Document:

MOODY NATIONAL REIT II, INC. 8-K

EXHIBIT
10.7

 

PROMISSORY
NOTE

 

	$29,100,000.00	September
    13, 2017

 

FOR
VALUE RECEIVED, RI II MC-HOU, LLC, a Delaware limited liability company (“Maker”) promises to pay to the order
of AMERICAN NATIONAL INSURANCE COMPANY, a Texas insurance company, (American National Insurance Company, its successors or assigns
being hereinafter called “Noteholder”) the sum of TWENTY-NINE MILLION ONE HUNDRED THOUSAND AND 00/100 DOLLARS
($29,100,000.00) or so much thereof as may be disbursed from time to time pursuant to that certain Construction Loan Agreement
(the “Loan Agreement”) of even date herewith by and between Noteholder and Maker, together with interest on the
outstanding principal balance hereof from the date of each advance hereunder until paid at the rate of five percent (5%) per annum
(the “Contract Rate”).

 

The
initial phase of the loan evidenced hereby (the “Interest Only Phase”) shall commence as of the date hereof and
shall terminate on September 30, 2019. Commencing on October 1, 2017 and continuing on the first day of each and every calendar
month thereafter through and including the payment due on October 1, 2019, Maker shall pay monthly installments of interest only,
in arrears, at the Contract Rate on the principal balance hereof outstanding from time to time. Such monthly installments of interest
only during the Interest Only Phase shall be calculated based on a three hundred sixty-five (365) or three hundred sixty-six (366)
day year, as applicable.

 

On
and after October 1, 2019, all interest shall be computed on the basis of a three hundred sixty (360) day year comprised of twelve
(12) equal thirty (30) day months. Commencing on November 1, 2019, and continuing on the first day of each and every succeeding
calendar month thereafter until the entire indebtedness shall have been fully paid, Maker shall pay equal monthly installments
of principal and interest at the Contract Rate in the amount of ONE HUNDRED SEVENTY THOUSAND ONE HUNDRED Ill-MEN AND 70/100 DOLLARS
($170,115.70) each, or such lesser monthly amount necessary to amortize the outstanding principal balance of the Note on the last
day of the Interest Only Phase over a twenty-five (25) year period at the Contract Rate.

 

Maker
understands that the monthly installments of interest and principal on this Note referred to above are based upon a hypothetical
twenty-five (25) year amortization; that such installments will not amortize fully the principal balance by the Scheduled Maturity
Date; that the final installment will be a “balloon” payment; and that Noteholder has no obligation to refinance such
“balloon” payment.

 

As
monthly installments are paid, they are to be applied first to the payment of interest accrued on the entire amount of said indebtedness
unpaid at the time of said payment, and the balance, if any, shall be applied to the payment of principal.

 

This
Note shall mature on October 1, 2024 (the “Scheduled Maturity Date”). Notwithstanding anything to the contrary
contained in this Note, the entire outstanding principal balance of this Note, together with all accrued and unpaid interest thereon
computed as aforesaid and any other sums due hereunder shall become due and payable, without offset and without further notice,
on the Scheduled Maturity Date.

 

    1

    

    

 

Both
principal and interest are payable at the office of American National Insurance Company, in the Mortgage and Real Estate Investment
Department, 2525 South Shore Blvd., Suite 207, League City, Texas 77573 or at such place as Noteholder may from time to time designate
in writing.

 

Maker
acknowledges and agrees that (i) the monthly installments described above are based on the Contract Rate; and (ii) Noteholder
may, but is not obligated to, recalculate the monthly installments due under this Note based upon a change in interest rate resulting
from the calculation of interest at the Default Rate (as defined below) as provided in this Note, and Maker shall pay any such
recalculated monthly installment amounts.

 

This
Note is given for a loan of $29,100,000.00 and is secured by a Deed of Trust, Security Agreement and Financing Statement (as amended,
the “Deed of Trust”) of even date herewith from Maker to Darryl H. Levy, Trustee, on the property (the “Mortgaged
Property”) described in Exhibit A  attached hereto and made a part hereof. This Note, the Deed of Trust, the Loan
Agreement, that certain Absolute, Unconditional Payment Guaranty (the “Payment Guaranty”) executed of even date
herewith by Brett C. Moody (the “Guarantor”) in favor of Noteholder, that certain Absolute, Unconditional Completion
Guaranty (the “Completion Guaranty”) executed of even date herewith by Guarantor in favor of Noteholder and any
and all other documents securing, evidencing or relating to the Note are sometimes individually referred to as a “Loan
Document” and collectively as “Loan Documents”. The Payment Guaranty and the Completion Guaranty are
individually and collectively referred to as the “Guaranty”.

 

It
is expressly agreed that if (a) Maker shall be in default in the payment when due of any principal, interest or installment
of principal and interest or any other sums due and payable pursuant to the terms, conditions, covenants, agreements, of this
Note or any Loan Documents; (b) Maker shall be in default under the other terms, conditions, covenants, agreements,
representations or warranties contained in this Note or any other Loan Document, and such default shall continue beyond any
applicable cure period provided herein or therein; or (c) any Maker, or any drawer, acceptor, endorser, guarantor, surety or
accommodation party or other person liable upon or for the payment of the indebtedness evidenced by this Note and/or for the
performance of the landlord’s obligations pursuant to any lease on any portion of the Mortgaged Property (each hereinafter
called “Other Liable Party” or “Other Liable Parties”) (i) admits in writing its inability
to pay its debts generally as they become due, (ii) files a petition in bankruptcy as a Debtor or seeking reorganization or
an arrangement or otherwise to take advantage of any state or federal bankruptcy or insolvency law, (iii) makes an assignment
for the benefit of creditors, (iv) files a petition for or consents to the appointment of a receiver of any of its assets or
a part thereof, (v) without its consent, a petition in bankruptcy is filed against it, or an order, decree or judgment is
entered by a court of competent jurisdiction appointing a receiver over its property, or approving a petition filed against
it seeking a reorganization or an arrangement of it under any bankruptcy or insolvency law, and such petition, order, decree
or judgment is not vacated, set aside or stayed within ninety (90) days from the date of entry, (vi) dissolves, or its
existence as a legal entity terminates, other than any Permitted Transfer, as such term is defined in the Deed of
Trust, (vii) is a party to any merger or consolidation, other than any Permitted Transfer, is the subject of any transaction
known as or similar to a leveraged buy-out or is involved in any material corporate restructuring, however designated, then
Noteholder, in any of such events, shall have the right and option, without notice or demand, to accelerate the maturity of
this Note and declare the entire unpaid balance of this Note, both outstanding principal and accrued but unpaid interest,
immediately due and payable and/or may enforce such other rights as are available to Noteholder under the terms
and conditions of any Loan Document or otherwise available at law or in equity. Upon such acceleration by Noteholder in the
event of default as aforesaid, whether such event of default be voluntary or involuntary, Maker specifically agrees that
Noteholder shall be entitled to collect the prepayment fee when due as hereafter provided in addition to the balance of
indebtedness due under this Note. All rights and remedies available to Noteholder shall be cumulative and not exclusive,
failure to exercise any of such rights upon default shall not constitute a waiver of the right to exercise any of them at any
time, and the exercise or beginning to exercise of any one of such rights and remedies shall not preclude the simultaneous or
later exercise of any or all of such rights and remedies.

 

    2

    

    

 

Maker
hereby agrees to pay all expenses incurred, including, but not limited to, reasonable attorney’s fees if this Note is placed in
the hands of an attorney for collection or if this Note is collected through probate, bankruptcy or other judicial proceedings.

 

Prior
to default hereon, unpaid principal shall bear interest from the date hereof at the Contract Rate hereinabove provided. From and
after any default and continuing so long as Noteholder has not agreed in writing to a waiver or cure of such default, all unpaid
principal (whether or not overdue) and unpaid interest shall bear interest at the lesser of the Maximum Nonusurious Rate (as hereinafter
defined), or seventeen percent (17%) (hereinafter referred to as the “Default Rate”), whether or not Noteholder
has exercised its option to accelerate the maturity of this Note and to declare the entire unpaid principal indebtedness and accrued
interest due and payable. Provided, however, at any time after the tenth (10th) day a delinquent payment is
due but has not been received by Noteholder, Noteholder, in its sole and absolute discretion, may elect to charge a rate of interest
or impose a delinquency charge which is less than the amount which would result from applying the Default Rate provided for in
the preceding sentence, but any such delinquency charge for any delinquent installment or other amount shall not exceed five percent
(5%) of such delinquent installment or amount, as applicable. Any such election by Noteholder to charge such lesser amount shall
not constitute a waiver of Noteholder' s right to impose the Default Rate during the existence of any future defaults.

 

In
the event of default hereunder and following acceleration of maturity by Noteholder as aforesaid, a tender of payment of the amount
necessary to satisfy the entire indebtedness evidenced by this Note or secured by the aforementioned liens made at any time prior
to a foreclosure sale shall be deemed to constitute an attempted evasion by Maker of the following restrictions on the right of
prepayment and shall be deemed a voluntary prepayment hereunder, and such payment must therefore include a prepayment fee equal
to the lesser of (a) the prepayment fee provided for in the next succeeding paragraph, or if no fee is provided, 8% on the then
outstanding principal balance, or (b) the maximum amount, which when added to all other interest charged, paid or contracted for
hereunder, would not exceed the Maximum Nonusurious Rate for this loan.

  

    3

    

    

 

This
Note shall not be prepayable in whole or in part prior to November 1, 2021. Maker reserves the privilege of paying this Note in
full (but not in part) on or after November 1, 2021, on at least thirty days but not more than ninety days prior written notice;
provided, however, that in addition to the principal and accrued interest payable upon any such prepayment, Maker agrees and promises
to pay an amount equal to a percentage of the principal remaining unpaid on the interest payment date next preceding such prepayment
according to the following schedule: 3% during the period from November 1, 2021 through October 31, 2022, 2% during the period
from November 1, 2022 through October 31, 2023, 1% beginning on November 1, 2023, and thereafter until the loan is paid in full;
provided, further, that no premium shall be due on payments made within one hundred and twenty (120) days of the Scheduled Maturity
Date or as a result of the application of insurance or condemnation proceeds to the repayment of the indebtedness due under this
Note.

 

Except
as otherwise expressly provided in the Deed of Trust with respect to notice of default, Maker hereof, and all Other Liable Parties,
jointly and severally waive presentment for payment, protest and demand, notice of non-payment, protest, notice of protest, notice
of acceleration, notice of the intent to accelerate, the filing of suit, and diligence in collecting this Note or enforcing any
of the security herefor, and agree to the substitution, exchange or release of any such security or the release of any party primarily
or secondarily liable hereon, and further agree that it will not be necessary for the holder hereof, in order to enforce payment
of this Note by it, to first institute suit or exhaust its remedies against Maker or any Other Liable Party, or to enforce its
rights against any security herefor, and consent to any one or more rearrangements, modifications, extensions or postponements
of the time, amount or manner of payment of this Note on any terms or any other indulgences with respect thereto, without notice
thereof to any of them and without discharging or reducing any of their liability hereunder. Noteholder may transfer this Note,
and the rights and privileges of Noteholder under this Note shall inure to the benefit of Noteholder’s successors, and assigns.

 

This
Note shall be governed by and construed in accordance with Texas law and applicable federal law. It is the intention of
Noteholder and Maker that this Note and all provisions hereof and of all other Loan Documents conform in all respects to the
laws of the State of Texas and applicable federal law pertaining to usury. Notwithstanding any provision in this Note or in
any other Loan Documents to the contrary, it is expressly provided that in no case or event should the aggregate amounts,
which by applicable law are deemed to be interest with respect to this Note or any other Loan Documents ever exceed the
“Maximum Nonusurious Rate” (as defined below). In this connection, it is expressly stipulated and agreed that it is
the intention of Noteholder and Maker to contract in strict compliance with applicable usury laws of the State of Texas
and/or of the United States (whichever permits the higher rate of interest) from time to time in effect. Nothing in this Note
or other Loan Documents shall ever be construed to create a contract to pay, as consideration for the use, forbearance or
detention of money, interest at a rate in excess of the Maximum Nonusurious Rate. If under any circumstances the aggregate
amounts contracted for, charged or paid with respect to this Note, whether by fulfillment of any provision hereof or of any
mortgage, deed of trust, loan agreement or other document now or hereafter securing, evidencing or relating to the
indebtedness evidenced hereby, which by applicable law are deemed to be interest, would produce an interest rate greater than
the Maximum Nonusurious Rate, Maker and any other person obligated to pay this Note, stipulates that the amounts will be
deemed to have been paid, charged or contracted for as a result of an error on the part of Maker, any other person obligated
for the payment of this Note and Noteholder and upon discovery of the error or upon notice thereof from Maker or the party
making such payment, Noteholder or the party receiving such excess payment shall, at its option, refund the amount of such
excess payment or credit the excess payment against any other amount due under this Note. In addition, all sums paid or
agreed to be paid to the holder of this Note for the use, forbearance or detention of monies shall be, to the extent
perniitted by applicable law, amortized, prorated, allocated and spread through the full stated term of this Note so that the
amount of interest on account of the indebtedness evidenced hereby does not exceed the maximum permitted by law. The
provisions of this paragraph shall control all existing and future agreements between Maker and Noteholder. At all times, if
any, as Title Four of the Texas Finance Code shall establish the maximum nonusurious rate, the “Maximum
Nonusurious Rate” shall be the highest permitted rate based upon the “weekly ceiling” (as defined in Title
Four of the Texas Finance Code) from time to time in effect; but Noteholder may from time to time, as to current or future
balances, implement, withdraw, and reinstate any ceiling under such Title as an alternative, including the right to reinstate
the weekly ceiling, or revise the index, formula or the provisions of law used to compute the Maximum Nonusurious Rate by
notice to Maker, if and to the extent permitted by and in the manner in, such Title. If the Maximum Nonusurious Rate is
increased or removed by statute or other governmental action subsequent to the date of this Note, then the new Maximum
Nonusurious Rate, if any, will be applicable to this Note from the effective date of the new Maximum Nonusurious Rate, unless
such application is precluded by the statute or governmental action or by the general law of the jurisdiction governing this
Note. As a condition precedent to any claim seeking usury penalties against Noteholder, Maker shall provide written notice to
Noteholder advising Noteholder in reasonable detail of the nature and amount of the violation, and Noteholder shall have
sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such
excess interest in Maker or crediting such excess interest against the indebtedness then owing by Maker to such
Noteholder.

 

    4

    

    

 

Maker
warrants and represents to Noteholder and all holders of the indebtedness evidenced hereby, that (i) all loans evidenced by this
Note shall be “business loans” as that term is used in the Depository Institutions Deregulatory and Monetary Control
Act of 1980, as amended, (ii) that this transaction is specifically exempt under Section 226.3(a) of Regulation Z issued by the
Board of Governors of the Federal Reserve System, and Title I and Title V of the Consumer Credit Protection Act, and (iii) that
such loans are for business, commercial, investment or other similar purposes and not primarily for personal, family, household
or agricultural use as such terms are used in the Texas Credit Code and/or the Texas Finance Code.

 

Without
limiting in any way the obligations of Guarantor under the Guaranty and except as otherwise specifically provided below, in
the event of a default in the payment of this Note by Maker, or any other default under any other Loan Document, after
Completion, Noteholder’ s sole recourse against Maker shall be against the Mortgaged Property described in the Deed of Trust
securing this Note, and Noteholder shall not be entitled to recover any deficiency judgment against Maker if the foreclosure
or recovery of such Mortgaged Property is not sufficient to pay the amount owed by Maker hereunder. Notwithstanding the
foregoing limitation of liability, Maker shall be fully liable (a) for fraud or material misrepresentation made in or in
connection with this Note or any other Loan Document or the apparent purpose of which is to deprive Noteholder of the
security for this Note; (b) for failure to pay taxes, assessments, charges for labor or materials or any other charges which
can create liens on any portion of the Mortgaged Property (less any money held by Noteholder in an escrow account established
as a reserve for such payment); (c) for the misapplication of (i) proceeds of insurance covering any portion of the Mortgaged
Property, or (ii) proceeds of the sale or condemnation of any portion of the Mortgaged Property; (d) for failure to maintain,
repair or restore the Mortgaged Property in accordance with any Loan Document (less any money held by Noteholder in an escrow
account established as a reserve for such payment); (e) for any act or omission knowingly or intentionally committed or
permitted by Maker which results in the waste, damage or destruction to the Mortgaged Property, but only to the extent such
events are not covered by insurance proceeds which are received by Noteholder; (f) for the return to Noteholder of all
unearned advance rentals and security deposits paid by tenants of the Mortgaged Property or any guarantors of the leases of
such tenants which are not rightfully refunded to or which are forfeited by such tenants or guarantors; (g) for the return
of, or reimbursement for, all personal property taken from the Mortgaged Property by or on behalf of Maker except as
expressly permitted in the Deed of Trust; (h) for any liability of Maker pursuant to the provision contained in the Deed of
Trust pertaining to hazardous or toxic materials or substances; (i) for any liability of Maker pursuant to the Closing
Certificate executed by Maker in favor of Noteholder on or about the date hereof or Certificate and Indemnity
Regarding Hazardous Substances executed by Maker and delivered to Noteholder in connection with the indebtedness evidenced by
this Note; (j) for any delay after a default which is not cured, in deeding over the Mortgaged Property to Noteholder or
failure to cooperate in a consensual foreclosure within 90 days of Noteholder’ s request; (k) for failure to maintain or
alter the Mortgaged Property in compliance with the Americans with Disabilities Act of 1990, as it may be amended from time
to time; and (1) for all court costs and reasonable attorneys' fees incurred in connection with the enforcement of one or
more of the above subparagraphs (a) through (k), inclusive.

 

    5

    

    

 

Time
is of the essence of this Note. This Note shall be interpreted, construed and enforced in accordance with the internal laws of
the State of Texas, without regard to Texas law with respect to conflict of laws. Where the context so requires references to
any gender shall include the others and references to the singular shall include the plural and vice versa. If any term, covenant,
condition, agreement, representation or warranty of the Note or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Note, or the application of such term, covenant, condition, agreement,
representation or warranty to persons or circumstances other than those as to which it is held invalid or unenforceable, shall
not be affected thereby and each term, covenant, condition, agreement, representation or warranty of this Note shall be valid
and enforced to the fullest extent permitted by law.

 

[REMAINDER
OF PAGE INTENTIONALLY RESERVED]

  

    6

    

    

 

	 	MAKER:
	 	 
	 	RI II MC-HOU, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	/s/ Brett C. Moody	 
	 	Name: Brett C. Moody
	 	Title: President

 

Signature
Page to Promissory Note

 

     

    

    

 

EXHIBIT
A

 

Mortgaged
Property

 

Unrestricted
Reserve “A”, in Block 1, of RESIDENCE INN MEDICAL CENTER, in Harris County, Texas, according to the map or plat thereof,
recorded under Film Code No. 674452, of the Map Records of Harris County, Texas.

 

Exhibit
A to Promissory NoteMOODY NATIONAL REIT II, INC. 8-K

EXHIBIT
10.8

 

CONSTRUCTION
LOAN AGREEMENT

 

THIS
CONSTRUCTION LOAN AGREEMENT (this “Agreement”) is made and entered into and to be made effective as of
September 13, 2017 by and between RI II MC-HOU, LLC, a Delaware limited liability company (“Maker”), whose
address is 6363 Woodway, Suite 110, Houston, Texas 77057, and AMERICAN NATIONAL INSURANCE COMPANY, a Texas insurance company (“Noteholder”),
whose address is Attention: Mortgage and Real Estate Investment Department, 2525 South Shore Blvd., Suite 207, League
City, Texas, 77573.

 

RECITALS:

 

A.       Maker
is the owner of fee simple title to the Land (as defined herein).

 

B.       Maker
desires to improve the Land by constructing the Improvements (as defined herein) thereon.

 

C.       Maker
has applied to Noteholder for the Loan (as defined herein) to fund the development and construction of the Improvements on the
Land as more fully provided in this Agreement. The Loan is to be secured by a deed of trust lien encumbering the Project (as defined
herein).

 

D.       Noteholder
has agreed to make the Loan for such purpose pursuant to the Commitment, on the terms, conditions and provisions set forth in
the Commitment.

 

E.       Capitalized
terms used but not defined in this Agreement shall have the meaning given such terms in Exhibit G attached hereto and incorporated
herein by this reference.

 

NOW,
THEREFORE, in consideration of Ten and 00/100 Dollars ($10.00) paid in hand and the mutual covenants and agreements of the parties
hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed as follows:

 

ARTICLE
I.

THE LOAN

 

Section
1.1      The foregoing recitals to this Agreement are incorporated herein and made a part hereof by reference to the same
extent as if herein set forth in full.

 

Section
1.2       For purposes of evidencing the Loan and securing Noteholder in the payment of the Loan, all interest thereon and all other
amounts at any time due from Maker to Noteholder, and for the purpose of securing the performance by Maker of all of the covenants
and undertakings of Maker as set forth herein and as set forth in the below listed documents, the following documents have been
or will be executed and delivered to Noteholder:

 

(a)      The
Note, or so much thereof as shall be advanced, which Note shall be due and payable on the Scheduled Maturity Date, as that term
is defined therein or any earlier maturity of the Note provided therein;

 

(b)      the
Security Instrument;

 

     

     

    

 

(c)       the
Completion Guaranty;

 

(d)      the
Payment Guaranty;

 

(e)      the
Tax Lien Guaranty;

 

(f)       the
Lease Assignment;

 

(g)      the
Environmental Indemnity;

 

(h)      the
Closing Certificate;

 

(i)       the
Financing Statement; and

 

(j)       the
Assignment of Plans and Specifications.

 

Maker
agrees that a default by Maker, Guarantor or any other applicable party under any one or more of the Loan Documents which is not
cured within any applicable notice, grace and/or cure period shall automatically be deemed to be a default by Maker under each
of the Loan Documents without further notice or curative grace period being given to Maker.

 

ARTICLE
II. 

CONSTRUCTION
OF IMPROVEMENTS

 

Section
2.1       Maker covenants and agrees to perform or cause to be performed any and all of the construction obligations
(including, without limitation, material compliance with all design, development, construction and delivery schedules and
deadlines) and to cause Completion to occur on or before twenty-four (24) months after the date of this Agreement (the “Completion
Deadline”), subject to Force Majeure (as defined below). Additionally, Maker covenants and agrees to cause (a)
approval of the Plans and Specifications by the Inspecting Engineer and, if required under the Franchise Agreement, the
Franchisor, and (b) completion of all foundations of the Improvements (as necessary) not later than one hundred twenty (120)
days after the date of this Agreement, subject to Force Majeure (as defined below). Notwithstanding the foregoing, Noteholder
acknowledges that, prior to the date of this Agreement, the Inspecting Engineer reviewed and approved the Plans and
Specifications.

 

Section
2.2       Maker covenants and agrees to commence construction within the earlier of (a) sixty (60) days after the date of this Agreement
or (b) the date by which Maker is required to commence construction as required by the Franchise Agreement, and thereafter to
continue diligently, subject to Force Majeure and other delays, including weather delays, with the construction of the Improvements
in accordance with the requirements of the Franchise Agreement and the Project Budget in order for Completion to occur on or before
the earlier of (x) the Franchise Construction and Delivery Deadlines and (y) the Completion Deadline. Maker acknowledges and agrees
that the Project Budget requires Maker to pay into (or provide evidence that it has already paid into) the Project equity in the
amount of Maker’s Equity.

 

Section
2.3    The Improvements shall be constructed in substantial accordance with the Plans and
Specifications. The identification and acceptance of the Plans and Specifications by Noteholder
shall in no way constitute acceptance or warranty by Noteholder or the Inspecting Engineer, defined below, as to the
sufficiency and/or adequacy of the Improvements and/or any of the component parts thereof, nor shall it constitute an
acceptance or warranty as to the sub-soil conditions involved in the Land. The Plans and Specifications are incorporated
herein and made a part hereof by reference to the same extent as if herein set forth in full, and the same shall not be
changed or modified in any material respect without the prior written consent of Noteholder and the Inspecting Engineer, such
consent not to be unreasonably withheld, conditioned or delayed.

 

     2

     

    

 

Section
2.4       The Improvements shall be constructed with new, unused sound materials and in a good and workmanlike manner and in accordance
with any requirements set forth in the Franchise Agreement. The Improvements shall be constructed by the Contractor, in accordance
with a guaranteed maximum price Construction Contract to be submitted to and approved by Noteholder. Subject to the provisions
of Section 3.2(a) below, the Construction Contract and the sums payable by Maker to the Contractor thereunder shall not
be modified, altered or amended in any material respect without the prior written consent of Noteholder in each instance, such
consent not to be unreasonably withheld, conditioned or delayed. The Improvements shall be constructed substantially in accordance
with the Plans and Specifications, in compliance with any requirements set forth in the Franchise Agreement and in compliance
with all applicable statutes, ordinances and regulations of all public authorities having jurisdiction thereof. Maker hereby certifies
to Noteholder that the copy of the Construction Contract to be delivered to Noteholder is a true, correct and complete copy of
such contract, and that, except as contained therein or subsequently approved by Noteholder, such approval not to be unreasonably
withheld, conditioned or delayed, and except as set forth on Exhibit D, there will be no other agreements, arrangements,
undertakings or understandings between Maker and any other person or entity, relative to construction of the Improvements. Maker
hereby represents and warrants to Noteholder that no subdivision approval or re-subdivision of the Mortgaged Property or rezoning
is required for construction of the Improvements or to comply with applicable statutes, ordinances and regulations of any public
authorities having jurisdiction thereof.

 

Section
2.5       As additional security for the performance of Maker’s obligations hereunder, Maker hereby collaterally
transfers and assigns to Noteholder as set forth herein and in the Loan Documents, all of Maker’s right, title and
interest in and to all present and future: (i) construction contracts (including, without limitation, the Construction
Contract, as defined below), subcontracts, architectural contracts (including, without limitation, the Owner-Architect
Agreement, as defined below), all guaranties of construction contracts, engineering contracts, plans and specifications
including the Plans and Specifications, building permits (to the extent assignable), bonds in favor of or for the benefit of
Maker, development agreements, affecting the Land and recorded or to be recorded in the applicable recording records of the
jurisdiction(s) in which the Land is located), and all other present and future contracts, agreements, permits (to the extent
assignable) surveys, plats (to the extent assignable), franchises, including without limitation the Franchise Agreement (to
the extent assignable) and authorizations (to the extent assignable) in any way related to the development, construction
and/or operation of the Improvements, including all extensions, renewals and modifications of or substitutions for any of the
foregoing; (ii) income, profits, operating accounts, receipts, funds and accounts receivable to the extent related to the
Improvements, held by or owing to Maker or any agent of Maker subject to a license in favor of Maker; (iii) Equipment,
Inventory, Fixtures, Accounts, Contract Rights, Documents, Instruments and General Intangibles of Maker to the extent
assignable, as such terms are defined in. the Uniform Commercial Code as adopted in the States of Texas and Minnesota to the
extent related to the Improvements; and (iv) other “Collateral” as such term is defined (respectively) in
the Security Instrument.

 

     3

     

    

 

(a)       The
foregoing collateral assignment in this Section 2.5, at Noteholder’s sole and absolute option, shall, to the maximum
extent permitted by law (subject to Noteholder’s liens and security interests under the Loan Documents, which liens and
security interests shall not merge in any such vesting), become unconditionally and absolutely vested, automatically, without
notice and without the requirement of any further action on the part of Noteholder, upon default by Maker in the performance of
any of its obligations hereunder or under any of the other Loan Documents, provided that Maker has failed to cure any such default
within the notice and time periods specified in Article IV hereof and/or in the other Loan Documents. In addition, the
foregoing collateral assignment shall be a security agreement, and Noteholder shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code as adopted in Texas and any other applicable law, including, without limitation, the right
to require the personal property described in this Section 2.5 to be assembled by Maker and the right to foreclose.

 

(b)       Notice
by Noteholder of any default hereunder or under any of the other Loan Documents, Maker’s failure to cure timely the same,
Noteholder’s exercise of its aforesaid option, and the resultant then present vesting of said transfer and assignment, given
to the party or parties to such contracts, agreements, permits, franchises, etc., other than Maker, shall be conclusive evidence
that such conditional transfer and assignment has in law and in fact thereupon become unconditionally and absolutely vested as
a then present and effective assignment, which may be relied upon by any such other party or parties and which shall acquit and
discharge such other party or parties from all liability and obligation to Maker thereafter accruing.

 

ARTICLE
III. 

DISBURSEMENTS,
RETENTION, RESERVES AND INSPECTIONS

 

Section
3.1       The Loan Proceeds shall be disbursed by Noteholder to Maker, from time to time but not more frequently than once in any
30-day period in accordance with the Project Budget and generally in accordance with the Cash Disbursement Projection for actual
cash costs to permit construction of the Improvements, plus any allocation of the applicable contingency reserve (and for no other
purpose) less the retainage in accordance with Section 3.4(a) below, and only after compliance by Maker with all of the
terms and conditions specified in this Agreement as conditions or requirements for Advances. Advances shall only be made for the
following in accordance with the Project Budget: (a) the payment of actual costs of labor and materials, equipment and services
performed or supplied for the construction of the Improvements; (b) actual costs furnishing and equipping of the Improvements
for its intended use as a Resident Inn by Marriott hotel and (c) payment of soft costs set forth in the Project Budget. Maker
shall submit requisitions for disbursements of the Loan Proceeds at least ten (10) days prior to the date of the anticipated disbursement,
excluding the Initial Advance. All requisitions for payment shall be submitted on AIA Forms G-702 and G-703, Application and Certification
for Payment, or such other form as Noteholder may hereafter reasonably require.

 

     4

     

    

 

Provided
Maker has complied with all of the applicable terms, conditions and provisions set forth in this Agreement as conditions for Advances,
Noteholder shall disburse the Loan Proceeds to Maker within ten (10) days after receiving Maker’s request for Advance. Noteholder
may, at its sole and absolute option, make any and all disbursements or portions thereof for construction expenses directly to
Maker or directly to any contractor or subcontractor owed more than Twenty-Five Thousand and 00/100 Dollars ($25,000.00), and/or
in an appropriately designated special bank account and the execution of this Agreement by Maker shall, and hereby does, constitute
an irrevocable direction and authorization to so advance the funds. In the event Noteholder disburses funds to Maker, any contractor
or subcontractor, Noteholder shall provide Maker with timely notice of such disbursement. No further authorization or direction
from Maker shall be necessary to warrant such direct Advances to any contractor and/or subcontractor and all such Advances shall
satisfy pro tanto the obligations of Noteholder hereunder and shall be secured by the Security Instrument as fully as if
made to Maker, regardless of the disposition thereof by such contractor or subcontractor. Maker covenants and, agrees
that it will hold all Advances of Loan Proceeds it receives from Noteholder as a trust fund to be withdrawn and used solely for
the payment or reimbursement of the bills for the labor, materials, fixtures, interest, fees and services used in the development
of the Project and the construction of the Improvements for which such Loan funds were requested by Maker, and for no other purpose
whatsoever other than the categories shown on the Project Budget. Notwithstanding the foregoing, Maker shall not have the ability
to reallocate cost line items without Noteholder’s express approval in Noteholder’s sole and absolute discretion to
fund shortfalls in one category from savings in another; provided, however, that Maker may fund shortfalls in any line item from
the “Contingency” line item (other than any cost savings which have been moved into the “Contingency”
line as provided in the next sentence). Maker may, with Noteholder’s prior approval, not to be unreasonably withheld, delayed
or conditioned, (y) move savings from line items into the Contingency line item and (z) use those cost savings to fund shortfalls
in line items. Each and every request for an advance presented by Maker to Noteholder shall constitute a representation and warranty
by Maker to Noteholder, with respect to the work, materials, and services for which payment is requested by Maker: that such work,
materials and services have been, or will be, incorporated into the Improvements or have been or will be purchased for use in
the Improvements and temporarily stored on site in a secure manner reasonably satisfactory to Noteholder, or offsite in accordance
with the requirements below, and in either case, free of liens and encumbrances; that the value thereof is as estimated therein
to the best of its knowledge; that to the best of its knowledge such work and materials conform in all material respects to the
Franchise Agreement, the Plans and Specifications, this Agreement, and to all applicable statutes, rules, laws, ordinances and
regulations; and that the sums requisitioned for such work, materials and services for which payment is requested by Maker have
either (A) theretofore been in fact paid for in cash by Maker, or (B) are then due and owing by Maker and will in fact be paid
in cash by Maker within ten (10) days after Maker’s receipt of the requested advance, only to unrelated third parties for
work performed and materials supplied for construction of the Improvements, except for any fees with affiliates that are expressly
disclosed in, and shall be disbursed to Maker in accordance with, the Project Budget, or otherwise disclosed in writing to and
approved by Noteholder in Noteholder’s sole and absolute discretion. Approval by Noteholder of requests for Advances shall
not constitute an acceptance by Noteholder of the work, materials or services for which payment is requested by Maker except to
the extent that the facts contained in Maker’s requests for Advances are actually as so represented and warranted.

 

     5

     

    

 

Nothing
herein shall impose upon Noteholder any obligation whatsoever to see to the proper application of any such monies by Maker. Advances
for material not yet physically incorporated into the Improvements which are stored off-site are not permissible unless (I) expressly
approved in writing by Noteholder in its sole and absolute discretion, or (II) (1) if required by Noteholder, such materials are
stored in a bonded warehouse or other manner acceptable to Noteholder in quantities and of a valuation acceptable to Noteholder
in its sole and absolute discretion, (2) such unincorporated materials are covered by the builder’s risk insurance required
herewith and (3) upon payment, a copy of the bill of sale for such unincorporated materials is been delivered to Noteholder in
form and content and in sufficient detail to verify quantity and cost separate from installation costs for such materials.

 

Section
3.2       Not less than five (5) business days prior to the Initial Advance, except where a different time period is otherwise
noted below, in the sole and absolute discretion of Noteholder, the following conditions shall have been satisfied by Maker, at
no cost to Noteholder:

 

(a)       On
the date of the Initial Advance, Maker, Guarantor and any other parties thereto shall have executed, acknowledged (as appropriate),
delivered and caused to be recorded (as appropriate), all the Loan Documents listed in Section 1.3 above.

 

(b)       On
the date of the Initial Advance, Maker shall have furnished to Noteholder a loan policy of title insurance, together with the
endorsements required by Noteholder, insuring the priority of the Security Instrument securing the Note and Noteholder’s
interest in the Project. The amount of such policy shall be equal to the maximum principal amount of the Loan, subject to a pending
disbursement endorsement and shall be issued by the Title Company. Such policy shall insure that Maker has good and indefeasible
title to the Land, that the liens of the Security Instrument securing Noteholder’s Loan is a valid first lien on such interest,
subject only to the exceptions set forth therein as finally approved by Noteholder together with the required and approved endorsements
thereto. Such policy shall contain no exception for filed mechanics’ and materialmen’s liens (which may be in the
form of affirmative insurance, if Noteholder so approves in its sole and absolute discretion) and shall contain no survey exceptions
other than shortages in area. Such policy shall be extended and the Title Company’s liability increased, by written endorsement,
to cover the Initial Advance and each Advance subsequent to the Initial Advance, at the time of disbursement thereof pursuant
to a “pending disbursements” clause in form and substance approved in advance by Noteholder.

 

(c)       Maker
shall have furnished to Noteholder a recently dated, current survey of the Land certified to Noteholder and the Title Company
by a registered surveyor in form and substance satisfactory to Noteholder, and for portions of the Land located in the State of
Texas, prepared in accordance with the 2016 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys and confirming
the legal description of the Land, showing the location of all buildings and other improvements (then existing) and all utilities
(then existing) that are above ground, roads, easements and rights of way then affecting the Land, and/or the Improvements proposed
to be erected, and certifying that all existing improvements have been constructed entirely within the boundary lines of the Land
and that there are no encroachments thereon.

 

     6

     

    

 

(d)       Maker
and Guarantor shall have delivered to Noteholder an opinion or opinions of Maker’s and Guarantor’s counsel, dated
contemporaneously with the execution of the Loan Documents, satisfactory in form and content to Noteholder and Noteholder’s
counsel.

 

(e)       Maker
shall have submitted to Noteholder, and Noteholder shall have approved, its Company Agreement and verification of good standing
with the appropriate governmental authorities. In addition, Maker shall furnish evidence of the authority of (i) Maker to enter
into the Commitment and to consummate the Loan, (ii) the signatories of the Loan Documents to execute and deliver the Loan Documents
on behalf of Maker and (iii) appropriate certificates of good stand, incumbency and resolutions.

 

(f)       Maker,
if requested by Noteholder, shall have submitted to Noteholder, and Noteholder shall have reasonably approved, a report from a
licensed, registered engineer reasonably acceptable to Noteholder describing the soil and subsoil conditions of the Land for the
proposed Improvements which describes the foundations which must be constructed as part of the Improvements and to analyze and
test data and make recommendations for engineered earthwork, fill and foundation design. Additionally, soil boring or other soil
tests, if any, used in formulating the site condition report shall be submitted with such report. Furthermore, compaction of all
engineered fill shall be supervised by such licensed, registered engineer or another such engineer reasonably acceptable to Noteholder.

 

(g)       Noteholder
shall have been furnished with evidence that the Project is not located within an area that has been identified as an area having
“special flood hazards”, as that term is used in the Flood Disaster Protection Act of 1973 (P.L. 93-234), or shall
have been furnished with a flood insurance policy satisfactory to Noteholder, meeting the requirements of said Act, which policy
shall be maintained in full force until the Loan is repaid in full.

 

(h)       Noteholder
shall have been furnished with verification of comprehensive general liability insurance coverage other than that which is to
be carried by the contractor as required in Section 3.2(o) herein.

 

(i)       Maker
shall have submitted to Noteholder a fully executed copy of the Construction Contract. The Construction Contract may be amended
from time to time pursuant to Noteholder’s prior written consent not to be unreasonably denied, delayed or conditioned (any
non-material amendments to any of the contracts or agreements referred to above shall not require Noteholder’s consent or
approval provided that such non-material amendments (a) are in accordance with the Project Budget, and (b) do not involve, when
taken together with any other non-material amendments to the Construction Contract which have not been previously expressly consented
to by Noteholder, more than Fifty Thousand and No/100 Dollars ($50,000.00) in the aggregate).

 

(j)       Maker
shall have obtained and submitted to Noteholder an agreement and consent to the assignment of the Construction Contract, defined
below, executed by Contractor (or such other contractors, as applicable, engaged by Maker from time to time for construction of
any the Improvements not performed by Contractor) and Maker which shall be in form and substance satisfactory to Noteholder in
its sole and absolute discretion. Such agreement and consent shall include without limitation, that such assignment shall be effective
at the option of Noteholder upon any Event of Default under this Agreement or any of the Loan Documents which is not cured
within any applicable cure periods and shall include the Contractor’s agreement that in the event of Maker’s default
at Noteholder’s request, to continue construction of the Improvements in accordance with the terms of the Construction Contract
for Noteholder or Noteholder’s successors and assigns.

 

     7

     

    

 

(k)       Maker
shall have submitted to Noteholder the Owner-Architect Agreement. The Owner-Architect’s
Agreement may be amended from time to time pursuant to Noteholder’s prior written consent; not to be unreasonably withheld,
delayed or conditioned, provided that any nonmaterial amendments to any Owner-Architect’s Agreement shall not require Noteholder’s
consent or approval provided that such non-material amendments (i) are in accordance with the Project Budget, and (ii) do not
involve, when taken together with any other non-material amendments to the Owner-Architect Agreement which have not been previously
expressly consented to by Noteholder, more than Twenty-Five Thousand and 00/100 Dollars ($25,000.00) in the aggregate.

 

(1)       Maker
shall have obtained and submitted to Noteholder an agreement and consent to the assignment of the Owner-Architect Agreement
executed by Architect and Maker in form and substance reasonably satisfactory to Noteholder and shall include, without
limitation, (i) Architect’s consent to Noteholder’s use of the Plans and
Specifications, without cost in excess of the cost contemplated by the Owner-Architect Agreement in the event of a default by
Maker under any of the Loan Documents which is not cured within any applicable cure periods and
(ii) the Architect shall also each agree, at the election of Noteholder, to
continue performance of the terms of the Owner-Architect Agreement for Noteholder or Noteholder’s assigns in the event
of any default by Maker under the Loan or Loan Documents which is not cured within any applicable cure periods.

 

(m)       Maker
shall have submitted to Noteholder the Owner-Engineer Agreement. The Owner-Engineer’s Agreement may be amended from time
to time pursuant to Noteholder’s prior written consent; not to be unreasonably withheld, delayed or conditioned, provided
that any nonmaterial amendments to any Owner-Engineer’s Agreement shall not require Noteholder’s consent or approval
provided that such non-material amendments (i) are in accordance with the Project Budget, and (ii) do not involve, when taken
together with any other non-material amendments to the Owner-Engineer Agreement which have not been previously expressly consented
to by Noteholder, more than Twenty-Five Thousand and 00/100 Dollars ($25,000.00) in the aggregate.

 

(n)       Maker
shall have obtained and submitted to Noteholder an agreement and consent to the assignment of the Owner-Engineer Agreement
executed by Engineer and Maker in form and substance reasonably satisfactory to Noteholder and shall include, without
limitation, (i) Engineer’s consent to Noteholder’s use of the Plans and Specifications, without cost in excess of
the cost contemplated by the Owner-Engineer Agreement in the event of a default by Maker under any of the Loan Documents
which is not cured within any applicable cure periods and (ii) the Engineer shall
also each agree, at the election of Noteholder, to continue performance of the terms of the Owner-Engineer Agreement for
Noteholder or Noteholder’s assigns in the event of any default by Maker under the Loan or Loan Documents which is not
cured within any applicable cure periods.

 

     8

     

    

 

(o)       Maker
shall have furnished to Noteholder evidence that builder’s risk, workmen’s compensation, rent loss (as of the date
of Completion) for at least twelve (12) months, fire, hazard, comprehensive public liability and property damage insurance have
been placed, paid for, and remain in force on the Project in a sufficient amount to protect Noteholder’s interest, as agreed
between Noteholder and Maker based on such insurance coverages customarily obtained on similar projects. Maker’s policy
of casualty insurance on the Project shall include comprehensive coverage and builder’s risk coverage (which may be carried
by the Contractor) on a completed value, non-reporting form with permission to complete and occupy, covering the Project and all
personal property of Maker therein. Coverage contained within the casualty insurance policy or policies shall be subject to Noteholder’s
review and reasonable approval but shall not be less than that encompassed by “Fire, Extended Coverage and Vandalism and
Malicious Mischief’ perils broadened to include the so-called “All Risk of Physical Loss Coverage” and a collapse
endorsement including “XCU” coverage or coverage equivalent thereto. All policies shall be issued by a company or
companies licensed in the State of Texas and maintaining an A.M. Best’s Rating of “A-” or better and an A. M.
Best’s financial rating of X or better, and certificates thereof (certified as true and correct by the issuing agent) shall
be deposited with Noteholder throughout the entire term of the Loan, and shall be in an amount sufficient to prevent the application
of any co-insurance contribution to any loss. The casualty insurance policy or policies shall in no event be for an amount less
than one hundred percent (100%) of the full replacement cost of the Improvements without application of any co-insurance provision.
Noteholder shall be named as mortgagee on all casualty insurance policies by means of a “standard” mortgage clause.
The casualty insurance policy will provide for thirty (30) days written notice to Noteholder prior to expiration or cancellation
shall be deposited with Noteholder. Notwithstanding anything herein contained to the contrary, in the event of any conflict to
the applicable insurance requirements contained herein, in any of the Security Instrument or in the Commitment, the provisions
of the Security Instrument shall control.

 

(p)       Maker
shall have submitted the Plans and Specifications to Noteholder, together with written evidence of the approval thereof, if required
by the Franchisor, if required by the Franchise Agreement, and all appropriate governmental authorities.

 

(q)       The
Plans and Specifications, Project Budget and Construction Contract shall have been delivered by Maker to the Inspecting Engineer
who shall review such Plans and Specifications on behalf of Noteholder, and the Inspecting Engineer shall have approved the Plans
and Specifications and provided his written certification to Noteholder that the Improvements may be constructed for construction
costs set forth in the Project Budget. Maker shall contract with Inspecting Engineer to provide the services required under this
Agreement by separate written contract at Maker’s cost.

 

(r)       On
the date of the Initial Advance from proceeds of the Initial Advance, Maker shall have submitted evidence satisfactory to Noteholder
that any and all fees due and owing to any broker (other than Maker or any affiliate of Maker) involved with obtaining the Loan
have been paid in accordance with the Project Budget.

 

(s)       Maker
shall have submitted evidence reasonably satisfactory to Noteholder that it has obtained site plan approval and foundation approval
including, if applicable, a site development and foundation permit satisfactory to Noteholder.

 

     9

     

    

 

(t)       Maker
shall have furnished to Noteholder, and Noteholder shall have reasonably approved a complete cost breakdown for construction of
the Improvements including a “construction trade breakdown,” which shall be prepared on AIA Form 0702 and G702A in
such detail and broken down into such categories as Noteholder may reasonably require. The construction trade breakdown shall
not exceed, in its total amount, the amount of Loan Proceeds allocated to construction costs as set forth in the Project Budget.
Such breakdown shall be based on actual contracts obtained to date plus the best estimate of unsigned contracts. As soon as Maker
becomes aware of any state of facts which materially changes the total of all items or any line item in the Budget, Maker shall
notify Noteholder, in writing, of such facts and the actual or anticipated change and the reasons therefor which may be amended
from time to time with the prior written consent of Noteholder. Noteholder’ s consent to any such allocation of contingency
items shall not be unreasonably withheld, conditioned or delayed.

 

(u)       Maker
shall have delivered to Noteholder the Cash Disbursement Projection which may be amended from time to time with notice to Noteholder,,
which consent shall not be unreasonably withheld, conditioned or delayed which outlines the projected principal amount of
the Loan Proceeds outstanding under the Loan on the first day of each calendar month.

 

(v)       Maker
shall have furnished to Noteholder reasonable written evidence of: (i) satisfactory governmental approvals of the Land for construction
of the Improvements in accordance with the Plans and Specifications without the need for any special exceptions or approvals by
any zoning board or body and that there are no pending proceedings, either administrative, legislative or judicial, which would
in any manner adversely affect the status of any then current zoning of the Land; (ii) the future availability of all utilities
including potable water, sanitary and storm sewer, electricity and telephone, in quantities sufficient for the successful construction,
occupancy, and operation of the Improvements, including if applicable easements and service agreements therefor; (iii) the future
availability of parking spaces in no event less than the number required by applicable law; and (iv) the availability of all permits,
licenses or approvals necessary in connection with commencement and completion of construction of the Improvements (or, if not
yet issued, the same shall be furnished prior to commencement of construction of the Improvements).

 

(w)       Maker
shall have funded Maker’s Equity.

 

(x)       Borrower
shall have submitted to Lender an acceptable performance bond bonding the construction of the Improvements in accordance with
the Plans and Specifications and an acceptable payment bond guaranteeing payment to the Contractor and subcontractor pursuant
to the Construction Contract.

 

Section
3.3    Not less than ten (10) days prior to each advance subsequent to the Initial Advance of Loan
Proceeds hereunder, in the reasonable discretion of Noteholder, and in addition to the conditions of Section 3.2
above, all of which shall then have been finally satisfied, the following conditions shall have been satisfied, at no cost to
Noteholder:

 

(a)       No
Event of Default shall exist hereunder.

 

     10

     

    

 

(b)       Construction
of the Improvements to such date shall have been in accordance with the provisions of Article II hereof, as certified in writing
by the Inspecting Engineer, but subject at Noteholder’s option, with respect to each Advance, to verification by the Inspecting
Engineer confirming that: (i) the status of construction is progressing satisfactorily and in accordance with the Franchise Agreement’s
requirements, (ii) the amount requested, plus amounts previously disbursed and not yet repaid, do not exceed the percentage of
the Project completed as of the requisition date, and (iii) the undisbursed portion of the Loan together with any other amounts
previously deposited with Noteholder and Maker’s Equity is sufficient to complete the Improvements in accordance with the
Plans and Specifications except as otherwise provided in Section 3.7(a).

 

(c)       Maker
shall have furnished to Noteholder and to the Title Company from the Contractor and all subcontractors under contracts for Twenty-Five
Thousand and 00/100 Dollars ($25,000.00) or more dealing directly with Contractor or Maker, copies of all invoices and change
orders, sworn statements of payment to date and waivers or release of mechanics’ liens, in form satisfactory to Noteholder
and the Title Company, covering all work done and materials furnished to the previous application for payment in connection with
the construction of the Improvements.

 

(d)       Noteholder
shall have received written notice, in the form of an endorsement to Noteholder’s title insurance policy, of title continuation
from the Title Company indicating that since the preceding advance there has been no change, except as herein or otherwise permitted
by Noteholder, in the state of title to the Project (including, without limitation, a change in the ownership of legal or equitable
title or the filing of any mechanics’ or materialmen’s or other liens) other than as herein required (or as is hereinafter
required by Noteholder in its reasonable determination as reasonably necessary for the construction of the Improvements) and that
there are no survey exceptions or other exceptions to title not theretofore expressly approved by Noteholder in writing. Preliminary
verbal notice to Noteholder from the Title Company, to expedite disbursements, may be affected by telephone call, at Noteholder’s
option.

 

(e)       All
inspections of the Improvements then required to be made by or on behalf of any public authorities shall have been made, the work
shall have been approved (or will be approved based upon minor corrective work, and Maker provides Noteholder with reasonably
satisfactory evidence that such corrective work will be completed in a timely manner) and satisfactory evidence thereof submitted
to Noteholder.

 

(f)       All
permits, licenses, clearances, consents, bonds (if any) and approvals, and any waivers, terminations or modifications to recorded
documents, as are necessary to commence and continue construction of the Improvements as of the time in question shall have been
or continue to be duly issued and outstanding and no notice of violation or stop work order shall have been issued against the
construction of the Improvements or any portion thereof.

 

(g)       Maker
determines, in its reasonable judgment that all material portions of the work completed at the time of the application for an
Advance shall have been performed in accordance with the Plans and Specifications and the Franchise Agreement and no uncured default
by Maker exists under the Franchise Agreement.

 

     11

     

    

 

(h)       Any
outstanding, due, unpaid taxes, assessments or other governmental or municipal charges, assessments or impositions shall have
been paid by Maker prior to delinquency (unless being contested in accordance with Section 11.8 below).

 

(i)       No
proceeding shall have been commenced by an authority having the power of eminent domain to condemn any part of the Land which
Noteholder, in its reasonable discretion, deems substantial and would have a material adverse effect on Maker’s ability
to construct the Improvements or comply with the Franchise Agreement.

 

(j)       If,
at the time of such request for an Advance, the foundations of the Improvements have been completed and Maker has not already
delivered to Noteholder a survey showing the location of the foundation(s), Maker shall deliver to Noteholder a foundation survey
of the location of the Improvements upon the Land showing no state of facts reasonably objectionable to Noteholder. Maker shall
have submitted to Noteholder upon completion, a report from the applicable engineer that the earthwork, engineered fill and foundation
substantially are in accordance with the Plans and Specifications approved by Noteholder.

 

(k)       Intentionally
Deleted.

 

(1)       Noteholder
may, in its sole and absolute discretion, require that it be provided with an updated Closing Certification by Maker and/or a
Closing Certification by Guarantor and such additional evidence as Noteholder may reasonably require that: (i) the matters
set forth in the original Maker’s Closing Certificate and/or Guarantor’s Closing Certificate, as applicable are
true and accurate in all material respects or if not, the reasons why; and (ii) there has been no change that has not been
previously approved, if required, by Noteholder in any line item of the Project Budget.

 

(m)       Maker
shall have submitted evidence satisfactory to Noteholder that all necessary approvals have been obtained with respect to the design
and use of the Project from all parties required to provide such consents as may be required for the then current state of construction
as may be reflected in any restrictions or encumbrances recorded in the office of the governing entity in which the Land is located.

 

(n)       Maker
shall have submitted to Noteholder a complete listing, on AIA Document G805, of all contracts then in effect relating to the construction
of the Project. Such listing of contractors shall be updated by Maker and promptly delivered to Noteholder as additional contracts
are let.

 

(o)       During,
construction of all earthwork, engineered fill and foundation work and until all such work is complete as verified by a compliance
report as required in this subsection, Maker shall have furnished to Noteholder with periodic compliance reports not less than
monthly in a form and substance reasonably satisfactory to Noteholder from a qualified architect or engineer reasonably satisfactory
to Noteholder verifying that such earthwork, engineered fill and foundation work constructed through the date of such report has
been constructed in accordance with Plans and Specifications.

 

(p)       Maker
otherwise shall have complied with all other terms and conditions of this Agreement applicable to the Initial Advance.

 

     12

     

    

 

Section
3.4       Notwithstanding anything to the contrary contained herein, the disbursements of Loan Proceeds, including the Initial Advance
to the extent applicable, shall be subject to the following:

 

(a)       All
disbursements of Loan Proceeds for labor, materials and other so called hard

construction costs in the Project Budget and all other disbursements are subject to a holdback of Retainage of ten percent (10%)
of the amount of each requested disbursement of Loan Proceeds. The Retainage shall be disbursed by Noteholder to Maker, for payment
to the Contractor, upon satisfaction of the conditions contained in Section 3.4(b) below.

 

(b)       The
final advance of all remaining Retainage which has not theretofore been disbursed by Noteholder shall be disbursed by Noteholder
to Maker thirty-five (35) days after all of the following conditions, in addition to the conditions of Section 3.3, have
been satisfied, at no cost to Noteholder;

 

(i)       at
least fifteen (15) days prior to the date for which such final disbursement is requested, the Inspecting Engineer, or such other
person as Noteholder may approve, has certified to Noteholder on standard AIA forms that the Improvements have been substantially
completed, subject to minor punch list items reasonably acceptable to Noteholder, in accordance with the Plans and Specifications
and a set of As-Built Plans and Specifications has been submitted to Noteholder certified as such by the Architect or Inspecting
Engineer;

 

(ii)      at
least fifteen (15) days prior to the date for which such final disbursement is requested, all material conditions of the Construction
Contract and Architectural Contract have been fully satisfied other than final payment;

 

(iii)     at
least fifteen (15) days prior to the date for which such final disbursement is requested, the Architect has certified to Noteholder
on standard AIA forms that the Improvements have been substantially completed;

 

(iv)    at
least fifteen (15) days prior to the date for which such final disbursement is requested, Noteholder has received evidence reasonably
satisfactory to it that all work requiring inspection by governmental or regulatory authorities having or claiming jurisdiction
has been duly inspected and approved by such authorities as applicable, including, but not limited to, if required, the approval
of an As-Built Site Plan from the appropriate public authority;

 

(v)     at
least fifteen (15) days prior to the date for which such final disbursement is requested, receipt and approval by Noteholder of
final certificates of occupancy, if applicable, and, if applicable, other certificates from appropriate governmental authorities
evidencing compliance with all zoning, building, or other government codes and regulations and all other operating, use and occupancy
permits, licenses or certificates, have been obtained to permit the full and complete utilization of the Project;

 

(vi)    at
least fifteen (15) days prior to the date for which such final disbursement is requested, receipt and approval of Completion Reports
and Certifications executed
by Architect and Contractor in a form and substance reasonably acceptable to Noteholder certifying that all Improvements have
been substantially completed, subject to minor punch list items reasonably acceptable to Noteholder, in accordance with Plans
and Specifications, the requirements of all applicable zoning, building, and other governmental codes and regulations and The
Americans With Disabilities Act;

 

     13

     

    

 

(vii)   at
least thirty (30) days prior to the date for which such final disbursement is requested, receipt and approval of a satisfactory
updated as-built survey of current date for the Project prepared by a licensed surveyor containing a full legal metes and bounds
description showing lot, lot lines, building, street lines, driveways, flood plain information, locations of all plottable easements
and other matters of record and the location of all Improvements in place and the total square footage of both the Land and the
Improvements thereon, all access thereto from public roads, with the dimensions thereof, all of which must be identified by indicating
thereon book and page number of the recording thereof and certified as true and correct by the surveyor (having affixed thereto
his seal and registered number) to Noteholder and the Title Company, including, without limitation, certification of the land
area, the non-existence of any encroachments, the date of the survey and identification of adjacent and contiguous streets in
form and substance reasonably satisfactory to Noteholder;

 

(viii)  no
Event of Default exists under any of the Loan Documents;

 

(ix)     any
and all other requirements and conditions required to be met as of the date of the final Advances of the Loan Proceeds, as set
forth herein and in the other Loan Documents, have been satisfied;

 

(x)      at
least fifteen (15) days prior to the date for which such final disbursement is requested, receipt and approval of an endorsement
to Noteholder’ s loan title insurance policy from the Title Company increasing the coverage thereof to the disbursed amount
of Note insuring the first lien priority of the lien of the Security Instrument securing such amount without exception for payments
of mechanic’s and materialmen’s liens or pending disbursements or completion of the Improvements, and otherwise in
a form and substance reasonably satisfactory to Noteholder;

 

(xi)     at
least fifteen (15) days prior to the date for which such final disbursement is requested, receipt of photographs of the completed
Improvements by Noteholder;

 

(xii)   at
least fifteen (15) days prior to the date for which such final disbursement is requested, receipt of policies of fire, extended
coverage, liability, vandalism, malicious mischief, rental and rental value insurance and such other insurance as required under
the Security Instrument to insure the completed Improvements;

 

(xiii)  at
least fifteen (15) days prior to the date for which such final disbursement is requested, Noteholder or Noteholder’ s representative
shall have inspected the Improvements and determined that the Improvements have been properly completed in accordance with this
Agreement;

 

     14

     

    

 

(xiv)  at least fifteen (15) days prior to the date for which such final disbursement
is requested, Maker shall deliver an updated appraisal or letter update from the initial appraiser. In the event an escrow is
established pending completion of any part of the improvements, the appraiser shall, upon full completion of the Improvements,
submit a report addressed to Noteholder indicating his current opinion of the subject property value. The form of such updated
appraisal letter or report, apart from the amount of the appraised value therein, must be reasonably satisfactory to Noteholder;

 

(xv)   at
least fifteen (15) days prior to the date for which such final disbursement is requested, receipt and approval of an updated environmental
report updating the Environmental Reports (as defined in the Environmental Indemnity) and certifying no new additional environmental
matters and otherwise in a form and substance satisfactory to Noteholder;

 

(xvi)  at
least thirty (30) days prior to the date for which such final disbursement is requested, copies of all warranties and maintenance
agreements with respect to the completed Improvements; and

 

(xvii) a
report, conducted in accordance with ASTM E 2018-08, Standard Guide for Property Condition Assessment, from a professional engineer
reasonably approved by Lender, stating that in all material respects the property and improvements continue unimpaired, not reduced,
undamaged, and free from all settling or other structural defects and that the property is in compliance with the Americans with
Disabilities Act in all material respects; and

 

(xviii) Maker
shall have submitted a statements from the Architect and Contractor in form and substance reasonably satisfactory to Noteholder
acknowledging the portion of his or her fees that have accrued as of the date thereof which are then due and payable. The Architect’s
statement shall include, without limitation, a certification: (i) that construction of the Improvements is in accordance with
the Plans and Specifications, complies in all material respects with applicable building, zoning, subdivision, ecological and
environmental laws, ordinances, regulations and other applicable requirements imposed by all governmental authorities having jurisdiction
over the Project; (ii) upon completion of the Improvements, the gross square footage and leasable square footage of the Improvements;
and (iii) that construction of the Improvements in accordance with the Plans and Specifications shall comply in all material respects
with all applicable federal, state and local laws affecting (A) the discharge of chemical wastes into sewage systems, (B) discharge
of air pollutants, (C) solid waste disposal and (D) underground storage tanks, and any other codes or regulations affecting
the construction and/or proposed use of the Improvements.

 

Upon
Maker’s request, Noteholder shall give written confirmation to Maker when Completion has occurred.

 

Section
3.5       Noteholder shall be entitled to advance or to deduct from any advance requested by Maker, if not previously paid
when due and, with respect to all of the following, after any applicable notice and cure periods,: interest due on the Note,
such amounts as may be necessary to pay any encumbrances, taxes, easements, or any other charges or liens upon the Land
and/or Improvements, (subject to the right to insure or bond over any of the preceding and to contest any of the preceding in
accordance with Section 11.8 herein) whether existing before or accruing after the date of this Agreement; any premium
on any insurance policy affecting the Land or the Improvements; any fees, costs and/or expenses due to Noteholder or
Noteholder’s counsel from Maker provided in connection with the Loan Maker has been provided with a description of such
costs in reasonable detail and fails to pay same within twenty (20) days thereof; and all due and overdue interest on the
Loan. Such Advances and/or deductions shall be for the account of Maker as if said Advances and/or deductions were made upon
the requisition of Maker.

 

     15

     

    

 

Section
3.6       Any and all inspections, reviews and approvals of the work made by Noteholder or its agents, employees and/or representatives
or the Inspecting Engineer shall be solely for Noteholder’ s own information and shall not be deemed to have been made for
or on account of Maker or any other party; and Maker hereby specifically relieves Noteholder, its agents, employees and representatives
and the Inspecting Engineer of any and all liability or responsibility relating in any way whatsoever to (a) the construction
of the Improvements, including, but not limited to, the work thereon, the material or labor supplied in connection therewith,
and (b) any errors, inconsistencies or other defects in the approved Plans and Specifications or the Franchise Agreement. Noteholder
shall have the right to withhold Advances on the basis of unsatisfactory inspection results as determined by Noteholder in its
reasonable discretion, but such withholding shall only be in an amount of the portion of the advance for which there is a claim
of unsatisfactory inspection results.

 

Section
3.7       Notwithstanding anything to the contrary contained herein, Noteholder shall not make any disbursement if, in Noteholder’
s opinion, or in the opinion of the Inspecting Engineer:

 

(a)       the
undisbursed portion of the Loan Proceeds remaining after such disbursements together with any other amount previously deposited
with Noteholder would be insufficient to complete construction of the Improvements and any other related construction and development
described or referred to on the Project Budget. In such event, Noteholder shall not make any further Advances until Maker has
provided funds or evidence of the availability of funds sufficient to complete the construction of the Improvements; and

 

(b)       any
portion of the work that is the subject of the advance at the time of the application for an advance has not been performed in
a good and workmanlike manner, but such withholding shall only be in an amount of the portion of the advance for which there is
a claim of unsatisfactory inspection results and all materials and fixtures usually furnished and installed at that stage of construction
have not been furnished and installed, or any uncured monetary or non-monetary default remains under any of the Loan Documents.

 

Section
3.8       If, during the progress of the work, Maker neglects or refuses to employ adequate watchman service for the protection
of the Project, and such service is necessary, in Noteholder’s reasonable judgment, Noteholder may, after any notice and
opportunity to cure to Maker as Noteholder determines as reasonable under the circumstances, employ or engage such service. Any
amounts thus expended shall be deemed to be Advances to Maker.

 

     16

     

    

 

Section
3.9       Whenever so requested by Noteholder, Maker will promptly furnish Noteholder written evidence satisfactory to Noteholder
that all monies theretofore advanced by Noteholder under the Loan have actually been applied in payment of the cost of construction
of the Improvements and in payment of the other items of costs for which such funds were advanced by Noteholder, and until such
evidence is produced, at the option of Noteholder, no future or additional payments or Advances of Loan Proceeds need be made
hereunder. Maker shall segregate all of its records relating to the Loan and construction of the Improvements and shall make those
records available to Noteholder for inspection upon Noteholder’s request during usual business hours.

 

Section
3.10       Noteholder shall not be responsible, liable or obligated to any contractors, subcontractors, suppliers, materialmen,
laborers, architects, engineers, or to any other parties, for services or work performed, or for goods delivered by them or any
of them, for the Project or employed directly or indirectly in the construction of the Improvements, or for any debts or claims
whatsoever accruing in favor of any such parties and against Maker or others. It is distinctly understood and expressly agreed
that Maker is not and shall not be an agent of Noteholder for any purpose whatsoever. Without limiting the generality of the foregoing,
advances made, at Noteholder’s option, directly to the Contractor or to any other contractor, subcontractor or supplier
of labor and/or materials, or to any other party, shall not be deemed a recognition by Noteholder of any third party beneficiary
status of any such person or entity.

 

ARTICLE
IV.

DEFAULT
BY MAKER

 

Section
4.1       The occurrence of any of the following events shall, at Noteholder’s option, after the expiration of any
applicable notice, cure and/or grace period, constitute an Event of Default hereunder: (a) if Maker shall be in default (i)
in payment of any amounts due to Noteholder beyond any applicable notice and cure periods provided in the Security Instrument
(respectively), or (ii) in the performance of any of its undertakings hereunder, or the breach of any representation, that
continues for thirty (30) days (or such longer number of days, up to a maximum of ninety (90) days in the aggregate, as are
reasonably necessary to cure such default, provided that Maker promptly commences and continuously and diligently pursues
such cure) after written notice of such default to Maker, or under the Security Instrument or any of the other Loan Documents
beyond the applicable notice and cure periods provided in the Security Instrument or applicable Loan Document; (b) if Maker
or any Guarantor shall become insolvent or be adjudicated bankrupt or shall make an assignment for the benefit of creditors
or file or have filed against it a petition for bankruptcy or reorganization or arrangement (provided, however, that in the
case of any such involuntary petition, such petition is not discharged or dismissed, vacated, set aside or stayed within
ninety (90) days of its filing); (c) if a receiver, conservator, or trustee shall be appointed for Maker or Guarantor, or any
substantial portion of their property; (d) if there shall occur a termination of existence or dissolution of Maker or sale
out of the ordinary course of business by Maker of all or a substantial part of its assets other than permitted in the
Security Instrument; (e) if any representation, warranty or statement heretofore or hereafter made by or on behalf of Maker
and contained in any Loan Document is false or misleading in any material respect; (f) if construction of the Improvements
shall be abandoned as determined by Noteholder in its reasonable judgment, or at any time construction of the Improvements
shall cease or be suspended for more than thirty (30) consecutive business days, except for Force Majeure; (g) if Completion
of the Project has not occurred on or before the Completion Deadline, plus any additional time due to Force Majeure or to
satisfy the requirements of Section 3.4(b), but not later than twenty-four (24) months after the date hereof, or any
earlier applicable Franchise Construction and Delivery Deadlines, as the same may be extended; (h) if Maker neglects,
fails or refuses to keep in full force and effect any material permit, approval or license issued with respect to the
construction of the Improvements, unless such permit approval or license is not necessary for the construction of the
Improvements, or if any such permit, approval or license shall be revoked or suspended, or if any stop work order is issued
against construction of the Improvements or any material aspect thereof, and such suspension, revocation or order is not
rescinded by the governmental agency having authority within ninety (90) days of the date issued; (i) if there should occur
an event of default which continues beyond any applicable notice and cure period by Maker under the Owner-Architect Agreement
or the Construction Contract and Maker is not diligently contesting same; (j) Maker shall have failed to have satisfied all
of the conditions precedent for the next advance of Loan Proceeds within ninety (90) days after the date of the last advance
of Loan Proceeds except to the extent due to Force Majeure; or (k) if the Franchise Agreement is terminated for any reason.
The occurrence of an Event of Default hereunder shall automatically be deemed to be a default under the Note, Security
Instrument, and each and every one of the other Loan Documents, without any additional notice or grace period being given to
Maker.

 

     17

     

    

 

Section
4.2       If any such default is not completely cured within the applicable grace period, if any, set forth in this Article
IV, time being of the essence in this Agreement, and is continuing the Noteholder, at its option, may exercise any or
all of the following remedies:

 

(a)       withhold
disbursement of all or any part of the Loan Proceeds;

 

(b)       terminate
its obligation to make any further disbursements of the Loan Proceeds, except such as it may elect to make under Article
V below;

 

(c)       declare
the entire indebtedness of Maker to Noteholder hereunder and under the other Loan Documents, together with interest thereon at
the then applicable rate and all other fees and charges due thereunder, to be immediately due and payable, without further notice;

 

(d)       exercise
any and all rights and remedies in respect of a default by Maker that are provided for herein or in the Note, or in the Security
Instrument, or in the Guaranty or in any of the other Loan Documents, or as provided by law or at equity, including appointment
of a receiver. It is expressly understood and agreed that Noteholder may exercise its rights under the Security Instrument, or
under any other security document providing security for the Loan without exercising its rights or affecting the security afforded
by any other security document, and it is further understood and agreed that Noteholder may proceed against all or any portion
or portions of the collateral security for the Loan in such order, and at such time, as Noteholder, in its sole and absolute discretion,
sees fit; and Maker hereby expressly waives any rights under the doctrine of marshaling of assets; and/or

 

(e)       with
or without entry upon the Project, in the name and on behalf of Maker, as Maker’s agent, cause construction of the
Improvements to be completed, and Noteholder for such purposes may use all available materials and equipment on the Land, all
contracts, licenses, arrangements and agreements assigned to it, and may purchase all other necessary materials and employ
contractors and other employees. All sums expended by Noteholder for such purpose shall constitute disbursements pursuant
hereto for Maker’s account and shall be secured by the Security Instrument and other Loan Documents and shall forthwith
be due and payable by Maker to Noteholder with interest thereon at seventeen percent (17%) per annum not to exceed the
Maximum Nonusurious Rate (as defined below). The authority conferred hereby upon Noteholder shall be deemed to create a power
coupled with an interest and shall be irrevocable.

 

     18

     

    

 

ARTICLE
V.

MECHANIC’S
LIENS

 

Section
5.1       Maker shall keep title to the Project free and clear of any encumbrance not set forth on the attached Exhibit
F or specifically approved in writing by Noteholder, which approval shall not be unreasonably, withheld, conditioned or
delayed.

 

Section
5.2      In the event any mechanic’s lien or other lien encumbrance shall be filed or
attach against the Land or the Improvements thereon without the prior written consent of Noteholder in each instance, Maker
covenants and agrees that, within thirty (30) days after Maker receives notice of the filing of such lien, Maker will
discharge the same by payment or filing bond or otherwise as permitted by law; and if Maker fails to do so, Noteholder may,
at its option, subject to Maker’s right to contest as provided in Section 11.8 below, in addition to, and not in
limitation of, all other rights and remedies of Noteholder in an Event of Default by Maker, and without regard to the
priority of said mechanic’s lien or other lien or encumbrance, pay the same, and all amounts expended by Noteholder for
such purpose shall constitute Advances to Maker and shall be secured by the Security Instrument and the other Loan Documents,
and be due and payable forthwith by Maker to Noteholder with interest thereon at a rate per annum thereon at seventeen
percent (17%), but not to exceed the Maximum Nonusurious Rate, if applicable.

 

ARTICLE
VI.

RIGHT
OF ENTRY AND ACCESS TO BOOKS, RECORDS AND PLANS

 

Section
6.1       Noteholder shall at all reasonable times during normal business hours and upon at least one (1) business day’s
prior notice have the right of entry and free access to the Project subject to the rights of tenants for the purpose of
inspecting the same, and also to inspect all drawings, plans, books, records and contracts maintained or otherwise available
to Maker relating to the Project.

 

Section
6.2       Maker shall maintain at the Project a copy of all sealed drawings, specifications, approved shop drawings, change
orders and other modifications, together with all written or graphic interpretations and clarifications thereto in good order
and marked to include all changes made during construction of the Improvements. These documents shall be available to the
Noteholder at all reasonable times.

 

     19

     

    

 

ARTICLE
VII.

PAYMENT
OF LOAN COSTS

 

Section
7.1       Maker shall pay all fees and charges reasonably incurred by Noteholder in connection
with the closing of the Loan and the making of all Advances hereunder, and in connection
with any enforcement by Noteholder of this Agreement and all of the other Loan Documents, including, without limitation, the
following:

 

(a)       All
recording fees, title insurance premiums, title company charges, title examination charges, escrow charges, surveyor’s charges,
appraisal fees, credit report fees; and

 

(b)       All
reasonable costs of the Loan closing and all other costs in connection with this Agreement including, without limitation, Maker’s
and Noteholder’s reasonable attorneys’ fees and expenses, Inspecting Engineer’s fees and expenses and all other
charges and costs.

 

ARTICLE
VIII.

ASSIGNMENT

 

Section
8.1       Maker may not, without the prior written consent of Noteholder, assign or otherwise transfer this Agreement, the Loan
or any of Maker’s rights in and to the Loan Commitment or the Loan, except that Maker may pay or otherwise transfer any
Loan Proceeds to Contractor or any other third party in connection with the construction of the Improvements.

 

Section
8.2       Noteholder, without any notices whatsoever to anyone, may sell, assign or otherwise transfer all or any part of the Loan,
but Noteholder may elect to remain the servicing agent for the Loan. If Noteholder is no longer the servicing agent for the Loan,
Noteholder shall promptly notify Maker of the identity and address of its successor. In addition to its rights to sell, assign
or otherwise transfer Noteholder shall have the right to enter into a participation agreement with any lending institution with
respect to the Note.

 

Section
8.3       All covenants and undertakings herein of Maker and Noteholder shall be binding upon Maker and Noteholder and their successors
and assigns, and shall inure to the benefit of the successors and assigns of Maker and Noteholder, and any and all participants
in the Loan.

 

ARTICLE
IX.

NOTICES

 

All
notices and communications which are required or are permitted hereunder shall be in writing and shall be either hand delivered,
or by national, overnight receipted courier service (such as Federal Express or UPS) with delivery charges prepaid by sender,
or mailed by certified U.S. mail, return receipt requested, postage prepaid, or in any other manner as herein provided, and addressed
to the parties as follows:

 

	Noteholder:

         

         

         

         

        Maker:

         
	American
National Insurance Company 

        Attn:
Mortgage and Real Estate Investment Department

        2525 South Shore Blvd., Suite 207 

        League
City, Texas, 77573 

         

        RI
II MC-HOU, LLC

        6363 Woodway, Suite 110

        Houston, Texas 77057

        Attn: Brett C. Moody 

 

     20

     

    

 

or
to such other address as either party shall designate by written notice to the other in the manner provided herein. All such notices
shall be effective and be deemed given and received on the earlier of actual receipt, the third business day after being deposited
in the U.S. Mail as aforesaid or the next business day after deposit in such overnight receipted courier service as aforesaid
or via facsimile transmission as described above.

 

ARTICLE
X.

COMMITMENT
SUPERSEDED

 

All
of the terms, conditions, and provisions of the Commitment are hereby superseded and all terms, conditions and provisions of this
Agreement and all of the other Loan Documents, shall control.

 

ARTICLE
XI. 

MISCELLANEOUS

 

Section
11.1       Noteholder has not engaged any broker in connection with the Loan. Noteholder shall not be required to pay any brokerage
fee or Commission arising out of the issuance of the Commitment, the making of the Loan or the Franchise Agreement and MAKER
HEREBY INDEMNIFIES AND AGREES TO HOLD NOTEHOLDER HARMLESS against any and all expenses (including reasonable attorney’s
fees), liabilities and losses arising from any such claims.

 

Section
11.2       Noteholder shall not be responsible, liable or obligated to any contractors, subcontractors, suppliers, materialmen,
laborers, architects, engineers, or to any other parties, for services or work performed, or for goods delivered by them or any
of them, for the Project or employed directly or indirectly in the construction of the Improvements, or for any debts or claims
whatsoever accruing in favor of any such parties and against Maker or others. It is distinctly understood and expressly agreed
that Maker is not and shall not be an agent of Noteholder for any purpose whatsoever. Without limiting the generality of the foregoing,
Advances made, at Noteholder’ s option, directly to the Contractor or to any other contractor, subcontractor or supplier
of labor and/or materials, or to any other party, shall not be deemed a recognition by Noteholder of any third party beneficiary
status of any such person or entity.

 

Section
11.3       Neither the failure nor the delay of either party to exercise any right, option, power or privilege under this Agreement
nor any advance hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, option,
power or privilege by either party operate as a waiver of any such right, option, power or privilege.

 

Section
11.4       All personal pronouns used herein, whether used in the masculine, feminine or neuter gender, shall include all other
genders. The singular shall include the plural unless the context of the Loan Agreement shall specifically provide to the contrary.

 

Section
11.5       Time shall be of the essence of this Agreement.

 

Section
11.6       The provisions of this Agreement cannot be waived or modified or amended unless such waiver or modification or
amendment is in writing and signed by Noteholder and Maker. Once an agreement, contract, appraisal, budget, plat, plan,
specification, survey, document or other matter has been approved or accepted by
Noteholder unless otherwise provided herein to the contrary, there shall be no subsequent change, amendment or modification
(other than merely ministerial changes) thereto without the prior written approval of Noteholder not to be unreasonably
delayed, conditioned or denied. Maker and Noteholder agree that any non-material amendments to any of the contracts or
agreements referred to above shall not require Noteholder’s consent or approval provided that such non-material
amendments (a) are in accordance with the Project Budget, and (b) do not involve, when taken together with any other
non-material amendments to the contract in question which have not been previously expressly consented to by Noteholder, more
than Twenty-Five Thousand and 00/100 Dollars ($25,000.00) in the aggregate.

 

     21

     

    

 

Section
11.7 After the execution of this Agreement, any and all publicity releases to newspapers of general or limited circulation
or trade publications announcing any of the financing by Noteholder described herein shall be issued by, or subject to the prior
approval of, Noteholder. Maker agrees to erect, within 60 days after the date of this Agreement, at Maker’s expense, a sign
on the Land to advertise the fact that Noteholder is providing the financing for the project and to maintain such sign until the
construction of the Improvements described in the Plans and Specifications and the Construction Contract has been substantially
completed. The sign may also include the names of other parties involved in the project, such as Maker, Architect, Contractor,
project engineers and subcontractors. Any such sign shall comply with any applicable sign ordinance.

 

Section
11.8   Maker may in good faith contest, by proper legal proceedings, the validity or amount of any tax, assessment, charge or
levy which Maker has agreed to pay pursuant to the provisions of this Agreement, or any third party liens or claims upon the Mortgaged
Property or compliance with any laws, orders, rules or regulations and may delay payment, performance or discharge thereof during
the period in which the same is being contested; provided, however, that if payment, performance or discharge is delayed: (a)
such proceedings must suspend the collection thereof from Maker, the Noteholder, or either of them, and the Mortgaged Property;
(b) in any such event Maker shall deposit with the Noteholder, or court, as applicable, as secbrity for the payment or discharge
of such contested item, an amount equal thereto plus interest, penalties, and costs reasonably estimated in connection therewith
or provide a bond reasonably satisfactory to Noteholder in said amount; (c) such contested item and all costs and penalties, if
any, shall have been paid at least thirty (30) days before the date on which the Mortgaged Property, or any portion thereof, may
be sold in order to satisfy any such contested items; and (d) in the case of any matter described above for which criminal or
civil liability might accrue to Maker or the Noteholder, neither Maker nor Noteholder, nor any of them, would be in any danger
of any criminal or civil liability for failure to comply therewith.

 

Section
11.9   The headings used herein are inserted only for convenience of reference and in no way define, limit or describe the scope
or intent of this Agreement or of any particular paragraph or section hereto.

 

Section
11.10   This Agreement and the rights and indebtedness hereby secured shall be construed and enforced according to, and governed
by, the laws of the State of Texas except to the extent preempted by Federal law, without regard to any conflicts of law provisions.

 

     22

     

    

 

Section
11.11   If any clause or provision herein contained operates or would prospectively operate to invalidate this Agreement in
whole or in part, then such clause or provision only shall be held for naught, as though not herein contained, and the remainder
of this Agreement shall remain operative and in full force and effect.

 

Section
11.12   This Agreement and all of the other Loan Documents were created by the joint efforts of Maker and Noteholder and their
respective legal counsel. As both Noteholder and Maker and their respective counsel have participated in the creation of this
Agreement and the other Loan Documents, it is represented and agreed by both Noteholder and Maker that any rule of law requiring
the interpretation of a contract against the party who drafted it is not to be, and cannot be, applied to this Agreement or to
any of the other Loan Documents.

 

Section
11.13  Except as otherwise expressly provided in any of the Loan Documents, Noteholder shall not be liable to (a) Maker except
as a result of breach of contract, fraud, gross negligence or willful misconduct or bad faith, or (b) any other party, in any
event, for any act or omission by Noteholder pursuant to the provisions of this Agreement, the Commitment, the Franchise Agreement
or any Loan Document (except as a result of fraud, gross negligence or willful misconduct) or as a result of its actions or inactions,
or in reliance on any certificate or document, or in reliance on any certificate or other paper believed by the Noteholder to
be genuine, or in reliance on an opinion of counsel of Noteholder’ s selection. By accepting or approving anything required
to be observed, performed or fulfilled by Maker or to be given to Noteholder pursuant to the terms of the Commitment, including
without limitation, any certificate, balance sheet, statement of profit and loss or other financial statement, survey, receipt,
appraisal, insurance policy or plans or specifications, the Noteholder shall not be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance
or approval thereof shall not be or constitute any warranty or representation to any party with respect thereto by Noteholder.
Nothing contained in the Commitment, this Agreement or the Loan Documents shall be construed in a manner to create any relationship
of Maker and Noteholder except for that of lender and borrower, and Maker and the Noteholder shall not be considered partners
or co-venturers for any purpose.

 

Section
11.14   Noteholder shall have the rights and remedies granted in the Loan Documents available at law or in equity. These rights
or remedies shall be cumulative and not exclusive and may be pursued separately, successively, concurrently against Maker, any
guarantor and any Mortgaged Property covered thereby, at the sole discretion of Noteholder. Any exercise or failure to exercise
any right or remedy shall not constitute a waiver, release thereof or of any right or remedy and the same shall be non-exclusive.

 

Section
11.15   In no event shall Noteholder’s rights and interests under the Loan Documents be construed to give Noteholder the
right to control, or be deemed to indicate that Noteholder is in control of, the business, management or properties of Maker or
has power over the daily management functions and operating decisions made by Maker.

  

     23

     

    

 

Section
11.16   Notwithstanding any provision in this Agreement to the contrary, it is expressly provided that in no case or event
should the aggregate amounts, which by applicable law are deemed to be interest with respect to this Agreement, the Note or
any document securing, evidencing or relating to the Note ever exceed the “Maximum Nonusurious Rate” (as defined
in the Note). In this connection, it is expressly stipulated and agreed that it is the intention of Noteholder and Maker to
contract in strict compliance with applicable usury laws of the State of Texas and/or of the United States (whichever permits
the higher rate of interest) from time to time in effect. Nothing in this Agreement, the Note or any document securing,
evidencing or relating to the Note shall ever be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the Maximum Nonusurious Rate. If under any circumstances
the aggregate amounts contracted for, charged or paid with respect to the Note which by applicable law are deemed to be
interest, would produce an interest rate greater than the Maximum Nonusurious Rate, Maker and any other person obligated to
pay the Note, stipulates that the amounts will be deemed to have been paid, charged or contracted for as a result of an error
on the part of Maker, any other person obligated for the payment of the Note and the Noteholder and upon discovery of the
error or upon notice thereof from Maker or the party making such payment, the Noteholder or the party receiving such excess
payment shall, at its option, refund the amount of such excess payment or credit the excess payment against any other amount
due under the Note. In addition, all sums paid or agreed to be paid to the holder of the Note for the use, forbearance or
detention of monies shall be, to the extent permitted by applicable law, amortized, prorated, allocated and spread through
the term of the Note. At all times, if any, as Title Four of the Texas Finance Code or other applicable law shall establish
the Maximum Nonusurious Rate, the Maximum Nonusurious Rate shall be the “weekly ceiling” (as defined in Title
Four of the Texas Finance Code or such other applicable law) from time to time in effect; but the Noteholder may from time to
time, as to current or future balances, implement any other ceiling under such Title or revise the index, formula or the
provisions of law used to compute the Maximum Nonusurious Rate by notice to Maker, if and to the extent permitted by, in the
manner in, such Title or other applicable law.

 

Section
11.17    PURSUANT TO THE COLLATERAL PROTECTION INSURANCE NOTICE PROVISIONS OF TEXAS FINANCE CODE, SECTION 307.052, and
without limiting any of Maker’s obligations in Section 3.2, or elsewhere in this Agreement:

 

(a)       MAKER
IS REQUIRED UNDER THIS AGREEMENT:

 

(i)       TO
KEEP THE MORTGAGED PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNTS SPECIFIED BY NOTEHOLDER IN SECTION 3.2
HEREOF;

 

(ii)       TO
PURCHASE THE INSURANCE FROM AN INSURER THAT IS FULLY LICENSED AND AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS; AND

 

(iii)       TO
NAME NOTEHOLDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS;

 

(b)
   MAKER SHALL, IF REQUESTED BY NOTEHOLDER, DELIVER TO NOTEHOLDER A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS; AND 

 

     24

     

    

 

(c)
IF MAKER FAILS TO MEET ANY REQUIREMENT LISTED IN PARAGRAPHS (a) OR (b) OF THIS SECTION 11.17, NOTEHOLDER MAY OBTAIN COLLATERAL
PROTECTION INSURANCE ON BEHALF OF MAKER AT MAKER’S EXPENSE.

 

Section
11.18 Reference is made to the Note for the provisions regarding any limitation of Maker’s recourse hereunder but nothing
in this Agreement or the Note or any other Loan Document shall limit or affect any recourse of Maker against Guarantor under the
Guaranty.

 

Section
11.19 This Agreement may be executed in multiple counterparts, each of which shall be an original instrument and which, taken
together, constitutes one and the same agreement.

 

It
is understood and agreed that this Agreement shall become effective concurrently with the Note and the Security Instrument.

 

[THE
REMAINDER OF PAGE INTENTIONALLY BLANK]

 

     25

     

    

 

IN
WITNESS WHEREOF, Maker and Noteholder, intending to be legally bound, have executed and delivered this Agreement under seal as
of the day and year first above written.

	 	 	 
	 	MAKER:
	 	 
	 	RI II MC-HOU, LLC,
	 	a Delaware limited liability company
	 	 
	 	By: 	/s/ Brett C. Moody	 
	 	Name: Brett C. Moody
	 	Title: CEO
	 	 	 
	 	NOTEHOLDER:
	 	 
	 	AMERICAN NATIONAL INSURANCE COMPANY,
	 	a Texas insurance company
	 	 	 
	 	By: 	/s/ Robert J. Kirchner	 
	 	Name: Robert J. Kirchner
	 	Title: Vice President

 

Exhibits
attached hereto and made a part hereof:

 

Exhibit
A — Legal Description

Exhibit
B — Project Budget

Exhibit
C — List of Plans and Specifications

Exhibit D — Additional Professional

Agreements Exhibit E — Cash Disbursement

Projection Exhibit F — Permitted Title

Exceptions Exhibit G — Defined Terms

 

Signature
Page to Construction Loan Agreement

 

     

     

    

 

EXHIBIT
A

 

Legal
Description

 

Unrestricted
Reserve “A”, in Block 1, of RESIDENCE INN MEDICAL CENTER, in Harris County, Texas, according to the map or plat thereof,
recorded under Film Code No. 674452, of the Map Records of Harris County, Texas.

 

     

     

    

 

EXHIBIT
B

 

Project
Budget

 

[to be attached]

 

     

     

    

 

SCHEDULE
OF VALUES

 

Residence
Inn - Medical Center

 

	 	PERIOD TO:	 
	 	PROJECT:	RI Med Ctr
	 	TMG Job #:	1710

 

	A

        DIV

NO.
	B

        DESCRIPTION
OF WORK
	C

        SCHEDULED

VALUES
	D

        WORK
FROM

PREVIOUS

APPLICATIONS

        (D+E)
	E

        COMPLETED
THIS PERIOD
	F

        REIMBUR
AMOUNT STORED (NOT IN D OR E)
	G

        TOTAL

        COMPLETED

        AND
STORED TO DATE (D+E+F)
	%

        (G/C)
	H

        BALANCE

TO FINISH

        (C-G)
	I

        Reimbursable

	01	Pre-Construction/Scheduling
    Consultant	$	30,000	0.00	0.00	0.00	0.00	0%	30,000	—
	01	Traffic
    Controls/Professional Surveyor	$	36,850	0.00	0.00	0.00	0.00	0%	36,850	—
	02	Tower
    Crane/Manlift/Power & Set-up	$	679,500	0.00	0.00	0.00	0.00	0%	679,500	—
	03	Turnkey
    Building Concrete/Garage/Piles	$	8,180,112	0.00	0.00	0.00	0.00	0%	8,180,112	—
	04	Masonry
    Block/Stone Veneer	$	349,772	0.00	0.00	0.00	0.00	0%	349,772	—
	05	Structural
    & Misc Steel/Stairs/Erection	$	911,481	0.00	0.00	0.00	0.00	0%	911,481	—
	06	Rough
    Carpentry/Casework/Countertops	$	1,235,810	0.00	0.00	0.00	0.00	0%	1,235,810	—
	07	Dam
    proofing/EIFS/Insulation/Roofing	$	1,672,977	0.00	0.00	0.00	0.00	0%	1,672,977	—
	08	DR,FR,HWMindows/Storefronts/Entry
    Locks	$	1,331,906	0.00	0.00	0.00	0.00	0%	1,331,906	—
	09	Gypsum
    Wall Systems/Flooring/Ceilings	$	3,962,009	0.00	0.00	0.00	0.00	0%	3,962,009	—
	10	Bath
    Acc./Acc. Part/CNR Guards/Entry	$	311,100	0.00	0.00	0.00	0.00	0%	311,100	—
	11	Roof
    Davit System	$	57,200	0.00	0.00	0.00	0.00	0%	57,200	—
	12	Tub
    Surroundings	$	152,785	0.00	0.00	0.00	0.00	0%	152,785	—
	13	Swimming
    Pool	$	65,000	0.00	0.00	0.00	0.00	0%	65,000	—
	14	Elevator
    & Linen Shoot	$	1,121,195	0.00	0.00	0.00	0.00	0%	1,121,195	—
	21	Fire
    Suppression System	$	484,800	0.00	0.00	0.00	0.00	0%	484,800	—
	22	Plumbing
    System	$	2,201,511	0.00	0.00	0.00	0.00	0%	2,201,511	—
	23	Heating,
    Ventilating and Air Conditioning	$	2,350,000	0.00	0.00	0.00	0.00	0%	2,350,000	—
	26	Electrical/Generator/Lighting
    Protection	$	3,350,911	0.00	0.00	0.00	0.00	0%	●        3,350,911	—
	28	Fire
    Alarm System	$	201,079	0.00	0.00	0.00	0.00	0%	201,079	—
	31	Earthwork/Excavation/Stabilization/SWPP	$	181,256	0.00	0.00	0.00	0.00	0%	181,256	—
	32	Concrete
    Paving/Striping/Pavers/LAN. & IRR.	$	275,590	0.00	0.00	0.00	0.00	0%	275,590	—
	33	Dom
    and Fire Water/Storm/Sanitary Utilities	$	405,650	0.00	0.00	0.00	0.00	0%	405,650	—
	01	General
    Requirements	$	1,368,000	0.00	0.00	0.00	0.00	0%	1,368,000	—
	01	General
    Liability Ins./Safety/Builders Risk Ins.	$	417,373	0.00	0.00	0.00	0.00	0%	417,373	—
	 	Contractors
    Fee	$	940,016	0.00	0.00	0.00	0.00	0%	940,016	—
	 	Construction
    Project Total	$	32,273,883	 	 	 	 	 	 	 
	 	Guestroom/Lobby
    FF&E	$	2,950,000	0.00	0.00	0.00	0.00	0%	2,950,000	—
	 	Supplies
    Textiles Tech	$	100,000	0.00	0.00	0.00	0.00	0%	100,000	—
	 	Pre-Opening	$	150,000	0.00	0.00	0.00	0.00	0%	150,000	—
	 	Interest
    Carry	$	913,408	0.00	0.00	0.00	0.00	0%	913,408	—
	 	Atty
    Fees	$	50,000	0.00	0.00	0.00	0.00	0%	50,000	—
	 	Appraisal	$	9,500	0.00	0.00	0.00	0.00	0%	9,500	—
	 	Phase
    I	$	2,500	0.00	0.00	0.00	0.00	0%	2,500	—

 

     

     

    

 

SCHEDULE
OF VALUES

 

Residence
Inn - Medical Center

 

	 	PERIOD TO:	 
	 	PROJECT:	RI Med Ctr
	 	TMG Job #:	1710

 

	A

        DIV

NO.
	B

        DESCRIPTION
OF WORK
	C

        SCHEDULED

VALUES
	D

        WORK
FROM

PREVIOUS

APPLICATIONS

        (D+E)
	E

        COMPLETED

THIS PERIOD
	F

        REIMBUR
AMOUNT STORED (NOT IN D OR E)
	G

        TOTAL

        COMPLETED

        AND
STORED TO DATE (D+E+F)
	%

        (G/C)
	H

        BALANCE

TO FINISH

        (C-G)
	I

        Reimbursable

	 	Survey	$	4,000	0.00	0.00	0.00	0.00	0%	4,000	—
	 	Grandbridge
    Fee	$	218,250	0.00	0.00	0.00	0.00	0%	218,250	—
	 	Lender
    Fee	$	291,000	0.00	0.00	0.00	0.00	0%	291,000	—
	 	Title
    Policy	$	113,411	0.00	0.00	0.00	0.00	0%	113,411	—
	 	Subtotal	$	4,802,069	 	 	 	 	 	 	 
	 	Architect	$	30,000	0.00	0.00	0.00	0.00	0%	30,000	—
	 	Engineering	$	475,000	0.00	0.00	0.00	0.00	0%	475,000	—
	 	Miscellaneous	$	95,000	0.00	0.00	0.00	0.00	0%	95,000	—
	 	Subtotal	$	600,000	 	 	 	 	 	 	 
	 	Contingency	$	321,117	0.00	0.00	0.00	0.00	0%	321,117	—
	 	Impact
    Fees	$	250,000	0.00	0.00	0.00	0.00	0%	250,000	—
	 	Duke
    Construction Fee	$	320,000	0.00	0.00	0.00	0.00	0%	320,000	—
	 	Subtotal	$	891,117	 	 	 	 	 	 	 
	 	Land	$	6,200,000	0.00	0.00	0.00	0.00	0%	6,200,000	—
	 	Project
    Development Total	44,767,069.00	0.00	0.00	0.00	0.00	 	44,767,069.00	—

 

     2

     

    

 

EXHIBIT
C

 

List
of Plans and Specifications

 

[to be attached]

 

     

     

    

 

 

 

     

     

    

 

 

 

     

     

    

 

EXHIBIT
D

 

List
of Professional Agreements

 

Agreement
for Services Between Architect and Owner for a Small Commercial Project between Maker, as owner, and David Baca Studio, L.L.C.,
a Texas limited liability company, as architect, dated effective August 2, 2016.

 

Professional
Services Agreement between Maker and Jones & Carter, as engineer, dated effective April 28, 206, as amended by letter agreement
dated December 21, 2016; and

 

Modified
Form of Agreement Between Owner and Design-Builder — Lump Sum between Maker, as owner, and ARCO/Murray National Dallas,
Inc., a Delaware corporation, as design-builder, dated February 16, 2017.

 

     

     

    

 

EXHIBIT
E

 

Cash
Disbursement Projection

 

[to
be attached]

 

     

     

    

 

EXHIBIT
F

 

Permitted
Title Exceptions 

 

1.            Restrictive
Covenants as set forth in Film Code No. 674452, of the Map Records of Harris County, Texas.

 

2.            The
following matters reflected on the recorded plat filed under Film Code No. 674452, of the Map Records of Harris County, Texas:

 

		(a)	An
                                         easement for drainage purposes extending 15 feet on each side of the centerline of all
                                         natural drainage courses.

 

		(b)	Building
                                         set back line(s) 25 feet in width along the front property line.

 

		(c)	Houston
                                         Lighting and Power Company easement, 10 feet in width along the Southeasterly property
                                         line, together with an aerial easement 5 feet wide from a plane 20 feet above the ground
                                         attached thereto; and as set out in instrument(s), filed under Harris County Clerk’s
                                         File No(s). D953829.

 

     

     

    

 

EXHIBIT
G

 

Defined Terms 

 

“Advance”
means any disbursements of the Loan Proceeds by Noteholder to or for the benefit of Maker.

 

“Architect”
means MITCHELL CARLSON STONE, INC., a Texas corporation, or another licensed, qualified architect(s) employed by Maker
from time to time in connection with the construction of the Improvements.

 

“Assignment
of Plans and Specifications” means the Assignment of Plans and Specifications and Rights Contracts dated of even
date from Maker for the benefit of Noteholder, as amended modified, restated or supplemented from time to time.

 

“Cash
Disbursement Projection” means the cash disbursement projection attached hereto as Exhibit E and incorporate
herein by this reference for all purposes.

 

“Closing
Certificate” means the Closing Certificate by Maker dated of even date herewith from Maker in favor of Noteholder,
together with any subsequent affirmations thereof required herein, given to Noteholder.

 

“Commitment”
means the loan commitment entitled “Mortgage Loan Application” and referencing Construction/Permanent Loan
Application, refereeing Loan Application No. 17-052, as amended modified, restated or supplemented from time to
time.

 

“Completion”
means Maker has satisfied all of the conditions in Section 3.4(b) with respect to Improvements.

 

“Completion
Guaranty” means the Absolute, Unconditional Completion Guaranty of even date herewith executed by Guarantor in
favor of Noteholder, as amended modified, restated or supplemented from time to time.

 

“Construction
Contract” means a complete contract for construction of the Improvements with a guaranteed maximum price construction
contract to be executed by Maker, as owner and the Contractor, as well as all other subcontractors engaged by Maker, if any, from
time to time to construct the Improvements not covered by such contract with Contractor, in a form and substance approved in advance
in writing by Noteholder, such approval not to be unreasonably withheld, delayed or conditioned, together with any amendments
as may be approved in advance in writing by Noteholder or otherwise permitted herein.

 

“Contractor”
means ARCH-CON CORPORATION, a Texas corporation, the general contractor for the Project, or any other general contractor
engaged by Maker and approved by Noteholder.

 

“Engineer”
means CENTURY ENGINEERING, INC., a Texas corporation, or another licensed, qualified engineer(s) employed by Maker from
time to time in connection with the construction of the Improvements.

 

    G-1

     

    

“Environmental
Indemnity” means the Certificate and Indemnity Agreement Regarding Hazardous Substances dated of even date herewith
from Maker for the benefit of Noteholder, as amended modified, restated or supplemented from time to time.

 

“FF&E”
means all construction materials, equipment, fixtures, furnishings, supplies, inventory and other personal property owned by
Maker, from time to time, and located on or used in connection with the construction, use, occupancy, operation and sale
of the Project.

 

“Financing
Statement” means the UCC-1 Financing Statement to be recorded to perfect Noteholder’ s security interest in all
personal property of Maker that is part of the Project.

 

“Force
Majeure” means cessations or suspensions caused by fire, unavailability of labor or materials, casualty, unusual weather
that is not reasonably anticipatable, or if, war, terrorist attacks, failure of power, acts of public enemies, riots, insurrections,
civil commotion, governmental delays in permitting, action or inaction of governments affecting the work of construction of the
Improvements, or other unforeseeable causes beyond the reasonable control of Maker.

 

“Franchise
Agreement” means that certain Residence Inn By Marriott Franchise Agreement between Maker as franchisee and Franchisor
as franchisor with an effective dated effective of or about December 15, 2015, which shall permit the Project to be operated as
a Residence Inn by Marriott with a term of at least thirty (30) years from completion of construction, as amended with the consent
of Noteholder.

 

“Franchise
Construction and Delivery Deadlines” means any deadlines for completion of construction required to be performed under
the Franchise Agreement, as the same may be extended, or the date by which such Franchise Agreement will terminate or be cancelled
for failure to complete any construction.

 

“Franchisor”
means Marriott International Inc., a Maryland corporation.

 

“Guarantor” means BRETT C. MOODY, an individual.

 

“Guaranty”
means, individually and collectively, as the context requires, the Completion Guaranty, the Payment Guaranty and the Tax
Lien Guaranty.

 

“Improvements”
means the approximately 182-room Residence Inn by Marriott hotel to be constructed on the Land in accordance with the
Plans and Specifications.

 

“Initial
Advance” means the first advance of Loan Proceeds hereunder.

 

“Inspecting
Engineer” means Eland Development Corporation or any other third-party consultant engaged by Noteholder as its
inspecting engineer.

 

“Land”
means those parcels of land more particularly described in Exhibit A attached hereto and made a part hereof by
reference, together with the easements, estates and rights described in the Security Instrument.

 

    G-2

     

    

 

“Lease
Assignment” means the Absolute Assignment of Leases and Rents to be recorded in Harris County, Texas of even date herewith
from Maker in favor of Noteholder, as amended modified, restated or supplemented from time to time.

 

“Loan”
means the loan in amount of $29,100,000.00, which is evidenced by the Note.

 

“Loan
Documents” means this Agreement, the Commitment, the Assignment of Leases and Rents, the Assignment of Plans and Specifications,
the Closing Certificate, the Security Instrument, the Environmental Indemnity, the Financing Statement, the Guaranty, the Note
and any and all other documents now or at any time hereafter evidencing, securing and/or relating to the Loan.

 

“Loan
Proceeds” means all proceeds of the Loan.

 

“Maker’s
Equity” means Maker’s funds of at least $15,667,069,.00, of which $6,200,000.00 will be the value of the Land
and $9,467,069.00 will be cash, together with any additional amounts required of Maker hereunder and actually contributed by or
on behalf of Maker.

 

“Note”
means the Promissory Note dated of even date herewith, made by Maker and payable to the order of Noteholder in the
original principal amount of TWENTY-NINE MILLION ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($29,100,000.00), as amended
modified, restated or supplemented from time to time.

 

“Owner-Architect
Agreement” means a fully executed copy of the agreement concerning the Improvements between Maker and Architect, in
a form and substance approved in advance in writing by Noteholder, such approval not to be unreasonably withheld, delayed or conditioned,
together with any material amendments as may be approved in advance in writing by Noteholder or otherwise permitted herein, such
approval not to be unreasonably withheld, delayed or conditioned.

 

“Owner-Engineer
Agreement” means a fully executed copy of the agreement concerning the Improvements between Maker and Engineer, in a
form and substance approved in advance in writing by Noteholder, such approval not to be unreasonably withheld, delayed or conditioned,
together with any material amendments as may be approved in advance in writing by Noteholder or otherwise permitted herein, such
approval not to be unreasonably withheld, delayed or conditioned.

 

“Payment
Guaranty” means the Absolute, Unconditional Payment Guaranty of even date herewith executed by Guarantor in favor of
Noteholder, as amended modified, restated or supplemented from time to time.

 

“Plans
and Specifications” means the plans and specifications for construction of the Improvements prepared by the
Architect and Contractor and submitted to and approved by Noteholder in the application of its reasonable judgment, such
approval not to be unreasonably denied, delayed or conditioned, together with all material additions, modifications and
amendments thereto approved by Noteholder, such approval not to be unreasonably denied, delayed or conditioned, which are
generally described in Exhibit C attached to this Agreement and made a part hereof.

 

    G-3

     

    

 

“Project”
means, collectively, the Land and the Improvements.

 

“Project
Budget” means the project budget submitted to and approved by Noteholder and set forth on Exhibit B attached
hereto and made a part hereof.

 

“Retainage”
means statutory retainage of ten percent (10%) of the amount of each Advance, or such other amount as is set forth in
the Construction Contract approved by Noteholder.

 

“Security
Instrument” means that certain the Deed of Trust, Security Agreement and Financing Statement to be recorded in Harris
County, Texas, dated of even date herewith from Maker to the trustee named therein, including a first priority assignment of leases,
rents, profits and issues of that portion of the Project described herein and a first priority security interest in all FF&E
located thereon, as amended modified, restated or supplemented from time to time.

 

“Tax
Lien Guaranty” means the Guaranty Regarding Taxes and Tax Liens of even date herewith executed by Guarantor in favor
of Noteholder, as amended modified, restated or supplemented from time to time.

 

“Title
Company” means Moody National Title Company, L.P., as agent for Old Republic National Title Insurance Company.

 

    G-4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00295-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00295-of-00352.parquet"}]]