
day-to-day manager of the Company as a result of being replaced in such capacity pursuant to
Section 6.5, any Person appointed by a majority in interest (determined by Participating
Percentages) of the remaining Members will act as the liquidating trustee. The winding up and
Liquidation of the Company will be accomplished in a businesslike manner as determined by the
liquidating trustee. A reasonable time will be allowed for the orderly Liquidation of the Company
and the discharge of liabilities to creditors so as to enable the Company to minimize any losses
attendant upon Liquidation. Any gain or loss on disposition of any Company assets in Liquidation
(including any distribution in kind) will be allocated to Members, and credited or charged to
Capital Accounts, in accordance with the Tax Allocation Provisions. Any liquidating trustee
(including Members) is entitled to reasonable compensation for services actually performed, and may
contract for such assistance in the liquidating process as such Person deems necessary or
desirable. Until the filing of articles of dissolution as provided in Section 12.7, the
liquidating trustee may settle and close the Company’s business, prosecute and defend suits,
dispose of its property, discharge or make provision for its liabilities, and make distributions in
accordance with the priorities set forth in Section 12.2.



     12.2 Priority of Payment. The assets of the Company will be distributed in
Liquidation in the following order:




     (a) First, to creditors by the payment or provision for payment of the debts and
liabilities of the Company (including any loans or advances that may have been made by any
Member or Affiliate) and the expenses of Liquidation;




     (b) Second, to the setting up of any reserves that Campus Crest and HSRE determine are
necessary for any contingent, conditional or unmatured liabilities or obligations of the
Company; and




     (c) Third, in the manner provided for in Section 4.1 hereof.



     12.3 Liquidating Distributions. The liquidating Distributions due to the Members will
be made by selling the assets of the Company and distributing the net proceeds. Notwithstanding
the preceding sentence, but only upon the agreement of all Members, the liquidating Distributions
may be made by distributing some or all of the assets of the Company in kind to the Members in
proportion to the amounts distributable to them pursuant to Section 12.2, and valuing such
assets at their Fair Market Value (net of liabilities secured by such property that the Member
takes subject to or assumes) on the date of Distribution. Except as provided herein, any assets
distributed in kind shall be deemed to have been sold for their Fair Market Value (net of such
liabilities) and the Capital Accounts of the parties shall be adjusted to



44









 




reflect such deemed sale for purposes of determining the Distributions to which they are
entitled under Section 12.2. Each Member agrees to save and hold harmless the other
Members from such Member’s proportionate share of any and all such liabilities which are taken
subject to or assumed. Appropriate and customary prorations and adjustments will be made incident
to any Distribution in kind. The Members will look solely to the assets of the Company for the
return of their Capital Contributions, and if the assets of the Company remaining after the payment
or discharge of the debts and liabilities of the Company are insufficient to return such
contributions, they will have no recourse against any other Member. The Members acknowledge that
Section 12.2 may establish Distribution priorities different from those set forth in the
provisions of the Act applicable to Distributions upon Liquidation, and the Members agree that they
intend, to that extent, to vary those provisions by this Agreement.




     12.4 No Restoration Obligation. Nothing contained in this Agreement imposes on any
Member an obligation to make a contribution in order to restore a deficit Capital Account upon
Liquidation of the Company.



     12.5 Timing. Final Distributions in Liquidation will be made by the end of the
Company’s Fiscal Year in which such actual Liquidation occurs (or, if later, within 90 days after
such event) in the manner required to comply with the Treasury Regulations promulgated under
Section 704(b) of the Code (the “§704(b) Regulations”). If it is not practicable to make such
Distributions within that time, they may be delayed for a reasonable time to allow the orderly
liquidation of the Company’s assets. Payments or Distributions in Liquidation may be made to a
liquidating trust established by the Company for the benefit of those entitled to payments under
Section 12.2, in any manner consistent with this Agreement and the § 704(b) Regulations.



     12.6 Liquidating Reports. A report will be submitted with each liquidating
Distribution to Members, showing the collections, disbursements and Distributions during the period
which is subsequent to any previous report. A final report, showing cumulative collections,
disbursements and Distributions, will be submitted upon completion of the liquidation process.



     12.7 Certificate of Dissolution. Upon Dissolution of the Company and the completion
of the winding up of its business, the Company will file a Certificate of Dissolution (or other
instrument appropriate to cancel its Certificate of Formation) with the Delaware Secretary of State
pursuant to the Act. At such time, the Company will also file an application for withdrawal of its
certificate of authority in any jurisdiction where it is then qualified to do business.



ARTICLE 13




GENERAL PROVISIONS



     13.1 Amendment. This Agreement may be amended only by a writing signed by all
Members.



45









 





13.2 Authorized Representatives.





     (a) For the purposes hereof, all Approvals hereunder shall be deemed valid and binding
on a Member if given by any Authorized Representative thereof.




     (b) The four individuals appointed to the Executive Committee under Section
5.2, shall be deemed the Authorized Representatives of the respective Members which
appointed them.




     (c) Any Member may remove or change any of its Authorized Representatives or appoint
additional Authorized Representatives by giving written notice thereof to the other Member.
Such change, removal, or appointment shall be effective upon the later to occur of (i) the
date of receipt of such notice by such other Member or (ii) the effective date for such
change, removal or appointment set forth in such notice. Any replacement or additional
Authorized Representative thereof shall in the case of the Campus Crest be either an officer
or manager of Campus Crest or an Affiliate thereof.


13.3 Arbitration.





     (a) Except in the event of a breach by a Member under Article 10 or Section
13.19 hereof, if any dispute, controversy or claim arises between the Members with
respect to whether either Member is in breach or default of its respective obligations
hereunder, or as to whether any breach or default has occurred under the Property Management
Agreement, the Construction Agreement or the Development Agreement, or any agreement between
Campus Crest or any of its Affiliates and the Company (or any of its Affiliates), then the
dispute shall be settled by arbitration at a location in the United States where the
defendant Member has its principal place of business (or if the principal place of business
of the defendant Member is outside the United States, at a location in the United States
designated by the defendant Member). Such arbitration shall be administered by the American
Arbitration Association (“AAA”) and shall be conducted in accordance with the Commercial
Arbitration Rules (the “Rules”) of AAA then in effect, or such other arbitral body as the
Members may jointly select.




     (b) The award of the arbitrator shall be binding upon the parties and each party hereby
consents to the entry of judgment by any court of competent jurisdiction in accordance with
the decision of the arbitrator.




     (c) The prevailing party in any such arbitration shall be entitled to recover, in
addition to any other relief awarded, its reasonable costs of preparation for and
participation in the arbitration, including reasonable attorneys’ fees. The arbitrator
shall have no power to award punitive, treble or other multiple damages, as a result of this
Section 13.3, and the arbitrator’s jurisdiction is limited accordingly, and no
arbitration award issued pursuant to this Section 13.3 shall grant such damages.



46









 






     (d) The Members hereby agree to make a good faith effort to resolve any dispute,
controversy or claim arising between them prior to electing to arbitrate such matter.




     (e) Any such arbitration proceedings shall include by consolidation, joinder or joint
filing, any additional person or entity not a party to this Agreement to the extent
necessary to the final resolution of the matter in controversy.




     (f) In the event that a Member breaches any provision of Article 10 or
Section 13.19 hereof, the Company or the other Member, as applicable, shall be
entitled to institute and prosecute proceedings in any court of competent jurisdiction
(either in law or in equity) to enforce the specific performance thereof by the Member or to
enjoin the Member from any further or continuing breach or violation without the necessity
of showing actual damages or furnishing a bond or other security. In the event the Company
the other Member, as applicable, initiates any legal action (including, without limitation,
litigation) to enforce Article 10 or Section 13.19 hereof or to seek damages
for any breach hereof, the Company shall be entitled to recover from the Member reasonable
attorneys’ fees and all other costs incurred by it in connection with such legal action.
Each Member hereby irrevocably waives all defenses inconsistent with the terms of this
Section 13.3(f). Each Member hereby submits to the jurisdiction of the federal or
state courts of the location in the United States where the defendant Member has its
principal place of business (or if the principal place of business of the defendant Member
is outside the United States, at a location in the United States designated by the defendant
Member) for all matters related in any manner to this Section 13.3(f).



     13.4 Unregistered Interests. Each Member (a) acknowledges that the Membership
Interests are not securities and, therefore have not been registered under The Securities Act of
1933, as amended, or under similar provisions of state law, (b) represents and warrants that such
Person is an accredited investor as defined for federal securities laws purposes, (c) represents
and warrants that the Membership Interest is being acquired for such Person’s own account, for
investment, and with no view to the distribution of the Membership Interest, and (d) agrees not to
sell or to offer to sell all or any part of its Membership Interest without registration under the
Securities Act of 1933, as amended, and any applicable state securities laws, unless the transfer
is exempt from such registration requirements.



     13.5 Waiver of Dissolution Rights. The Members agree that irreparable damage would
occur if any Member should bring an action for judicial dissolution of the Company. Accordingly,
each Member accepts the provisions under this Agreement as such Person’s sole entitlement on
Dissolution of the Company and waives and renounces such Person’s right to seek a court decree of
dissolution or to seek the appointment by a court of a liquidator for the Company.



     13.6 Waiver of Partition Right. Each Member waives and renounces any right that it
may have prior to Dissolution and Liquidation to institute or maintain any action for partition
with respect to any real property held by the Company.



47









 





     13.7 Waivers Generally. No course of dealing will be deemed to amend or discharge any
provision of this Agreement. No delay in the exercise of any right will operate as a waiver of
such right. No single or partial exercise of any right will preclude its further exercise. A
waiver of any right on any one occasion will not be construed as a bar to, or waiver of, any such
right on any other occasion.



     13.8 Notice. All Notices under this Agreement will be in writing and will be sent
addressed as follows:



	 	 	 	 	 

	     If to HSRE:	 	c/o Harrison Street Real Estate Capital, LLC
	 	 	71 S. Wacker Drive
	 	 	Suite 3571
	 	 	Chicago, IL 60606
	 

	 	Attn:
	 	Christopher N. Merrill

Stephen M. Gordon
	 
	 	 	 	 
	     With copy (not constituting notice) to:	 	DLA Piper US LLP

203 N. LaSalle #1900
	 	 	Chicago, IL 60601
	 	 	Attn: Jesse A. Criz
	 
	 	 	 	 
	     If to Campus Crest:	 	c/o Campus Crest Communities, Inc.
	 	 	2100 Rexford Rd, 4th Floor
	 	 	Charlotte, NC 28211
	 	 	Attention: Donald L. Bobbitt, Jr.
	 
	 	 	 	 
	     With a copy (not constituting notice) to:	 	c/o Bradley Arant Boult Cummings LLP

One Federal Place
	 	 	1819 Fifth Avenue North
	 	 	Birmingham, AL 35203
	 	 	Attention: Dawn Helms Sharff






     Each Member shall have the right from time to time to change its address and add or delete, or
change the addresses of, Persons to whom copies of Notices must be sent. Any Notice given to any
Member in accordance with this Agreement will be deemed to have been duly given: (a) on the date
of receipt if personally delivered, (b) five (5) days after being sent by U.S. mail, postage
prepaid, (c) the date of receipt, if sent by registered or certified U.S. mail, postage prepaid, or
(d) one (1) business day after having been sent by a nationally recognized overnight courier
service. In computing time periods, the day of Notice will be included. For Notice purposes, a
day means a calendar day. Any Notice given by a Member to all other Members shall be deemed given
to the Company.



     13.9 Other Business of Members. Subject to the terms of this Agreement, the terms of
the Non-Competition and Right of First Opportunity Agreement and the terms of the



48









 




Development Agreement, Construction Agreement and Property Management Agreement, the Members,
their constituent owners, their Affiliates, and the respective employees and agents of all such
parties, shall be free to engage in or possess any interests in other business ventures of any
kind, whether or not directly competing with the Company or the Properties, and to exploit other
business opportunities, whether or not arising from the conduct of Company business, and the
pursuit of such ventures or business opportunities will not be deemed improper for purposes of this
Agreement.




     13.10 Partial Invalidity. Wherever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. However, if for any
reason any one or more of the provisions of this Agreement are held to be invalid, illegal or
unenforceable in any respect, such action will not affect any other provision of this Agreement.
In such event, this Agreement will be construed as if such invalid, illegal or unenforceable
provision had never been contained in it.



     13.11 Entire Agreement. This Agreement and the other instruments being entered into
between the parties pursuant hereto or thereto, contains the entire agreement and understanding of
the Members concerning its subject matter and supersedes all other prior agreements, including,
without limitation, the Original Agreement.



     13.12 Benefit. The contribution obligations of each Member will inure solely to the
benefit of the other Members and the Company, without conferring on any other Person any rights of
enforcement or other rights.



     13.13 Binding Effect. This Agreement is binding upon, and inures to the benefit of,
the Members and their permitted transferee; provided that, any transferee will have only the rights
specified in Section 10.5 unless admitted as a Substitute Member in accordance with this
Agreement.



     13.14 Further Assurances. Each Member agrees, without further consideration, to sign
and deliver such other documents of further assurance as may reasonably be necessary to effectuate
the provisions of this Agreement.



     13.15 Headings. Article and section titles have been inserted for convenience of
reference only. They are not intended to affect the meaning or interpretation of this Agreement.



     13.16 Governing Law. Except to the extent pre-empted by any federal law, this
Agreement will be governed by, and construed in accordance with, the laws of the State of Delaware.
Any conflict or apparent conflict between this Agreement and the Act will be resolved in favor of
this Agreement, except as otherwise expressly required by the Act.



     13.17 Limited Liability of Member. Except as expressly required under the Act or
required hereunder, (i) no Member shall have any liability to contribute money or make loans to,
the Company, and (ii) no Member shall be liable for any liabilities or obligations of the Company.



49









 





     13.18 Counterparts. This Agreement may be executed in multiple counterparts with
separate signature pages, each such counterpart shall be considered an original, but all of which
together shall constitute one and the same instrument. To facilitate the execution of this
Agreement, the parties may execute and exchange by facsimile or by Adobe Acrobat counterparts of
the signature pages, and such execution shall be deemed an original by the parties.



     13.19 Confidential Information. Except to the extent required or permitted by this
Agreement or required by any applicable Law, or compelled use in litigation, or for tax return
preparation, each Member shall maintain the confidentiality of, and not publicly disclose, (a) the
terms of this Agreement, any agreement executed in connection herewith or any agreement to which
the Company or any Subsidiary thereof is a party or (b) any financial information or other
forecasts regarding the Company or any Subsidiary thereof, in all cases other than with the
Approval of all Members (which Approval shall not be unreasonably withheld), without the consent of
the Company and the other Members. Without limiting the generality of the foregoing, prior to a
Member issuing any press release, disclosure statement or other marketing item, such release,
statement or item shall be presented to and subject to the Approval of the other Member, such
Approval not to be unreasonably withheld or delayed. Notwithstanding the foregoing, no information
provided by Campus Crest to its Affiliates or in any private placement memorandum, organizational
documents or regular reports that either HSRE or Campus Crest provides to investors (or potential
investors) in any fund of which it is a sponsor, managing general partner or the equivalent shall
be subject to the foregoing terms of this Section 13.19. Nothing in this Section
13.19 is intended to waive the attorney-client privilege or any other privilege, including the
tax advisor privilege under Section 7525 of the Code. In the event either Member shall disclose
any information of the other Member to the extent required by Law, (i) the disclosing Member shall
send Notice of such disclosure to the other Member immediately after such disclosure unless
prohibited by Law and (ii) the disclosing party shall use reasonable efforts to seek protection for
confidential information that is required to be disclosed.



[signature pages to follow]




50









 





     IN WITNESS WHEREOF, each of the parties has executed this Amended and Restated Operating
Agreement of HSRE-Campus Crest I, LLC, as of the date first set forth above, and agrees to be bound
by this Agreement.



	 	 	 	 	 	 	 	 	 	 	 

	 	Campus Crest:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	CAMPUS CREST VENTURES III, LLC, a

Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Campus Crest Properties, LLC, a North

Carolina limited liability company, its

Manager
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Donald L. Bobbitt, Jr.  
	 	 	 	 
	 

	 	 	 	Name:
	 	Donald L. Bobbitt, Jr. 

	 	 	 	 
	 

	 	 	 	Its:
	 	Manager 

	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 
	 
	 	HSRE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	HSRE-CAMPUS CREST IA, LLC, a Delaware

limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	HSREP II Holding, LLC, a Delaware limited

liability company, its sole member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HSRE REIT II, a Maryland

real estate investment trust, its

member
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:  /s/ Stephen Gordon	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	Name: Stephen Gordon
	 	 	 	 	 	 	Its: Trustee






 









 





JOINDER




     The undersigned hereby executes this Agreement not as a Member of the Company, but solely for
the purposes of guaranteeing payment of the obligations of Campus Crest and the Developer, to the
extent provided for under this Agreement, the Development Agreement and the Completion and Cost
Overrun Guaranty Agreement.



	 	 	 	 	 	 	 

	October 19, 2010	 	CAMPUS CREST GUARANTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	CAMPUS CREST COMMUNITIES

OPERATING PARTNERSHIP, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Donald L. Bobbitt, Jr. 
	 	 
	 

	 	Name:
	 	Donald L. Bobbitt, Jr.
	 	 
	 

	 	Its:
	 	Executive Vice President, Chief Financial 

Officer and Secretary of the sole member 

of its General Partner
	 	 
	 

	 	 	 	 

	 	 






 









 





JOINDER




     The undersigned hereby executes this Agreement not as a Member of the Company, but solely for
the purposes of approving the form of the Development Agreement attached hereto as Exhibit
F and the form of the Property Management Agreement attachment hereto Exhibit G.



	 	 	 	 	 	 	 	 	 	 	 

	October 19, 2010	 	PROPERTY MANAGER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	THE GROVE STUDENT

PROPERTIES, INC., a Delaware

corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Donald L. Bobbitt, Jr. 
	 	 
	 

	 	 	 	 	 	Name:
	 	Donald L. Bobbitt, Jr.
	 	 
	 

	 	 	 	 	 	Its:
	 	Chief Financial Officer,

Secretary and Treasurer 

	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	October 19, 2010	 	DEVELOPER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	CAMPUS CREST DEVELOPMENT,

INC., a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Donald L. Bobbitt, Jr. 
	 	 
	 

	 	 	 	 	 	Name:
	 	Donald L. Bobbitt, Jr.
	 	 
	 

	 	 	 	 	 	Its:
	 	Chief Financial Officer,

Secretary and Treasurer
	 	 
	 

	 	 	 	 	 	 	 	 

	 	 






 









 





EXHIBIT A




DEFINITIONS



     Act. The Delaware Limited Liability Company Act, as amended from time to time.



     Acquisition Budget. For each Property acquired by the Company, a form of which
attached as Exhibit K.



     Acquisition Loan. For each Property acquired by the Company, the loan(s) obtained by
the Company to fund the acquisition of such Property.



     Acquisition Property. An existing student housing Property that has been or is
intended to be acquired by the Company.



     Acquisition Termination Notice. The meaning set forth in Section 3.3(b)
hereof.



     Additional Member. Any new Member admitted after the date of this Agreement other
than a Substitute Member.



     Additional Properties. All Development Projects and Acquisition Properties acquired
by the Company.



     Affiliate. Any Person that directly, or through one or more intermediaries, Controls
or is Controlled by or is under Common control with a Member; any Person that is an officer,
director, partner, member, principal, manager or trustee of or serves in a similar capacity with
respect to a Member, or any Entity in which a Member, directly or indirectly, is a partner,
principal, shareholder, member, beneficiary or otherwise an owner. For purposes hereof, the term
“Control” of Person shall mean the power, directly or indirectly, to direct or cause the direction
of management and policies of such Person, whether through ownership of voting securities, by
contract or otherwise.



     Agreement. This Amended and Restated Operating Agreement of the Company, also known
as a limited liability company agreement under the Act, as amended from time to time.



     Annual Business Plan. The annual business plan of the Company which has been approved
by the Members, from time to time pursuant to Section 5.5 hereof.



     Annual Operating Budget. The annual operating budget of the Company which has been
approved by the Members, from time to time pursuant to Section 5.5 hereof.




	 	 	Approve, Approved or Approval. As to the subject matter thereof and as the context
may require or permit, an express approval contained in a written statement signed by an approving
Person or any authorized representative thereof.





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     Approved Pre-Development Costs or Pre-Acquisition Costs. The Pre-Development Costs or
Pre-Acquisition Costs incurred by Campus Crest and its Affiliates in connection with the
acquisition or development of a Property, each as set forth in the applicable Acquisition or
Development Budget Approved by HSRE.



     Budgeted Project Costs. The aggregate costs for the acquisition or development of a
Property as set forth in the applicable Acquisition or Development Budget, respectively.



     Buy-Out Closing Date. The meaning set forth in Section 9.6 hereof.



     Buy/Sell Notice. The meaning set forth in Section 9.1 hereof.



     Buy/Sell Price. The meaning set forth in Section 9.1 hereof.



     Campus Crest. The meaning set forth in the Recitals.



     Campus Crest Change in Control Effective Date. The meaning set forth in Section
5.1(c) hereof.



     Campus Crest Guarantor. Campus Crest Communities Operating Partnership, LP, a
Delaware limited partnership.



     Campus Crest Triggering Event. The meaning set forth in Section 6.1 hereof.



     Capital Account. The meaning set forth in Exhibit B hereof.



     Capital Call. The meaning as set forth in Section 3.2 hereof.



     Capital Contribution. The amount of money and/or the Fair Market Value of any
property contributed to the capital of the Company by a Member (less the amount of liabilities
encumbering such property assumed by the Company or to which such property is subject). For
purposes of calculating the Internal Rate of Return under Section 4.4, the Capital Contributions of
HSRE and the dates of such Capital Contributions shall be set forth on Schedule 2 attached hereto.



     Capital Event. The borrowing of any funds by the Company or the placement of new or
additional financing securing all or any portion of a Property or any interest therein; the
refinancing of any existing or new financing upon all or any portion of a Property or any interest
therein; or the sale, exchange, condemnation, casualty loss or other disposition (whether voluntary
or involuntary) of all or any portion of the Properties or any interest therein (including any
disposition in consideration for securities in any real estate investment trust or other entity),
other than leases of space and dispositions of personal property in the ordinary course of
business.



     Capital Proceeds. The consideration resulting from a Capital Event with respect to
one or more of the Properties, less the sum of (a) any expenses incurred in connection with such
Capital Event, (b) any portion of such proceeds applied toward the payment of any indebtedness



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being refinanced or secured by or relating to the Property disposed of, (c) any portion of
such proceeds applied to acquire, develop, or rehabilitate real property or personal property or
interests therein in accordance with the terms hereof, and (d) any portion of the proceeds
reserved for payment of expenses and/or working capital Approved by HSRE.




     Certificate. The Certificate of Formation of the Company, as amended from time to
time.



     Certificate of Occupancy. The date upon which the Developer secures a final
certificate of occupancy or local equivalent for Development Properties.



     Code. The Internal Revenue Code of 1986, as amended from time to time (including
corresponding provisions of subsequent revenue laws).



     Company. HSRE-CAMPUS CREST I, LLC, a Delaware limited liability company, as formed
under the Certificate and governed by this Agreement.



     Completion and Cost Overrun Guaranty. The completion, payment and performance
guaranty to secure the completion of a Development Project and payment of Cost Overruns, executed
and delivered by the Campus Crest Guarantor in favor of the Company and, to the extent required,
the holder of the Construction Loan.



     Completion Date. The date upon which the final completion of a Development Project
occurs in accordance with the Development Agreement.



     Construction Agreement. That certain Construction Agreement to be entered into by
Campus Crest Construction, Inc., a Delaware corporation, and each Property Owning Subsidiary, a
form of which is attached hereto as Exhibit O.



     Construction Loan. The indebtedness of the Company incurred pursuant to Section
3.6 hereof in connection with the construction and development of each Development Project.



     Construction Schedule. The construction schedule for a Development Project.



     Contributed Property Interest. The meaning set forth in Section 3.3(a)
hereof.



     Contributing Member. The meaning set forth in Section 3.6(a) hereof.



     Control or control. The power, directly or indirectly, to direct or cause the
direction of management and policies of a Person, whether through ownership of voting securities,
by contract or otherwise.



     Conversion Date. The meaning set forth in Section 6.5(a) hereof.



     Cost Overruns. The meaning set forth in the Development Agreement.



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     “Day” or “day”. Any day which is not a Saturday or Sunday and on which banks are open
for business in the State of New York.



     Default Amount. The meaning set forth in Section 3.6(a) hereof.



     Defaulting Member. The meaning set forth in Section 3.6(a) hereof.



     Defaulting Purchaser. The meaning set forth in Section 9.8 hereof.



     Development Agreement. The Development Agreement in the form attached as Exhibit
F to be entered into by Developer and the Property Owning Subsidiary that develops a
Development Project.



     Development Budget. The final development budget for each Development Project
Approved by HSRE, a form of which is attached as Exhibit K.



     Development Project. A Property that has been or is intended to be developed and
constructed by the Company, including, without limitation, the Properties set forth on Schedule 1
attached hereto.



     Developer. Campus Crest Development, Inc., a Delaware corporation, or such other
Person as Approved by HSRE.



     Dilution Percentage. The meaning set forth in Section 3.6(e) hereof



     Distribution. The amount of any money (expressed in United States currency) and the
Fair Market Value of any property (net of liabilities) distributed by the Company to the Members,
whether as a distribution of Net Cash Flow or otherwise under this Agreement. For purposes of
calculating the Internal Rate of Return under Section 4.4, Distributions shall also include
the amount of proceeds received by a Member from the sale or disposition of all or a portion of its
Ownership Interest in the Company or a Property owned by the Company to another Member or a third
party, the amount of Necessary Cost Loans made by a Member, and any proceeds distributed to a
Member in repayment of any preferred equity investment in any Subsidiary.



     Distribution Shortfall. The meaning set forth in Section 4.4 hereof.



     Dissolution. The occurrence of any of the events set forth in Section 11.1,
causing the Company to dissolve as a legal entity.



     Entitlements. Any and all entitlements, permits, zoning, governmental and/or
quasi-governmental approvals and exactions including, without limitation, a vesting tentative tract
map and conditional use permits required to be obtained in order to develop and construct a
Development Project.



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     Entity. Any corporation, general partnership, limited partnership, joint venture,
trust, business trust, limited liability company or other association or other form of business or
legal entity.



     Exercise Amount. The meaning set forth in Section 3.7(d) hereof.



     Excess Project Costs. With respect to each line item of Project Costs, the amount, if
any, by which such line item of Project Costs exceeds said line item of Budgeted Project Costs.



     Exercise Period. The meaning set forth in Section 9.2(a) hereof.



     Event of Withdrawal. The meaning set forth in Section 11.2 hereof.



     Fair Market Value. The value of any property distributed to a Member by the Company,
as determined by the mutual agreement of HSRE and Campus Crest in the case of any other asset.



     Financing Commitment. The meaning set forth in Section 9.2(b) hereof.



     Fiscal Year. The fiscal and taxable year of the Company, including both 12-month and
short fiscal or taxable years.



     Funding Conditions. Those conditions set forth in Exhibit E that must be
satisfied in order for HSRE to be obligated to make a Mandatory Capital Contribution for a
Development Project or the acquisition of a Property.



     Funding Member. The meaning set forth in Section 3.7(a) hereof.



     General Contractor. The general contractor for a Development Project Approved by the
Members.



     Governmental Authority. Any federal, state or local government, any political
subdivision thereof or any court, administrative or regulatory agency, department, instrumentality,
board, office, body or commission or other governmental authority or agency, domestic or foreign.



     Hard Costs. The total Budgeted Project Costs, excluding land cost, Soft Costs, any
transfer taxes and customary fees payable to local jurisdictions associated with selling the land
and any other fees payable to HSRE, Campus Crest or their Affiliates.



     HSRE. The meaning as set forth in the Recitals.



     HSRE Change in Control Effective Date. The meaning set forth in Section
5.1(c) hereof.



     HSRE Mandatory Capital Contribution. Any Mandatory Capital Contribution made by HSRE.




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     HSRE Triggering Event. The meaning set forth in Section 6.3 hereof.



     IC Approval Notice. The meaning set forth in Section 3.3(b) hereof.



     Immediate Family. The parents, children, grandchildren and spouse of such Person.



     In Balance. As defined in the Development Agreement.



     Initial Capital Contribution shall mean the amount of cash or the Fair Market Value of
any property contributed to the Company by the Members pursuant to Section 3.1 hereof.



     Initiating Member. The meaning set forth in Section 9.1 hereof.



     Initiating Member Purchase Price. The meaning set forth in Section 9.2(b)
hereof.



     Internal Rate of Return. The rate, determined as set forth herein, which will
discount Distributions made to a Member by the Company to an amount equal to the Capital
Contributions made by such Member. A specified Internal Rate of Return (the “Applicable IRR”)
shall be deemed to have been attained as of any date that (i) the sum of the separate present
values of each Distribution made to the Member, when discounted to their present values as of the
date of the Initial Capital Contribution made by such Member, using a discount rate equal to the
Applicable IRR is equal to (ii) the sum of the separate present values of each Capital Contribution
made to the Company by such Member, when discounted to their present values as of the date of the
Initial Capital Contribution made by such Member, using the same specific discount rate as referred
to above. The XIRR function in Microsoft Excel, U.S. English Version MS Excel 2003 or any other
program approved by the Members shall be used to calculate whether an Applicable IRR is obtained,
and the present value shall be determined using monthly compounding periods. Any Capital
Contributions made by a Member and Distributions made by the Company to a Member during a month
shall be deemed to occur on the first or last day of the month in which such Distribution or
Capital Contribution is made, whichever is closer to the actual date of such Capital Contribution
or Distribution. The Internal Rate of Return with respect to any Member shall be deemed to include
any amount paid or received by any predecessor in interest of any Member.



     “Internal Revenue Service” or “IRS”. The Internal Revenue Service of the United
States.



     Laws. All statutes, rules, codes, regulations, restrictions, ordinances, orders,
decrees, approvals, directives, judgments, injunctions, writs, awards and decrees of, or issued by,
all Governmental Authorities.



     Lease. Any agreement in effect from time to time between the Company or a Property
Owning Subsidiary, as landlord, and any other Person, as tenant, conferring upon said tenant the
right to use and occupy space at a Property, including without limitation the leases for retail,
parking or storage space (including, without limitation, month-to-month tenancies), and any
occupancy, licensee, franchise and concessionaire agreement from time to time applicable to a
Property (other than subleases, occupancy, license, franchise, concessionaire agreements entered



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into by tenants and third parties for space within such tenant’s premises) and all amendments
and supplements thereto.




     Liquidation. The process of winding up and terminating the Company after its
Dissolution.



     Major Decisions. The meaning set forth in Section 5.2 hereof.



     Mandatory Capital Contributions. With respect to any Member, any Capital Contribution
required to be made by such Member pursuant to Section 3.2, Section 3.4, or
otherwise designated as a “Mandatory Capital Contribution” under this Agreement.



     Mandatory Capital Limit. An amount equal to the Budgeted Project Costs for the
acquisition or development of a Property, minus the amount of Project Financing to be obtained by
the Company with respect to such Property, all as Approved by HSRE.



     Material Change in Control. The meaning set forth in Section 5.1(c) hereof.



     Member. An initial Member as listed in Section 1.4, and any other Person
subsequently admitted to the Company as an Additional Member or Substitute Member in accordance
with the terms of this Agreement.



     Membership Interest. With respect to each Person owning an interest in the Company,
all of the interests of such Person in the Company, including such Person’s interest in the Profits
and Losses of the Company, such Person’s Capital Account, such Person’s right to receive
Distributions and all other rights and obligations of such Person under this Agreement.



     Necessary Contributions. The meaning set forth in Section 3.7 hereof.



     Net Cash Flow. Operating Cash Flow and Capital Proceeds.



     Net Invested Capital. Shall mean the aggregate amount of Capital Contributions made
to the Company by a Member, reduced by the amount of distributions constituting a return of capital
under Section 4.1(b)(ii).



     Non-Competition and Right of First Opportunity Agreement. The meaning set forth in
Section 2.4 hereof.



     Non-Defaulting Purchaser. The meaning set forth in Section 9.8 hereof.



     No Funding Notice. The meaning set forth in Section 9.2(b) hereof.



     Non-Initiating Member. The meaning set forth in Section 9.1 hereof.



     Non-Initiating Member Purchase Price. The meaning set forth in Section 9.3(a)
hereof.



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     Notice. A written notice actually delivered or deemed delivered under
Section 13.8 hereof.



     Operating Cash Flow. With respect to any period, the amount by which the gross cash
receipts, other than Capital Contributions, in such period exceed the sum of the following (to the
extent not paid from Capital Proceeds): (a) all principal and interest payments on any indebtedness
of the Company or any Subsidiary, and all other sums paid to such lenders in such period; (b) all
cash expenditures (including expenditures for capital improvements) made in such period incident to
the operation of the Company or any Subsidiary business; and (c) working capital and other reserves
for operation of the Company business Approved by HSRE.



     Parent REIT. The meaning set forth in Section 5.9(a) hereof.



     Participating Percentages. With respect to each Member, the aggregate Capital
Contributions of a Member divided by the aggregate Capital Contributions of all of the Members, as
adjusted from time to time pursuant to the terms of this Agreement. If the Participating
Percentages of the Members are changed pursuant to the terms of this Agreement, such change shall
be effective for all purposes on the date of the change. As of the date hereof, the Participating
Percentages of each Member are as follows:



	 	 	 	 	 

	HSRE
	 	 	50.1	%
	Campus Crest
	 	 	49.9	%






     Permitted Transferees. The meaning set forth in Section 10.2 hereof.



     Person. An individual, corporation, partnership, limited partnership, trust,
unincorporated organization, association or other entity.



     Plans and Specifications. The plans and specifications for the Project, prepared by
the Architect (as defined in the Development Agreement), as the same may thereafter be changed,
replaced in whole or in part, or supplemented in accordance herewith.



     Pool Cutoff Date. With respect to the Company, December 15, 2009; and with respect to
each subsequent Portfolio Company, October 31 of the year in which such subsequent Portfolio
Company was formed, unless the Members agree otherwise.



     Portfolio Company. The meaning set forth in Section 2.3 hereof.



     Pre-Acquisition Costs. The pre-acquisition costs incurred by Campus Crest and its
Affiliates in connection with the acquisition of a Property.



     Pre-Acquisition Due Diligence Budget. The budgets submitted by Campus Crest to HSRE
setting forth the Pre-Acquisition Costs to be incurred with respect to an acquisition of an
Additional Property.



     Pre-Development Costs. The pre-development costs incurred by Campus Crest and its
Affiliates in connection with the development of a Development Project.



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     Prime Rate. The “base rate” of interest announced from time to time by Citibank, New
York, New York; or, if Citibank shall cease to exist or shall cease to announce a prime rate, the
prime rate, corporate base rate or other comparable rate of interest announced from time to time by
the largest national banking association with headquarters in New York, New York.



     Project Costs. The actual costs to acquire, construct and complete the Development
Project, including the cost of land, construction debt financing, all Soft Costs and all actual
operating costs through the Completion Date, including any contingencies provided for in the
Development Budget.



     Project Financing. The amount of the Acquisition Loan, in the case of a Property that
is not a Development Project, or the Construction Loan, in the case of a Development Project, to be
obtained, as set forth in the Acquisition Budget or the Development Budget, as applicable, Approved
by HSRE.



     Properties. The properties set forth on Schedule 1 attached hereto and the Additional
Properties.



     Property Manager. The Grove Student Properties, Inc., a Delaware corporation.



     Property Management Agreement. The Property Management Agreement in the form attached
hereto as Exhibit G to be entered into by the Property Manager and the Company or the
relevant Property Owning Subsidiary.



     Property Owning Subsidiary. Each Subsidiary that owns a Property.



     Purchase Option. The meaning set forth in Section 9.2(a) hereof.



     Recourse Obligations. The meaning set forth in Section 9.4(a) hereof.



     Reimbursement Amount. The meaning set forth in the Development Agreement.



     Reimbursement Conditions. The meaning set forth in the Development Agreement.



     REIT. The meaning set forth in Section 5.9 hereof.



     Request for Advance. The meaning set forth in Section 3.4(d) hereof.



     Required Amount. The meaning set forth in Section 3.4(d) hereof.



     Related Party Agreement. The meaning set forth in Section 5.1(d) hereof.



     Reply Notice. The meaning set forth in Section 9.2(a) hereof.



     Review Items. The meaning set forth in Section 5.6 hereof.



     Sale Option. The meaning set forth in Section 9.2(a) hereof.



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     Sale Period. The meaning set forth in Section 9.3(a) hereof.



     Secured Lender. Any owner or holder of a secured claim or lien against a Property,
including any mortgagee under construction or permanent financing.



     Services Agreement. The meaning set forth in Section 5.9(b) hereof.



     Soft Costs. The costs of design, engineering, legal, accounting, interest,
construction loan charges, title company charges and real estate taxes accrued during the
construction period as set forth in the Development Budget and any other costs designated as “soft
costs” in the Development Budget, including, without limitation, projected operating deficit
amounts through the Completion Date, and which shall include reasonable costs incurred by HSRE to
engage legal counsel to review and approve actions undertaken by Campus Crest, evaluate and advise
HSRE with respect to Company matters relating to a Development Project, evaluating approvals
requested by Campus Crest and otherwise performing services for the Company upon Campus Crest’s
prior approval and further provided that any costs incurred by either Member related to engaging
counsel in connection with a dispute between the Members shall not be Soft Costs.



     Subsidiary. Any business enterprise in which the Company has a direct or indirect
ownership interest and which is controlled directly or indirectly by the Company.



     Substantial Completion Date. Shall have the meaning set forth in the Development
Agreement.



     Substitute Member. A transferee of a Membership Interest who is admitted as a new
Member under Section 11.2 in respect of the Membership Interest transferred.



     Tax Allocation Provisions. The tax provisions to be followed by the Company as
described in Exhibit B.



     Transfer. The meaning set forth in Section 10.1 hereof.



     Treasury Regulations. The Treasury regulations promulgated under the Code, as amended
from time to time.



     TRS. The meaning set forth in Section 5.9(b) hereof.



     Unfunded Excess Project Costs. Any Excess Project Costs which, at the time they are
required to be paid by the Company, are not able to be funded from Mandatory Capital Contributions
and Project Financing. For purposes of determining Unfunded Excess Project Costs, the proceeds of
borrowings by the Company shall be deemed to be applied first to Budgeted Project Costs,
irrespective of how said proceeds may be allocated as between the Company and the lenders in
question.



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EXHIBIT B




UNITED STATES INCOME TAX MATTERS



     1. Company for Federal Income Tax Purposes. The Company intends to be treated as a
partnership for United States (U.S.) income tax purposes.



     2. Capital Accounts. The Company shall maintain a separate Capital Account for each
Member according to the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). For this purpose,
the Company may, upon the occurrence of the events specified in Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), adjust the Member’ Capital Accounts in accordance with the rules of
such regulation and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of
Company property. For purposes of computing the amount of any item of Company income, gain, loss
or deduction to be allocated pursuant to Section 3 below and to be reflected as an
adjustment to the Members’ Capital Accounts, the determination, recognition and classification of
any such item shall be the same as its determination, recognition and classification for federal
income tax purposes (including any method of depreciation, cost recovery or amortization used for
this purpose), provided that:




     (a) The computation of all items of income, gain, loss and deduction shall include
income exempt from federal income tax and those items described in Code Section 705(a)(2)(B)
or Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such
items are not includable in gross income or are not deductible for federal income tax
purposes.




     (b) If the Book Value (as defined below) of any Company property is adjusted pursuant
to Treasury Regulation Section 1.704-1 (b)(2)(iv)(e) or (f), the amount of such adjustment
shall be taken into account as gain or loss from the disposition of such property.




     (c) Items of income, gain, loss or deduction attributable to the disposition of Company
property having a Book Value that differs from its adjusted basis for tax purposes shall be
computed by reference to the Book Value of such property.




     (d) Items of depreciation, amortization and other cost recovery deductions with respect
to Company property having a Book Value that differs from its adjusted basis for tax
purposes shall be computed by reference to the property’s Book Value in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv)(g).




     (e) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant
to Code Sections 732(d), 734(b) or 743(b) is required, pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining the amount in the
Capital Accounts, the amount, of such adjustment to the Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis).



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     (f) For purposes of this Exhibit B, “Book Value” shall mean with respect to any
asset, such asset’s adjusted basis for United States federal income tax purposes, except as
follows: (i) the initial Book Value of any asset contributed by a Member to the Company
shall be the fair market value of such asset as of the date of the contribution (as
determined hereunder); (ii) the Book Value of all Company assets shall be adjusted to equal
their respective fair market value (as determined hereunder) upon each occurrence of the
liquidation of the Company within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g); and (iii) the Book Value of any asset distributed by the
Company to a Member shall be adjusted to equal the fair market value (as determined
hereunder) of such asset on the date of distribution.



     3. Allocations.




     (a) For Capital Account purposes, all items of taxable income and gain under the Code
(“Profits”) and all items of deduction and loss under the Code (“Losses”) shall (subject to
Section 3(f)) be allocated among the partners in a manner such that if the Company
were dissolved, its affairs wound up and its assets distributed to the Members in accordance
with their respective Capital Account balances immediately after making such allocation,
such distributions would, as nearly as possible, be equal to the distributions that would be
made pursuant to Section 4.1 of this Agreement. For the purposes of this
Section 3, the assets held by the Company shall be deemed to have a value equal to
their “Book Value” without regard to Section 2(d)(ii) hereof. The foregoing
allocations are intended to cause all items of income, gain, deduction and loss to be
allocated in a manner consistent with the distributions of Operating Cash Flow and Capital
Proceeds under Section 4.1 of this Agreement. To effectuate this result, the
Company may (with the Approval of HSRE) make such other assumptions (in addition to those
described above in this Section 3(a)), as it deems necessary or appropriate in order
to cause the allocations of income, gain deduction and loss to be consistent with the
intended economic arrangement of the Members as set forth in Section 4.1.




     (b) For federal, state and local income tax purposes, all Profits and Losses shall be
allocated to the Members in accordance with the allocations of the corresponding items for
Capital Account purposes under Section 3, except that items with respect to which
there is a difference between tax and book basis (“book-tax disparity”) will be allocated in
accordance with Section 704(c) of the Code, the Treasury Regulations thereunder, and
Treasury Regulations Section 1.704-1(b)(4)(i). The methodology for curing any book-tax
disparity shall require the Approval of HSRE.




     (c) The provisions of this Section 3 are intended to comply with Treasury
Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent
with such Treasury Regulations. Campus Crest shall be authorized to make appropriate
amendments to the allocations of items pursuant to this Section 3 if necessary in
order to comply with Section 704 of the Code of applicable Treasury Regulations thereunder;
provided that no such change shall have any effect upon the amount distributable to any
Member.



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     (d) Notwithstanding any provision set forth in this Section 3, no item of
deduction or loss shall be allocated to a partner to the extent the allocation would cause a
negative balance in such partner’s Capital Account (after taking into account the
adjustments, allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) that exceeds the amount that such partner
would be required to reimburse the Company pursuant to this paragraph or under applicable
U.S. federal income tax law (including amounts that a partner would be deemed to be
obligated to restore pursuant to Treasury Regulations Section 1.704-2(g)(1) and
1.704-2(i)(5)). In the event some but not all of the partners would have such excess
Capital Account deficits as a consequence of such an allocation of loss or deduction, the
limitation set forth in this Section 3(d) shall be applied on a partner by partner
basis so as to allocate the maximum permissible deduction or loss to each partner under
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations. All deductions and losses in
excess of the limitations set forth in this Section 3(d) shall be allocated in
accordance with Treasury Regulations promulgated under Section 704 of the Code. In the
event any loss or deduction shall be specially allocated to a partner pursuant to either of
the two preceding sentences, an equal amount of income of the Company shall be specially
allocated to such partner prior to any allocation pursuant to Section 3(a).




     (e) In the event any Member unexpectedly receives any adjustments, allocations, or
distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and
(6), items of Company income and gain shall be specially allocated to such partner in an
amount and manner sufficient to eliminate as quickly as possible any deficit balance in its
Capital Account in excess of that permitted under Section 3(d) created by such
adjustments, allocations or distributions. Any special allocations of items of income or
gain pursuant to this Section 3(e) shall be taken into account in computing
subsequent allocations pursuant to this Section 3 so that the net amount of any
items so allocated and all other items allocated to each partner pursuant to this
Section 3 shall, to the extent possible, be equal to the net amount that would have
been allocated to each such partner pursuant to the provisions of this Section 3 if
such unexpected adjustments, allocations or distributions had not occurred.




     (f) In the event the Company incurs any nonrecourse liabilities, income and gain shall
be allocated in accordance with the “minimum gain chargeback” provisions of
Sections 1.704-1(b)(4)(iv) and 1.704-2 of the Treasury Regulations.



     4. Tax Elections and Accounting Methods. All elections and accounting methods,
depreciation and amortization recovery periods for purpose of the U.S. tax requirements, including
the method of allocating items with respect to contributed property under Section 1.704-3 of the
Treasury Regulations, will be made by the Tax Matters Member designated below and shall require the
Approval of HSRE.



     5. Tax Matters Member. Campus Crest is designated as the tax matters partner under
§ 6231(a)(7) of the Code. The tax matters partner will be responsible for notifying all Members of
ongoing proceedings, both administrative and judicial, and subject to Section 5.2 of the
Company Agreement, will represent the Company throughout any such proceeding. The



B-3









 




Members will furnish the tax matters partner with such information as it may reasonably
request to provide the Internal Revenue Service and any foreign taxing authority with sufficient
information to allow proper notice to the Members. If an administrative proceeding with respect to
a partnership item under the Code has begun, and the tax matters partner so requests, each Member
will notify the tax matters partner of its treatment of any partnership item on its federal income
tax return, if any, which is inconsistent with the treatment of that item on the partnership return
for the Company. Any settlement agreement with the Internal Revenue Service (which will not be
entered into by Campus Crest without the prior Approval of HSRE) will be binding upon the Members
only as provided in the Code. The tax matters partner will not bind any other Member to any
extension of the statute of limitations or to a settlement agreement without such Member’s written
consent. Any Member who enters into a settlement agreement with respect to any partnership item
will notify the other Members of such settlement agreement and its terms no later than ten (10)
days prior to the effective date of settlement. If the tax matters partner does not file a
petition for readjustment of the partnership items in the Tax Court, Federal District Court or
Claims Court within the 90-day period following a notice of a final partnership administrative
adjustment, any notice partner or 5-percent group (as such terms are defined in the Code) may
institute such action within the following 60 days. The tax matters partner will timely notify the
other Members in writing of its decision. Any notice partner or 5-percent group will notify any
other Member its filing of any petition for readjustment. The Company shall reimburse the tax
matters partner for any and all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ and other professional fees) incurred by it in its capacity as tax matters partner. The
Company shall indemnify, defend and hold the tax matters partner harmless from and against any
loss, liability, damage, cost or expenses (including reasonable attorneys’ fees) sustained or
incurred as a result of any act or decision concerning Company tax matters and within the scope of
such Member’s responsibilities as tax matters partner, provided that the tax matters partner shall
act in good faith in accordance with this Agreement and shall not be guilty of willful misconduct
or gross negligence.




B-4









 





EXHIBIT C




LIST OF REVIEW ITEMS



     Set forth below is a list of items that HSRE may, without obligation, request to review and
Approve prior to the Company making any expenditures with respect to the development of any of the
Properties, provided that nothing herein shall require Campus Crest to create or modify any
document to comply with such request. (the requirement or timing of which items may be modified or
waived by HSRE as provided in said Section 5.6):



     1. Agreements relating to the purchase of any improved or unimproved real property;



     2. Title reports (or the equivalent documents used in the applicable jurisdiction);



     3. Identity of third party architects, engineers and contractor(s);



     4. Plans and specifications;



     5. Development Budget which shall include all Hard and Soft Costs and a detailed construction
schedule, along with proforma lease-up schedule and statement of projected operating cash flow for
such Property;



     6. All architect/engineering agreements and construction contracts,;



     7. Copies of all necessary and appropriate permits, permit applications and licenses
(including special use permits);



     8. Evidence of insurance;



     9. Identity of any lender and copies of construction financing documents;



     10. Soil tests;



     11. Environmental assessment reports;



     12. All necessary and appropriate utility agreements and easements;



     13. Form Lease and leasing guidelines;



     14. Contracts and other agreements relating to the use, construction, financing or operation
of the subject Property;



     15. Payment applications (including line item accounting);



     16. Inspection reports for:




	 	(i)	 	concrete forms and reinforcing steel




C-1









 






	 	(ii)	 	structural steel
	 
	 	(iii)	 	mechanical
	 
	 	(iv)	 	electrical
	 
	 	(v)	 	curtain walls





     17. Copies of the following shop drawings:




	 	(i)	 	structural steel
	 
	 	(ii)	 	curtain wall
	 
	 	(iii)	 	electrical switch gear
	 
	 	(iv)	 	all HVAC shop drawings





     18. Copies of operating manuals;



     19. Copies of legal opinions; and



     20. Such other items as may be material to the construction and operation of the subject
Property.



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EXHIBIT D




CAPITAL CONTRIBUTIONS



	 	 	 	 	 	 	 	 	 
	 	 	Initial	 	 	 	 
	 	 	Capital	 	 	Participating	 
	Member	 	Contribution	 	 	Percentage	 
	Campus Crest

	 	$	49.90	 	 	 	49.9	%
	HSRE

	 	$	50.10	 	 	 	50.1	%
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Total

	 	$	100	 	 	 	100	%
	 

	 	 	 	 	 	 






D-1









 





EXHIBIT E




HSRE FUNDING CONDITIONS



     These conditions apply to development and/or acquisition project as appropriate.




	1.	 	With respect to a Development Project, all conditions to funding as set forth in the
Construction Loan commitment shall have been satisfied.
	 
	2.	 	Approval by HSRE of the documentation relating to the Construction Loan.
	 
	3.	 	Campus Crest has secured a construction contract with an Affiliate of Campus Crest or a
reputable general contractor for the completion of the Development Project meeting the
requirements in the Development Agreement for a minimum amount of eighty percent (80%) of the
total construction costs or value of the Property, and such contract has been Approved by
HSRE.
	 
	4.	 	All Entitlements and governmental approvals for the construction of the Development Project,
including but not limited to, zoning shall have been delivered to and Approved by HSRE.
	 
	5.	 	HSRE and Campus Crest shall have approved and executed the Non-Competition and Right of First
Opportunity Agreement.
	 
	6.	 	HSRE shall have Approved the legal and environmental due diligence with respect to the
Property.
	 
	7.	 	HSRE shall have Approved the Acquisition Budget or Development Budget, as the case may be,
including, without limitation the amount of equity capital to be invested by the Members.
	 
	8.	 	HSRE shall have been furnished with, and shall have Approved, all of the items identified on
Exhibit C; provided, however, that the delivery of items 16 through 18 shall not be
required to be delivered as a Funding Condition.
	 
	9.	 	HSRE shall have Approved the Pre-Development Costs or Pre-Acquisition Costs, as the case may
be, with respect to such Property.
	 
	10.	 	All blanks in the form of Property Management Agreement, Construction Agreement and
Development Agreement have been filled in a manner Approved by HSRE and Campus Crest.
	 
	11.	 	HSRE and Campus Crest shall have approved and executed the Indemnity Agreement.





E-1









 





EXHIBIT F




FORM OF DEVELOPMENT AGREEMENT



(Attached)



F-1









 





DEVELOPMENT AGREEMENT




dated as of ___________, 201__



by and between



CAMPUS CREST AT _________________, LLC/LP



as Owner



and



CAMPUS CREST DEVELOPMENT, INC.



as Developer








 









 











TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	1. RETENTION OF DEVELOPER
	 	 	1	 
	 
	 	 	 	 
	2. DEVELOPER’S RESPONSIBILITY
	 	 	2	 
	 
	 	 	 	 
	2.1. Budgeting and Scheduling
	 	 	2	 
	2.2. Design and Permitting
	 	 	4	 
	2.3. Selection of General Contractor; Bidding
	 	 	5	 
	2.4. Construction Phase
	 	 	6	 
	2.5. Construction Financing
	 	 	12	 
	2.6. Compliance with Project Criteria
	 	 	12	 
	2.7. Project Executive
	 	 	13	 
	 
	 	 	 	 
	3. COST OVERRUNS
	 	 	13	 
	 
	 	 	 	 
	3.1. Obligations of Developer and Owner
	 	 	13	 
	3.2. In Balance Requirement
	 	 	13	 
	 
	 	 	 	 
	4. RESPONSIBILITY OF THE OWNER
	 	 	15	 
	 
	 	 	 	 
	4.1. Review of Documents
	 	 	15	 
	4.2. Professional Services
	 	 	15	 
	 
	 	 	 	 
	5. DEVELOPER’S FEE
	 	 	15	 
	 
	 	 	 	 
	5.1. Terms of Payment
	 	 	15	 
	5.2. Substantial Completion
	 	 	16	 
	5.3. Force Majeure
	 	 	17	 
	 
	 	 	 	 
	6. CONSULTANT COSTS
	 	 	18	 
	 
	 	 	 	 
	7. DEFAULT; TERMINATION
	 	 	18	 
	 
	 	 	 	 
	7.1. Developer Defaults
	 	 	18	 
	7.2. Owner Defaults
	 	 	19	 
	7.3. Buyout under Venture Operating Agreement
	 	 	19	 
	7.4. Payment on Termination
	 	 	19	 
	 
	 	 	 	 
	8. LIENS
	 	 	20	 
	 
	 	 	 	 
	9. CONSTRUCTION WARRANTIES
	 	 	20	 
	 
	 	 	 	 
	10. REPRESENTATIONS AND WARRANTIES
	 	 	21	 
	 
	 	 	 	 
	10.1. Representations and Warranties of Developer
	 	 	21	 
	10.2. Representations and Warranties of Owner
	 	 	21	 






-i-









 









 











TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	11. INDEMNIFICATION
	 	 	22	 
	 
	 	 	 	 
	12. MISCELLANEOUS PROVISIONS
	 	 	22	 
	 
	 	 	 	 
	12.1. Notices
	 	 	22	 
	12.2. Relationship; Insurance
	 	 	23	 
	12.3. Governing Law
	 	 	25	 
	12.4. Entire Agreement
	 	 	25	 
	12.5. Construction
	 	 	25	 
	12.6. Headings
	 	 	25	 
	12.7. Waivers
	 	 	25	 
	12.8. Rights and Remedies Cumulative
	 	 	25	 
	12.9. Severability
	 	 	25	 
	12.10. Heirs, Successors and Assigns
	 	 	26	 
	12.11. Assignment
	 	 	26	 
	12.12. HSRE Member Information
	 	 	26	 
	12.13. Enforcement of Owner’s Rights
	 	 	26	 
	12.14. Owner Approvals
	 	 	26	 
	12.15. Lender Provisions
	 	 	26	 
	12.16. Attorneys’ Fees
	 	 	26	 
	12.17. Counterparts
	 	 	27	 
	12.18. Time of the Essence
	 	 	27	 
	 
	 	 	 	 
	13. LIMITATION OF LIABILITY
	 	 	27	 






-ii-







 









 








DEVELOPMENT AGREEMENT




     THIS DEVELOPMENT AGREEMENT (the “Agreement”) is dated as of the ____ day of _________, 201__,
by and between [CAMPUS CREST AT _________________, LLC/LP], a Delaware limited liability
company/limited partnership (“Owner”), and CAMPUS CREST DEVELOPMENT, INC., a Delaware corporation
(“Developer”).



R E C I T A L S:




     A. HSRE-CAMPUS CREST I, LLC (“Venture”) is a Delaware limited liability company formed
pursuant to that certain Operating Agreement, dated as of November 7, 2008, as amended and restated
pursuant to that certain Amended and Restated Operating Agreement, dated as of October ___, 2010
(the “Venture Operating Agreement”), by and between Campus Crest Ventures III, LLC, a Delaware
limited liability company and Affiliate of Developer (“Member”), and HSRE-CAMPUS CREST IA, LLC, a
Delaware limited liability company (“HSRE Member”). This Agreement is made pursuant to the Venture
Operating Agreement, and any capitalized terms not otherwise defined herein shall have such
meanings as are ascribed thereto in the Venture Operating Agreement.



     B. Owner will acquire title to the real property located in [CITY, STATE] and legally
described in Exhibit A attached hereto and made a part hereof (the “Property”).



     C. Owner desires to develop the Property as a _______ bed student housing facility (together
with all necessary ancillary components and amenities, roads and any improvements necessary for
functioning as a student housing facility, unless otherwise agreed, or required in connection with
the construction thereof, the “Project”), to be constructed in accordance with (i) the Plans and
Specifications (as hereinafter defined), (i) the Development Budget (as hereinafter defined), and
(iii) the other terms and conditions of this Agreement.



     D. Developer and/or its Affiliates have substantial experience and expertise in supervising
and coordinating the design and construction of similar facilities throughout the United States.



     E. Owner desires to retain Developer (i) to supervise and direct the design of the Project,
(ii) to assist Owner in the selection and retention of architects, engineers, contractors and other
consultants (collectively, “Consultants”) for the Project, (iii) to administer and supervise
construction of the Project by the General Contractor (as hereinafter defined) and (iv) to provide
other services to Owner as specified herein, and Developer desires to provide such services to
Owner, upon the terms and subject to the conditions hereinafter set forth.



     NOW, THEREFORE, in consideration of the covenants, terms and conditions set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Owner and Developer hereby agree as follows:



     1. RETENTION OF DEVELOPER. Owner hereby retains Developer to perform services
relating to the design, permitting, construction and development of the Project,



1









 




including, without limitation, those services described in Section 2 hereof, on the terms and
conditions and in consideration of the payments set forth herein. In performing such services,
Developer will be acting on its own behalf, as an independent contractor and not as a partner,
venturer or employee of Owner. Developer agrees to further the interests of Owner by furnishing
Developer’s skill, judgment and expertise in the development of the Project. Developer shall
perform its services hereunder in an expeditious and economical manner consistent with the best
interests of Owner and with the standards utilized in the Generation-4 “The Grove” student housing
facilities (e.g. those developed in Jonesboro, AR, Troy, AL, Cheney, WA, etc.). Subject to the
terms and conditions of this Agreement, Developer shall have the authority to make and implement
day-to-day decisions that are necessary in the performance of its obligations hereunder and to
render directions to all third parties in connection therewith. Notwithstanding anything contained
herein to the contrary, in no event shall Developer have any right or authority, express or
implied, to commit or otherwise bind or obligate Owner or any of its Affiliates to any liability or
agreement, unless expressly authorized to do so in writing by Owner subsequent hereto or unless
expressly authorized to make a change order under Section 2.4.12 below.




     2. DEVELOPER’S RESPONSIBILITY. Developer shall provide the following services and
perform the following oversight and supervision functions in connection with the development of the
Project:



          2.1. Budgeting and Scheduling.





     2.1.1 Developer shall prepare for Owner’s review and approval a detailed budget
for total development costs for the Project. Such budget will be reviewed and
updated on a monthly basis, and any revisions will be promptly submitted to Owner.
The budget for the Project shall include detailed budget categories for each element
of the Project reasonably anticipated by Developer, including land acquisition
costs, estimated cost of procuring and maintaining entitlements and other Permits
(as hereinafter defined), design costs, construction costs, marketing costs, project
administration costs, financing costs and other cost items. Such budget will also
contain reasonable budget contingencies. Attached hereto as Exhibit B and
incorporated herein by this reference is the initial development budget for the
Project (the “Development Budget”), which is comprised of (i) “Hard Costs” as
defined in the Venture Agreement (“Hard Costs”), (ii) “Soft Costs” as defined in the
Venture Agreement (“Soft Costs”), (iii) costs attributable to acquiring the Property
(“Land Costs”), (iv) estimated costs anticipated to be incurred in placing and
servicing construction financing for the Project, including all up-front lender,
servicer and/or mortgage broker fees, points, interest and principal payments,
defeasance costs (if any) and estimated legal and accounting costs anticipated to be
incurred by Owner in connection with therewith (collectively “Financing Costs”), (v)
all estimated costs anticipated to be incurred in marketing portions of the Project
for sale and/or lease (“Marketing Costs”) and (vi) the Developer’s Fee (as defined
below). Notwithstanding anything contained herein to the contrary, any changes in
the Development Budget shall be subject to the approval of Owner; which approval
shall not be unreasonably



2









 







withheld, conditioned or delayed; provided, however, that Owner’s approval
shall not be required for changes in the Development Budget resulting from (i) the
application of line item savings or contingency reserve for which Owner’s approval
is not required pursuant to Section 2.4.12 or (ii) other change orders for which
Owner’s approval is not required pursuant to Section 2.4.12. Owner’s failure to
respond to a request for approval of any change of the Development Budget within ten
(10) business days of receipt of such request for approval shall be deemed an
approval.




     2.1.2 Developer shall prepare for Owner’s review and approval a detailed
project development schedule for the Project (the “Project Development Schedule”),
including subcategories for permitting, design, and construction of the Project.
The Project Development Schedule will be reviewed and updated on a regular basis,
and any revisions will be promptly submitted to Owner. The Project Development
Schedule, as revised, shall also include Owner’s occupancy and building start-up
requirements. Developer agrees to use commercially reasonable efforts to supervise
the Project and manage the development process in accordance with the Project
Development Schedule. Developer will promptly advise Owner of any material delays in
the Project Development Schedule and Developer’s opinion as to the reasons for any
such delay.




     2.1.3 Developer shall prepare monthly for Owner a report indicating the
progress of permitting, design and construction for the Project, the financial
status of the development program for the Project and such other reports as may
reasonably be required by Owner or as may be required by lenders of Owner.




     2.1.4 Developer shall perform for Owner all accounting functions necessary for
the development of the Project (other than internal accounting functions of the
members of Owner); prepare requests for draws from the Construction Lender (as
defined in Section 2.5 below) and administer disbursements on behalf of Owner for
development expenses. Developer shall review, advise Owner on, and implement
procedures to satisfy the requirements of lenders of Owner regarding loan
disbursements.




     2.1.5 Developer shall schedule and attend pre-construction, construction and
progress meetings with the Owner, the Project Architect (as hereinafter defined),
the General Contractor, other Consultants, public officials, lender’s
representatives and other appropriate parties, as and when necessary or appropriate.




     2.1.6 All reports, schedules and other documents to be prepared by Developer
for Owner pursuant to this Agreement shall be in a form reasonably acceptable to
both Owner and Developer.








3









 











          2.2. Design and Permitting.





     2.2.1 Developer has heretofore negotiated and submitted to Owner for approval
(and, if approved, execution), an architect’s agreement (as supplemented and amended
by the Owner, the “Architect Contract”), with ____________________, as the architect
for the Project (the “Project Architect”). Developer or Architect under Developer’s
oversight has heretofore negotiated and submitted to Owner for approval (and, if
approved, execution), an engineer’s agreement (as supplemented and amended by the
Owner, the “Engineer Contract”) with ____________________, as engineer for the
Project (the “Project Engineer”). [CONFORM TO ACTUAL CONTRACTUAL RELATIONSHIP.]
Developer or Architect under Developer’s oversight shall negotiate and submit to
Owner for Owner’s approval (and, if approved, execution) any and all other contracts
or agreements with Consultants as may be necessary or appropriate for the design and
engineering of the Project, taking into account the Project Development Schedule and
the Development Budget. The Architect Contract, Engineer Contract and such other
contracts with Consultants, to the extent not executed by or assigned to Owner, will
name Owner as a third party beneficiary thereunder. Developer shall direct and
supervise the activities of the Project Architect and the other Consultants, whether
contracted by Developer or Architect, and Developer shall provide administrative,
management and related services as reasonably required to coordinate the work of
Consultants with each other to complete the Project.




     2.2.2 Exhibit C attached hereto contains a description of plans and
specifications for the Project which have been prepared by Project Architect or
Project Engineer and approved by the Owner through the design development phase
(which plans shall be revised to create construction documents in sufficient detail
to obtain a permit and as may be supplemented and amended with the written approval
of Owner, the “Plans and Specifications”). Owner and Developer acknowledge and
agree that the Plans and Specifications do not constitute a set of final working
plans and specifications for the Project, but will require supplementation in order
to constitute final working plans and specifications for the entire Project.
Developer shall not suffer or permit any supplementation of, change to, or deviation
from, the Plans and Specifications, without the express prior written approval of
the Owner, such approval not to be unreasonably withheld, conditioned or delayed,
except those related to change orders for which Owner’s consent is not required
pursuant to Section 2.4.12. In connection with Developer’s supervision and
direction of the activities of the Consultants, Developer shall endeavor to cause
the Project Architect and other Consultants to assure that the design of the Project
complies with applicable law and otherwise meets the overall program objectives of
Owner, consistent with budgeting constraints.




     2.2.3 With the Project Architect and other appropriate Consultants, Developer
shall undertake cost analysis, value engineering and constructability



4









 







reviews for the Project and evaluate design alternatives that are generally
consistent with the development of the Project as a Generation-4 “The Grove” student
housing facility.




     2.2.4 Developer shall negotiate on behalf of Owner, for Owner’s review and
approval, all necessary agreements with public bodies relating to access, traffic,
zoning, street vacation, and other design and construction considerations pertaining
to the Project.




     2.2.5 Developer shall manage on behalf of Owner, and with the assistance of the
Consultants shall obtain, all necessary licenses, approvals and permits required to
be obtained for the construction and operation of the Project, including, without
limitation, any and all necessary building permits, zoning, stormwater and building
variances, approvals required under recorded covenants and other instruments of
record, and other approvals required in connection with the relocation of utilities
and assessing the availability of utilities to the Project (collectively, the
“Permits”).




     2.2.6 With the Consultants, Developer shall review design documents during
their development and advise Owner on proposed site improvements, selection of
materials, building systems and equipment, and methods of Project delivery.
Developer shall cause the Project Architect, General Contractor or other appropriate
Consultants to provide recommendations and directions to Developer and Owner on
relative feasibility of construction methods, availability of materials and labor,
and time requirements for procurement, installation and construction. The parties
acknowledge that Owner is relying on the experience and expertise of Developer,
General Contractor and the other Consultants to propose and recommend site
improvements, and building systems and materials which meet the program objectives
of Owner consistent with budget constraints and the requirements of the Permits.




     2.2.7 Developer shall manage and coordinate the professional services of
surveyors and special consultants required for the Project.




     2.2.8 Developer shall take, or cause to be taken (subject to Owner’s review and
approval), without cost to Developer, any and all actions as may be reasonably
necessary or appropriate under or in connection with any and all ground leases,
covenants, conditions, restrictions, easements and agreements affecting Owner or the
Project, including, without limitation, all easements or other title encumbrances
now or hereafter affecting the Property.



          2.3. Selection of General Contractor; Bidding.





     2.3.1 On or about the date of this Agreement, Owner shall enter into that
certain Standard Form of Design-Build Agreement and General Conditions Between Owner
and Design-Builder (Where the Basis of Payment is the Cost of



5









 







the Work Plus a Fee with a Guaranteed Maximum Price) with Campus Crest
Construction, Inc., an affiliate of Developer and the Member (the “General
Contractor”) for the construction of the entire Project (as supplemented and amended
by the Owner, collectively the “Construction Contract”), in accordance with the
Plans and Specifications. Notwithstanding anything contained in this Agreement to
the contrary, Developer shall have no authority to enter into, extend, terminate,
amend, waive or otherwise change the Construction Contract or any other contract or
agreement with any Consultant, without Owner’s prior written consent, or except as
may be expressly authorized relative to change orders under Section 2.4.12.




     2.3.2 Developer shall assist the General Contractor in developing the interest
of subcontractors to bid for Project subcontracts; provided, however, that General
Contractor shall be responsible for coordinating and managing the subcontracting bid
process, and neither General Contractor nor any other person shall be deemed a third
party beneficiary of this Agreement.




     2.3.3 To the extent set forth in the Development Budget or pursuant to the
Construction Contract, Developer shall receive, approve and administer the bonding
and insurance requirements for the General Contractor in accordance with Owner’s
insurance requirements and bonding requirements (and confirm and monitor compliance
with such requirements) for subcontractors for whom bonds are required by Owner
and/or Construction Lender. However, the General Contractor shall be responsible
for the management of the insurance program applicable to subcontractors, suppliers
and materialmen working under the Construction Contract.



          2.4. Construction Phase.





     2.4.1 Developer shall direct and oversee pre-construction activities of the
General Contractor relating to design and cost analysis, and preparation of
construction schedules and construction budgets. The construction schedule and
construction budget from the General Contractor shall be incorporated into the
revised Development Budget and the Project Development Schedule to be prepared by
Developer in accordance with Section 2.1.




     2.4.2 On behalf of Owner, Developer shall provide administration of the
Construction Contract.




     2.4.3 Developer shall provide administrative, supervisory and related services
to coordinate scheduled activities and responsibilities of the General Contractor
with those of the Developer, Owner and the Consultants in order to develop the
Project in an expeditious manner, consistent with the Owner’s interests. Developer
shall use commercially reasonable efforts to cause the Project to be developed in
accordance with the Project Development Schedule and the Construction Contract.
Without limiting the generality of the foregoing,



6









 







Developer (i) shall direct the Architect to ensure that the Plans and
Specifications describe improvements that, when constructed, will be in substantial
compliance with all applicable zoning ordinances and building codes and all other
applicable Permits, laws, statutes and ordinances and have been prepared in
substantial compliance with the commercially reasonable standard of professional
care for projects of such nature, and (ii) shall direct the General Contractor to
construct the Project in accordance with all applicable zoning ordinances and
building codes and all other applicable Permits, laws, statutes and ordinances.
Developer shall use commercially reasonable efforts to cause the General Contractor
to construct the Project free from defects in materials and workmanship and in
substantial accordance with the Plans and Specifications and all applicable
covenants, conditions, restrictions, easements, set back requirements and agreements
that affect the Project and, without limiting the generality of the foregoing, in
accordance with the standard of professional care for projects of such nature.




     2.4.4 Developer shall schedule and conduct meetings to discuss such matters as
progress and scheduling. Developer shall require and coordinate preparation of, and
promptly distribute minutes, if any, of such meetings to Owner, the Project
Architect, the General Contractor and other Consultants. Such meetings are expected
to be held on a monthly basis.




     2.4.5 Utilizing the construction schedule provided and updated by the General
Contractor from time to time, Developer shall update the Project Development
Schedule. If an update indicates that the previously approved Project Development
Schedule may not be met, Developer will promptly recommend to Owner any viable
corrective action(s) of which Developer is aware.




     2.4.6 Developer shall use commercially reasonable efforts to obtain
satisfactory performance of the Construction Contract by the General Contractor.
The parties acknowledge that Owner is relying on the experience and expertise of
Developer to oversee construction so as to identify as early as possible
non-performance by the General Contractor and to recommend corrective action and
alternatives. As appropriate, Developer shall have authority to require additional
inspection or testing of the work in accordance with the provisions of the
Construction Contract, whether or not such work is fabricated, installed or
completed. Developer shall have the authority in its reasonable discretion to
reject work which does not conform to the requirements of the Plans and
Specifications or the Construction contract, unless Owner directs Developer
otherwise.




     2.4.7 Developer shall develop for Owner monthly reports and forecasts for the
Project in the form of the cost accounting report attached hereto as
Exhibit D and advise Owner as to discrepancies between actual and budgeted
costs.








7









 












     2.4.8 Developer shall maintain accounting records on all work performed on the
basis of Owner-approved unit pricing or actual costs of labor and materials, and
other work requiring accounting records.




     2.4.9 Based upon Developer’s observations and evaluations of each application
for payment from the General Contractor, Developer shall review and certify (or, if
required by Construction Lender, shall cause to be reviewed and certified by the
Architect, a civil engineer or construction consultant) the amounts due the General
Contractor. The approval by the Developer of an application for payment shall
constitute a representation to Owner based upon Developer’s overall supervision of
the course of construction, inspections at the site and review of supporting data
that, in Developer’s professional judgment, the work has progressed to the point
indicated and that the quality of the work is in substantial accordance with the
Plans and Specifications and the Construction Contract (subject to minor deviations
correctable prior to completion and to specific qualifications expressed by
Developer in approving the application for payment). In addition, if required as
part of Owner’s construction financing, Developer shall prepare or cause to be
prepared for submission to Construction Lender an application for payment based on
the General Contractor’s certificate for payment and including other Project costs
payable from the Construction Loan (as defined in Section 2.5.1 below). Developer
shall administer all Contractor’s and Subcontractor’s sworn statements and waivers
of lien, covering all work for which disbursement is to be made to a date specified
therein, and covering all work done on the Project to a reasonably current date,
otherwise paid for or to be paid for by Owner or any other person consisting of
current conditional waivers for all work to be paid from the proceeds of said draw,
together with unconditional waivers for all work for which proceeds were disbursed
in the previous draw), all in compliance with applicable mechanics’ lien laws and in
such form as otherwise required by the Construction Lender (and in compliance with
the requirements of the title insurance company for issuance of interim title
endorsements to the Construction Lender covering such disbursement, if Construction
Lender has obtained a title insurance policy with respect to the Construction Loan
and requires such interim endorsements), together with such contracts or other
supporting data as Owner may reasonably require.




     2.4.10 Developer shall process for payment on behalf of Owner all requests for
disbursements made by the General Contractor pursuant to the Construction Contract
and by the Project Architect pursuant to the Architect Contract, and any other
construction, architectural, engineering or planning service agreements for the
Project, including the collection and review of documentation required to be
submitted to Owner, confirming the accuracy thereof and making recommendations
concerning such draw requests.




     2.4.11 With respect to the General Contractor’s work, Developer will not have
control over or charge of and will not be responsible for construction means,
methods, techniques, sequences or procedures, or for safety precautions and



8









 







programs in connection with the work, since these are solely the General
Contractor’s responsibility under the Construction Contract. In addition, Developer
will not have control over or charge of acts or omissions of the General Contractor,
subcontractors, other Consultants or their respective agents or employees or any
other persons performing portions of the work not directly employed by Developer.
However, nothing in this Section 2.4.11 shall relieve the Developer from its duties
to oversee and administer the Construction Contract in accordance with prevailing
industry standards based upon Developer’s skill, judgment and experience in similar
projects.




     2.4.12 Developer shall administer the change order program for the Project, as
hereinafter described.




     (a) Developer shall have the right to enter into change orders if
(i) the change order is necessary to address either value engineering
opportunities, unforeseen conditions or minor adjustments to fixtures or
finishes; (ii) such change order does not adversely affect the external
appearance of the Project, the common areas or other public areas, reduce
the performance standards of any building’s mechanical or other systems or
reduce the number of beds at the Project, (iii) such change order reflects
the use of any available contingency amounts in the Development Budget or
reallocation of line item savings in the Development Budget in compliance
with the provisions of the Construction Loan (as defined in Section 2.5.1
below); and (iv) such change order conforms with all applicable legal
requirements pertaining to the Project or the Owner, including without
limitation, all applicable Permits, governmental laws, Construction Lender
requirements and requirements under recorded covenants and other instruments
of record. In addition to the foregoing requirements, if the change order
involves use of any contingency amounts, Developer, without first obtaining
the approval of Owner (which approval will not be unreasonably withheld,
conditioned or delayed), shall not be permitted to reallocate more than
twenty-five percent (25%) of the contingency amount until such time as the
Project is twenty-five percent (25%) complete, fifty percent (50%) of the
contingency amount until such time as the Project is fifty percent (50%)
complete, seventy-five percent (75%) of the contingency amount until such
time as the Project is seventy-five percent (75%) complete, and the
remaining balance of the contingency amount until the Project is one hundred
percent (100%) complete. For purposes of the preceding sentence, the
percent complete shall be defined as indicated on Developer’s G702 Draw
Request form submitted each month to Construction Lender. All other
Project-related change orders (as well as any change orders that satisfy the
criteria set forth above but for which Construction Lender’s approval is
required pursuant to the Construction Loan) shall be submitted to Owner for
approval, not to be unreasonably withheld, conditioned or delayed.
Developer shall provide Owner on a monthly basis a report detailing any



9









 







Project-related change orders which were approved by Developer and did
not require the approval of Owner. The costs of a Project-related change
order shall include the fees of the Project Architect or any appropriate
Consultants to design and implement the change order.




     (b) In addition to Project-related change orders, Owner shall have the
right to request and Developer shall administer “Owner-Initiated Change
Orders,” which for this purpose shall mean change orders initiated by Owner
to add, delete or revise features of the Project after execution of the
Construction Contract. With respect to Owner-Initiated Change Orders
(i) Owner shall be responsible for all of the costs to implement such change
orders, including design costs, construction costs, and related costs,
(ii) the costs of such change orders shall not be applied against the
amounts budgeted for the change order allowance or change order allowance
contingency, and (iii) the Project Development Schedule and Development
Budget will be reasonably adjusted by mutual agreement of Owner and
Developer prior to the making of any such change orders to reflect any
delays and increased costs associated with implementing such change orders.
In connection with the administration of all change orders, Developer shall
maintain or cause to be maintained by Architect or General Contractor a
detailed log of field questions that may lead to change orders. Promptly,
following each Project meeting, Developer shall advise Owner of the status
of any pending field questions, potential change orders and change orders
which are then being implemented.




     2.4.13 Prior to the date on which the General Contractor commences the work
contemplated by the Construction Contract (the date such work begins is referred to
hereinafter as the “Construction Commencement Date”), Developer shall receive and
review and, if requested by Owner, forward to Owner, certificates of insurance from
the General Contractor (and from any major subcontractors requested by Owner) to
confirm such certificates of insurance conform to the Owner’s and Construction
Lender’s requirements.




     2.4.14 In collaboration with the Project Architect and Consultants, Developer
shall establish and implement procedures for expediting the processing and approval
of shop drawings, product data, samples and other submittals.




     2.4.15 Developer shall record the progress of the Project. The Developer shall
submit monthly written progress reports in a form mutually acceptable to Owner and
Developer, each acting reasonably, to Owner (and, to the extent necessary, in
Developer’s reasonable judgment, the Project Architect and Consultants), including
information on the General Contractor’s work, as well as the entire Project, showing
percentages of completion. Developer shall cause the General Contractor to keep a
daily log containing a record of weather, work on the site, number of workers,
identification of equipment, work accomplished,



10









 







problems encountered, and other similar relevant data as Owner may reasonably
require. Developer shall forward to Owner a final Project application for payment
upon compliance with the requirements of the Construction Contract.




     2.4.16 Developer shall cause the General Contractor to maintain at the Project
site and/or at Developer’s principal office location for Owner one record copy of
all contracts, drawings, specifications, addenda, change orders and other
modifications, in good order and marked currently in readable form to record changes
and selections made during construction, and in addition, approved shop drawings,
product data, samples and submittals. Developer shall further cause the General
Contractor to maintain records of principal building layout lines, elevations of the
bottom of the footings, floor levels and key site elevations certified by a
qualified surveyor or professional engineer. General Contractor shall make all such
records available to the Project Architect and other Consultants and Owner and upon
completion of the Project shall deliver them to Owner. Developer shall cause the
General Contractor and/or Consultants following completion of the Project to prepare
red-lined “as built” plans and specifications for the Project.




     2.4.17 Developer shall arrange for the delivery, storage, protection and
security of Owner-purchased materials, systems and equipment that are a part of the
Project until such items are incorporated into the Project, it being agreed that the
same may be stored off-site if permitted under the Construction Loan documents.




     2.4.18 With a representative of Owner, Developer shall observe the General
Contractor’s final testing and start-up of utilities, operational systems and
equipment. Developer shall oversee the testing and delivery of all building systems
in consultation with Owner to ensure complete working operation prior to acceptance.




     2.4.19 Developer shall establish maintenance standards and specifications in
consultation with Owner (or, if Owner is to have a property manager, Owner’s
property manager) and shall assist Owner (or, if Owner is to have a property
manager, Owner’s property manager) in negotiating contracts with persons performing
maintenance and operations functions.




     2.4.20 When Developer considers the General Contractor’s work or a designated
portion thereof substantially complete, Developer shall, jointly with Owner, the
General Contractor and the property manager and, if applicable, other Consultants,
prepare a list of incomplete or unsatisfactory items (the “Punch List”) and a
schedule for their completion. Developer shall assist the Project Architect and
other Consultants in conducting inspections to determine whether the work or
designated portion thereof is substantially complete.



11









 






     2.4.21 Developer shall supervise the correction and completion of the Punch
List. Developer shall assist the Project Architect and other Consultants in
conducting final inspections. Notwithstanding the foregoing, final approval of the
Project and the completion of construction and the Punch List shall remain vested in
Owner.




     2.4.22 Developer will assist Owner in securing for Owner’s benefit all
warranties, guarantees and similar submittals related to the Project, including all
warranties required by the Construction Contract or otherwise (collectively, the
“Construction Warranties”). Developer will also assist Owner in obtaining all keys,
building system manuals and other manuals, and record drawings related to the
Project.




     2.4.23 Developer shall perform or cause to be performed all other services
customarily performed by developers of similar projects or necessary to complete the
Project as contemplated hereby.



          2.5. Construction Financing.





     2.5.1 [ALTERNATIVE #1: On or about the date of this Agreement, Owner is
obtaining a construction loan in the amount of $______________ (the “Construction
Loan”) from _____________________________ (the “Construction Lender”)]




     [ALTERNATIVE #2: Developer shall be primarily responsible for obtaining, and
negotiating the terms of, a construction loan for the acquisition of the Property
and the development of the Project (the “Construction Loan”). Developer will seek
to obtain a Construction Loan in an amount equal to approximately ____________
percent (___%) of the amount of the Development Budget from a reputable lender
approved by Owner (the “Construction Lender”). The economic terms of, and the
documentation of, the Construction Loan shall be subject to Owner’s review and
approval in Owner’s sole discretion.]




     2.5.2 Developer, together with Member’s asset manager shall administer the
Construction Loan on behalf of Owner, including the preparation and submission of
draw requests and the collection, review and submission of all documentation
required to be submitted to the Construction Lender in order to obtain the necessary
draws of Construction Loan proceeds as and when required in order to fund
construction in accordance with the Project Development Schedule and the Development
Budget.




     2.6. Compliance with Project Criteria. Without limitation of the foregoing,
Developer shall use commercially reasonable efforts, consistent with the generally accepted
and customary standard of care for comparable student housing facilities, to manage the
development of the Project in accordance with the Development Budget, the



12









 







Project Schedule and other project criteria developed hereunder, as reasonably approved
from time to time by Owner.




     2.7. Project Executive. Brian L. Sharpe is hereby designated as the initial
project executive (the “Project Executive”) for the Project, and shall continue to serve as
Project Executive so long as he is employed by Developer or any Affiliate thereof. Owner
shall have the right to approve any replacement Project Executive, which approval shall not
be unreasonably withheld, delayed or conditioned. The Project Executive shall devote so
much of its time and effort to the Project as is necessary for Developer to perform its
obligations under this Agreement and shall obtain the services of such additional employees
of Developer as and when needed to perform such obligations. The Project Executive shall
visit the Property regularly following the Construction Commencement Date, and more
frequently, if and when circumstances reasonably require his presence on-site. The Project
Executive shall be available to Owner during normal business hours during the construction
phase of the Project.



     3. COST OVERRUNS. Developer acknowledges and agrees that (i) Developer has prepared
the Development Budget, (ii) Developer has participated in the negotiation of the Construction
Contract and the Architect’s Contract, and (iii) Developer is familiar with the Plans and
Specifications and all recorded covenants and restrictions applicable to the Project. Developer
further acknowledges that Owner may suffer material adverse consequences if the Project is not
completed in accordance with the Project Development Schedule and the Development Budget.




     3.1. Obligations of Developer and Owner. Developer shall advise Owner and the
HSRE Member promptly and at any time from time to time if the Project is not In Balance (as
such term is hereinafter defined). If the Project is not In Balance at any time, then the
Developer shall deposit with Owner (or, if required pursuant to the terms of the
Construction Loan, with the Construction Lender) the amount of any Cost Overruns within ten
(10) days following a request made to Developer by Owner or the HSRE Member, or sooner, to
the extent required by the Construction Lender. Any Cost Overruns deposited to cause the
Project to be In Balance shall not be deemed to be capital contributions or loans to Owner
or the Venture. Except as set forth in Section 3.2.3 below, neither Developer nor the
Member shall be entitled to repayment of such deposited amounts pursuant to this Agreement
or otherwise. Owner shall have the right to withhold any further payments of the
Developer’s Fee until Owner has been reimbursed for any Cost Overruns that Developer has
failed to pay that Owner has funded on Developer’s behalf.




     3.2. In Balance Requirement.




     3.2.1 The Project shall be deemed to be “In Balance” only if the total of the
Available Funds (as hereinafter defined) applicable to each line item of the
Development Budget (subject to reallocation as provided in Section 2.4.12) shall in
the reasonable judgment of Owner (or as determined by the Construction Lender) equal
or exceed the aggregate of the unexpended costs under said line



13









 







item, including without limitation: (i) the amount to be paid as retainage to
persons who have supplied labor, materials or services in connection with the
Project; (ii) the amount necessary to pay for all unpaid costs incurred or to be
incurred in the completion of the development, construction and equipping of the
Project, including the cost of purchase and installation of all fixtures and
equipment and the cost of supplying all labor, material or other services to the
Project; and (iii) interest, finance charges, letter of credit fees, and other fees
and charges in connection (including without limitation, any interest payable in
excess of the interest set forth in the Development Budget due to the Project not
being substantially complete as of the Target Date (as defined in Section 5.2
below)) with financing the construction of the Project. Any amounts required to
cause the Project to be In Balance other than those Excess Project Costs for which
Owner is responsible, as set forth below, shall constitute “Cost Overruns”
hereunder. Cost Overruns shall include, without limitation, Operating Deficit
Overruns (as defined in Section 5.2 below). Subject to the right of Developer to
re-allocate line items under Section 2.4.12(a), any Hard Costs or Soft Costs
exceeding the line item amounts set forth in the then-current Development Budget
shall be referred to herein and in the Venture Operating Agreement as “Excess
Project Costs”; provided, however, that the following Excess Project Costs shall not
be deemed Cost Overruns, and shall instead be deemed Project Costs for which Owner
is responsible (“Owner Costs”): (a) costs associated with Owner-Initiated Change
Orders; and (b) costs associated with Force Majeure Events.




     3.2.2 As used herein, the term “Available Funds” shall mean, with respect to
each line item of the Development Budget: (a) all amounts not yet expended by or on
behalf of Owner in connection with said line item (subject to reallocation in
accordance with Section 2.4.12); plus (b) any funds deposited with Owner by the
Developer pursuant to this Agreement for application to said line item (subject to
reallocation in accordance with Section 2.4.12) and held by Owner.




     3.2.3. Anything to the contrary contained in this Article 3 notwithstanding,
in the event that Developer is required to fund any Cost Overruns as set forth above
and the Reimbursement Conditions (as defined below) are satisfied, then Developer
shall be entitled to a reimbursement from Owner equal to the Reimbursement Amount
(as defined below). As used in this Section 3.2.3, the term “Reimbursement Amount”
shall mean an amount equal to the lesser of (a) the amounts paid by Developer on
account of Cost Overruns, and (b) the amount of the Final Savings. As used in this
Section 3.2.3, the term “Final Savings” shall mean the amount by which the final
Development Budget exceeds the final costs in completing the Project. As used in
this Section 3.2.3, the term “Reimbursement Conditions” shall mean: (1) the Project
achieved Substantial Completion (as defined in Section 5.2) for less than the amount
set forth in the Development Budget (as amended from time to time in connection with
the Owner-Initiated Change Orders) and final and unconditional lien waivers have
been obtained from the General Contractor and any other Consultants; and



14









 







(2) the Construction Lender funds the amount of the reimbursement to be paid to
Developer. If the Construction Lender does not fund the Reimbursement Amount,
Developer shall receive the Reimbursement Amount from Owner pursuant to Section
3.4(b)(2) of the Venture Operating Agreement. Notwithstanding the foregoing to the
contrary, if Substantial Completion does not occur by the Target Date and as a
result thereof, the tenants cannot move into the Project by the eighth day of
classes at the applicable college and/or university, Owner shall not be required to
provide the Reimbursement Amount until the total amount of Operating Deficit
Overruns (if any) resulting from such late tenant move-in has been determined, and
the Reimbursement Amount shall be offset against the amount of any such Operating
Deficit Overruns.



     4. RESPONSIBILITY OF THE OWNER. In addition to the payment and reimbursement
obligations set forth elsewhere in this Agreement, Owner shall perform the following
responsibilities:




     4.1. Review of Documents. Owner shall review for approval proposed supplements
or other changes to the Plans and Specifications, the Development Budget and any proposed
revisions thereto, change orders requiring the approval of Owner and all other documents
submitted to Owner by Developer with regard to the Project. Such review and approval shall
be done as soon as practicable after Owner’s receipt of all necessary submissions related
thereto so as not to cause undue delay to the orderly and sequential progress of the
Project.




     4.2. Professional Services. Owner shall furnish all legal and accounting
services as may be necessary at any time for Owner’s participation in the Project.



     5. DEVELOPER’S FEE. Subject to the other terms of this Agreement, Owner shall pay to
Developer as Developer’s full compensation for the services to be rendered and expenses to be
incurred hereunder including all of Developer’s general overhead, personnel, office, travel and
entertainment expenses (it being the intention of the parties that Developer shall not seek
separate reimbursement therefor, except as expressly provided in Section 5), the Developer’s Fee
(as hereinafter defined). The “Developer’s Fee” shall be equal to four percent (4%) of the
Developer’s Fee Base (defined below). The term “Developer’s Fee Base” as used herein shall mean
the budgeted Project Costs (as defined in the Venture Operating Agreement), excluding the purchase
price for the Property, financing costs, and the Developer’s Fee itself. The Developer’s Fee Base
may be adjusted from time to time (but only increased to the extent any increases result from
changes that give rise to Cost Overruns for which Developer is not responsible).




     5.1. Terms of Payment. The Developer’s Fee shall be payable as follows:




     5.1.1 One-fourth (1/4) of the Developer’s Fee shall be payable to Developer
upon the satisfaction of all conditions precedent to the initial funding of the
Construction Loan;



15









 






     5.1.2 One-half (1/2) of the Developer’s Fee shall be payable in equal monthly
installments over the number of months from the Construction Commencement Date to
the Substantial Completion Date, as set forth in the Project Development Schedule.
The first monthly payment shall be made on the first day of the month following the
month in which the Construction Commencement Date occurs and thereafter on the first
day of each month ensuing; provided, however, that (i) if the Substantial Completion
Date (defined in Section 5.2) of the Project occurs prior to the end of said
construction period, then Developer shall be entitled to the balance of Developer’s
fee payments then owing under this subsection (b) within thirty (30) days after the
Substantial Completion Date, and (ii) to the extent that the Developer’s Fee is not
funded by the Construction Lender, Developer recognizes the Owner may be paying
Developer its Developer’s Fee on money contributed to Owner by a member of Owner,
subject to the satisfaction of certain conditions set forth in the Venture Operating
Agreement, and therefore, Developer agrees that, if the Developer’s Fee is paid from
such contributions, Owner may pay Developer its Developer’s Fee (or applicable
portion thereof) within five (5) days after each such contribution is due (whether
or not on the first day of each month); and




     5.1.3 One-fourth (1/4) of the Developer’s Fee shall be payable to Developer
within fifteen (15) days after the achievement of Substantial Completion and
completion of all Punch List items, together with Construction Lender’s disbursement
of final payment to General Contractor with respect to the Project).




Notwithstanding the foregoing provisions of this Section 5.1 to the contrary, in the
event that the Construction Lender provides notice that the Project is not In
Balance and Developer fails to deposit any sums required of Developer pursuant to
Section 3.1 above, any portion of the Developer’s Fee that would otherwise be
payable to Developer shall be withheld until (i) such time as the final 1/4 of the
Developer’s Fee would have otherwise been payable to Developer as set forth in
Section 5.1.3, above, and (ii) Owner has determined that such withheld portion of
the Developer’s Fee shall not be necessary to fund Cost Overruns for which Developer
would otherwise be responsible pursuant to Section 3.1.




     5.2. Substantial Completion. For purposes hereof, “Substantial Completion” is
the stage in the progress of the construction of the Project when the Project is
sufficiently complete so the applicable governmental authority can and does issue either
temporary or permanent certificates of occupancy that allow for occupancy and operation of
the Property as a student housing facility, the Project Architect and/or engineer and
General Contractor executes and delivers a certificate of substantial completion in form and
substance reasonably satisfactory to Owner, and the Project can, in fact, be occupied and/or
substantially utilized for its intended use in all material respects, subject only to the
completion of minor Punch List items and the completion of tenant improvements. Subject to
Owner-authorized delays (as evidenced by a change order), delays caused by the acts or
omissions of Owner and delays caused by Force



16









 







Majeure Events (as defined below), Developer shall use commercially reasonable efforts
to cause Substantial Completion to be achieved on or before ______________, 201__, which is
the date set forth in the Project Development Schedule (the “Target Date”). For purposes of
this Agreement, the date of Substantial Completion shall be referred to as the “Substantial
Completion Date”. Developer shall use commercially reasonable efforts to achieve final
completion of the Project, including completion of all Punch List items (but excluding
tenant improvements) as soon as is reasonably possible and in any event no later than ninety
(90) days after the Substantial Completion Date. If Substantial Completion has not occurred
by the Target Date and as a result thereof, the tenants cannot move into the Project by the
eighth day of classes at the applicable college and/or university, Developer shall be
responsible for funding any operating deficits of the Project resulting from such late
tenant move-in in excess of the operating deficit line item set forth in the Development
Budget that occurs during the first year of operation of the Project (the “Operating Deficit
Overruns”).




     5.3. Force Majeure. If Developer is delayed at any time in the progress of the
Project due to: (i) strikes or lockouts affecting the general vicinity in which the Project
is located through no fault of Developer or General Contractor, (ii) to the extent not
caused by Developer or Affiliates of Developer, delays in the delivery of materials or
disruption of shipping, (iii) adverse weather delays in excess of the number of days allowed
for adverse weather delays in the Construction Schedule (as defined in the Venture Operating
Agreement), and that were not reasonably avoidable at the time in question (for purposes of
this Agreement, adverse weather delays shall mean those days impacted by historically
excessive (i.e., during the last 5 years) and/or adverse weather not otherwise anticipated
for the season), (iv) wars, riots, or acts of civil insurrection or terrorism, (v) changes
(occurring after the approval of the Plans and Specifications) in laws, codes and
regulations, fire or other unavoidable casualty not caused by Developer or any Affiliate of
Developer, (vi) lawsuits, injunctions and moratoriums beyond Developer’s control, (vii)
actions or inactions of governmental agencies, including, without limitation, any
unreasonable delay in performing any required inspections or issuance of temporary
certificates or final certificates of occupancy (but not based on the failure, within the
reasonable control of Developer, to comply with laws, codes and regulations and documents of
record presently in effect), or (viii) any other event which is beyond the reasonable
control of the Developer (and for purposes hereof, an event shall be deemed to be beyond the
reasonable control of the Developer only if a Fully Competent Developer (as defined below)
would not have avoided a material delay associated therewith by taking reasonable measures
to avoid such delay) (in each case above, a “Force Majeure Event”), then (1) the parties
shall determine whether Substantial Completion can be achieved by the original Target Date
at a cost acceptable to Owner by increasing hours worked and/or hiring additional
subcontractors to supplement the original subcontractors’ efforts to achieve Substantial
Completion (“Acceleration Measures”), in which case the Development Budget shall be
increased by the amount necessary to so achieve Substantial Completion by the original
Target Date, or (2) if the parties determine that Substantial Completion cannot be achieved
by the original Target Date at a cost acceptable to Owner as set forth in clause (1) above,
the Target Date shall be extended by change order for the additional reasonable time caused
by such delay, which change order



17









 







shall also reflect any increases to the Development Budget for Acceleration Measures
that have been approved by Owner. Developer will provide written notice, with supporting
documentation, for any requested extension of time by notice to Owner, indicating the
existence of a situation constituting a Force Majeure Event, within five (5) business days
after the date Developer becomes aware of the event for which such claim is made and
believes that such event is likely, in the judgment of a Fully Competent Developer, to
result in a delay of Substantial Completion of the Project, and the Target Date may be
extended only by change order. Such extension shall be limited to the extent any “critical
path” items on the Project Development Schedule are delayed as a result of any delay caused
by the Force Majeure Event, as reasonably agreed to by Owner and Developer. If such notice
of a Force Majeure Event is not timely delivered by Developer, no extension shall be
granted, regardless of the operative underlying circumstances. In addition, Developer
agrees to use commercially reasonable efforts to anticipate, shorten and minimize the
impacts of such delays and the negative consequences to Owner therefrom. As used herein,
the term “Fully Competent Developer” shall mean a developer whose competence and
professionalism equals that of developers performing services similar in scope, complexity
and quality to those required of Developer hereunder, for large corporate and institutional
clients. For purposes of subsection (viii) above in the definition of “Force Majeure
Event,” the parties acknowledge that soil conditions or environmental conditions not
revealed in reasonably obtained third party reports may constitute Force Majeure Events
hereunder.



     6. CONSULTANT COSTS. If and to the extent (i) contemplated under the Development
Budget and (ii) requested by Owner, Developer shall retain the services of one or more Consultants
to provide services not otherwise specified herein with respect to the Project, including without
limitation, surveyors, insurance brokers, soils engineers and similar consultants, and the costs
and fees payable to such consultants by Developer shall be a development cost under this Agreement.



     7. DEFAULT; TERMINATION.




     7.1. Developer Defaults. It shall be a “Developer Event of Default” under this
Agreement if (i) Developer shall fail to comply with or perform any term, covenant,
agreement or condition of this Agreement, and such failure shall continue after thirty (30)
days written notice; provided, however, if such default does not consist solely of a failure
to pay monies required hereunder and such default cannot reasonably be cured in thirty (30)
days, Developer shall have an additional reasonable period of time (not to exceed ninety
(90) additional days) to cure such failure provided that Developer has commenced to cure
such failure within said thirty (30) day period and thereafter diligently and continuously
uses commercially reasonable efforts to pursue the remedies or steps necessary to cure such
failure; (ii) any representation of Developer herein shall prove to have been false in any
material respect, provided that if such misrepresentation was not made intentionally or
negligently, then Developer shall have the same cure rights with respect to said such
misrepresentation as the cure rights for a non-monetary default as specified in clause
(i) above; (iii) the occurrence of a Campus Crest Triggering Event (as defined in the
Venture Operating Agreement), which is not cured within any applicable



18









 







grace, cure or notice period; (iv) Developer or any of its directors, officers,
employees or agents shall commit any gross negligence, willful misconduct, fraud or breach
of fiduciary duty (provided that if such gross negligence, willful misconduct, fraud or
breach of fiduciary duty is committed by a party other than a director or officer of
Developer, then such act shall not be Developer Event of Default if the same does not result
in a material loss to Owner or the Project and Developer takes corrective action against
such party in a manner reasonably acceptable to Owner); (v) Developer shall fail to pay any
amount payable by Developer to Owner under this Agreement when due and such default shall
continue for thirty (30) days after written notice thereof to Developer; or (vi) Developer
shall fail to satisfy the governmental requirements necessary to legally conduct business in
the state and municipality (if applicable) in which the Project is located and such failure
shall continue for sixty (60) days after Developer receives written notice of such failure
from any governmental authority or any other person. Upon the occurrence of a Developer
Event of Default, Owner may take one or more of the following actions: (x) obtain specific
performance of Developer’s obligations hereunder, or (y) terminate this Agreement and take
possession of the Project and of all materials, equipment, tools and construction equipment
and machinery thereon and complete the Project by whatever method Owner may deem expedient,
or (z) pursue any other legal or equitable remedies. Notwithstanding anything to the
contrary set forth in this Agreement, except as provided in the last sentence of Section 5.2
hereof, in no event shall Developer be liable to Owner under this Agreement for any
consequential, special, indirect or incidental damages of any kind whatsoever.




     7.2. Owner Defaults. It shall be an “Owner Event of Default” under this
Agreement if Owner shall fail to comply with or perform any term covenant, agreement or
condition of this Agreement and such failure shall continue for thirty (30) days after
written notice; provided, however, if such default does not consist solely of a failure to
pay monies required hereunder and such default cannot be cured in thirty (30) days, Owner
shall have an additional reasonable time (not to exceed ninety (90) additional days) to cure
such failure provided that Owner has commenced to cure such failure within said thirty (30)
day period and thereafter diligently and continuously pursues the remedies or steps
necessary to cure such failure. In no event shall Owner be liable to Developer under this
Agreement for any consequential, special, indirect or incidental damages of any kind
whatsoever.




     7.3. Buyout under Venture Operating Agreement. Notwithstanding anything
contained herein to the contrary, in the event HSRE Member or an affiliate of HSRE Member
shall acquire the Member’s interest in the Venture pursuant to the provisions of the Venture
Operating Agreement, then, at any time thereafter, Owner may elect to terminate this
Agreement upon thirty (30) days’ written notice. Nothing contained in this Agreement shall
limit, waive or otherwise affect any termination right which HSRE Member might have relative
to this Agreement under the Venture Operating Agreement.




     7.4. Payment on Termination. Upon any termination of this Agreement pursuant
to this Section 7, Owner shall pay to Developer, within fifteen (15) days of the



19









 







date of such termination, the Developer’s Fee and reimbursable costs payable hereunder
up to the date of such termination. Notwithstanding the foregoing, in the event that Owner
elects to terminate this Agreement in accordance with Section 7.1 Owner may set off against
any amounts owed by Owner to Developer pursuant to Section 5 hereof any and all actual
damages suffered by Owner on account of any Developer Event of Default.



     8. LIENS. If any mechanic’s lien or other encumbrance shall be filed against the
Property or any portion thereof because of any gross negligence, willful misconduct or breach of
this Agreement by Developer, whether or not arising from the development of the Project, unless
such lien shall be filed as a result of Owner’s breach of its obligations under this Agreement or
any other contracts or agreements related to the Project, Developer shall, at its own cost and
expense but with the reasonable cooperation of Owner, cause the same to be discharged of record,
bonded over (as provided under applicable laws of the State in which the Property is located and
subject to any additional requirements of Construction Lender) and/or insured over (in form and
amount as required by Construction Lender) by the title insurer for the benefit of Owner and/or
Construction Lender, within sixty (60) days after Developer becomes aware of the filing of any such
mechanic’s lien, or such shorter time required pursuant to the terms and conditions of the
Construction Loan documents. So long as Developer complies with the preceding sentence, Developer
may contest any such lien or encumbrance so long as such contest does not create an imminent danger
of foreclosure of such lien or encumbrance. If Developer fails to comply with the foregoing
provisions, Owner shall have the option, on five (5) business days’ prior written notice to
Developer, to discharge, bond or insure over any such lien, charge, order or encumbrance, and
Developer shall reimburse Owner for all reasonable costs and expenses thereof, including reasonable
attorneys’ fees and costs. The cost of discharging, bonding off or insuring over any mechanic’s
lien or other encumbrance that is not the result of any gross negligence, willful misconduct or
breach of this Agreement by Developer shall be deemed an Owner Cost and not considered to be an
Excess Project Cost.



     9. CONSTRUCTION WARRANTIES. Developer shall secure in the name of Owner all
warranties and guarantees of the work (1) by the General Contractor to provide that work shall be
performed in conformance with the contract documents and in new, good and workmanlike quality, and
(2) from suppliers and manufacturers of components of the Project. In addition, Developer shall
secure in the name of Owner a call-back warranty of 1 year from Substantial Completion in which
General Contractor shall repair, correct or replace all defective work without additional cost.
After final completion of the Project, Developer shall assist Owner with enforcing any warranties
or guarantees with respect to the Project upon request and shall be reimbursed for its reasonable
out-of-pocket costs in connection therewith. If there is an opportunity to purchase extended
warranties or guaranties from the General Contractor or any subcontractor, manufacturer or supplier
with respect to the mechanical systems, roof or structural components of the Project, Developer
shall present such opportunity to Owner. If Owner so elects and provides payment therefor at least
ten (10) days prior to the date on which such opportunity expires, Developer shall purchase such
extended warranty or guaranty at Owner’s cost for Owner’s benefit.



20









 





     10. REPRESENTATIONS AND WARRANTIES.




     10.1. Representations and Warranties of Developer. Developer represents and
warrants to HSRE Member and the Owner that:




     (a) Developer (or, as applicable, an Affiliate of Developer) is duly
organized, validly existing, in good standing in the state of its formation
and has all requisite power and authority to develop the Property and, to
the extent required by law, conduct business in the state in which the
Project is located, and each individual executing this Agreement on behalf
of Developer is duly authorized to execute and deliver this Agreement on
behalf of Developer.




     (b) This Agreement has been duly executed and delivered by Developer
and is binding on Developer in accordance with its terms, subject to
creditor’s rights laws and other equitable principles.




     (c) Except for the other documents being entered into with Owner or its
Affiliates (or which are being assigned to and assumed by Owner)
contemporaneously with this Agreement, and except for the existing ownership
of the Property by Affiliates of Developer, Developer has not entered into
any agreements or other arrangements for ownership, development or occupancy
of the Project (or any part thereof).




     (d) To Developer’s knowledge, the Development Budget fully and properly
accounts for all tap-on and similar charges pertaining to utilities and all
costs of relocating utilities. To Developer’s knowledge, all utilities
required to be relocated in connection with the construction of the Project
have been or will be relocated in connection with the development of the
Project and the Development Budget fully and properly accounts for the costs
of relocating such utilities.




     (e) To Developer’s knowledge, all easements necessary or desirable for
the construction, ownership and operation of the Project are or will be in
place, duly executed, delivered and recorded and the Development Budget
fully and properly accounts for the costs to obtain such easements.




     10.2. Representations and Warranties of Owner.




     (a) Owner is duly organized, validly existing, in good standing in the
State of its formation and has all requisite power and authority to develop
the Property and, to the extent required by law, conduct business in the
State in which the Project is located, and each individual executing this
Agreement on behalf of Owner is duly authorized to execute and deliver this
Agreement on behalf of Owner.



21









 






     (b) This Agreement has been duly executed and delivered by Owner and is
binding on Owner in accordance with its terms, subject to creditor’s rights
laws and other equitable principles.


Each of the representations, warranties and indemnifications contained in Sections 10.1 and 10.2 of
this Agreement shall survive the completion of the Project or earlier termination of this
Agreement.




     11. INDEMNIFICATION. To the fullest extent permitted by law, Developer shall
indemnify, defend and hold harmless the Owner, Member and HSRE Member and their respective
partners, members, managers, officers, directors, representatives, consultants, agents and
employees, from and against claims, damages, losses and expenses (including, without limitation,
reasonable attorneys’ fees and costs), in connection with the development and construction of the
Project, but only to the extent caused by any Developer Event of Default. Such obligation shall not
be construed to negate, abridge, or reduce other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this Section 11. All indemnities set forth in
this Agreement shall survive any termination hereof.



     12. MISCELLANEOUS PROVISIONS.




     12.1. Notices. Any notice, demand, or communication required or permitted
under this Agreement shall be in writing and shall deemed to have been duly given if
delivered (a) personally to the party to whom directed, (b) by registered or certified mail,
postage and charges prepaid, or (c) by nationally-recognized overnight courier, next day
delivery addressed as follows:



	 	 	 

	Owner:

	 	Campus Crest at ___________, LLC/LP

2100 Rexford Road, 4th Floor

Charlotte, NC 28211

Attn: Chief Financial Officer
	 
	 	 
	with a copy to:

	 	Bradley Arant Boult Cummings LLP

One Federal Place

1819 Fifth Avenue North

Birmingham, AL 35203

Attn: Dawn Helms Sharff
	 
	 	 
	with a copy to:

	 	c/o Harrison Street Real Estate Capital, LLC

71 S. Wacker Drive

Suite 3565

Chicago, IL 60606

Attn: Stephen Gordon






22









 






	 	 	 

	with a copy to:

	 	DLA Piper LLP (US)

203 North LaSalle Street

Suite 1900

Chicago, Illinois 60601

Attn: Michael Gershowitz
	 
	 	 
	Developer:

	 	Campus Crest Development, Inc.

2100 Rexford Road, Suite 414

Charlotte, NC 28211

Attn: ____________________________
	 
	 	 
	with a copy to:

	 	Dawn Helms Sharff, Esq.

Bradley Arant Boult Cummings LLP

One Federal Place

1819 Fifth Avenue North

Birmingham, AL 35203







     Except as otherwise provided herein, any such notice shall be deemed to be given when
personally delivered or, if mailed by registered or certified mail, the date of receipt, or,
if sent by overnight courier, the next business day after having been sent. Any party may
change its address for purposes of notices hereunder by giving notice to the others
specifying such changed address in the manner specified in this Section 12.1.




     12.2. Relationship; Insurance.




     12.2.1 Developer is acting under this Agreement as an independent contractor
and nothing herein contained, nor any acts of Developer or Owner, nor any other
circumstances, shall be construed to establish Developer as an employer, co-venturer
or partner of Owner (without limiting the rights of Developer’s Affiliates as
members of Owner). Developer shall be responsible for each of Developer’s employees
or other persons performing services to be performed by Developer hereunder and for
determining the manner and time of performance of all acts to be performed by
Developer hereunder.




     12.2.2 At Owner’s expense as a component of Soft Costs in the Development
Budget, Developer shall obtain and maintain (or cause to be obtained and maintained)
for Owner as the insured party at all times during the term of this Agreement,
commercial general liability insurance and property insurance with respect to the
Project that is acceptable in all respects to Construction Lender, it being
understood and agreed that if there is a conflict between the terms and provisions
of this Section and the terms and provisions of the Construction Loan documents, the
Construction Loan documents shall govern and control. The property insurance shall
cover the full replacement cost of the Project on an “all risk” or “special form”
basis, and shall cover builder’s risk as well as completed building exposures. The
commercial general liability insurance obtained by Developer pursuant to this
Section shall be written on an “occurrence



23









 







form” basis and in such amounts as Owner may reasonably elect from time to
time, but not less than $1,000,000 per occurrence and $2,000,000 as an annual
aggregate. All policies for such liability insurance shall include blanket
contractual liability coverage, independent contractors coverage, broad form
property damage including coverage for explosion, collapse and underground hazards,
personal injury and advertising insurance coverage, and products and completed
operations coverage and a cross-liability or separation of insureds provision that
provides that the insurance applies separately to each insured against whom a claim
is filed and that the policies do not exclude coverage for claims or suits by one
insured against the other. Each such policy of liability insurance shall provide
that it may not be canceled, or the coverage reduced, without thirty (30) days prior
written notice to Owner and Construction Lender except in the case of nonpayment of
premiums, in which case ten (10) days prior written notice shall be required. The
liability insurance shall name Owner as the insured party and shall name Owner’s
members and Construction Lender as additional insureds. The property insurance
shall name the Construction Lender as loss payee as required by any then current
Construction Loan documents and/or the Construction Contract, as applicable. The
property insurance shall name the General Contractor as the insured party.




     12.2.3 At Developer’s sole expense, Developer shall obtain and maintain, at all
times during the term of this Agreement, for itself as the insured party commercial
general liability insurance written on an occurrence basis, including blanket
contractual liability coverage, broad form property damage including coverage for
explosion, collapse and underground hazards, personal injury and advertising
insurance coverage, and products and completed operations coverage (which shall
remain in place for the statutory period in which construction defect claims may be
made under __________ law). Such liability insurance shall be in such amounts as
Developer may reasonably determine from time to time, but not less than $1,000,000
per occurrence and $2,000,000 as an annual aggregate. At Developer’s expense,
Developer shall at all times during the term of this Agreement, maintain in full
force and effect for itself as the insured party Workers’ Compensation insurance
required by the laws of the state where the Property is located and Employer’s
Liability insurance in an amount not less than the statutory minimum. Developer
shall obtain from the insurers providing the Workers’ Compensation and Employer’s
Liability insurance a waiver of all rights of recovery by way of subrogation against
Owner and the members of Owner, and their respective officers, directors, employees
and representatives, in connection with any claim, loss or damage covered by such
insurance, it being understood that if such waiver of subrogation is available at
additional expense, such additional expense shall be borne by Owner upon Owner’s
prior written approval thereof. Developer shall maintain employee dishonesty
insurance in an amount not less than $1,000,000 covering all of Developer’s
employees who handle or have access to funds of Owner or the Project. Each such
policy of liability insurance shall provide that it may not be canceled, or the
coverage reduced, without thirty (30) days prior written notice to Developer, except
in the case of



24









 







nonpayment of premiums, in which case ten (10) days prior written notice shall
be required, and shall provide that the insurer shall simultaneously give Owner such
notice of cancellation or reduction. All such insurance shall name Developer as the
insured party and shall name Owner, Venture, Member and HSRE-Member and its partners
as additional insureds.




     All policies of insurance required to be maintained hereunder shall be issued by
companies authorized to do business in the state where the Property is located with a
Policyholder Alphabetic Category Rating of not less than “A” and a Financial Size Category
Rating of not less than “VIII” according to the latest edition of Best’s Key Rating Guide.
Developer shall provide Owner with evidence of required insurance coverage in the form of
certificates of insurance.




     12.3. Governing Law. This Agreement shall be construed in accordance with the
laws of the state where the Property is located without regard to its conflicts of laws
principles.




     12.4. Entire Agreement. This Agreement is the entire agreement between the
parties with respect to the subject matter hereof and shall not be amended or modified
except in a written document signed by Developer and Owner.




     12.5. Construction. Whenever the singular number is used in this Agreement and
when required by the context, the same shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa. As used in
this Agreement, the terms “herein”, “hereof”, “herewith”, “hereinafter”, “hereunder” and
words of similar import shall be deemed to refer to this Agreement and not the particular
section, paragraph or article in which such reference is found.




     12.6. Headings. The headings in this Agreement are inserted for convenience
only and shall not affect the interpretations of this Agreement.




     12.7. Waivers. The failure of any party to seek redress for violation of or to
insist upon the strict performance of any covenant or condition of this Agreement shall not
prevent a subsequent act, which would have originally constituted a violation, from having
the effect of an original violation.




     12.8. Rights and Remedies Cumulative. Except as expressly provided otherwise
in this Agreement, the rights and remedies provided by this Agreement are cumulative and the
use of any one right or remedy shall not preclude or waive the right to use any or all other
remedies.




     12.9. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid, illegal or unenforceable to any
extent, the remainder of this Agreement and the application thereof shall not be affected
and shall be enforceable to the fullest extent permitted by law.



25









 






     12.10. Heirs, Successors and Assigns. Each of the covenants, terms, provisions
and agreements herein contained shall be binding upon and inure to the benefit of the
parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal
representatives, successors and assigns.




     12.11. Assignment. Neither Developer nor Owner shall assign any or all of its
rights and/or obligations under this Agreement, without the consent of the other party. The
parties acknowledge and agree that the Owner may collaterally assign its rights under this
Agreement to the Construction Lender.




     12.12. HSRE Member Information. Upon HSRE Member’s specific request, Developer
shall furnish to HSRE Member copies of all materials supplied to Owner pursuant to this
Agreement.




     12.13. Enforcement of Owner’s Rights. Developer acknowledges that the Member
is an Affiliate of Developer, and that to avoid conflict of interest, the HSRE Member shall
have the sole right to direct the Owner to enforce the Owner’s rights under this Agreement
pursuant to Section 5.1(d) of the Venture Operating Agreement, and that no waiver,
compromise or settlement of any claim by or against Owner under this Agreement, and no
modification of this Agreement may be made without the consent of the HSRE Member.
Developer shall diligently enforce the terms and conditions of the Construction Contract,
Architect Contract and Engineer Contract and each and every other agreement entered into by
Developer in connection with its fulfilling its obligations hereunder in a commercially
reasonable manner and notwithstanding any affiliation between Developer and General
Contractor and/or any other subcontractor.




     12.14. Owner Approvals. Any approval or disapproval, or deemed approval or
disapproval, by Owner hereunder shall be deemed the approval or disapproval, as applicable,
by the Venture and each of its members and managers, and vice versa.




     12.15. Lender Provisions. Developer hereby agrees that it will negotiate in
good faith with the Construction Lender and execute any reasonable documentation requested
by Owner and Construction Lender in conjunction with any collateral assignment of this
Agreement by Owner in favor of Construction Lender and any request by Construction Lender
that Developer conditionally subordinate its rights hereunder to Construction Lender’s
rights under any security instrument of Construction Lender.




     12.16. Attorneys’ Fees. If there is any legal action or proceeding between the
parties to enforce or interpret any provisions of this Agreement or to protect or establish
any right or remedy of any of them hereunder, the unsuccessful party to such action or
proceeding shall pay to the prevailing party all costs and expenses (including, but not
limited to, reasonable attorneys’ fees and disbursements) incurred by such prevailing party
in such action or proceeding. If any party secures a judgment or award in any such action
or proceeding, then any costs and expenses (including, but not limited to, reasonable
attorneys’ fees and disbursements) incurred by the prevailing party in enforcing such
judgment, or any costs and expenses (including, but not limited to,



26









 







reasonable attorneys’ fees and disbursements) incurred by the prevailing party in any
appeal from such judgment in connection with such appeal shall be recoverable separately
from and in addition to any other amount included in such judgment or award. The preceding
sentence is intended to be severable from the other provisions of this Agreement, and shall
survive and not be merged into any such judgment or award.




     12.17. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which shall constitute one and the same
instrument. Signatures hereon sent by facsimile may be treated as original signatures.




     12.18. Time of the Essence. Time is of the essence with respect to the
parties’ performance of each and every obligation hereunder.



     13. LIMITATION OF LIABILITY. Each party agrees that the other party and the present
and future members, managers, partners, shareholders, officers, directors, employees and agents of
the other party and its constituent members shall not have any personal liability for or by reason
of any matter or thing whatsoever, under or in connection with this Agreement, and each party
hereby waives any and all such personal liability and, in the case of Owner’s liability, Developer
agrees to look solely to the interests of Owner in the Property for the payment and satisfaction of
all claims and actions hereunder. The limitation of liability provided in this Section is in
addition to, and not in limitation of, any limitation of liability applicable to either party or
its owners provided by law or in this Agreement or by any other contract, agreement or instrument
relating to such party or the members, managers, partners, shareholders, officers, directors,
employees or agents of such party or its constituent members. Developer, for itself and all of its
Affiliates, hereby expressly waives and releases the right to file a lien against all or part of
the Property or the Project in connection with any claim arising under this Agreement.
Notwithstanding the foregoing, nothing herein contained shall limit the liability of the guarantor
pursuant to that certain Completion and Cost Overrun Guaranty, dated even date herewith, granted by
Campus Crest Communities Operating Partnership, LP in favor of Owner.



[SIGNATURES FOLLOW ON NEXT PAGE]






27









 








     IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above.



	 	 	 	 	 	 	 

	 	 	DEVELOPER:	 	 
	 
	 	 	 	 	 	 
	 	 	CAMPUS CREST DEVELOPMENT, INC., a	 	 
	 	 	Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	OWNER:	 	 
	 
	 	 	 	 	 	 
	 	 	CAMPUS CREST AT ______________________, LLC/LP, a Delaware
limited liability company/limited partnership






	 	 	 	 	 	 	 	 	 	 	 

	 	 	[By:	 	HSRE-Campus Crest GP I, LLC, a Delaware limited
liability company, its sole general partner]
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HSRE-Campus Crest I, LLC,
a Delaware limited liability company, its sole member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Campus Crest Ventures III, LLC, a Delaware limited liability
company, a member
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	Campus Crest Properties, LLC, a North Carolina
limited liability company, its manager






	 	 	 	 	 	 	 

	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

Manager
	 	 











28









 








SCHEDULE OF EXHIBITS




Exhibit A – Legal Description of Property



Exhibit B – Development Budget



Exhibit C – Plans and Specifications



Exhibit D – Form of Report









29









 








EXHIBIT A




Legal Description of Property



[TO BE ATTACHED]




A-1 









 





EXHIBIT B




Development Budget



(ATTACHED)








B-1 









 








EXHIBIT C




List of Plans and Specifications


1. Civil Engineering Drawings



2. 12 Unit Building Drawings



3. 24 Unit Building Drawings



4. Clubhouse Drawings





C-1 









 








EXHIBIT D




Form of Report



(ATTACHED)




D-1 











 





EXHIBIT G




FORM OF PROPERTY MANAGEMENT AGREEMENT



(Attached)



G-1









 





PROPERTY MANAGEMENT AGREEMENT




FOR



THE GROVE AT                                         



BY AND BETWEEN



THE GROVE STUDENT PROPERTIES, INC.



AND



CAMPUS CREST AT                     , LLC/LP



CONTRACT DATE:                                         



 









 





     THIS PROPERTY MANAGEMENT AGREEMENT (the “Agreement”) is made and entered into as of                                         ,
201                    , by and between Campus Crest at                     , LLC [GLOBAL CHANGE TO LP
AS APPROPRIATE], a Delaware limited liability company (including any successors or assigns,
“Owner”), and The Grove Student Properties, Inc., a Delaware corporation (including any successors
or assigns, “Manager”):



WITNESSETH:




     WHEREAS, Owner is the owner of that certain student housing project located in                     ,                     
and commonly known as The Grove at                      (“Property”). Manager is in the business
of managing and operating student housing projects. Owner desires to appoint Manager to manage the
day-to-day operations of the Property;



     WHEREAS, Owner is owned by HSRE-Campus Crest I, LLC (“Venture”). The members of the Venture
are, Campus Crest Ventures III, LLC (“CCV III”), an affiliate of Manager, and HSRE-Campus Crest IA,
LLC (“HSRE”; capitalized terms that are not otherwise defined herein shall have the meaning
ascribed to them in the operating agreement of the Venture); and



     WHEREAS, Owner and Manager wish to set forth their agreement with respect to the management of
the Property by Manager.



     NOW, THEREFORE, in consideration of the mutual covenants herein contained, Owner and Manager
mutually agree as follows:



ARTICLE 1. APPOINTMENT OF MANAGER




     1.01 Appointment of Manager. Owner hereby appoints Manager and Manager accepts
appointment as the sole and exclusive manager for the Property upon and subject to the terms and
conditions set forth herein.



     1.02 Term of Contract. The primary term of this contract shall commence on                     ,
20___ and shall expire on                     , 20___ [COMMENCEMENT DATE +1 YEAR], unless
otherwise terminated in accordance with the provisions hereof. Upon the expiration of the original
term, this Agreement will automatically renew on an annual basis until termination occurs as
provided in Article 5 hereof.



     1.03 Accounts. Owner hereby authorizes and directs Manager to set up the accounts
described herein at                                            (or any other financial institution designated by
Owner), in the name of Owner, or, if authorized by Owner, in Manager’s name (the funds thereof to
be held in trust for Owner). Unless otherwise agreed, Manager shall set up (1) an “Operating
Account” into which all rental income and other revenue due from or arising out of the operation of
the Property shall be deposited on a daily basis as such revenue is received by Manager; (2) a
“Security Deposit Account” into which account funds collected as security deposits shall be
periodically deposited; and (3) such other



1









 




accounts as Owner may designate from time to time. All accounts to the extent possible should
be interest bearing accounts. All funds in any such account shall be the exclusive property of
Owner, and Owner shall have continuous access to such accounts, including but not limited to
signatory access, and Manager shall have concurrent signatory access to the Operating Account only.




     Manager and Owner shall, upon the reasonable request of Owner’s lender execute any documents
reasonably requested by lender to evidence the lender’s security interest in any of the accounts.



     1.04 Independent Contractor Status. Manager is engaged in the business of managing
properties as an independent contractor, and in that capacity, is serving as the property manager
for the Property. Manager shall not be liable for any obligation or expenditure incurred on behalf
of the Property or Owner if such obligation is incurred by Manager within the scope of Manager’s
authority or in the Annual Operating Budget and/or capital budget approved by Owner. In contracting
for services and products giving rise to any obligations incurred by Manager within the scope of
its authority, Manager shall be acting solely as Owner’s agent, and Owner agrees to indemnify,
defend and save Manager, its principals and employees harmless from and against all claims asserted
and losses sustained by reason of such obligations, so long as Manager performs its duties in good
faith within the scope of this agreement and so long as Manager’s acts or omissions do not
constitute gross negligence, willful misconduct, malfeasance or fraud. Subject to the foregoing,
Manager may advise any contracting party with whom it deals that Manager is acting as Owner’s
agent, and that Manager shall have no liability for the obligation or expenditure, and may exact a
commitment from the contracting party to look only to the Property or Owner for payment. Manager
shall not be obligated to advance any sum of money for Owner or the Property, or lend its credit
for the benefit of the Property.



     1.05 Compliance with Building Regulations. Manager shall use its best efforts to cause
the Property, and any personal property relating thereto, to comply with the requirements of any
building codes or with any statute, ordinance, law or regulation of any governmental body or
official thereof. Manager shall notify Owner promptly of any complaints, warnings, notices or
summonses received by it relating to such matters.



     1.06 Manager’s Liability. Manager assumes no liability whatsoever for any acts or
omissions of Owner, or any subsequent owners or managers of the Property, or their agents or
employees. Manager shall not be liable for any failure of, or default by, any tenant in the payment
of any rent or other obligations under any lease pertaining to the Property. Manager assumes no
liability for violations of environmental or other building regulations other than (i) to exercise
its best efforts to comply with such regulations, (ii) for violations arising due to Manager’s
gross negligence or willful misconduct, and (iii) to promptly notify Owner of violations or hazards
discovered.



ARTICLE 2. MANAGER’S DUTIES AND RESPONSIBILITIES




     2.01 Management Plans. Manager shall use its best efforts to operate the Property



2









 




in accordance with any marketing plan, Annual Operating Budget, capital budget, and lease up
budget which shall be established by or approved by Owner from time to time (collectively, the
“Management Plans”).




     2.02 Manager’s Obligations. Manager shall:



     (a) lease the Property in accordance with rental rates, rental terms, and tenant concessions
established by the Manager and approved by the Owner;



     (b) implement marketing strategies for the Property, as approved by Owner;



     (c) supervise the preparation and execution of all strategic marketing plans to include
advertising, brochures, lead generation campaigns, and model apartments;



     (d) develop advertising and promotional materials in full compliance with Federal, State, and,
if applicable, Municipal fair housing laws;



     (e) exercise its best efforts to obtain and keep tenants in the Property in accordance with
any Annual Operating Budget approved by Owner;



     (f) if requested by Owner and subject to the leasing parameters established by Manager for
Owner from time to time, negotiate, prepare, and execute leases as agent for Owner, including all
renewals and extensions of leases and modifications of existing leases using such standard lease
forms as approved by Owner from time to time;



     (g) collect, maintain, apply and refund security deposits in accordance with Owner’s policies and
any applicable laws and the terms of each tenant’s lease;



     (h) promptly collect rents and other charges and enforce tenant leases;



     (i) provide such reports as Owner shall require from time to time;



     (j) subject to the Owner’s approval, (a) terminate tenancies, (b) sign and serve such notices
of default and other notices to tenants, (c) institute and prosecute actions to evict tenants, and
recover rents and other sums due, and (d) settle, compromise and release such actions or suits or
reinstate such tenancies;



     (k) subject to Owner’s prior authorization, pay and incur obligations in connection with or
arising from the ownership, operation, management, repair, replacement, maintenance, and use or
occupancy of the Property including, without limitation, expenditures for any of the following (i)
license and permit fees, landowner association fees, real estate and personal property taxes and
assessments, and all other charges of any kind and nature by any governmental or public authority;
(ii) management fees and reimbursable expenses payable to Manager; (iii) advertising and marketing
expenses, and leasing fees and commissions; (iv) legal, accounting, engineering and other
professional and consulting fees and disbursements; (v) accounts payable to contractors



3









 




and vendors providing labor, material, services and equipment to the Property; (vi) premiums
for insurance paid with respect to the Property or the operations thereof; (vii) tenant
improvements and property and equipment maintenance, repairs and replacements (including property
used in connection with the Property) and segregated reserves therefor; (viii) refunds of security
or other deposits to tenants and contracting parties; (ix) funds reserved for contingent or
contested liabilities, insurance premiums, and other amounts not payable on a monthly basis; (x)
service contracts and public utility charges and assessments; (xi) personnel administration charges
and pre-employment screening and testing costs, on-site payroll costs including salary and wages,
incentive bonuses, holiday and vacation pay, insurance benefits, worker’s compensation premiums or
allocable costs for self insurance of such matters, pension and health and welfare payments,
payroll taxes and other governmental assessments; and (xii) costs of credit reports, bank charges
and like matters;




     (l) negotiate and execute, on behalf of and in the name of Owner or the Property, contracts
for water, electricity, gas, telephone, television, vermin or pest extermination, security services
and any other services which are, in Manager’s opinion, reasonably necessary to properly serve and
maintain the Property; provided, that (i) all utility deposits will be the responsibility of the
Owner; and (ii) each contract shall: (A) be in the name of the Owner, (B) include a provision for
cancellation thereof without penalty by Owner or Manager upon not more than 30 days written notice,
(C) require all contractors providing services to provide evidence of insurance as specified by
Owner, and (D) be approved by Owner. Any discounts, rebates, or commissions obtained in connection
with any such purchases or service contracts shall be the property of Owner;



     (m) interview, hire, supervise, discharge, and pay all personnel necessary to maintain and
operate the Property, or contract with an employment contractor therefor, subject to approval of
the expenditures therefor by Owner; provided, any such personnel shall be employees of Manager (or
of such employment contractor), to be paid from the Management Fees paid to Manager, and Owner
shall have no right to supervise or direct such employees; further, provided, that the employment
of any person as property manager shall be approved by Owner;



     (n) subject to Owner’s approval, pay debt service and taxes due relating to the Property
pursuant to any Federal, State, County or Municipal authority, or other similar body having
jurisdiction thereover;



     (o) unless otherwise instructed by Owner, maintain accounting records on an accrual basis in
accordance with GAAP based on calendar year-end and provide monthly financial statements and
reports to Owner within fifteen (15) days after month-end;



     (p) furnish monthly reports of collections, disbursements, and other accounting matters in the
form and with such frequency as may be required by Owner from time to time, including, without
limitation: (1) an income and expense statement and balance sheet showing the results of operation
of the Property for the preceding calendar month and the Fiscal Year-to-Date, (2) a comparison of
income and expenses to the applicable approved



4









 




Annual Operating Budget, (3) cash balances for savings, reserves and operating accounts as of
the last day of such month, and (4) a statement of cash flow for the preceding calendar month and
the Fiscal Year-to-Date; all of which Manager shall deliver on or before twenty (20) days following
the end of each calendar month




     (q) maintain copies of the following: bank statements, bank deposit slips and canceled checks;
comprehensive bank reconciliations; detailed cash receipts records; summaries of adjusting journal
entries; copies of all invoices and receipts paid; and supporting documentation for payroll,
payroll taxes and employee benefits;



     (r) maintain the Property and grounds in accordance with any approved budgets in a neat and
clean manner;



     (s) maintain policies of insurance on the Property in such amounts and of such kinds as Owner
may require from time to time;



     (t) comply with any and all governmental regulations;



     (u) maintain a professional, efficient, clean and courteous staff that is properly trained to
work in a student housing apartment complex;



     (v) notify Owner immediately of any adverse situation that may arise from time to time that
may have a negative effect on the Property such as, but not limited to, any insurance claims or
losses;



     (w) regularly inspect all units no less than quarterly to check the condition, and report any
damage to Owner;



     (x) update and maintain an annual inventory of all furniture, fixtures, and equipment
(including condition) and report to Owner;



     (y) immediately report to Owner any environmental problems on the Property that is in
violation of any applicable code or loan covenants;



     (z) cooperate with Owner as needed with respect to the Property and provide any requested
information relating to the Property;



     (aa) maintain the confidentiality of Owner’s information and any trade secrets of Owner;



     (bb) act in a fiduciary capacity for Owner;



     (cc) cooperate with and provide all necessary accounting information relating to the Property
to Owner and Owner’s accountants and other professional advisors in connection with the preparation
of Owner’s financial statements and tax returns; and



5









 





     (dd) apply for, obtain and maintain in the name and at the expense of Owner, all licenses and
permits (including deposits and bonds) required by law of Owner, Manager or Manager’s employees in
connection with the management and operation of the Property. Owner agrees to execute and deliver
any and all applications and other documents and to otherwise cooperate to the fullest extent with
Manager in applying for, obtaining and maintaining such licenses and permits.



     2.03 Cancellation of Leases. Manager is not authorized to cancel any leases at the
Property unless authorized by Owner.



     2.04 Owner’s Approval. Owner’s approval of an Annual Operating Budget or capital budget or
of marketing plans or other plans shall constitute Owner’s approval of any expenditures
specifically authorized therein, including the expenditure of any amounts discretionary to Manager
set out therein. In cases of emergency, Manager may make expenditures that exceed the aforementioned
spending limit without prior approval, if it is necessary, in the reasonable judgment of Manager,
to prevent imminent damage to property or injury to persons. Manager will promptly notify Owner of
any such emergency expenditure no later than two (2) business days following such emergency,
describing the cause of such emergency, the basis of the expenditure undertaken in connection with
such emergency, and the amount of such expenditure.



     2.05 Management Duties and Operations. Manager shall fulfill its duties and
obligations under this Agreement in the same manner as is customary and usual in the operation,
management and leasing of comparable student residential facilities and shall provide such services
as are customarily provided by operators of such complexes of comparable class and standing as the
Property, and shall act solely with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with such matters would
use in the conduct of any enterprise of a like character and with like aims.



     2.06 Owner’s Right to Audit. Owner reserves the right to conduct an examination of the
books and records maintained by Manager, and to perform any and all audit tests relating to
Manager’s activities. Any and all such audits conducted either by Owner’s employees or appointees
will be at the sole expense of Owner.



     2.07 Annual Operating Budget.



     (a) Manager shall submit for Owner’s approval, no later than November 1 of each year, the
Annual Operating Budget for the ensuing Fiscal Year, with the expectation of approving a final
budget not later than December 30 of the current Fiscal Year (provided however, that Manager shall
submit the Annual Operating Budget for the                      Fiscal Year no later than March 31,                     ). If
Owner does not approve an Annual Operating Budget for any Fiscal Year prior to the commencement of
such year, then, until Owner does approve an Annual Operating Budget for such year, the Annual
Operating Budget in effect for the immediately preceding calendar year shall constitute the Annual
Operating Budget for such calendar year, except that (i) any items or portions of the Annual
Operating Budget for such calendar year



6









 




which Owner approves shall be substituted for the corresponding items in the preceding year’s
Annual Operating Budget, and (ii) with respect to all items of cost and expense that are not within
the discretion of Owner or Manager (including, for example, debt service, real property taxes,
utilities, costs of compliance with governmental requirements, contractually required increases and
all expenditures required under this Agreement or under any lease of space in the Property), the
actual amount of each such item shall be substituted for the amount of such item set forth in the
preceding year’s Annual Operating Budget.




     (b) No expenses may be incurred or commitment made by Manager in connection with the
maintenance and operation of the Property which would cause the amount of expenses contemplated for
any expense category in the most recently approved Annual Operating Budget for the Fiscal Year in
question, prorated on a monthly basis, to be exceeded by the actual amount of such expenses by more
than five percent (5%), without the prior written consent of Owner, provided, however, that the
foregoing limitation with respect to incurring any expense not covered by the Annual Operating
Budget shall not apply to expenses relating to debt service in connection with a Construction Loan
or Acquisition Loan (each as defined in the operating agreement of the Venture) approved by HSRE,
taxes, insurance, utilities, snow removal, compliance with governmental requirements, contractually
required increases and all other expenses required by this Agreement and shall not apply in cases
of emergency involving loss of or damage to life or property. Manager shall promptly advise Owner
of any actual or anticipated substantial variance of the results of operations for any month from
the estimated results of operations for such month as set forth in the Annual Operating Budget.



ARTICLE 3. OWNER’S DUTIES AND RESPONSIBILITIES




     3.01 Deposits Into Operating Account. Owner shall establish and maintain such funds in
its operating account necessary to cover the expenses of operating the Property, as approved by
Owner. Owner will transfer from the collection account funds sufficient to cover reasonably
anticipated operating expenses and capital expenditures as approved by Owner in a timely fashion to
avoid delinquencies, late fees and/or defaults. Manager shall not be obligated to advance its own
funds on behalf of Owner, or incur any liability in its own name.



     3.02 Manager’s Compensation; Reimbursement of Expenses. Owner agrees to pay to Manager
for services rendered (and to reimburse Manager for approved expenses) in managing the Property in
accordance with and subject to the terms of this Agreement, the fees specified in the attached
Schedule A. Unless otherwise agreed, such compensation may be paid from the Operating
Account.



ARTICLE 4. INSURANCE AND INDEMNIFICATION




     4.01 Property and Liability Insurance. Owner, at Owner’s expense, shall obtain and
keep in force at all times insurance as is (a) required to be maintained by Owner pursuant to the
terms and provision of any mortgage, deed of trust or loan agreement covering or secured by the
Property, or any portion thereof, and/or (b) as specified by Owner from time to time, to protect
Owner, Manager and any lender against physical



7









 




damage (e.g., fire with extended coverage endorsement, boiler and machinery) and against
liability for loss, damage, or injury to property or persons which might arise out of the use,
occupancy, management, operation or maintenance of the Property. Such insurance shall be obtained,
carried and maintained in accordance with the terms and provisions of the applicable Loan
Documents. Such insurance shall provide for the payment of all costs of defense of any claims. Any
deductible required under such insurance policies shall be Owner’s expense. Manager may elect to
maintain, at Manager’s expense, additional separate insurance to cover its own risks. Manager shall
cause all persons who are authorized signatories of Manager or who in any way handle funds for the
Property to be covered by employee dishonesty insurance policies with reputable and responsible
insurance carriers, which policies shall contain liability limits of not less than $1,000,000.00
per occurrence, and Manager shall be responsible for all acts in connection therewith of all its
authorized signatories.




     Owner shall furnish Manager with certificates evidencing such insurance and duplicate copies
of such policies as requested by Manager from time to time. The certificates evidencing insurance
shall provide that each of Owner, Manager and any lender shall be given at least thirty (30) days
written notice prior to cancellation, non-renewal or any material change in the subject policy.



     4.02 Workers’ Compensation Insurance. Manager shall maintain, at Manager’s expense,
workers’ compensation insurance (or a substitute acceptable to Owner) covering all employees of
Manager employed in, on, or about the Property so as to provide statutory benefits required by
state and federal laws.



     4.03 Indemnification.



     It is the Owner’s and Manager’s intent to look initially to the insurance coverage required
pursuant to Sections 4.01 and 4.02 above for both legal defense and payment of any applicable
claims, without regard to the following indemnities. Therefore, the parties agree that,
notwithstanding any indemnity language to the contrary, in the event that a claim, liability, loss
or expense arises which is covered by the insurance required pursuant to Sections 4.01 and 4.02
above, Owner and Manager shall cause such insurance to be paid in accordance with such policies,
and to the extent of such payment, the indemnities provided below shall not apply. To the extent
insurance is not available, or any claim is not fully paid by applicable insurance, the parties
agree that the following indemnities shall control. As to any claims paid by insurance, the parties
agree to waive all rights of subrogation, provided that such waiver does not invalidate any
insurance policy or materially adversely affect the premium rates for such insurance.



     Owner’s Indemnities. Owner shall indemnify, defend and hold harmless Manager, its
principals and employees (collectively referred to as “Manager” for the purposes of this
subsection), from and against any and all claims, proceedings, liabilities, losses, costs and
expenses (including reasonable attorneys’ fees and costs of defense) incurred by or asserted
against Manager as a result of any act or omission (or allegation thereof, including allegations of
simple negligence) by (i) Owner, or (ii) Manager acting within its capacity and scope of authority
(as set forth in this Agreement) as the property manager, including



8









 




but not limited to any liability for which insurance coverage is required pursuant to Section
4.01 above and not actually provided by Owner. Notwithstanding the foregoing, Manager shall not be
indemnified by Owner for acts or omissions constituting Manager’s gross negligence, willful
misconduct, malfeasance or fraud in excess of the coverage provided by the insurance coverage
required pursuant to Sections 4.01 and 4.02 above. Nothing in this Section 4.03 or elsewhere in
this Agreement shall be construed to release Manager from liability to the Owner for a breach or
violation of any of the covenants, duties and obligations to be performed by Manager under the
terms of this Agreement.




     Manager’s Indemnities. Manager shall indemnify, defend and hold harmless Owner, its
members, employees, partners, principals, attorneys and agents (collectively referred to as “Owner”
for the purposes of this subsection), from and against any and all claims, proceedings,
liabilities, losses, costs and expenses (including reasonable attorneys’ fees and costs of defense)
incurred by or asserted against Owner, in excess of the insurance coverage required pursuant to
Sections 4.01 and 4.02 above, as a result of any act or failure to act by Manager if Manager is
adjudicated by a court of competent jurisdiction to have acted in a manner constituting gross
negligence, willful misconduct, malfeasance, fraud or otherwise outside the scope of its authority
(as set forth in this Agreement). Manager further indemnifies and holds Owner harmless from any and
all fees, expenses, fines and penalties which may be assessed against Manager for any failure by
Manager to comply with employment-related laws and regulations.



     4.04 Expenses of Litigation. Any party providing indemnity to any other party shall
pay all expenses incurred by the indemnified party, including, but not limited to, costs of defense
and reasonable attorneys’ fees, and any liability, fines, penalties or the like, in connection with
any claim that, as alleged, is subject to the indemnity obligations set out herein; provided, that
such expenses shall be recoverable from the indemnified party in the event that a court of
competent jurisdiction in a final order makes any finding of fact showing that the claims alleged
were not properly the subject of the indemnitor’s indemnity obligations.



ARTICLE 5. TERMINATION




     5.01 Termination by Owner. This Agreement may be terminated by Owner under any of the
following circumstances: (i) immediately, upon a showing of a material breach of this Agreement
resulting from the willful or grossly negligent conduct of Manager, or upon a material breach by
Manager of its fiduciary duties to Owner, (ii) if Manager shall fail to keep, observe or perform in
any material respect any covenant, agreement, term or provision of this Agreement to be kept,
observed or performed by Manager, and such default shall continue for a period of thirty (30) days
after written notice thereof by Owner, or, if such default is not reasonably capable of being cured
within such 30-day period, then within such additional period as shall be reasonable (not to exceed
an additional sixty (60) days), provided that Manager is reasonably capable of curing same with the
exercise of diligence and in fact prosecutes such cure with reasonable diligence; (iii) immediately
upon the occurrence of a Campus Crest Triggering Event (as defined in Section 6.1 of the operating
agreement of the Venture); (iv) thirty (30) days after notice from Owner in the event HSRE or an
affiliate of HSRE shall acquire CCV III’s



9









 




interest in the Venture pursuant to the provisions of the operating agreement of the Venture;
(v) if Manager liquidates, dissolves or files for bankruptcy (whether voluntary or involuntary) or
otherwise makes an assignment for the benefit of creditors or takes advantage of any insolvency
law; provided, however, that in the case of an involuntary bankruptcy filing or
other proceeding, said filing or other proceeding involving Manager shall not constitute a
termination event hereunder unless such filing or other proceeding shall continue undismissed or
unstayed for a period of sixty (60) consecutive calendar days, or (vi) immediately if Manager (a)
commits a felony or other criminal act involving fraud, misappropriation of funds, dishonesty or
acts of a similar nature; or (b) misapplies any funds derived from the Property, including security
deposits, insurance proceeds or condemnation awards (provided, however, with respect to an
inadvertent misapplication of funds, such misapplication shall not give rise to a termination right
hereunder if Manager correctly applies such funds within three (3) business days after discovery of
such misapplication).




     5.02 Termination by Manager. Manager may terminate this Agreement upon thirty (30)
days’ prior written notice to Owner if Owner fails to cure a deficiency or to deposit sufficient
funds to cover all current operating expenses, or if Owner fails to pay in a timely manner the fees
due to Manager, or for other good cause.



     5.03 Termination by 60-Day Notice. Either party may terminate this Agreement, without
cause, by giving the other party at least sixty (60) days’ prior notice in writing. Such notice
shall not affect or impair any right which has accrued to either party prior to the date of such
notice.



     5.04 Termination on Sale, Destruction. This Agreement will automatically terminate (i)
upon the sale, destruction, seizure or taking by eminent domain or foreclosure of the Property, or
(ii) upon the termination of the Owner’s right to possession of or right to collect and retain the
rents from the Property. If possible, Owner will endeavor to provide to Manager thirty (30) days’
prior written notice of any such event.



     5.05 Effect of Termination. Upon termination by either party, the obligations of
Manager to provide services to Owner shall terminate; provided, Manager shall provide such
accountings and reports and cooperate with Owner and Owner’s new property manager as may be
reasonably required by Owner to change the property manager for the Property without undue
disruption. Further, Owner and Manager shall be entitled to the indemnity provisions set out in
this Agreement relating to events and occurrences transpiring prior to the date of termination.



     Owner will be responsible for the direct handling and payment of invoices received after
notice of termination; provided that to the extent of available operating funds in the operating
account, Manager may, but shall not be required to, continue to pay obligations incurred by the
Property through the termination date, but not including Manager’s fees and reimbursements.



     On the termination date of this Agreement, Manager shall deliver to Owner (or shall relinquish
Manager’s control over) all funds in all accounts related to the Property. Within



10









 




fifteen (15) days after the termination date, Manager shall deliver to Owner a final
accounting, reflecting the balance of income and expenses pertaining to the Property as of the date
of termination; and all original records, contracts, leases, receipts or deposits, unpaid bills and
other papers or documents in Manager’s custody or control necessary to the management of the
Property. Manager shall be entitled to retain copies of or have reasonable access upon request to
all documents necessary to defend any claims made against Manager.




     5.06 No Waiver of Rights. No termination of this Agreement shall operate to waive,
diminish or impair any right that has accrued to either party to the date of termination, nor shall
any such termination impair either party’s right to indemnity under this Agreement.



ARTICLE 6. NOTICES, ETC.




     6.01 Notices. All notices provided for in this Agreement shall be in writing and shall
be given to Owner or Manager at the address set forth below or at such other address as they
individually may specify thereafter by written notice in accordance herewith:


To Owner:



Campus Crest at                     , LLC/LP

2100 Rexford Road, Suite 414

Charlotte, NC 28211

Attention: Chief Financial Officer



With copy to:



c/o Harrison Street Real Estate Capital, LLC

71 S. Wacker Drive, Suite 3575

Chicago, IL 60606

Attention: Stephen Gordon



To Manager:



The Grove Student Properties, Inc.

2100 Rexford Road, Suite 414

Charlotte, NC 28211

Attention: Chief Financial Officer




     Such notices shall be deemed effective upon actual delivery or, if mailed, certified return
receipt requested, postage prepaid, properly addressed, three (3) days after posting.



     6.02 Cooperation. Owner and Manager will cooperate to facilitate and promote the
mutual objectives of managing the Property.



11









 





     6.03 Assignment. No assignment of this Agreement may be made by Manager without the
prior written consent of Owner.



     6.04 Pronouns. Where appropriate to the context, words of one gender include all
genders, and the singular includes the plural and vice versa.



     6.05 Amendments. This Agreement may not be modified except in a written instrument
signed by the parties.



     6.06 Representations. Manager represents and warrants that it is fully qualified to
manage student housing apartments and perform all obligations assumed by Manager hereunder. Manager
agrees to comply with all such laws now or hereafter in effect.



     6.07 Complete Agreement. This Agreement together with all schedules attached hereto
and made part thereof, supersedes all previous agreements, understandings and representations made
by or between the parties hereto.



     6.08 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of North Carolina.



     6.09 Legal Construction. In case any one or more of the provisions contained in this
Agreement shall for any reason be held by a court of competent jurisdiction to be invalid, illegal
or unenforceable in any respect, such invalid provision shall be deemed severable, and shall not
affect the validity or enforceability of any other provisions of this Agreement, all of which shall
remain fully enforceable.



     6.10 Captions. The captions used in this Agreement are solely for convenience, and
shall not be deemed to constitute a part of the substance of the Agreement for purpose of its
construction.



     6.11 Enforcement of Owner’s Rights. Manager acknowledges that CCV III is its
Affiliate, and that to avoid conflict of interest, HSRE shall have the sole right to direct Owner
to enforce Owner’s rights under this Agreement pursuant to Section 5.1(d) of the operating
agreement of the Venture, and that no waiver, compromise or settlement of any claim by or against
Owner under this Agreement, and no modification of this Agreement may be made without the consent
of HSRE.



ARTICLE 7. MARKETING, TRADE NAMES, MARKS, ETC.




     Section 7.01 Marketing Program. To the extent provided for in each approved Annual
Operating Budget, Owner hereby authorizes and directs Manager, and Manager agrees, to manage and
market the Property pursuant to the common marketing program implemented by Manager for all “Campus
Crest-The Grove” properties. Said common marketing program shall include but not be limited to the
creation and operation of a common website for all Campus Crest-The Grove properties and the use of
a common logo and common trade names, trademarks and service marks. Owner further grants Manager
the right to use Manager’s stationery and



12









 




invoices in conjunction with performing its obligations under this Agreement, but in any
documentation affecting the legal rights and obligations of Owner or the Property (including,
without limitation, tenant lease agreements), Manager shall identify its representative capacity of
Owner and/or the Property so as to avoid any misunderstanding of Owner’s separate identity.




     Section 7.02 Use of Trade Names and Marks, Etc. Manager hereby grants to Owner a
non-exclusive sublicense in all rights of Manager in and to the Marks described and defined in that
certain License Agreement effective as of October                     , 2010, between Campus Crest Group, LLC, as
licensor, and Manager, as licensee (as may be amended from time to time, the “License Agreement”),
and such non-exclusive sublicense shall include any and all Marks added to the License Agreement
under any future amendments thereto; provided, however, Owner shall not have the
right to further sublicense any Marks. In conjunction with the granting of such sublicense, Owner
agrees to comply with all requirements imposed by the Licensor under the License Agreement, and
Owner agrees that Manager may terminate this sublicense by written notice to Owner upon termination
of this Agreement or if there is a change in control of Owner; provided however, the Owner shall
have a reasonable period of time (not to exceed sixty (60) days) subsequent to receipt of such
notice of termination to discontinue use of the Marks and transition to use of replacements for the
Marks.



ARTICLE 8. OWNER’S REIT STATUS




     Manager recognizes that HSRE REIT II (“HSRE REIT”) and Campus Crest Communities, Inc. (“CC
REIT”), both indirect owners of the Owner, are real estate investment trusts. HSRE REIT and CC
REIT must comply with a number of restrictions under Internal Revenue Code of 1986, as amended (the
“Code”) to maintain their REIT status. In furtherance thereof, the Manager agrees not to take any
action which to its knowledge would cause any of the income derived by Owner to fail to qualify as
(i) “rents from real property” (defined in the Code) or (ii) other qualifying income under Section
856(c)(2) of the Code or to take any other action which to Manager’s knowledge would cause either
HSRE REIT or CC REIT to fail to qualify as a REIT under the Code. Without limiting the generality
of the foregoing, Manager hereby agrees that without Owner’s approval, Manager shall not knowingly
perform or provide any services to tenants which would cause the Owner to derive “impermissible
tenant service income” within the meaning of Section 856(d)(3) of the Code. Instead, any such
services must be provided by a “Taxable REIT Subsidiary” of the HSRE REIT and/or CC REIT, or by an
independent contractor (as defined in Code Section 856(d)(3)) from whom neither the Owner, HSRE
REIT nor CC REIT derives any income, directly or indirectly. In the event that HSRE or CCV III
determines that any such services or amenities would cause any of the income derived indirectly by
HSRE REIT or CC REIT (through its respective ownership of the Owner) to fail to qualify as (i)
“rents from real property” or (ii) otherwise qualifying income under Code Section 856(c)(2), then
HSRE or CCV III, as applicable, may deliver written notice to Manager to undertake offering such
service or amenity in a different structure that does not result in such a failure, and Manager, at
Owner’s expense, shall use commercially reasonable efforts to comply with such request from and
after the date Manager receives such request.



13









 





     IN WITNESS WHEREOF the parties have executed this Agreement as of the date first set forth
above.



	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	OWNER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	CAMPUS CREST AT                                                             , LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	HSRE-Campus Crest I, LLC, a Delaware limited

liability company, its sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Campus Crest Ventures III, LLC, a Delaware

limited liability company, a member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Campus Crest Properties, LLC, a North

Carolina limited liability company, its

manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:
	 	Manager
	 	 






	 	 	 	 	 	 	 

	 	 	[REVISE IF OWNER IS AN LP]	 	 
	 
	 	 	 	 	 	 
	 	 	MANAGER:	 	 
	 
	 	 	 	 	 	 
	 	 	THE GROVE STUDENT PROPERTIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





14









 





SCHEDULE A




MANAGER’S COMPENSATION


Management Fee. Manager’s compensation for management of the Property shall be calculated
as follows:



(1) Three Percent (3.00%) of the Gross Revenue (defined below), payable monthly; and



(2) Three Percent (3.00%) of the net operating income, payable monthly.



As used herein, the term “Gross Revenue” shall mean the entire amount of all receipts, determined
on a cash basis, from (a) tenant rentals collected pursuant to tenant leases for each month during
the term hereof; provided, however, that there shall be excluded from tenant rentals any tenant
security deposits and other deposits (except as provided below); (b) cleaning, security and damage
deposits forfeited by tenants in such period; (c) community fees and cable TV, electronic media,
Internet, laundry and vending machine income; (d) any and all receipts from the operation of the
Property received and relating to the period in question; (e) proceeds from rental interruption
insurance; (f) all interest and income earned on deposits and investments of funds held by Manager
hereunder; (g) any other sums and charges collected in connection with termination of the tenant
leases; and (h) any other source of revenue derived and collected by Manager, including, but not
limited to, any commission or percentage of collection on contracts at, for, or in connection with
the Property, and miscellaneous income derived from premiums, amenities, parking, storage, or other
sources. Gross Revenue does not include the proceeds of (i) any sale, exchange, refinancing,
condemnation, or other disposition of all or any part of the Property, (ii) any loans to Owner,
whether or not secured by all or any part of the Property, (iii) any capital contributions to
Owner, or (iv) any insurance (other than rental interruption insurance) maintained with regard to
the Property.



For illustration purposes only, net operating income will be calculated in the manner set forth on
Exhibit A attached hereto and made a part hereof.




15









 





Exhibit A



Management Fee Calculation Example (all numbers used in the following example are hypothetical and are not to be used
in connection with any calculations done with respect to the Property)




The Grove




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Rent per bed	 	Annual
	UNIT & BED MIX	 	Units	 	Beds	 	per month	 	Rent Revenue
	2-Bedroom Units
	 	 	64	 	 	 	128	 	 	$	565	 	 	$	867,840	 
	3-bedroom Units
	 	 	136	 	 	 	408	 	 	$	505	 	 	$	2,472,480	 
	Total
	 	 	200	 	 	 	536	 	 	$	1,070	 	 	$	3,340,320	 






	 	 	 	 	 	 	 	 	 
	 	 	The Grove	 
	2-Bedroom Suites
	 	 	 	 	 	$	867,840	 
	3-Bedroom Suites
	 	 	 	 	 	 	2,472,480	 
	 
	 	 	 	 	 	 	 
	Gross Potential Revenue — Unadjusted
	 	 	 	 	 	 	3,340,320	 
	 
	 	 	 	 	 	 	 
	less holdbacks (15 student management beds)
	 	 	 	 	 	 	90,900	 
	 
	 	 	 	 	 	 	 
	Gross Potential Revenue — Adjusted
	 	 	 	 	 	 	3,249,420	 
	 
	 	 	 	 	 	 	 
	other revenue per bed
	 	 	 	 	 	 	140	 
	add other income
	 	 	 	 	 	 	75,040	 
	 
	 	 	 	 	 	 	 
	Gross Revenue & Other Income
	 	 	 	 	 	 	3,324,460	 
	 
	 	 	 	 	 	 	 
	vacancy rate & loss-to-lease
	 	 	 	 	 	 	5.00	%
	less vacancy & loss-to-lease
	 	 	 	 	 	 	166,223	 
	 
	 	 	 	 	 	 	 
	Gross Revenue & Other Income after Vacancy
	 	 	 	 	 	 	3,158,237	 
	 
	 	 	 	 	 	 	 
	less collection loss (bad debts)
	 	 	1.00	%	 	 	31,582	 
	 
	 	 	 	 	 	 	 
	Effective Gross Revenue (EGR)
	 	 	 	 	 	$	3,126,655	 
	 
	 	 	 	 	 	 	 
	Operating Expenses
	 	 	 	 	 	 	 	 
	Payroll Expenses — Management
	 	 	 	 	 	$	139,000	 
	Insurance
	 	 	 	 	 	 	39,500	 
	Marketing
	 	 	 	 	 	 	50,500	 
	Office Expenses
	 	 	 	 	 	 	25,000	 
	Communications
	 	 	 	 	 	 	7,500	 
	Utilities
	 	 	 	 	 	 	370,000	 
	Travel
	 	 	 	 	 	 	2,000	 
	Training
	 	 	 	 	 	 	1,200	 






16









 






	 	 	 	 	 	 	 	 	 
	 	 	The Grove	 
	Repairs & Maintenance — with Payroll
	 	 	 	 	 	 	134,000	 
	Taxes, Licenses, & Fees
	 	 	 	 	 	 	227,000	 
	Professional Fees
	 	 	 	 	 	 	12,000	 
	Residence Life/Clubhouse
	 	 	 	 	 	 	11,000	 
	Management Fee (1)
	 	 	 	 	 	 	154,225	 
	 
	 	 	 	 	 	 	 
	Total Operating Expenses
	 	 	 	 	 	$	1,172,925	 
	 
	 	 	 	 	 	 	 
	 
	Net Operating Income
	 	 	 	 	 	$	1,953,730	 
	 
	 	 	 	 	 	 	 
	 
	Reserves (per bed)
	 	 	100	 	 	 	53,600	 
	 
	 	 	 	 	 	 	 
	Net Cash Flow from Operations
	 	 	 	 	 	$	1,900,130	 








 




			
	(1)	 	Management Fee equals 3% of Effective Gross Revenue plus 3% of Net Operating Income which
is calculated before adding the 3% of Net Operating Income portion to the Management Fee Line Item
and before any reserves are deducted.






17











 





EXHIBIT H




NON-COMPETITION AND RIGHT OF FIRST

OPPORTUNITY AGREEMENT



(Attached)



H-1









 






EXECUTION VERSION




NON-COMPETITION AND RIGHT




OF FIRST OPPORTUNITY AGREEMENT



     THIS NON-COMPETITION AND RIGHT OF FIRST OPPORTUNITY
AGREEMENT dated effective November 7, 2008 (the “Agreement”), is entered into by and between
CAMPUS CREST GROUP, LLC, a North Carolina limited liability company (“Campus Crest”) and
HARRISON STREET REAL ESTATE CAPITAL, LLC, a Delaware limited liability company (“HSRE”). Any
capitalized terms not defined herein shall have the meaning set forth in the Operating Agreement
(as defined below).



RECITALS:




     A. Campus Crest and its Affiliates (as defined below) (individually and collectively, the
“Campus Crest Group”) are in the business of acquiring, rehabilitating, constructing, developing
and/or managing Student Housing Projects (as defined below).



     B. HSRE and its Affiliates (individually and collectively, the “HSRE Group”) are in the
business of real estate investment, including investment in Student Housing Projects.



     C. Concurrently with the execution of this Agreement, (i) HSRE-Campus Crest I, LLC, a Delaware
limited liability company (the “Company”) has been formed for the purpose of acquiring, developing
and redeveloping student housing properties and (ii) Campus Crest Ventures, III, LLC, a Delaware
limited liability company and HSRE-Campus Crest IA, LLC, a Delaware limited liability company, have
entered into the Operating Agreement of the Company (the “Operating Agreement”).



     D. The execution of the Operating Agreement is conditioned upon the parties hereto entering
into this Agreement.



AGREEMENTS




     In consideration of the premises and the mutual covenants hereinafter set forth, the
parties agree as follows:



ARTICLE I 




DEFINITIONS AND INTERPRETATION



     1.1 Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:



          Additional Review Items. The meaning set forth in Section 2.2(a).



 









 







     Affiliate. With respect to (i) any Person, any other Person that directly, or through
one or more intermediaries, Controls or is Controlled by or is under common Control with such
Person; (ii) any Person, any other Person that is an officer, director, partner, member,
principal, manager or trustee of or serves in a similar capacity with respect to such Person; (iii)
Campus Crest, any member of the Immediate Family (as defined in the Operating Agreement) of Michael
S. Hartnett and Ted W. Rollins or (iv) Campus Crest, any Person that Michael S. Hartnett and Ted W.
Rollins (or members of his Immediate Family) Controls. For purposes hereof, the term “Control” of a
Person shall mean the power, directly or indirectly, to direct or cause the direction of management
and policies of such Person, whether through ownership of voting securities, by contract or
otherwise.




     Agreement. The meaning set forth in the introductory paragraph.




     Approved.
The meaning set forth in Section 2.2(a).




     Business Day. Any day other than a Saturday, Sunday or any day that banks are not
open for business in the city of Chicago.




     Campus Crest. The meaning set forth in the introductory paragraph.




     Campus Crest Group. The meaning set forth in Recitals.




     Campus Crest Notice. The meaning set forth in Section 2.1(a).




     Campus
Crest Preliminary Approval Notice. The meaning set forth in Section 2.3(a).




     Campus
Crest Rejection. The meaning set forth in Section 2.3(b).




     Company. The meaning set forth in the Recitals.




     Expansion. A Potential Development Project which would be either (i) an expansion of
a JV Student Housing Project, or (ii) adjacent to a JV Student Housing Project.




     HSRE. The meaning set forth in the introductory paragraph.




     HSRE Approval Notice. The meaning set forth in Section 2.2(a).




     HSRE Group. The meaning set forth in the Recitals.




     HSRE Notice. The meaning set forth in Section 2.3(a).



2









 







     HSRE Potential Acquisition Project. An existing Student Housing Project located within
the United States including Puerto Rico identified by the HSRE Group for potential acquisition
and/or investment.




     HSRE Potential Development Project. A Student Housing Project to be located within
the United States including Puerto Rico which the HSRE Group proposes to construct and develop.




     HSRE Preliminary Approval Notice. The meaning set forth in Section 2.1(a).




     Joint Venture. Any subsequent vehicle established by the HSRE Group and the Campus
Crest Group to own Student Housing Projects.




     JV Student Housing Project. Any Student Housing Project owned, in whole or in part,
by the Company, or any Joint Venture. Any Student Housing Project which is Preliminarily Approved
or Approved by the HSRE Group pursuant to the Operating Agreement or this Agreement shall be
deemed a JV Student Housing Project unless and until such date that the HSRE Group shall
disapprove or have been deemed to have disapproved such Student Housing Project.





     Non-Competition
Termination Date. The meaning set forth in Article V.




     Operating Agreement. The meaning set forth in the Recitals.




     Person. An individual, corporation, partnership, limited partnership, trust,
unincorporated organization, association or other entity.




     Potential Acquisition Project. An existing Student Housing Project located within the
United States including Puerto Rico identified by the Campus Crest Group for potential acquisition
and/or investment.




     Potential Development Project. A Student Housing Project to be located within the
United States including Puerto Rico which the Campus Crest Group proposes to construct and
develop.




     Preliminarily Approved. The meaning set forth in Section 2.1(a).




     Preliminary Review Items. The meaning set forth in Section 2.1 (a).




     Projected Stabilized Unleveraged Return. The meaning set forth in Section
2.1(b).




     Radius Restriction. One-half (1/2) mile.





     Rejection.
The meaning set forth in Section 2.1(b).



3









 






     Restricted Activities. The meaning set forth in Article III.




     ROFO Termination Date. The meaning set forth in Article V.




     Student Housing Project. Any real property designed and used primarily for the
purposes of a residential rental development consisting of rental units for a student
housing community.



ARTICLE II




RIGHT OF FIRST OPPORTUNITY



     2.1 HSRE Right of First Opportunity. Beginning on the date hereof and continuing
until the ROFO Termination Date, if the Campus Crest Group identifies a potential investment in a
Potential Development Project or Potential Acquisition Project, then the Campus Crest Group shall
provide the Company or any Joint Venture the right to develop or acquire such Potential
Development Project or Potential Acquisition Project in accordance with the terms set forth below:




     (a) Promptly after the Campus Crest Group identifies a Potential Development Project or
Potential Acquisition Project, the Campus Crest Group shall deliver notice thereof to HSRE
(“Campus Crest Notice”), and as soon as reasonably practicable thereafter, deliver to HSRE
those items described on Exhibit A as the Preliminary Review Items (the “Preliminary
Review Items”). In the event HSRE desires to proceed with the Potential Development Project
or Potential Acquisition Project, it shall deliver written notice thereof (“HSRE Preliminary
Approval Notice”) to Campus Crest within five (5) Business Days after receipt of the Campus
Crest Notice and all of the Preliminary Review Items, and such Potential Development Project
or Potential Acquisition Project shall be deemed “Preliminarily Approved” if such notice is
timely delivered. The failure of HSRE to deliver a HSRE Preliminary Approval Notice within
five (5) Business Days after receipt of the Campus Crest Notice and all the Preliminary
Review Items shall be deemed a disapproval of such Potential Development Project or Potential
Acquisition Project by HSRE.




     (b) If HSRE disapproves or is deemed to have disapproved such Potential Development
Project or Potential Acquisition Project (a “Rejection”), then the Campus Crest Group shall
have the right to pursue such Potential Development Project or Potential Acquisition Project
at any time during the term of this Agreement but only on substantially the same terms and
conditions as set form in the Preliminary Review Items submitted to HSRE, and neither the
Company, any Joint Venture nor HSRE shall have any interest therein; provided, however, that
in no event shall the Campus Crest Group have the right to engage in any Restricted Activity
prohibited under Article III hereof For purposes of this
Section 2.1(b), any
Potential Development Project or Potential Acquisition Project shall not be deemed to be “on
substantially the same terms and



4









 








conditions” if the Projected Stabilized Unleveraged Return (as defined below) for such
Potential Development Project or Potential Acquisition Project set forth in any proposal
offered to any third party is more than one hundred twenty percent (120%) higher than
the Projected Stabilized Unleveraged Return for such Potential Development Project or
Potential Acquisition Project, as the case may be, set forth in any proposal offered to
the HSRE Group. For purposes hereof, the term “Projected Stabilized Unleveraged
Retain” shall mean (i) the projected gross revenue from the property, less all projected
operating expenses for the property (including replacement reserves), divided by (ii)
the total cost of such Potential Development Project or Potential Acquisition Project.
For example, if the Projected Stabilized Unleveraged Return for a Potential
Development Project or Potential Acquisition Project that is presented by the Campus
Crest Group to the HSRE Group is ten percent (10%) and the HSRE Group declines to
participate in such investment, and the Campus Crest Group subsequently makes an offer
to a third party to invest in such Potential Development Project or Potential
Acquisition Project and the projections for such Potential Development Project or
Potential Acquisition Project set forth in such subsequent offer reflect a Projected
Stabilized Unleveraged Return of greater than twelve percent (12%) for any reason
(including, without limitation, cost savings or higher projected
rental rates), then the
Campus Crest Group shall again be obligated to offer the HSRE Group the opportunity to
invest in such Potential Development Project or Potential Acquisition Project pursuant
to the provisions of Section 2.1(a).



     2.2 Steps Following HSRE Preliminary Approval.




     (a) If HSRE Preliminarily Approves a Potential Development Project or Potential Acquisition
Project, then the Campus Crest Group shall, as soon as reasonably practicable after receipt of the
HSRE Preliminary Approval Notice, deliver to HSRE those items described on Exhibit A as
Additional Review Items that are reasonably capable of being produced or secured by the Campus
Crest Group (the “Additional Review Items”) with respect to such Potential Development Project or
Potential Acquisition Project, which are necessary in order for HSRE to present the Potential
Development Project or Potential Acquisition Project to its investment committee. In the event
HSRE desires to proceed with a Potential Development Project or Potential Acquisition Project, it
shall deliver written notice thereof (“HSRE Approval Notice”) to Campus Crest within ten (10)
Business Days after receipt of the Additional Review Items, and such Potential Development Project
or Potential Acquisition Project shall be deemed “Approved” if such notice is timely delivered;
provided, however, that the obligation of HSRE to fund any payments with respect to such Potential
Development Project or Potential Acquisition Project shall be subject to the terms and conditions
set forth in the Operating Agreement or, if applicable, the formation documents of any Joint
Venture. The failure of HSRE to deliver a HSRE Approval Notice within ten (10) Business Days after
receipt of the Review Items shall be a Rejection.



5









 






     (b) If HSRE Preliminarily Approves a Potential Development Project or Potential
Acquisition Project, but such Potential Development Project or Potential Acquisition Project
is subsequently Rejected, then the Campus Crest Group shall have the right to pursue such
Potential Development Project or Potential Acquisition Project at any time during the term
of this Agreement, and neither the Company nor HSRE shall have any interest therein;
provided, however, that in no event shall the Campus Crest Group have the right to engage in
any Restricted Activity prohibited under Article III hereof.



     2.3 Campus Crest Right of First Opportunity. Beginning on the date hereof and
continuing until the ROFO Termination Date, if (i) the HSRE Group identifies a potential
investment in a HSRE Potential Development Project or HSRE Potential Acquisition Project located
at a college or university where a JV Student Housing Project is located; (ii) such HSRE Potential
Development Project or HSRE Potential Acquisition Project is located outside of the Radius
Restriction of the JV Student Housing Project; (iii) relative to the JV Student Housing Project,
such HSRE Potential Development Project or HSRE Potential Acquisition Project is situated closer
to the student union building of the subject college or university, and (iv) the number of
full-time students enrolled at such college or university is less than 7,000 students, then the
HSRE Group shall provide the Company or any Joint Venture the right to develop or acquire such
HSRE Potential Development Project or HSRE Potential Acquisition Project in accordance with the
terms set forth below:




     (a) Promptly after the HSRE Group identifies a HSRE Potential Development Project or
HSRE Potential Acquisition Project, the HSRE Group shall deliver notice thereof to the Campus
Crest Group together with any Preliminary Review Items within the HSRE Group’s possession at
such time (“HSRE Notice”). In the event the Campus Crest Group desires to proceed with the
HSRE Potential Development Project or HSRE Potential Acquisition Project, it shall deliver written notice thereof (“Campus Crest Preliminary Approval Notice”) to the HSRE Group within
twenty-five (25) Business Days after receipt of the HSRE Notice. As soon as reasonably
practicable thereafter, the Campus Crest Group shall deliver to HSRE me Preliminary Review
Items and Additional Review Items pursuant to the provisions of Sections 2.1 and 2.2
and the procedures set forth in Sections 2.1 and 2.2. shall apply. The failure of the
Campus Crest Group to deliver a Campus Crest Preliminary Approval Notice within twenty-five
(25) Business Days after receipt of the HSRE Notice shall be deemed a disapproval of such
HSRE Potential Development Project or HSRE Potential Acquisition Project by the Campus Crest
Group.




     (b) If the Campus Crest Group disapproves or is deemed to have disapproved such HSRE
Potential Development Project or HSRE Potential Acquisition Project (a “Campus Crest
Rejection”), then the HSRE Group shall have the right to pursue such HSRE Potential
Development Project or HSRE Potential Acquisition Project at any time during the term of
this Agreement, and neither the Company nor the Campus Crest Group shall have any interest
therein; provided, however, that in no event shall the HSRE Group have the right to engage
in any Restricted Activity prohibited under Article III hereof.



6









 





ARTICLE III




NON-COMPETITION



     No member of the Campus Crest Group or HSRE Group shall, directly or indirectly, alone
or with others, engage in the planning, design, development, construction, ownership, management,
operation or leasing (collectively, the “Restricted Activities”) of any Student Housing Project
located within the Radius Restriction of any JV Student Housing Project, except to the extent such
activities are taken on behalf of the Company in accordance with the Operating Agreement and this
Agreement (or any Joint Venture that is in existence at such time, each in accordance with the
applicable partnership or operating agreement).



ARTICLE IV




REMEDIES



     Each party acknowledges that a violation of any of the covenants set forth in this Agreement
would cause irreparable damage to the party for whose benefit such covenant was intended which
could not be adequately compensated by monetary damages. Each party therefore agrees that in the
event of the violation or threatened violation by such party of any of such party’s covenants
hereunder, the other party for whose benefit such covenant was intended shall be entitled to seek
preliminary and permanent injunctive relief, upon due notice, to restrain such violation, in
addition to and without limiting any other remedy available to such party at law or in equity.



ARTICLE V 




TERM



     The term of this Agreement shall commence on the date hereof and shall end:



     (i) with respect to the right of first opportunity under Article II hereof, on the date (the
“ROFO Termination Date”) that the HSRE Group shall have funded at least Forty Million and 00/100
Dollars ($40,000,000), in the aggregate, of equity to the Company and/or any Joint Venture; and



     (ii) with respect to the non-competition provisions under Article III hereof, on the date
(the “Non-Competition Termination Date”) which is the earlier of (A) the date of the
sale of the last asset held by the Company or any Joint Venture, or (B) the sale or transfer of
one hundred percent (100%) of the interests in the Company and all Joint Ventures, if any, from
the HSRE Group to the Campus Crest Group, or vice-versa.



7









 






ARTICLE VI 




NOTICES



     Any and all notices to be served hereunder shall be in writing and shall be sent by
reputable overnight courier for next Business Day delivery addressed to the intended recipient at
its address set forth below, or sent by certified mail to the intended recipient at its address
set forth below. The addresses for the parties are as follows:



	 	 	 

	If to
HSRE, to it at:

	 	c/o HSRE
	 

	 	71 S. Wacker Drive
	 

	 	Suite 3575
	 

	 	Chicago, IL 60606
	 

	 	Attn: Christopher Merrill,
	 

	 	          Stephen M. Gordon
	 
	 	 
	With a copy (not constituting notice) to:

	 	 DLA Piper US LLP
	 

	 	203 N. LaSalle #1900
	 

	 	Chicago, IL 60601
	 

	 	Attn: Jesse A. Criz
	 
	 	 
	If to Campus Crest, to it at:

	 	c/o Campus Crest Group, LLC
	 

	 	2100 Rexford Rd, 4th Floor
	 

	 	Charlotte, NC 28211
	 

	 	Attention: F. Brian Schneiderman
	 
	 	 
	With a copy (not constituting notice) to:

	 	c/o Bradley Arant Rose & White LLP
	 

	 	One Federal Place
	 

	 	1819 Fifth Avenue North
	 

	 	Birmingham, AL 35203
	 

	 	Attention: Dawn Helms Sharff






or to such other address as a party hereto may designate from time to time in a written notice
served upon the other parties in accordance herewith. Any notice sent by reputable overnight
courier as provided above shall be deemed delivered on the next Business Day after delivery to
such courier. Any notice sent by mail as provided above shall be deemed delivered on the fifth
(5th) Business Day next following the postmark date which it bears.



ARTICLE VII




MISCELLANEOUS PROVISIONS



     7.1 Amendment. This Agreement shall not be amended, altered or modified
except by a written instrument signed by all the parties hereto.



8









 





     7.2 Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable or shall terminate pursuant to this Agreement, such provision shall be fully
severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable or terminated provision never comprised a part hereof, and the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or
unenforceable or terminated provision or by its severance herefrom. If any provision of this
Agreement or the application of such provision to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those as to which it is held invalid, shall not be affected.



     7.3 Applicable Law. This Agreement shall be governed by the laws of the State of
Delaware without regard to its conflict of law principles.



     7.4 Waiver. The failure to insist upon strict enforcement of any of the provisions
of this Agreement or of any agreement or instrument delivered pursuant hereto shall not be deemed
or construed to be a waiver of any such provision, nor to in any way affect the validity of this
Agreement or any agreement or instrument delivered pursuant hereto or any provision hereof or the
right of any party hereto to thereafter enforce each and every provision of this Agreement and
each agreement and instrument delivered pursuant hereto. No waiver of any breach of any of the
provisions of this Agreement or any agreement or instrument delivered pursuant hereto shall be
effective unless set forth in a written instrument executed by the party against which
enforcement of such waiver is sought, and no waiver of any such breach shall be construed or
deemed to be a waiver of any other or subsequent breach.



     7.5 Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or limit the scope,
extent or intent of this Agreement or any provision.



     7.6 Counterparts. This Agreement may be executed in multiple counterparts with
separate signature pages, each such counterpart shall be considered an original, but all of which
together shall constitute one and the same instrument.



     7.7 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.



     7.8 Arbitration. If any dispute, controversy or claim arises between the parties
hereto or their respective Affiliates with respect to whether either party is in breach or
default of its respective obligations hereunder, then the dispute shall be settled pursuant to
arbitration provisions set forth in Section 13.3 of the Operating Agreement.



[Signature Page to Follow]




9









 






     IN WITNESS WHEREOF, each of the parties has executed this Non-Competition and Right
of First Opportunity Agreement effective as of the date first set forth above.



	 	 	 	 	 	 	 

	Campus Crest:	 	CAMPUS CREST GROUP, LLC, a North Carolina limited liability company	 	 
	 
	 

	 	By:
	 	Madeira Group, LLC, its Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Michael S. Hartnett
 

Michael S. Hartnett
	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	HSRE:	 	HARRISON STREET REAL ESTATE CAPITAL LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher N. Merrill	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Christopher N. Merrill	 	 
	 

	 	Its:
	 	Manager	 	 






 









 







EXHIBIT A



PRELIMINARY REVIEW ITEMS



The Preliminary Review Items referenced in Section 2.1(a) shall include the following items:




	 	1.	 	Property Photographs
	 
	 	2.	 	Pro Forma Operating Budget
	 
	 	3.	 	Preliminary Marketing Plan
	 
	 	4.	 	Investment Summary (including market, property, location and jurisdiction information)
	 
	 	5.	 	Preliminary Site Plan*
	 
	 	6.	 	Preliminary Development Budget (including-estimated pre-development costs)*
	 
	 	7.	 	Estimated Construction Commencement and Completion Dates*
	 
	 	8.	 	Projected Lease-up Schedule Summary*







 




			
	*	 	For Potential Development Projects Only





ADDITIONAL REVIEW ITEMS



The Additional Review Items referenced in Section 2.2(a) shall include the following items:





	 	1.	 	Market Analysis (including demographic supply/demand study, market forecast and recent
market developments).
	 
	 	2.	 	Required permits and approvals or if any required permits and approvals are not in
possession of Campus Crest, then a summary of process to obtain such permits and
approvals.*
	 
	 	3.	 	Executed Agreements relating to purchase of real property or otherwise evidencing site
control.
	 
	 	4.	 	Identity of prospective construction lender(s) and any terms sheets or documentation with
construction lender(s) in Campus Crest’s possession (if no term sheets available, list of
prospective construction lender(s) and status of discussions therewith).*
	 
	 	5.	 	Contracts with architect, civil engineer and general contractor, as available.*
	 
	 	6.	 	Proposed Pre-Acquisition Due Diligence Budget (i.e., for Property acquisitions only).
	 
	 	7.	 	Any items listed on Exhibit C of the Operating Agreement as a Review Item or Exhibit E
of the Operating Agreement as a Funding Condition that are in Campus Crest’s possession.







 




			
	*	 	For Potential Development Projects Only






A-1











 





EXHIBIT I




FORM OF MONTHLY FINANCIAL STATEMENTS



(Attached)





 




			
	***	 	The Members acknowledge and agree that upon the written request of HSRE, Campus Crest shall
provide additional information including, but not limited to, the following: (i) additional
comments for month ending and year-to-date; and (ii) a more detailed breakout of Other Income to
include Admin Fees, Application Fees, late charges, NSF check fees, parking income, resident
chargebacks and other.










I-1









 













Campus Crest at

Summary Income Statement




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Month Ending	 	Year to Date
	 	 	9/30/2008	 	9/30/2008
	 	 	 	 	 	 	 	 	 	 	Variance $ Fav	 	Variance % Fav*	 	 	 	 	 	 	 	 	 	Variance $ Fav	 	Variance % Fav*
	 	 	Actual	 	Budget	 	(Unfav)	 	(Unfav)	 	Actual	 	Budget	 	(Unfav)	 	(Unfav)
	Revenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rental Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bad Debt
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Revenue
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Expenses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payroll
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Marketing
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Office and Administration
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Communication
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Utilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Travel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Repairs and Maintenance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Landscaping*
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Turnover Expense*
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Taxes*
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Insurance*
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Management Fee
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Professional Fees
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Resident Life
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Expenses

(as a % of Revenue)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Operating Income

(as a % of Revenue)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Interest Expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Earnings Before Non-Operating
Items
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Operating Items
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Funds from Operations
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Depreciation and Amortization
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Income (Loss)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 








 




			
	*	 	To be added to the current statement to meet requests by Harrison Street


















 








EXHIBIT J




FORM OF CONSTRUCTION STATUS REPORTS



(Attached)



J-1









 










	APPLICATIONANDCERTIFICATIONFORPAYIWNT aiadocument 0702 pageiofapa.
:TO(Owner):PROJECT:TheGroveAPPLICATIONNO:Distributionto:StudentApartments__^OWNERPERIODFROM:ARCHITEC
TTO:CONTRACTORContractorCampusCrestConstruction,LLC2100RexfordRdARCHITECT’SCharlotte,NC28211PROJECTN
O:_____ FINAL
__CONTRACTDATE:CONTRACTOR’SAPPLICATIONFORPAYMENTApplicationismadeforPayment,asshownbelow,inconnectio
nwiththeContract.CHANGEORDERSUMMARYZZ^^ZUZZContinuationSheet,AIADocumentG703,isattached.Changeorders
approvedADDITIONSDEDUCTIONSinpreviousmonthsbyThepresentstatusoftheaccountforthisContractisasfollows:
OwnerTOTALJ[1ORIGINALCONTRACTSUMApprovedthisMonthNumberDateApproved2NetchangebyChangeOrders_$-_CONTR
ACTSUMTODATE_$-TOTALCOMPLETED&STOREDTODATE”~~(ColumnGonG703)TOTALS§-__§-5Retafnage5_%#REF!Netchangeb
yChangeOrders$-_ortotalinColumnIonG7036TOTALEARNEDLESSRETAINAGE#REF!TheundersignedContractortothebes
tofhisknowledge,informationandbelieftheWorkcoveredbythisApplicationfor7LESSPREVIOUSCERTIFICATESFORPA
YMENTPaymenthasbeencompletedinaccordancewiththeContractDocuments,matanamountsnaveoeenpaidtommror
vvofk
lorwnicnpreviousCertificatesforPaymentwereissuedandpaymentsreceived8CURRENTPAYMENTDUE#REFIfromtheOwn
er,andthatcurrentpaymentshownhereinisnowdue.CONTRACTOR:Stateof:Countyof:Subscribedandsworntobeforeme
dayof,2008By:Date:NotaryPublicMyCommissionexpires:ARCHITECT’SCERTIFICATEFORPAYMENTInaccordancewithth
eContractDocuments,basedonon-siteobser-AMOUNTCERTIFIED#REF!vationsandthedatacomprisingtheaboveapplic
ation,theArchitect(Attachexplanationifamountcertifieddiffersfromtheamountappliedfor.)certifiestotheO
wnerthattheWorkhasprogressedtothepointARCHITECT:indicated;thattothebestofhisknowledge,informationand
belief,thequalityoftheWorkisinaccordancewiththeContractDocu-By:Date:ments;andthattheContractorisenti
tledtopaymentoftheAMOUNTThisCertificateisnotnegotiable,theAMOUNTCERTIFIEDispayableonlytotheContracto
rCERTIFIED.namedherein.Issuance,paymentandacceptanceofpaymentarewithoutprejudicetoanyrightsottheOwne
rorContractorunderthisContractAIADOCUMENTG702-CONTINUATIONSHEET • APRIL1978EDITION • AIA(R) • (C)1978THEAM
ERICANINSTITUTEOFARCHITECTS,1735NEWYORKAVE.,N.W.,WASHINGTON,D.C.2006





 









 










	CONTINlONSHEETAIADOCUMENTG703PAG
E.2.0FJ.PAGESAIADocumentG702,APPLICATIONANDCERTIFICATIONFORPAYMENT,containingAPPLICATIONNUMBER:0Cont
ractor’ssignedCertificationisattached,APPLICATIONDATE:Intabulationbelow,amountsarestatedtothenearest
dollar.PERIODFROM:0-Jan-OQUseColumn!onContractswherevariableretainageforlineitemsmayapply.TO:0-Jan-O
QARCHITECTSPROJECTNO:0ABCD|E|FjG|HIITEMDESCRIPTIONOFWORKSCHEDULEDWORKCOMPLETEDT° TAL
COMPLETEDRETAINAGENo.VALUE’IThisApplicationIANDSTOREDBALANCEPreviousIStoredMaterialsTODATE%TOFINISHA
pplicationsWorkinPlace(notinDorE)(D+E+F)G/CC-G12345a5b678910’11121314151617181920212223242526272829;
        .||-|-|-|-|-|O.QQ%|-|AIADOCUMENTG702’CONTINUATIONSHEET • APRIL1978EDITION • AIA(R) • (C)1978THEAMERICANINS
TITUTEOFARCHITECTS,1735NEWYORKAVE.,N.W.,WASHINGTON,D.C.2006TROY





 









 










	mKIIINVIUINonCCIAIAUUUUMENlCj/ltt/”..
^rw3C_,avrjtr*/Vjeo..^AlADocurm’02,APPLICATIONANDCERTIFICATIONFORPAYMENT,containingAPPLICATIONNUMBER
:0Contractor’ssiynedCertificationisattached.APPLICATIONDATE:Intabulationbelow,amountsarestatedtothen
earestdollar.PERIODFROM:0-Jan-OOUseColumnIonContractswherevariableretainageforlineitemsmayapply.TO:0
-Jan-OOARCHITECT’SPROJECTNO:0AjBICID|.E|F.|GjjH[IITEMDESCRIPTIONOFWORKSCHEDULEDWORKCOMPLETEDTOTALCOM
PLETEDRETAINAGENo.VALUEIThisApplication[ANDSTOREDBALANCEPrevious(StoredMaterialsTODATE%TOFINISHAppli
cationsWorkinPlace(notinDorE)(D+E+F)G/CC-G1234567891011121314151617181920212223242526272829303132333
4





 









 










	
111tauuiauunr—v,dinuuniacmsoiaicuiumencaicoiuuiiar.. —
^rcr\iwurr\\Jm.U-Jean-uwAIADOCUMF702 • CONTINUATIONSHEET • APRIL1978EDITION • AIA(R) • (C)1978.”‘”.THEAMERIC
        ,...\ISTITUTEOFARCHITECTS,1735NEWYORKAVE.,N.W.,WASHINGTON,D.C.2th,..





 









 










	
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ILENDERIbudgetIREVISEDI1iFUNDSIEQUmTn.IiLINE-ITEMBUO6ETreallocatlonPROJECTTOTALLOANOISBATD1SBAT”..On
vtlDrawnBalancetoDESCRIPTIONtBUDGETEQUITYPROCEEDSCLOSINGCLOSiHG.ilBSBOOtlaDateComplete-AMPCOST:.Land
f-$-S-t$-i-RegionalPartnerFees^_«-^.—^-..;^_-Survey^- • —RealEstateTaxa/lnsurance :::
-ClosingCosts-_^— • _-._’olalLandCosts_$-$-ji-S$-i—HARDCOSTS:”~~^~~ConstructionContract :
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SUBTOTALHARDCOSTSi-’j,-$-t-t~-S~*"«-*tSOFTCOSTS:’~’,~AdvisoryFee_$-^»i • $-t-%-AppraisalFee^^^^_;—Arc
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        .;-3roundLease-: n _ t - r
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EXHIBIT K




FORM OF ACQUISITION BUDGET AND DEVELOPMENT BUDGET



(Attached)



K-1









 





CAMPUS CREST

DEVELOPMENT BUDGET




Project Unit Mix




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Unit Count	 	Type	 	Beds	 	Sq. Ft.	 	Total SF
	 
	 	2BRs	 	 	0	 	 	 	839	 	 	 	—	 
	 
	 	3BRs	 	 	0	 	 	 	1,180	 	 	 	—	 
	0
	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 
	Total Buildings
	 	 	16	 	 	 	 	 	 	 	 	 	 	 	0	 






	 	 	 	 	 	 	 
	 	 	Total	 	Dollars
	SOURCES:	 	Dollars	 	Per Unit
	Equity
	 	 	—	 	 	#DIV/0!
	Debt
	 	 	—	 	 	#DIV/0!
	 
	 	 	 	 	 
	 
	Total
	 	 	—	 	 	#DIV/0!
	 
	 	 	 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Unit	 	Cost	 	Total	 	Dollars
	 	 	USES:	 	Units	 	of Meas.	 	Per Unit	 	Dollars	 	Per Unit
	DEVELOPMENT	 	Land Cost
	 	 	 	 	 	acres	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Land Closing Costs
	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	RDP Compensation
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Survey
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Real Estate Taxes/Insurance
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total Land Costs
	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Architect
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Civil Engineer
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Landscape Architect
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Traffic Study
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Geotechnical Report
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Environmental
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total Design/Engineering Costs
	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Loan Origination Fees
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Advisory Fees
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Appraisal Fees
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Market Study Fees
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Construction Interest
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Loan Closing Costs
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Lender Inspections
	 	 	 	 	 	Months	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total Financing Costs
	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Development Fee
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Legal Fees-Development
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Impact Fees
	 	 	 	 	 	unit	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Acccounting Fees & Comp. Dep’n
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Municipality Fees
	 	 	 	 	 	ea	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Builders Risk Insurance
	 	 	 	 	 	Months	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	Travel
	 	 	 	 	 	Months	 	 	 	 	 	 	—	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total Development Fees, Permits & Costs
	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 







 









 






CAMPUS CREST

DEVELOPMENT BUDGET



Project Unit Mix




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Unit Count	 	Type	 	Beds	 	Sq. Ft.	 	Total SF
	 
	 	2BRs	 	 	0	 	 	 	839	 	 	 	—	 
	 
	 	3BRs	 	 	0	 	 	 	1,180	 	 	 	—	 
	0
	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 






	 	 	 	 	 	 	 	 	 

	INITIAL OPS BUDGET	 	Corporate Marketing/Support
	 	ea	 	 	—	 
	 	 	Site Operations
	 	ea	 	 	—	 
	 	 	Site Marketing
	 	ea	 	 	—	 
	 	 	Model/Trailer
	 	ea	 	 	—	 
	 	 	Final Cleaning
	 	Is	 	 	—	 
	 	 	 
	 	 	 	 	 
	 	 	Total Marketing and Pre-opening
	 	 	 	 	—	 
	 	 	 
	 	 	 	 	 	 
	CONSTRUCTION	 	Payroll/Overhead
	 	Months	 	 	—	 
	 	 	Construction Management Fee
	 	ea	 	 	—	 
	 	 	Bond Premiums
	 	ea	 	 	—	 
	 	 	Permits/Licensing
	 	Buildings	 	 	—	 
	 	 	Surveying/Engineer
	 	ea	 	 	—	 
	 	 	Plans/Blueprints
	 	ea	 	 	—	 
	 	 	Testing/Geotech
	 	ea	 	 	—	 
	 	 	Travel
	 	Months	 	 	—	 
	 	 	Sales Tax
	 	tbd	 	 	—	 
	 	 	Gross Receipts Tax
	 	tbd	 	 	—	 
	 	 	 
	 	 	 	 	 
	 	 	Total Construction Fees & Cost
	 	 	 	 	—	 
	 	 	 
	 	 	 	 	 	 
	 	 	Small Tools
	 	Months	 	 	—	 
	 	 	Temp. Water-Consumption
	 	Months	 	 	—	 
	 	 	Temp. Power-Consumption
	 	Months	 	 	—	 
	 	 	Temp. Toilets
	 	Months	 	 	—	 
	 	 	Temp. Telephones
	 	Months	 	 	—	 
	 	 	Safety
	 	Months	 	 	—	 
	 	 	Field Office
	 	Months	 	 	—	 
	 	 	FieldOffice Supplies
	 	Months	 	 	—	 
	 	 	Equipment Rental
	 	Months	 	 	—	 
	 	 	Gas & Oil
	 	Months	 	 	—	 
	 	 	General Labor
	 	Months	 	 	—	 
	 	 	Waste Removal
	 	Months	 	 	—	 
	 	 	Postage
	 	Months	 	 	—	 
	 	 	Final Cleaning
	 	ea	 	 	—	 
	 	 	 
	 	 	 	 	 
	 	 	Total Job-General Conditions Cost
	 	 	 	 	—	 
	 	 	 
	 	 	 	 	 	 
	SITEWORK	 	 
	 	 	 	 	 	 
	 	 	Sediment & Erosion
	 	Is	 	 	—	 
	 	 	Construction Entrances
	 	Is	 	 	—	 
	 	 	Temp Access Roadways (Stone)
	 	Is	 	 	—	 
	 	 	Dewatering
	 	Is	 	 	—	 
	 	 	Temp. Water-Installation
	 	Is	 	 	—	 
	 	 	Temp Facility Ground Lease
	 	Is	 	 	—	 
	 	 	 
	 	 	 	 	 
	 	 	Temporary Facilities
	 	 	 	 	—	 
	 	 	 
	 	 	 	 	 	 
	 	 	Clear & Grub
	 	Is	 	 	—	 
	 	 	Grading
	 	acres	 	 	—	 
	 	 	Cut & Fills
	 	acres	 	 	—	 
	 	 	Retaining Walls
	 	Is	 	 	—	 
	 	 	 
	 	 	 	 	 
	 	 	Grading, Walls, Fill, Cut Total
	 	 	 	 	—	 







 









 






CAMPUS CREST

DEVELOPMENT BUDGET




Project Unit Mix




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Unit Count	 	Type	 	Beds	 	Sq. Ft.	 	Total SF
	 
	 	2BRs	 	 	0	 	 	 	839	 	 	 	—	 
	 
	 	3BRs	 	 	0	 	 	 	1,180	 	 	 	—	 
	0
	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 






	 	 	 	 	 	 	 
	Water Service
	 	Is	 	 	—	 
	Sanitatry Sewer Service
	 	Is	 	 	—	 
	Storm Water
	 	Is	 	 	—	 
	 
	 	 	 	 	 
	Utilities — Wet
	 	 	 	 	—	 
	 
	Video
	 	Is	 	 	—	 
	Internet
	 	Is	 	 	—	 
	Landline Phone
	 	Is	 	 	—	 
	 
	 	 	 	 	 
	Utilities — Structured Wiring
	 	 	 	 	—	 
	 
	 	 	 	 	 	 
	Water Service
	 	If	 	 	—	 
	Sewer Service
	 	If	 	 	—	 
	Water Service Pump Station
	 	Is	 	 	—	 
	 
	 	 	 	 	 
	Off-Site Improvements
	 	 	 	 	—	 
	 
	 	 	 	 	 	 
	Asphaltic Paving, Striping & Signage
	 	sf	 	 	—	 
	 
	Curb
	 	If	 	 	—	 
	Sidewalks
	 	sf	 	 	—	 
	 
	 	 	 	 	 
	Site Concrete
	 	 	 	 	—	 
	 
	 	 	 	 	 	 
	Landscape
	 	Is	 	 	—	 
	Irrigation
	 	Is	 	 	—	 
	Fencing — Chain Link
	 	sf	 	 	—	 
	Fencing — Decorative
	 	sf	 	 	—	 
	Entrance Gates
	 	ea	 	 	—	 
	Card Reader Access
	 	Is	 	 	—	 
	 
	 	 	 	 	 
	Landscape, Fencing, Irrigation
	 	 	 	 	—	 
	 
	 	 	 	 	 	 
	Entry/Sign Monument
	 	Is	 	 	—	 
	B-Ball Court
	 	Is	 	 	—	 
	V-Ball Court
	 	Is	 	 	—	 
	Barbeque Grill w/lron
	 	Is	 	 	—	 
	Fire Pit Area
	 	Is	 	 	—	 
	Pool
	 	Is	 	 	—	 
	Skimmer
	 	Is	 	 	—	 
	Kool Deck
	 	Is	 	 	—	 
	Blue Bottom
	 	Is	 	 	—	 
	Large Size
	 	Is	 	 	—	 
	Compactor — SOG
	 	Is	 	 	—	 
	Compactor — Enclosure
	 	Is	 	 	—	 
	Compactor — Gate
	 	Is	 	 	—	 
	 
	 	 	 	 	 
	Site Amenities
	 	 	 	 	—	 
	 
	Site Contingency
	 	Is	 	 	—	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Total Sitework Cost
	 	 	 	 	—	 






 









 





CAMPUS CREST

DEVELOPMENT BUDGET




Project Unit Mix




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Unit Count	 	Type	 	Beds	 	Sq. Ft.	 	Total SF
	 
	 	2BRs	 	 	0	 	 	 	839	 	 	 	—	 
	 
	 	3BRs	 	 	0	 	 	 	1,180	 	 	 	—	 
	0
	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 






	 	 	 	 	 	 	 	 	 	 	 

	VERTICAL IMPROVEMENTS
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Concrete
	 	 	 	 	 	 	 	 	 	 
	Masonry
	 	 	 	 	 	 	 	 	 	 
	Metals
	 	 	 	 	 	 	 	 	 	 
	Wood & Plastics
	 	 	 	 	 	 	 	 	 	 
	Thermal/Moisture Protection
	 	 	 	 	 	 	 	 	 	 
	Doors & Windows
	 	 	 	 	 	 	 	 	 	 
	Finishes
	 	 	 	 	 	 	 	 	 	 
	Specialties
	 	 	 	 	 	 	 	 	 	 
	Mechanical
	 	 	 	 	 	 	 	 	 	 
	Electrical
	 	 	 	 	 	 	 	 	 	 
	Apartment Appliances
	 	units	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	Residence Buildings
	 	 	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Clubhouse
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Pavilion
	 	ea	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Building Contingency
	 	ea	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total Vertical Improvements
	 	 	 	 	—	 	 	 	 	 
	 
	FF&E
	 	 	 	 	 	 	 	 	 	 
	Apartment Furniture
	 	 	 	 	—	 	 	 	 	 
	Apartment Upholstry
	 	 	 	 	—	 	 	 	 	 
	Apartment Mattress & Frames
	 	 	 	 	—	 	 	 	 	 
	Apartment FF&E Shipping, Storage, Installation
	 	 	 	 	—	 	 	 	 	 
	Clubhouse Furniture
	 	 	 	 	—	 	 	 	 	 
	Clubhouse Amenities
	 	 	 	 	—	 	 	 	 	 
	Clubhouse Fixtures
	 	 	 	 	—	 	 	 	 	 
	Clubhouse Equipment
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Total FF&E
	 	 	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Per Unit

	Total Project Costs
	 	 	 	 	—	 	 	#DIV/0!

	 
	 	 	 	 	 	 	 	 	 







 











 





EXHIBIT L




FORM OF COMPLETION AND COST OVERRUN GUARANTY



(Attached)








L-1









 





COMPLETION AND COST OVERRUN GUARANTY




     THIS COMPLETION AND COST OVERRUN GUARANTY (this “Guaranty”) is made this                      day
of                     , 201                    , by CAMPUS CREST COMMUNITIES OPERATING PARTNERSHIP, LP, a Delaware
limited partnership (the “Guarantor”), for the benefit of [CAMPUS CREST AT
                    , LLC/LP], a Delaware limited [liability company/partnership] (“Owner”):



RECITALS:




     A. Owner is wholly-owned by HSRE-CAMPUS CREST I, LLC, a Delaware limited liability company
(the “Company”) that is a joint venture between HSRE-CAMPUS CREST IA, LLC, a Delaware
limited liability company (“HSRE Member”) and CAMPUS CREST VENTURES III, LLC, a Delaware
limited liability company (“Developer Member”). HSRE Member and Developer Member have
entered into that certain Amended and Restated Operating Agreement of the Company, dated as of
October                     , 2010 (as the same may from time to time be amended hereafter, the “Operating
Agreement”), confirming the formation of the Company for purposes of developing, maintaining,
owning, leasing and selling various student housing projects, including a student housing project
commonly known as                     , which is to be acquired, developed and operated by Owner (the
“Project”);



     B. The Owner has engaged an affiliate of Developer Member, Campus Crest Development, Inc., a
Delaware corporation (“Developer”), to be responsible for overseeing the design,
scheduling, permitting, construction and marketing (for sale and lease) of the Project (the
“Development”) pursuant to and as contemplated by a Development Agreement dated of even
date herewith (the “Development Agreement”), in accordance with the Plans and
Specifications (as defined in the Development Agreement), the Development Budget (as defined in the
Development Agreement), the Project Development Schedule (as defined in the Development Agreement),
the Construction Contract (as defined in the Development Agreement), and all requirements of
Construction Lender (as defined in the Development Agreement);



     C. As an affiliate of Developer and Developer Member, Guarantor will derive material benefit
from the Operating Agreement, the Development Agreement and the completion of the Development; and



     D. As a condition to HSRE Member’s obligation to make capital contributions to the Company in
connection with the Development, HSRE Member has caused Owner to require that Guarantor guarantee
to Owner the completion of the Development and the payment of Cost Overruns (as defined in the
Development Agreement) on the terms set forth below.



AGREEMENT:




     For valuable consideration, whose receipt and sufficiency are acknowledged, and in
consideration of the matters described in the foregoing Recitals, which Recitals are incorporated
herein and made a part hereof, Guarantor agrees as follows:



 









 





     1. Guaranty. Guarantor absolutely, unconditionally and irrevocably guarantees to
Owner the following (the “Guaranteed Obligations”):




	 	(a)	 	the completion of the Development substantially in accordance
with the Operating Agreement, the Development Agreement, the Plans and
Specifications, the Development Budget, the Project Development Schedule, the
Construction Contract, and all requirements of Construction Lender, free and
clear of all liens, except for those that Developer is permitted to contest
pursuant to the terms of the Development Agreement;
	 
	 	(b)	 	the payment of any Cost Overruns in accordance with the terms
of the Development Agreement, such payment to be made to the Owner or directly
to the third party entitled thereto or as directed by the Construction Lender;
and
	 
	 	(c)	 	the payment of all Enforcement Costs (as defined below).




Guarantor agrees and acknowledges that the guaranty of the payment of all Cost Overruns under
subsection (b) above shall not be construed to limit the guaranty of completion under subsection
(a) above.




     2. Waiver of Defenses. Guarantor agrees that the obligations, covenants and
agreements of Guarantor under this Guaranty shall not be affected or impaired by any act of Owner,
or any event or condition except full performance of the Guaranteed Obligations. Guarantor agrees
that, without full performance of the Guaranteed Obligations, the liability of Guarantor hereunder
shall not be discharged, and Guarantor waives any defense based on (a) lack of authority or
bankruptcy or insolvency of the Company, Owner, Developer, Developer Member, or any other person or
entity; (b) any failure of the HSRE Member, the Company or the Owner to commence action against the
Developer, the Developer Member or any other person or entity, or to file or enforce a claim
against the estate (either in administration, bankruptcy, or any other proceeding) of the
Developer, Developer Member or any other person or entity; (c) any failure of the HSRE Member, the
Company or the Owner to give notice of the existence, creation, or incurring of any new or
additional obligations or indebtedness or of any action or non-action on the part of any other
person or entity in connection with the obligations of Developer under the Development Agreement
and/or Developer Member under the Operating Agreement; (d) [Intentionally Omitted]; (e) any failure
on the part of the HSRE Member, the Company or the Owner to ascertain the extent or nature of the
liability of any person or entity liable for the obligations of Developer under the Development
Agreement or Developer Member under the Operating Agreement, or any failure on the part of the
Company or the Owner to disclose to Guarantor any material facts affecting the obligations of
Developer under the
Development Agreement or Developer Member under the Operating Agreement; (f) any lack of
acceptance or notice of acceptance of this Guaranty by the Owner; (g) any lack of presentment,
demand, protest, or notice of demand, protest, nonpayment or nonperformance with respect to the
obligations of Developer under the Development Agreement and Developer Member under the Operating
Agreement (other than as expressly set forth herein or therein); (h) any lack of due diligence by
the Company or the Owner in obtaining reimbursement from any person or entity



2









 







now or hereafter
liable for the obligations of Developer under the Development Agreement or Developer Member under
the Operating Agreement; (i) any deficiency in the ability of the Company or the Owner to collect
from any persons or entities now or hereafter liable for the obligations of Developer under the
Development Agreement and Developer Member under the Operating Agreement; (j) the renewal or
extension of time for the payment or performance of the Guaranteed Obligations or any other
agreement relating to the Guaranteed Obligations, whether made with or without the knowledge or
consent of Guarantor; (k) any transfer, waiver, compromise, settlement, modification, surrender or
release of the provisions of the Development Agreement, the Construction Contract, the Operating
Agreement or the requirements of Construction Lender; (l) the existence of any defenses to
enforcement of the provisions of the Development Agreement, the Construction Contract, the
Operating Agreement or the requirements of Construction Lender other than mandatory counter-claims;
(m) the existence of any set-off, claim, reduction or diminution of the Guaranteed Obligations, or
any defense of any kind or nature, which Guarantor may have against Developer, Developer Member,
the Owner or the Company or which any party has against Owner; (n) the addition of any and all
other endorsers, guarantors, obligors and other persons liable for the payment and performance of
the Guaranteed Obligations and the acceptance of any and all other security for the payment and
performance of the Guaranteed Obligations; or (o) any increase or other change in the scope or
extent of the Guaranteed Obligations (other than Owner-Initiated Change Orders, as defined in the
Development Agreement, or other costs for which Owner is responsible pursuant to the terms of the
Development Agreement); all whether or not Guarantor shall have had notice or knowledge or any act
or omission referred to in the foregoing clauses (a) through (o) of this Paragraph. Guarantor
intends that Guarantor shall remain liable hereunder as a principal until all Guaranteed
Obligations shall have been satisfied in full, notwithstanding any fact, act, event or occurrence
which might otherwise operate as a legal or equitable discharge of a surety or guarantor.



     3. Unconditional Liability. This is a guaranty of payment and performance and not a
guaranty of collection. The liability of Guarantor under this Guaranty shall be direct and
immediate and not conditional or contingent on the pursuit of any remedies against Developer,
Developer Member, the Company, the Owner or any other person or entity. Guarantor waives any right
to require that an action be brought against Developer, Developer Member, the Company, the Owner or
any other person or entity or to require that resort be had to any collateral. Upon a default in
payment or performance of any of the Guaranteed Obligations, Owner may enforce its rights, powers
and remedies under the Development Agreement or hereunder, in any order, without demand or notice
of any kind (except notice and cure periods as may be required by the Operating Agreement or the
Development Agreement), and without exercising any rights or remedies against Developer, Developer
Member, the Company or any other person or entity, and all such rights, powers and remedies
available to the Owner shall be
nonexclusive and cumulative of all other available rights, powers and remedies. If any of the
Guaranteed Obligations are partially paid or partially performed, for whatever reason, this
Guaranty shall remain in full effect, and Guarantor shall remain liable for the entire remaining
unpaid or unperformed Guaranteed Obligations. Guarantor waives and releases any right of
subrogation against the Developer, Developer Member, the Company, the Owner or any other person or
entity until such time as the Guaranteed Obligations are paid in full, and waives any rights to
enforce any remedy which the Owner may have against the Developer, Developer



3









 







Member, the Company or
any other person or entity until such time as the Guaranteed Obligations are paid in full.



     4. Waiver of Exemptions. Guarantor waives, to the fullest extent permitted by law,
all rights to the benefits of any moratorium, reinstatement, marshaling, forbearance, valuation,
stay, extension, redemption, appraisement, and exemption now or hereafter provided by any
applicable law.



     5. Enforcement Costs. If: (i) this Guaranty is placed in the hands of one or more
attorneys for collection or is collected through any legal proceeding; (ii) one or more attorneys
is retained to represent Owner in any bankruptcy, reorganization, receivership, or other
proceedings affecting creditors’ rights and involving a claim under this Guaranty, or (iii) one or
more attorneys is retained to represent Owner in any other proceedings whatsoever in connection
with the possible enforcement of this Guaranty, then Guarantor shall pay to Owner upon demand all
reasonable attorneys’ fees, costs and expenses, including, without limitation, court costs, filing
fees, and all other costs and expenses incurred in connection therewith (all of which are referred
to herein as “Enforcement Costs”), in addition to all other amounts due hereunder.



     6. Intentionally Deleted.



     7. Modification of Guaranty. This Guaranty may not be changed orally and no
obligation of Guarantor can be released or waived by the Owner except by a writing signed by the
Owner. This Guaranty shall be irrevocable by Guarantor until all Guaranteed Obligations have been
completely satisfied. This Guaranty shall be reinstated if any payment received by the Company or
the Owner from Developer or Guarantor is returned or rescinded due to any law relating to
bankruptcy, insolvency or other relief of debtors or for any other reason.



     8. Successors and Assigns. The provisions of this Guaranty shall be binding on
Guarantor and its successors and assigns and shall inure to the benefit of the Owner and its
successors and assigns.



     9. Governing Law; Jurisdiction. This Guaranty and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the State of North Carolina and
any applicable law of the United States of America. To the fullest extent permitted by law,
Guarantor hereby unconditionally and irrevocably waives any claim to assert that the law of any
other jurisdiction governs this Guaranty.



     The parties agree to submit to the jurisdiction of the State of North Carolina and United
States District Court for the Western District of North Carolina. The parties further agree that
venue shall lie in the state courts of Mecklenburg County, North Carolina and the United
States District Court for the Western District of North Carolina (Charlotte Division).



     10. Notices. Any notices, requests or other communications required or permitted to
be given hereunder must be in writing and shall be delivered by reputable overnight courier
(including Federal Express and UPS) or mailed by United States registered or certified mail, return
receipt requested, postage prepaid and addressed to each party at its address as set forth below.
Any such notice, request or other communication shall be considered given on (a) the



4









 







date of
receipt, if sent by registered or certified U.S. mail, postage prepaid, or (b) one (1) business day
after having been sent by a nationally recognized overnight courier service. By giving at least
ten days’ prior written notice thereof, any party may from time to time and at any time change its
mailing address hereunder. Any notice, request, or other communication required or permitted to be
given by any party hereunder may be given by such party’s counsel.



	 	 	 	 	 

	 

	 	Address of Guarantor:
	 	c/o Campus Crest Communities, Inc.

2100 Rexford Rd, 4th Floor

Charlotte, NC 28211

Attention: Chief Financial Officer
	 
	 	 	 	 
	 

	 	With copy to:
	 	Bradley Arant Boult Cummings LLP

One Federal Place

1819 Fifth Avenue North

Birmingham, AL 35203

Attention: Dawn Helms Sharff
	 
	 	 	 	 
	 

	 	Address of Owner:
	 	c/o Harrison Street Real Estate Capital, LLC

71 S. Wacker Drive

Suite 3571

Chicago, IL 60606

Attention: Stephen Gordon






     11. Entire Agreement. This Guaranty supersedes all prior discussions and agreements
among the parties with respect to the subject matter hereof and contains, together with the
Operating Agreement and the Development Agreement, the entire understanding among the parties with
respect to the subject matter hereof.



     12. Descriptive Headings. Headings and other similar references are for the purpose
of facilitating reference to this Guaranty and do not supplement, limit or otherwise vary the text
of this Guaranty.



     13. References. References to Sections shall be deemed to refer to the appropriate
Sections of this Guaranty. Unless otherwise specified in this Guaranty, the terms “herein,”
“hereof,” “hereunder” and other terms of like or similar import, shall be deemed to refer to this
Guaranty as a whole, and not to any particular Section hereof. The term “including” shall mean
including, without limitation.



     14. Individual Enforcement. Owner shall be entitled to enforce this Guaranty and to
take any action with respect hereto without any requirement to join any party (other than
Guarantor) in any such enforcement or other action.



     15. Time of Essence. Time is of the essence with respect to payment and performance
of the Guaranteed Obligations.



5









 





     16. Arbitration. If any dispute, controversy or claim arises between the parties
hereto or their respective Affiliates (as defined in the Operating Agreement) with respect to
whether either party is in breach or default of its respective obligations hereunder, then the
dispute shall be settled pursuant to arbitration provisions set forth in Section 13.3 of
the Operating Agreement.



6









 




Executed as of the date first written above.




	 	 	 	 	 	 	 	 	 	 	 

	 	 	CAMPUS CREST COMMUNITIES

OPERATING PARTNERSHIP, LP	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Campus Crest Communities GP, LLC,	 	 
	 	 	 	 	Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Campus Crest Communities, Inc.

Its Sole Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	 

Donald L. Bobbitt, Jr.
	 	 
	 

	 	 	 	 	 	Title:
	 	Chief Financial Officer	 	 





















 








EXHIBIT M




FORM OF ADDITIONAL PROJECT SCHEDULE



     The undersigned member of HSRE-Campus Crest I, LLC, a Delaware limited liability company, by
their execution of this Additional Project Schedule, acknowledge the matter set forth below for the
purposes of confirming each member’s Capital Account balance and agree that such terms are hereby
incorporated by reference into that certain Operating Agreement of HSRE-Campus Crest I, LLC, as if
fully set forth therein.



	 	 	 	 	 

	Project:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Acquiring Entity:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Capital Contributions:
	 	 	 	 






	 	 	 	 	 	 	 	 	 
	 	 	Contribution for	 	 	Total Capital	 
	Member	 	                     Project	 	 	Account Balance	 
	HSRE:
	 	$	                    	 	 	$	                    	 
	 
	 	 	 	 	 	 	 	 
	Campus Crest:
	 	$	                    	 	 	$	                    	 






[Signature Page to Follow]




M-1









 





     IN WITNESS WHEREOF, the parties hereto have executed this Additional Project Schedule as of
this ____ day of _____, 20___.





	 	 	 	 	 	 	 	 	 

	Campus Crest:	 	 
	 
	 	 	 	 	 	 	 	 
	CAMPUS CREST VENTURES, III, LLC, a 

Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Campus Crest Properties, LLC,

a North Carolina limited liability

company, its Manager
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 








	 	 	 	 	 	 	 	 	 	 	 

	HSRE:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	HSRE-CAMPUS CREST IA, LLC, a Delaware limited liability
company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	HSREP II Holding, LLC, a Delaware limited

liability company, its sole member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HSRE REIT II, a Maryland investment trust, a member
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:
	 	Stephen Gordon	 	 
	 

	 	 	 	 	 	Its:
	 	Trustee	 	 












Signature Page to Additional Project Schedule



M-2









 





EXHIBIT N




FORM OF SERVICES AGREEMENT



(To Be Attached)



N-1









 





EXHIBIT O




FORM OF CONSTRUCTION AGREEMENT



(To Be Attached)



O-1









 





SCHEDULE 1




SCHEDULE OF POOL ONE PROJECTS


1. San Angelo Property. Angelo State University. San Angelo, Texas.



2. Moscow Property. University of Idaho. Moscow, Idaho.



3. Huntsville Property . Sam Houston State University. Huntsville, Texas.



4. Conway Property. Central Arkansas University. Conway, Arkansas.



5. Lawrence Property. University of Kansas. Lawrence, Kansas.



6. Georgia Southern Property. Georgia Southern University. Statesboro, Georgia.




S-1









 





SCHEDULE 2




SCHEDULE OF HSRE CAPITAL CONTRIBUTIONS



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	HSRE	 	 	HSRE	 	 	 	 
	 	 	Capital	 	 	Capital	 	 	HSRE	 
	 	 	Contribution	 	 	Contribution	 	 	Capital	 
	 	 	(effective date -	 	 	(effective date -	 	 	Contribution	 
	Property	 	1/1/09)	 	 	3/26/10)	 	 	Total	 
	Conway

	 	$	4,037,918	 	 	$	0	 	 	$	4,037,918	 
	Statesboro

	 	$	6,453,070	 	 	$	0	 	 	$	6,453,070	 
	Huntsville

	 	$	7,191,000	 	 	$	0	 	 	$	7,191,000	 
	Moscow

	 	$	4,315,232	 	 	$	332,820	 	 	$	4,648,052	 
	San Angelo

	 	$	3,664,822	 	 	$	332,820	 	 	$	3,997,642	 
	Lawrence

	 	$	3,998,030	 	 	$	332,820	 	 	$	4,330,850	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	Total

	 	$	29,660,072	 	 	$	998,460	 	 	$	30,658,532	 
	 
	 	 	 	 	 	 	 	 	 






SCHEDULE OF DISTRIBUTIONS TO HSRE




	 	 	 	 	 
	 	 	Distribution to	 
	 	 	HSRE	 
	Property	 	(10/19/10)	 
	Conway

	 	$	852,191	 
	Statesboro

	 	$	1,829,735	 
	Huntsville

	 	$	2,293,286	 
	Moscow

	 	$	1,783,515	 
	San Angelo

	 	$	1,446,810	 
	Lawrence

	 	$	1,583,610	 
	 
	 	 	 	 
	 
	 	 	 
	Total

	 	$	9,789,147	 
	 
	 	 	 







S-2