exv10w58





Exhibit
10.58


SECOND AMENDMENT

TO THE

OPERATING AGREEMENT

OF

HSRE-CAMPUS CREST I, LLC




     This
SECOND AMENDMENT (this “Amendment”) to the Operating Agreement of HSRE-CAMPUS CREST I,
LLC, a Delaware limited liability company (the
“Company”) is entered into as of March 26, 2010
(the “Effective Date”) 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:




     A. The internal affairs of the Company are governed by the Operating Agreement of the Company,
dated as of November 7, 2008, as amended by that certain First Amendment to the Operating Agreement
of the Company, dated as of November 12, 2009 (as amended, the
“Operating Agreement”), by and
between HSRE and CAMPUS CREST.



     B. The Members desire to amend the Operating Agreement in order to incorporate certain
additional terms relating to that certain HSRE-CC JV I Assignment Agreement, dated as of March
26, 2010 (the “JV I Purchase Agreement”) entered into by and between HSRE and CAMPUS CREST,
pursuant to which the parties have agreed to the sale, transfer, conveyance and assignment by
CAMPUS CREST of a 9.9% Membership Interest in the Company to HSRE.



     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 hereby agree as follows:



     1. Terms. Except as otherwise specifically set forth in this Amendment, all
capitalized terms used herein shall have the meanings set forth in the Operating Agreement.



     2. Pre-Construction Funding for Development Projects, and Pre-Development Costs;
Pre-Acquisition Costs for Acquisition Properties. The third sentence of Section 3.3(a)
of the Operating Agreement is hereby amended by deleting the current sentence and replacing it with
the following:




“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.”



 









 





     3. Distributions of Net Cash Flow to the Members. Sections 4.1(a) of the Operating
Agreement is hereby amended by deleting the existing clauses (iv) and (v) of Sections 4.1(a) and
replacing them with the following new clauses (iv) and (v):




     “(iv) Fourth, eighty-five percent (85%) to HSRE and fifteen percent (15%) to
Campus Crest, until HSRE has received cumulative Distributions constituting a 15%
Cash on Cash Return (not taking into account any loans made by HSRE and payments
received thereon); and




     (v) Thereafter, the balance, sixty percent (60%) to HSRE and forty percent
(40%) to Campus Crest.”



     4. Distributions of Capital Proceeds to the Members. Sections 4.1(b) of the Operating
Agreement is hereby amended by deleting the existing clauses (iv) and (v) of Sections 4.1(b) and
replacing them with the following new clauses (iv) and (v):




     “(iv) Fourth, eighty-five percent (85%) to HSRE and fifteen percent (15%) to
Campus Crest, until HSRE has received cumulative Distributions constituting an
eighteen percent (18%) Internal Rate of Return (not taking into account any loans
made by HSRE and payments received thereon); and




     (v) Thereafter, the balance, sixty percent (60%) to HSRE and forty percent
(40%) to Campus Crest.”



     5. Pledge of Right to Distributions. Section 4.1 of the Operating Agreement is hereby
amended by adding the following new language at the end of Section 4.1 as the new last sentence of
such Section:




“In the event of (A) a termination of The Grove Student Properties, LLC, a North
Carolina limited liability company, d/b/a Campus Crest Real Estate Management, as
the Property Manager under Section 5.01 of any of the property management agreements
with any of the Subsidiaries or (B) a Campus Crest Triggering Event, Campus Crest
hereby pledges to HSRE its right to receive any distributions under this Section 4.1
until such time as the Repayment Amount (as defined in that certain Management Fee
Prepayment Agreement, dated March 26, 2010, by and between The Grove Student
Properties, LLC, HSRE and certain other parties) is paid in full to
HSRE.”



     6. Definition of Participating Percentages. The last sentence of the definition of
“Participating Percentages” in Exhibit A to the Operating Agreement is hereby amended by
deleting the existing last sentence and replacing it with the following:



     “As of the date hereof, the Participating Percentages of each Member are as follows:



	 	 	 	 	 

	HSRE
	 	 	99.9	%
	Campus Crest
	 	 	0.1	%	”






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     7. Exhibit D to Operating Agreement. HSRE and CAMPUS CREST hereby agree that (i) the
Participating Percentages of the Members shall be 99.9% HSRE and 0.1% CAMPUS CREST, respectively,
and (ii) the Operating Agreement shall be amended by deleting the existing Exhibit D to the
Operating Agreement and replacing it with the following:



	 	 	 	 	 	 	 	 	 
	 	 	Initial	 	Participating
	Member	 	Capital Contribution	 	Percentage
	Campus Crest
	 	$	10	 	 	 	0.1	%
	HSRE
	 	$	90	 	 	 	99.9	%
	 
	 	 	 	 	 	 	 	 
	Total
	 	$	100	 	 	 	100	%






     8. Forfeiture of Incentive Distributions. Pursuant to Section 5 of the JV I Purchase
Agreement, if any Forfeiture Event (as defined therein) occurs and is not cured within any
applicable cure period, CAMPUS CREST shall no longer be entitled to any Incentive Distributions
under Section 4.1 of the Operating Agreement (as amended by this Amendment), in accordance with the
terms and conditions set forth in Section 5 of the JV I Purchase Agreement.




     9. Pooling
of Cost Overruns and Savings by School Year Related to Funding of
Development Projects. HSRE and Campus Crest hereby agree
that (i) the terms and conditions of the agreement between the
parties outlined in the e-mail message attached hereto as
Exhibit A (the “E-mail Agreement”) shall
apply with respect to the pooling of savings and cost overruns
related to development projects delivered with respect to the various
school years and (ii) in the event of any conflict between the E-mail
Agreement and the Development Agreement or the Operating Agreement,
the terms and conditions of the E-mail Agreement shall control.





     10. Confirmation of Operating Agreement. Except as set forth herein, the terms and
provisions of the Operating Agreement are hereby confirmed, ratified and approved in their
entirety, and shall continue in full force and effect.



     11. Further Acts. The parties hereto agree to do such further acts and execute,
deliver, file and record such further documents and instruments as any of them may deem to be
reasonably necessary or advisable to effect and evidence the transactions contemplated by this
Amendment.



     12. Effective Date. Each provision of this Amendment shall be effective as of the
Effective Date.



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     13. Counterparts. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.



[Signatures on following page]






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SECOND AMENDMENT

TO THE OPERATING AGREEMENT

OF HSRE-CAMPUS CREST I, LLC




COUNTERPART SIGNATURE PAGE


IN WITNESS WHEREOF, each of the parties has executed this Amendment, as of the date first set forth
above, and agrees to be bound by this Amendment.




	 	 	 	 	 
	 	MEMBERS:



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/
Michael S. Hartnett	 
	 	 	Name:  	Michael S. Hartnett 	 
	 	 	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, a member 	 



					
	 	
 	 
	 	By:  	/s/
Stephen Gordon	 
	 	 	Name:  	Stephen Gordon 	 
	 	 	Its:        Trustee 	 
	 




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