Document:

exv10w46

Exhibit
10.46

Loan No.: 50-2857903

CAMPUS CREST AT ASHEVILLE, LLC,

as Borrower

to

TRSTE, INC.,

as Trustee

For the benefit of

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Lender

 

DEED OF TRUST, SECURITY AGREEMENT

AND FIXTURE FILING

 

Date: March 13, 2007

COLLATERAL IS OR INCLUDES FIXTURES AND THIS INSTRUMENT SHALL BE EFFECTIVE AS A FINANCING STATEMENT
FILED AS A FIXTURE FILING IN ACCORDANCE WITH NORTH CAROLINA GENERAL STATUTES § 25-9-502

THIS INSTRUMENT PREPARED
BY 
AND WHEN RECORDED RETURN TO:

Kilpatrick Stockton LLP

Hearst Tower, Suite 2500 
214
North Tryon Street

Charlotte, North Carolina 28202

Attn: John Nicholas Suhr, Jr., Esq.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	Page	 
	 
	ARTICLE I. REPRESENTATIONS AND WARRANTIES OF BORROWER	 	 	4	 
	 

	 	 	1.1	 	 	Organization; Special Purpose
	 	 	4	 
	 

	 	 	1.2	 	 	Title
	 	 	5	 
	 

	 	 	1.3	 	 	No Bankruptcy Filing
	 	 	5	 
	 

	 	 	1.4	 	 	Full and Accurate Disclosure
	 	 	6	 
	 

	 	 	1.5	 	 	Proceedings; Enforceability
	 	 	6	 
	 

	 	 	1.6	 	 	No Conflicts
	 	 	6	 
	 

	 	 	1.7	 	 	Federal Reserve Regulations; Investment Company Act
	 	 	6	 
	 

	 	 	1.8	 	 	Taxes
	 	 	7	 
	 

	 	 	1.9	 	 	ERISA
	 	 	7	 
	 

	 	 	1.10	 	 	Property Compliance
	 	 	7	 
	 

	 	 	1.11	 	 	Utilities
	 	 	8	 
	 

	 	 	1.12	 	 	Public Access
	 	 	8	 
	 

	 	 	1.13	 	 	Litigation; Agreements
	 	 	8	 
	 

	 	 	1.14	 	 	Physical Condition
	 	 	8	 
	 

	 	 	1.15	 	 	Contracts
	 	 	9	 
	 

	 	 	1.16	 	 	Leases
	 	 	9	 
	 

	 	 	1.17	 	 	Foreign Person
	 	 	9	 
	 

	 	 	1.18	 	 	Management Agreement
	 	 	9	 
	 

	 	 	1.19	 	 	Fraudulent Transfer
	 	 	10	 
	 

	 	 	1.20	 	 	Foreign Assets Control
	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE II. COVENANTS OF BORROWER	 	 	11	 
	 

	 	 	2.1	 	 	Defense of Title
	 	 	11	 
	 

	 	 	2.2	 	 	Performance of Obligations
	 	 	11	 
	 

	 	 	2.3	 	 	Insurance
	 	 	12	 
	 

	 	 	2.4	 	 	Payment of Taxes
	 	 	16	 
	 

	 	 	2.5	 	 	Casualty and Condemnation
	 	 	16	 
	 

	 	 	2.6	 	 	Construction Liens
	 	 	19	 
	 

	 	 	2.7	 	 	Rents and Profits
	 	 	20	 
	 

	 	 	2.8	 	 	Leases
	 	 	21	 
	 

	 	 	2.9	 	 	Alienation and Further Encumbrances
	 	 	23	 
	 

	 	 	2.10	 	 	Payment of Utilities, Assessments. Charges, Etc.
	 	 	27	 
	 

	 	 	2.11	 	 	Access Privileges and Inspections
	 	 	27	 
	 

	 	 	2.12	 	 	Waste; Alteration of Improvements
	 	 	28	 
	 

	 	 	2.13	 	 	Zoning
	 	 	28	 
	 

	 	 	2.14	 	 	Financial Statements and Books and Records
	 	 	29	 
	 

	 	 	2.15	 	 	Further Assurances
	 	 	30	 
	 

	 	 	2.16	 	 	Payment of Costs; Reimbursement to Lender
	 	 	31	 
	 

	 	 	2.17	 	 	Security Interest
	 	 	32	 
	 

	 	 	2.18	 	 	Security Agreement
	 	 	33	 
	 

	 	 	2.19	 	 	Easements and Rights-of-Way
	 	 	34	 
	 

	 	 	2.20	 	 	Compliance with Laws
	 	 	34	 

i

 

	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	Page	 
	 
	 

	 	 	2.21	 	 	Additional Taxes
	 	 	35	 
	 

	 	 	2.22	 	 	Secured Indebtedness
	 	 	35	 
	 

	 	 	2.23	 	 	Borrower’s Waivers
	 	 	35	 
	 

	 	 	2.24	 	 	SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
	 	 	36	 
	 

	 	 	2.25	 	 	Attorney-in-Fact Provisions
	 	 	37	 
	 

	 	 	2.26	 	 	Management
	 	 	37	 
	 

	 	 	2.27	 	 	Hazardous Waste and Other Substances
	 	 	38	 
	 

	 	 	2.28	 	 	Indemnification; Subrogation
	 	 	42	 
	 

	 	 	2.29	 	 	Covenants with Respect to Existence, Indebtedness, Operations, Fundamental
Changes of Borrower
	 	 	43	 
	 

	 	 	2.30	 	 	Embargoed Person
	 	 	47	 
	 

	 	 	2.31	 	 	Anti-Money Laundering
	 	 	48	 
	 

	 	 	2.32	 	 	ERISA
	 	 	48	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE III. RESERVES	 	 	48	 
	 

	 	 	3.1	 	 	Reserves Generally
	 	 	49	 
	 

	 	 	3.2	 	 	Payments Reserve
	 	 	50	 
	 

	 	 	3.3	 	 	Impound Account
	 	 	51	 
	 

	 	 	3.4	 	 	Intentionally Deleted
	 	 	52	 
	 

	 	 	3.5	 	 	Replacement Reserve
	 	 	52	 
	 

	 	 	3.6	 	 	Economic Occupancy Reserve
	 	 	53	 
	 

	 	 	3.7	 	 	Holdback Reserve
	 	 	53	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE IV. EVENTS OF DEFAULT	 	 	54	 
	 

	 	 	4.1	 	 	Events of Default
	 	 	54	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE V. REMEDIES	 	 	56	 
	 

	 	 	5.1	 	 	Remedies Available
	 	 	56	 
	 

	 	 	5.2	 	 	Application of Proceeds
	 	 	59	 
	 

	 	 	5.3	 	 	Right and Authority of Receiver or Lender in the Event of Default;
Power of Attorney
	 	 	60	 
	 

	 	 	5.4	 	 	Occupancy After Foreclosure
	 	 	61	 
	 

	 	 	5.5	 	 	Notice to Account Debtors
	 	 	61	 
	 

	 	 	5.6	 	 	Cumulative Remedies
	 	 	62	 
	 

	 	 	5.7	 	 	Payment of Expenses
	 	 	62	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VI. MISCELLANEOUS TERMS AND CONDITIONS	 	 	62	 
	 

	 	 	6.1	 	 	Time of Essence
	 	 	62	 
	 

	 	 	6.2	 	 	Release of Deed of Trust
	 	 	62	 
	 

	 	 	6.3	 	 	Certain Rights of Lender
	 	 	62	 
	 

	 	 	6.4	 	 	Waiver of Certain Defenses
	 	 	62	 
	 

	 	 	6.5	 	 	Notices
	 	 	63	 
	 

	 	 	6.6	 	 	Successors and Assigns; Joint and Several Liability
	 	 	63	 
	 

	 	 	6.7	 	 	Severability
	 	 	63	 
	 

	 	 	6.8	 	 	Gender
	 	 	63	 
	 

	 	 	6.9	 	 	Waiver; Discontinuance of Proceedings
	 	 	64	 
	 

	 	 	6.10	 	 	Section Headings
	 	 	64	 
	 

	 	 	6.11	 	 	GOVERNING LAW
	 	 	64	 
	 

	 	 	6.12	 	 	Counting of Days
	 	 	64	 

ii

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 

	 	 	6.13	 	 	Relationship of the Parties
	 	 	64	 
	 

	 	 	6.14	 	 	Application of the Proceeds of the Note
	 	 	65	 
	 

	 	 	6.15	 	 	Unsecured Portion of Indebtedness
	 	 	65	 
	 

	 	 	6.16	 	 	Cross Default
	 	 	65	 
	 

	 	 	6.17	 	 	Interest After Sale
	 	 	65	 
	 

	 	 	6.18	 	 	Inconsistency with Other Loan Documents
	 	 	65	 
	 

	 	 	6.19	 	 	Construction of this Document
	 	 	65	 
	 

	 	 	6.20	 	 	No Merger
	 	 	65	 
	 

	 	 	6.21	 	 	Rights With Respect to Junior Encumbrances
	 	 	65	 
	 

	 	 	6.22	 	 	Lender May File Proofs of Claim
	 	 	66	 
	 

	 	 	6.23	 	 	Fixture Filing
	 	 	66	 
	 

	 	 	6.24	 	 	After Acquired Property
	 	 	66	 
	 

	 	 	6.25	 	 	No Representation
	 	 	66	 
	 

	 	 	6.26	 	 	Counterparts
	 	 	66	 
	 

	 	 	6.27	 	 	Personal Liability
	 	 	67	 
	 

	 	 	6.28	 	 	Recording and Filing
	 	 	67	 
	 

	 	 	6.29	 	 	Entire Agreement and Modifications
	 	 	67	 
	 

	 	 	6.30	 	 	Intentionally Reserved
	 	 	67	 
	 

	 	 	6.31	 	 	Secondary Market
	 	 	67	 
	 

	 	 	6.32	 	 	Dissemination of Information
	 	 	67	 
	 

	 	 	6.33	 	 	Attorneys’ Fees
	 	 	68	 
	 

	 	 	6.34	 	 	REMIC Opinions
	 	 	68	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE VII. CONCERNING THE TRUSTEE	 	 	68	 
	 

	 	 	7.1	 	 	Certain Rights
	 	 	68	 
	 

	 	 	7.2	 	 	Retention of Money
	 	 	69	 
	 

	 	 	7.3	 	 	Successor Trustees
	 	 	69	 
	 

	 	 	7.4	 	 	Perfection of Appointment
	 	 	69	 
	 

	 	 	7.5	 	 	Succession Instruments
	 	 	69	 
	 

	 	 	7.6	 	 	No Representation by Trustee or Lender
	 	 	70	 

iii

 

DEEP OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING

     THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (as
the same may from time to time be amended, consolidated, renewed or replaced, this “Deed of Trust”)
is made as of March 13, 2007 by CAMPUS CREST AT ASHEVILLE, LLC, a Delaware limited liability
company, as grantor (“Borrower”), whose address is 2100 Rexford Road, Suite 414, Charlotte, North
Carolina 28211, to TRSTE, INC., a Virginia corporation, as Trustee (“Trustee”) whose address is 301
South College Street, Charlotte, North Carolina 28288, for the benefit of WACHOVIA BANK, NATIONAL
ASSOCIATION, a national banking association, as beneficiary (together with its successors and
assigns, “Lender”), whose address is Commercial Real Estate Services, 8739 Research Drive URP — 4,
NC 1075, Charlotte, North Carolina 28262.

WITNESSETH:

     THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS ($10.00), AND OTHER
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, BORROWER
HEREBY IRREVOCABLY MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND
ASSIGNS, with power of sale, all of Borrower’s estate, right, title and interest in, to and under
any and all of the following described property, whether now owned or hereafter acquired by
Borrower (collectively, the “Property”);

     (A) All that certain real property situated in the County of Buncombe, State of North
Carolina, more particularly described on Exhibit A attached hereto and incorporated
herein by this reference (the “Premises”), together with all of the easements, rights,
privileges, franchises, tenements, hereditaments and appurtenances now or hereafter thereunto
belonging or in any way appertaining thereto, and all of the estate, right, title, interest,
claim and demand whatsoever of Borrower therein or thereto, either at law or in equity, in
possession or in expectancy, now or hereafter acquired;

     (B) All structures, buildings and improvements of every kind and description now or at any
time hereafter located or placed on the Premises (the “Improvements”);

     (C) All furniture, furnishings, fixtures, goods, equipment, inventory or personal property
owned by Borrower and now or hereafter located on, attached to or used in and about the
Improvements, including, but not limited to, all machines, engines, boilers, dynamos, elevators,
stokers, tanks, cabinets, awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and
all appliances, plumbing, heating, air conditioning, lighting, ventilating, refrigerating,
disposal and incinerating equipment, and all fixtures and appurtenances thereto, and such other
goods and chattels and personal property owned by Borrower as are now or hereafter used or
furnished in operating the Improvements, or the activities conducted therein, and all building
materials and equipment hereafter situated on or about the Premises or Improvements, and all
warranties and guaranties relating thereto, and all additions thereto and substitutions and
replacements therefor (exclusive of any of the foregoing owned or leased by tenants of space in
the Improvements);

 

 

     (D) All easements, rights-of-way, strips and gores of land, vaults, streets, ways,
alleys,
passages, sewer rights, and other emblements now or hereafter located on the Premises or under
or above the same or any part or parcel thereof, and all estates, rights, titles, interests,
tenements,
hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging,
relating or appertaining to the Property or any part thereof, or which hereafter shall in any
way
belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Borrower;

     (E) All water, ditches, wells, reservoirs and drains and all water, ditch, well, reservoir
and drainage rights which are appurtenant to, located on, under or above or used in
connection
with the Premises or the Improvements, or any part thereof, whether now existing or hereafter
created or acquired;

     (F) All minerals, crops, timber, trees, shrubs, flowers and landscaping features now or
hereafter located on, under or above the Premises;

     (G) All cash funds, deposit accounts and other rights and evidence of rights to cash,
now or hereafter created or held by Lender pursuant to this Deed of Trust or any other of the
Loan Documents (as hereinafter defined), including, without limitation, all funds now or
hereafter on deposit in the Reserves (as hereinafter defined);

     (H) All leases (including, without limitation, oil, gas and mineral leases), licenses,
concessions and occupancy agreements of all or any part of the Premises or the Improvements (each,
a “Lease” and collectively, “Leases”), whether written or oral, now or hereafter entered into and
all rents, royalties, issues, profits, bonus money, revenue, income, rights and other benefits
(collectively, the “Rents and Profits”) of the Premises or the Improvements, now or hereafter
arising from the use or enjoyment of all or any portion thereof or from any present or future
Lease or other agreement pertaining thereto or arising from any of the Leases or any of the
General Intangibles (as hereinafter defined) and all cash or securities deposited to secure
performance by the tenants, lessees or licensees (each, a “Tenant” and collectively, “Tenants”),
as applicable, of their obligations under any such Leases, whether said cash or securities are to
be held until the expiration of the terms of said Leases or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject, however, to the
provisions contained in Section 2.7 hereinbelow;

     (I) All contracts and agreements now or hereafter entered into covering any part of the
Premises or the Improvements (collectively, the “Contracts”) and all revenue, income and Other
benefits thereof, including, without limitation, management agreements, service contracts,
maintenance contracts, equipment leases, personal property leases and any contracts or documents
relating to construction on any part of the Premises or the Improvements (including plans,
drawings, surveys, tests, reports, bonds and governmental approvals) or to the management or
operation of any part of the Premises or the Improvements;

     (J) All present and future monetary deposits given to any public or private utility with
respect to utility services furnished to any part of the Premises or the Improvements;

     (K) All present and future funds, accounts, instruments, accounts receivable, documents,
causes of action, claims, general intangibles (including, without limitation,

2

 

trademarks, trade names, service marks and symbols now or hereafter used in connection with
any part of the Premises or the Improvements, all names by which the Premises or the Improvements
may be operated or known, all rights to carry on business under such names, and all rights,
interest and privileges which Borrower has or may have as developer or declarant under any
covenants, restrictions or declarations now or hereafter relating to the Premises or the
Improvements) and all notes or chattel paper now or hereafter arising from or by virtue of any
transactions related to the Premises or the Improvements (collectively, the “General
Intangibles”);

     (L) All water taps, sewer taps, certificates of occupancy, permits, licenses, franchises,
certificates, consents, approvals and other rights and privileges now or hereafter obtained in
connection with the Premises or the Improvements and all present and future warranties and
guaranties relating to the Improvements or to any equipment, fixtures, furniture, furnishings,
personal property or components of any of the foregoing now or hereafter located or installed on
the Premises or the Improvements;

     (M) All building materials, supplies and equipment now or hereafter placed on the Premises or
in the Improvements and all architectural renderings, models, drawings, plans, specifications,
studies and data now or hereafter relating to the Premises or the Improvements;

     (N) All right, title and interest of Borrower in any insurance policies or binders now or
hereafter relating to the Property, including any unearned premiums thereon;

     (O) All proceeds, products, substitutions and accessions (including claims and
demands therefor) of the conversion, voluntary or involuntary, of any of the foregoing into
cash
or liquidated claims, including, without limitation, proceeds of insurance and condemnation
awards; and

     (P) All other or greater rights and interests of every nature in the Premises or the
Improvements and in the possession or use thereof and income therefrom, whether now owned or
hereafter acquired by Borrower.

     FOR THE PURPOSE OF SECURING:

     (1) The loan (the “Loan”) evidenced by that certain Promissory Note (such Promissory
Note, together with any and all renewals, amendments, modifications, consolidations and
extensions thereof, is hereinafter referred to as the “Note”) of even date with this Deed of
Trust, made by Borrower payable to the order of Lender in the principal face amount of Fourteen
Million Eight Hundred Thousand and No/100 Dollars ($14,800,000.00), together with interest as
therein provided;

     (2) The full and prompt payment and performance of all of the provisions, agreements,
covenants and obligations herein contained and contained in any other agreements, documents or
instruments now or hereafter evidencing, securing or otherwise relating to the Debt (as
hereinafter defined) including, but not limited to, the Environmental Indemnity Agreement (as
hereinafter defined) and the Indemnity and Guaranty Agreements (as hereinafter defined) (the
Note, this Deed of Trust, and such other agreements, documents and instruments, together with any
and all renewals, amendments, extensions and modifications thereof, are hereinafter

3

 

collectively referred to as the “Loan Documents”) and the payment of all other sums herein or
therein covenanted to be paid;

     (3) Any and all additional advances made by Lender to protect or preserve the Property or the
lien or security interest created hereby on the Property, or for taxes, assessments or insurance
premiums as hereinafter provided or for performance of any of Borrower’s obligations hereunder or
under the other Loan Documents or for any other purpose provided herein or in the other Loan
Documents (whether or not the original Borrower remains the owner of the Property at the time of
such advances); and

     (4) Any and all other indebtedness now owing or which may hereafter be owing by Borrower to
Lender, including, without limitation, all prepayment fees, however and whenever incurred or
evidenced, whether express or implied, direct or indirect, absolute or contingent, or due or to
become due, and all renewals, modifications, consolidations, replacements and extensions thereof,
it being contemplated by Borrower and Lender that Borrower may hereafter become so indebted to
Lender.

(All of the sums referred to in Paragraphs (1) through (4) above are herein referred to as
the “Debt”).

     TO HAVE AND TO HOLD the Property unto Trustee, its successors and assigns forever, for the
benefit of Lender, its successors and assigns, and Borrower does hereby bind itself, its
successors and assigns, to WARRANT AND FOREVER DEFEND the title to the Property, subject to the
Permitted Encumbrances (as hereinafter defined), to Lender and Trustee against every person
whomsoever lawfully claiming or to claim the same or any part thereof;

     PROVIDED, HOWEVER, that if the principal and interest and all other sums due or to become
due under the Note or under the other Loan Documents, including, without limitation, any
prepayment fees required pursuant to the terms of the Note, shall have been paid at the time and
in the manner stipulated therein and the Debt shall have been paid and all other covenants
contained in the Loan Documents shall have been performed, then, in such case, the liens,
security interests, estates and rights granted by this Deed of Trust shall be satisfied and the
estate, right, title and interest of Lender in the Property shall cease, and upon payment to
Lender of all costs and expenses incurred for the preparation of the release hereinafter
referenced and all recording costs if allowed by law, Lender shall promptly satisfy and release
this Deed of Trust of record and the lien hereof by proper instrument.

ARTICLE
I.

REPRESENTATIONS AND WARRANTIES OF BORROWER

     Borrower, for itself and its successors and assigns, does hereby represent, warrant and
covenant to and with Lender, its successors and assigns, that:

     1.1 Organization; Special Purpose. Borrower and its manager have been duly organized
and are validly existing and in good standing under the laws of the state of their formation,
with requisite power and authority, and all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to own their respective properties and to transact the

4

 

business in which each is now engaged. Borrower and its manager are duly qualified to do
business and are in good standing in each jurisdiction where each is required to be so qualified
in connection with their respective properties, businesses and operations. Borrower and its
manager possess all franchises, patents, copyrights, trademarks, trade names, licenses and permits
necessary for the conduct of their respective businesses substantially as now conducted. Borrower
and its manager area each a Single-Purpose Entity in compliance with the provisions of Section
2.29 hereof.

     1.2 Title. Borrower has good, marketable and indefeasible fee simple title to the
Property, subject only to those matters expressly set forth as exceptions to or subordinate matters
in the title insurance policy insuring the lien of this Deed of Trust delivered as of the date
hereof which Lender has agreed to accept, excepting therefrom all preprinted and/or standard
exceptions (such items being the “Permitted Encumbrances”), and has full power and lawful authority
to grant, bargain, sell, convey, assign, transfer, encumber and mortgage its interest in the
Property in the manner and form hereby done or intended. Borrower will preserve its interest in and
title to the Property and will forever warrant and defend the same to Lender against any and all
claims whatsoever and will forever warrant and defend the validity and priority of the lien and
security interest created herein against the claims of all persons and parties whomsoever, subject
to the Permitted Encumbrances. This Deed of Trust creates (i) a valid, perfected lien on the
Premises, subject only to Permitted Encumbrances and the liens created by the Loan Documents and
(ii) perfected security interests in and to, and perfected collateral assignments of, all
personalty, all in accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other liens as are permitted pursuant to the Loan Documents and the
liens created by the Loan Documents. There are no security agreements or financing statements
affecting all or any portion of the Property other than (i) as disclosed in writing by Borrower to
Lender prior to the date hereof and (ii) the security agreements and financing statements created
in favor of Lender. There are no claims for payment for work, labor or materials affecting the
Premises which are or may become a lien prior to, or of equal priority with, the liens created by
the Loan Documents. None of the Permitted Encumbrances, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided by this Deed of
Trust, materially and adversely affect the value of the Premises, impair the use or operations of
the Premises or impair Borrower’s ability to pay its obligations in a timely manner. The foregoing
warranty of title shall survive the foreclosure of this Deed of Trust and shall inure to the
benefit of and be enforceable by Lender in the event Lender acquires title to the Property pursuant
to any foreclosure.

     1.3 No Bankruptcy Filing. No bankruptcy, insolvency proceedings or liquidation of
all or a substantial portion of the Property is pending or contemplated by Borrower or, to the
best knowledge of Borrower, against Borrower or by or against any endorser or cosigner of the
Note or of any portion of the Debt, or any guarantor or indemnitor under any guaranty or
indemnity agreement, including, without limitation, those certain Indemnity and Guaranty
Agreements, each dated the date hereof, executed in favor of Lender (the “Indemnity and Guaranty

 Agreements”) executed in connection with the Note or the loan evidenced thereby and secured
hereby (an “Indemnitor”). No petition in bankruptcy has been filed against Borrower or any
general partner, manager, sole member, managing member or majority shareholder of Borrower, as
applicable (collectively, the “Borrower Parties”, each a “Borrower Party”), and neither

5

 

Borrower Party or any principal of a Borrower Party has ever made an assignment for the
benefit of creditors or taken advantage of any insolvency act for the benefit of debtors.

     1.4 Full and Accurate Disclosure. No statement of fact made by Borrower in any Loan
Documents contains any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein not misleading. There is no material fact presently
known to Borrower that has not been disclosed to Lender which adversely affects, or, as far as
Borrower can foresee, might adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower. All financial data, including the statements of cash flow and
income and operating expense, that have been delivered to Lender with respect to Borrower and the
Property (i) are true, complete and correct in all material respects, (ii) accurately represent the
financial condition of Borrower and the Property as of the date of such reports, and (iii) to the
extent prepared by an independent certified public accounting firm, have been prepared in
accordance with generally accepted accounting principles consistently applied throughout the
periods covered, except as disclosed therein. Borrower has no contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments, unrealized or anticipated losses from any
unfavorable commitments or any liabilities or obligations not expressly permitted by this Deed of
Trust. Since the date of such financial statements, there has been no materially adverse change in
the financial condition, operations or business of Borrower or the Property from that set forth in
said financial statements.

     1.5 Proceedings; Enforceability. The execution, delivery and performance of this
Deed of Trust, the Note and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Borrower in accordance with the
respective terms thereof and do not contravene, result in a breach of or constitute a default
(nor upon the giving of notice or the passage of time or both will constitute a default) under
the partnership agreement, articles of incorporation, operating agreement or other organizational
documents of Borrower or any contract or agreement of any nature to which Borrower is a party or
by which Borrower or any of its property may be bound and do not violate or contravene any law,
order, decree, rule or regulation to which Borrower is subject. The Loan Documents are not
subject to, and Borrower has not asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury.

     1.6 No Conflicts. Borrower is not required to obtain any consent, approval or
authorization from or to file any declaration or statement with, any governmental authority or
agency in connection with or as a condition to the execution, delivery or performance of this
Deed of Trust, the Note or the other Loan Documents which has not been so obtained or filed.
Borrower has obtained or made all necessary (i) consents, approvals and authorizations and
registrations and filings of or with all governmental authorities or agencies and (ii) consents,
approvals, waivers and notifications of partners, stockholders, members, creditors, lessors and
other non-governmental persons and/or entities, in each case, which are required to be obtained
or made by Borrower in connection with the execution and delivery of, and the performance by
Borrower of its obligations under, the Loan Documents.

     1.7 Federal Reserve Regulations; Investment Company Act. No part of the proceeds of
the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within

6

 

the meaning of Regulation T, U or X of the Board of Governors of the Federal Reserve System or
for any other purpose that would be inconsistent with such Regulation T, U or X or any other
regulation of such Board of Governors, or for any purpose prohibited by law or any Loan Document.
Borrower is not (i) an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended; (ii) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a
“subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as
amended; or (iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

     1.8 Taxes. Borrower and any general partner or managing member of Borrower, if any,
has filed all federal, state and local tax returns required to be filed as of the date hereof and
has paid or made adequate provision for the payment of all federal, state and local taxes, charges
and assessments payable by Borrower and any general partner or managing member, if any, as of the
date hereof. Borrower and any general partner or managing member, if any, believe that their
respective tax returns properly reflect the income and taxes of Borrower and said general partner
or managing member, if any, for the periods covered thereby, subject only to reasonable
adjustments required by the Internal Revenue Service or other applicable tax authority upon audit.
Borrower and the Property are free from any past due obligations for sales and payroll taxes.

     1.9 ERISA. Borrower (i) has no knowledge of any material liability that has been
incurred or is expected to be incurred by Borrower that is or remains unsatisfied for any taxes or
penalties with respect to any “employee benefit plan”, as defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), or any “plan” within the meaning of
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”) or any other
benefit plan (other than a multi-employer plan) maintained, contributed to, or required to be
contributed to by Borrower or by any entity that is under the common control with Borrower within
the meaning of ERISA Section 4001(a)(14) (collectively, a “Plan”) or any plan that would be a Plan
but for the fact that it is a multi-employer plan within the meaning of ERISA Section 3(37) and
(ii) has made and shall continue to make when due all required contributions to all such Plans, if
any. Each such Plan, if any, has been and will be administered in compliance with its terms and
the applicable provisions of ERISA, the Code and any other applicable Federal or state law and no
action shall be taken or fail to be taken that would result in the disqualification or loss of the
tax-exempt status of any such Plan, if any, intended to be qualified or tax-exempt. The assets of
Borrower do not constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101.

     1.10 Property Compliance. The Premises and the Improvements and the current intended
use thereof by Borrower comply in all material respects with all applicable restrictive
covenants, zoning ordinances, subdivision and building codes, flood disaster laws, health and
environmental laws and regulations and all other ordinances, orders or requirements issued by any
state, federal or municipal authorities having or claiming jurisdiction over the Property. In the
event that all or any part of the Improvements are destroyed or damaged, said Improvements can be
legally reconstructed to their condition prior to such damage or destruction, and thereafter
exist for the same use without violating any zoning or other ordinances applicable thereto and

7

 

without the necessity of obtaining any variances or special permits. No legal proceedings are
pending or, to the knowledge of Borrower, threatened with respect to the zoning of the Premises.
Neither the zoning nor any other right to construct, use or operate the Premises is in any way
dependent upon or related to any property other than the Premises. All certifications, permits,
licenses and approvals, including certificates of completion and occupancy permits required for the
legal use, occupancy and operation of the Premises have been obtained and are in full force and
effect. The Premises and Improvements constitute one or more separate tax parcels for purposes of
ad valorem taxation. The Premises and Improvements do not require any rights over, or restrictions
against, other property in order to comply with any of the aforesaid governmental ordinances,
orders or requirements.

     1.11 Utilities. All utility services necessary and sufficient for the full use,
occupancy, operation and disposition of the Premises and the Improvements for their intended
purposes are available to the Property, including water, storm sewer, sanitary sewer, gas,
electric, cable and telephone facilities, through public rights-of-way or perpetual private
easements approved by Lender. The Property is free from delinquent water charges, sewer rents,
taxes and assessments.

     1.12 Public Access. All streets, roads, highways, bridges and waterways necessary for
access to and full use, occupancy, operation and disposition of the Premises and the Improvements
have been completed, have been dedicated to and accepted by the appropriate municipal authority
and are open and available to the Premises and the Improvements without further condition or cost
to Borrower. All curb cuts, driveways and traffic signals shown on the survey delivered to Lender
prior to the execution and delivery of this Deed of Trust are existing and have been fully
approved by the appropriate governmental authority.

     1.13 Litigation; Agreements. There are no judicial, administrative, mediation or
arbitration actions, suits or proceedings pending or threatened against or affecting Borrower
(or, if Borrower is a partnership or a limited liability company, any of its general partners or
members) or the Property which, if adversely determined, would materially impair either the
Property or Borrower’s ability to perform the covenants or obligations required to be performed
under the Loan Documents. Borrower is not a party to any agreement or instrument or subject to
any restriction which might adversely affect Borrower or the Property, or Borrower’s business,
properties, operations or condition, financial or otherwise. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which it is a party or by which it or the Property is bound.

     1.14 Physical Condition. As of the date of this Deed of Trust, (i) the Property is
free from unrepaired damage caused by fire, flood, accident or other casualty, (ii) no part of
the Premises or the Improvements has been taken in condemnation, eminent domain or like
proceeding nor is any such proceeding pending or, to Borrower’s knowledge and belief, threatened
or contemplated, (iii) except as may otherwise be disclosed in that certain property condition
report (the “Property Condition Report”) dated December 12, 2006 and prepared by IVI Due
Diligence Services, Inc., the Improvements are structurally sound, in good repair and free of
defects in materials and workmanship and have been constructed and installed in substantial
compliance with the plans and specifications relating thereto, and (iv) all major

8

 

building systems located within the Improvements, including, without limitation, the heating
and air conditioning systems and the electrical and plumbing systems, are in good working order
and condition.

     1.15 Contracts. Borrower has delivered to Lender true, correct and complete copies of all
Contracts and all amendments thereto or modifications thereof. Each Contract constitutes the legal,
valid and binding obligation of Borrower and, to the best of Borrower’s knowledge and belief, is
enforceable against any other party thereto. No default exists, or with the passing of time or the
giving of notice or both would exist, under any Contract which would, in the aggregate, have a
material adverse effect on Borrower or the Property. No Contract provides any party with the right
to obtain a lien or encumbrance upon the Property superior to the lien of this Deed of Trust. All
Contracts affecting the Property have been entered into at arms-length in the ordinary course of
Borrower’s business and provide for the payment of fees in amounts and upon terms comparable to
existing market rates.

     1.16 Leases.
Borrower has delivered a true, correct and complete schedule (the “Rent
Roll”) of all Leases affecting the Property as of the date hereof, which accurately and completely
sets forth in all material respects for each such Lease, the following: the name of the Tenant,
the Lease expiration date, the base rent payable, the amount of any rent prepaid more than one (1)
month in advance, the security deposit held thereunder and any other material provisions of such
Lease. Upon Lender’s written request, Borrower shall provide true, correct and complete copies of
all Leases described in the Rent Roll. Each Lease constitutes the legal, valid and binding
obligation of Borrower and, to the best of Borrower’s knowledge and belief, is enforceable against
the Tenant thereof. No default exists, or with the passing of time or the giving of notice or both
would exist, under any Lease which would, in the aggregate, have a material adverse effect on
Borrower or the Property. Except as set forth in the Rent Roll, no Tenant under any Lease has, as
of the date hereof, paid rent more than thirty (30) days in advance, and the rents under such
Leases have not been waived, released, or otherwise discharged or compromised. All security
deposits required under such Leases have been fully funded and are held by Borrower in a separate
segregated account or as otherwise required by applicable law. No Lease provides any party with
the right to obtain a lien or encumbrance upon the Property superior to the lien of this Deed of
Trust. The Property forms no part of any property owned, used or claimed by Borrower as a
residence or business homestead and is not exempt from forced sale under the laws of the state in
which the Premises is located. Borrower hereby disclaims and renounces each and every claim to all
or any portion of the Property as a homestead.

     1.17 Foreign Person. Borrower is not a “foreign person” within the meaning of §
1445(f)(3) of the Code, and the related Treasury Department regulations, including temporary
regulations.

     1.18 Management Agreement. The property management agreement relating to the
Premises (the “Management Agreement”) is in full force and effect and to the best of Borrower’s
knowledge, there is no default, breach or violation existing thereunder by any party thereto
beyond the expiration of applicable notice and grace periods thereunder and no event has occurred
(other than payments due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation by any party thereunder.

9

 

The fee due under the Management Agreement, and the terms and provisions of the Management
Agreement, are subordinate to this Deed of Trust; provided that payments under the Management
Agreement may be paid and retained so long as no Event of Default has occurred and is continuing.

     1.19 Fraudulent Transfer. Borrower has not entered into the Loan or any Loan Document
with the actual intent to hinder, delay, or defraud any creditor, and Borrower has received
reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving
effect to the transactions contemplated by the Loan Documents, the fair saleable value of
Borrower’s assets exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower’s total liabilities, including subordinated, unliquidated, disputed or
contingent liabilities, including the maximum amount of its contingent liabilities or its debts as
such debts become absolute and matured. Borrower’s assets do not and, immediately following the
execution and delivery of the Loan Documents will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted. Borrower does not intend to,
and does not believe that it will, incur debts and liabilities (including contingent liabilities
and other commitments) beyond its ability to pay such debts as they mature (taking into account
the timing and amounts to be payable on or in respect of obligations of Borrower).

     1.20 Foreign Assets Control.

          (a) None of the Borrower, any subsidiary of the Borrower or any Affiliate of the Borrower or
any Indemnitor (i) is a Sanctioned Person (defined below), (ii) has more than 15% of its assets in
Sanctioned Countries (defined below), or (iii) derives more than 15% of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Countries. The loan proceeds
to be advanced by Lender will not be used and have not been used to fond any operations in,
finance any investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Country. For purposes of the foregoing, a “Sanctioned Person” shall mean (i) a person
named on the list of “specially designated nationals” or “blocked persons” maintained by the U.S.
Office of Foreign Assets Control (“OFAC”) at
http://wwwtreas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from
time to time, or (ii) (A) an agency of the government of a Sanctioned Country, (B) an organization
controlled by a Sanctioned Country, or (C) a person resident in a Sanctioned Country, to the
extent subject to a sanctions program administered by OFAC. A “Sanctioned Country” shall mean a
country subject to a sanctions program identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published
from time to time.

          (b) Lender may reject or refuse to accept any Collateral for credit toward payment of the
obligations hereunder or under any of the Loan Documents that is an account, instrument, chattel
paper, lease, or other obligation or property of any kind due from, owed by, or belonging to, a
Sanctioned Person.

          (c) Notwithstanding any grant of a security interest in the Collateral by virtue of other
provisions of this Deed of Trust or under any of the Loan Documents, (i) no account,

10

 

instrument, chattel paper or other obligation or property of any kind due from, owed by, or
belonging to, a Sanctioned Person or (ii) any lease in which the lessee is a Sanctioned Person
shall be Collateral.

          (d) Borrower shall pay any civil penalty or fine assessed by the U. S. Department of the
Treasury’s Office of Foreign Assets Control against, and all reasonable costs and expenses
(including counsel fees and disbursements) incurred in connection with defense thereof by Lender
as a result of the funding of the loan proceeds by Lender hereunder or the acceptance of payments
hereunder or under the Note and other Loan Documents or of Collateral due under any of the Loan
Documents.

All of the representations and warranties in this Article I and elsewhere in the Loan
Documents (i) shall survive for so long as any portion of the Debt remains owing to Lender and
(ii) shall be deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.

ARTICLE II.

COVENANTS OF BORROWER

     For the purposes of further securing the Debt and for the protection of the security of this
Deed of Trust, for so long as the Debt or any part thereof remains unpaid, Borrower covenants and
agrees as follows:

     2.1 Defense of Title. If, while this Deed of Trust is in force, the title to the
Property or the interest of Lender therein shall be the subject, directly or indirectly, of any
action at law or in equity, or be attached directly or indirectly, or endangered, clouded or
adversely affected in any manner, Borrower, at Borrower’s expense, shall take all necessary and
proper steps for the defense of said title or interest, including the employment of counsel
approved by Lender, the prosecution or defense of litigation, and the compromise or discharge of
claims made against said title or interest. Notwithstanding the foregoing, in the event that
Lender determines that Borrower is not adequately performing its obligations under this Section,
Lender may, without limiting or waiving any other rights or remedies of Lender hereunder, take
such steps with respect thereto as Lender shall deem necessary or proper and any and all costs and
expenses incurred by Lender in connection therewith, together with interest thereon at the Default
Interest Rate (as defined in the Note) from the date incurred by Lender until actually paid by
Borrower, shall be immediately paid by Borrower on demand and shall be secured by this Deed of
Trust and by all of the other Loan Documents securing all or any part of the indebtedness
evidenced by the Note.

     2.2 Performance of Obligations. Borrower shall pay when due the principal of and the
interest on the Debt in accordance with the terms of the Note. Borrower shall also pay all
charges, fees and other sums required to be paid by Borrower as provided in the Loan Documents,
in accordance with the terms of the Loan Documents, and shall observe, perform and discharge all
obligations, covenants and agreements to be observed, performed or discharged by Borrower set
forth in the Loan Documents in accordance with their terms. Further, Borrower shall promptly and
strictly perform and comply with all covenants, conditions, obligations and

11

 

prohibitions required of Borrower in connection with any other document or instrument
affecting title to the Property, or any part thereof, regardless of whether such document or
instrument is superior or subordinate to this Deed of Trust.

     2.3 Insurance. Borrower shall, at Borrower’s expense, maintain in force and effect on
the Property at all times while this Deed of Trust continues in effect the following insurance:

          (a) Insurance against loss or damage to the Property by fire, lightning, windstorm, tornado,
hail, terrorism, riot and civil commotion, vandalism, malicious mischief, burglary and theft and
against loss and damage by such other, further and additional risks as may be now or hereafter
embraced by a “special causes of loss” type of insurance policy. The amount of such insurance
shall be not less than one hundred percent (100%) of the full replacement cost (insurable value)
of the Improvements (as established by a Member of the Appraisal Institute appraisal), without
reduction for depreciation. The determination of the replacement cost amount shall be adjusted
annually to comply with the requirements of the insurer issuing such coverage or, at Lender’s
election, by reference to such indices, appraisals or information as Lender determines in its
reasonable discretion in order to reflect increased value due to inflation. “Full replacement
cost,” as used herein and elsewhere in this Section 2.3, means, with respect to the
Improvements, the cost of replacing the Improvements without regard to deduction for depreciation,
exclusive of the cost of excavations, foundations and footings below the lowest basement floor.
Borrower shall also maintain insurance against loss or damage to furniture, furnishings, fixtures,
equipment and other items (whether personalty or fixtures) included in the Property and owned by
Borrower from time to time to the extent applicable. Each policy shall contain a replacement cost
endorsement and either an agreed amount endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all subject to Lender’s approval. The
maximum deductible shall be $25,000.00.

          (b) If the “special causes of loss” policy required in subsection (a) above excludes coverage
for wind damage, Borrower shall maintain separate coverage for such risk. Furthermore, if the
Property is located in the State of Florida, or within twenty five (25) miles of the ocean coast
of the states of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina, Hawaii or South
Carolina, windstorm insurance must be maintained in an amount equal to the lesser of (i) the full
replacement cost of the Property or (ii) the maximum limit of coverage available with respect to
the Improvements and Equipment. If available, a minimum of eighteen (18) months general business
income coverage specifically relating to wind damage shall be required. The maximum deductible
shall be $25,000.00.

          (c) Ordinance and law insurance is required if the Property is “non-conforming” with respect
to any zoning requirements. Borrower shall maintain “Coverage A” against loss on value to the
undamaged portion of the Improvements for the full replacement cost of the Improvements. Borrower
shall also maintain “Coverage B” against the cost of demolition in an amount equal to ten percent
(10%) of the total value of the Improvements and “Coverage C” against increased cost of
reconstruction in an amount equal to twenty percent (20%) of the total value of the Improvements.
The aggregate total amount of coverage required for Coverage A, Coverage B and Coverage C above
shall be $10,000.00. The maximum deductible shall be $25,000.00.

12

 

          (d) Commercial General Liability Insurance against claims for personal injury, bodily
injury, death and property damage occurring on, in or about the Premises or the Improvements in
amounts not less than $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate plus umbrella
coverage in an amount not less than $10,000,000. Lender hereby retains the right to periodically
review the amount of said liability insurance being maintained by Borrower and to require an
increase in the amount of said liability insurance should Lender deem an increase to be reasonably
prudent under then existing circumstances. The maximum deductible shall be $10,000.00.

          (e) Equipment breakdown (also known as boiler and machinery insurance) is required if steam
boilers or other pressure-fired vessels are in operation at the Premises. Minimum liability
coverage per accident must equal the greater of the replacement cost (insurable value) of the
Improvements housing such boiler or pressure-fired machinery or $2,000,000.00. If one or more
large HVAC units is in operation at the Premises, “Systems Breakdowns” coverage shall be required,
as determined by Lender. Minimum liability coverage per accident must equal the value of such
unit(s). If available, a minimum of eighteen (18) months general business income coverage
specifically relating to boiler and machinery damage shall be required. The maximum deductible
shall be $10,000.00. Co-insurance is prohibited.

          (f) If the Improvements or any part thereof is situated in an area designated by the Federal
Emergency Management Agency (“FEMA”) as a special flood hazard area (Zone A or Zone V), flood
insurance in an amount equal to the lesser of: (i) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement basis (or the unpaid balance of
the Debt if replacement cost coverage is not available for the type of building insured), or (ii)
the maximum insurance available under the appropriate National Flood Insurance Administration
program. If available, a minimum of eighteen (18) months general business income coverage
specifically relating to flood damage shall be required. The maximum deductible shall be $3,000.00
per building or a higher minimum amount as required by FEMA or other applicable law.

          (g) If the Property is situated in an area designated by FEMA as a high probability
earthquake area (Zone 2b or greater), Lender may require a Probable Maximum Loss (“PML”) study to
be conducted at the Property. If the PML study reveals a PML equal to or exceeding twenty percent
(20%) of the full replacement cost of the Improvements, Borrower shall be required to maintain
earthquake insurance in an amount equal to the PML percentage of full replacement cost of the
Improvements. If available, a minimum of eighteen (18) months general business Income coverage
specifically relating to earthquake damage shall be required. The maximum deductible shall be no
more than five percent (5%) of the value at risk or the lowest deductible available in the State
in which the Property is located.

          (h) During the period of any construction, renovation or alteration of the existing
Improvements which exceeds the lesser of 10% of the principal amount of the Note or $500,000, at
Lender’s request, a completed value, “All Risk” Builder’s Risk form or “Course of Construction”
insurance policy in non-reporting form, in an amount approved by Lender, may be required. During
the period of any construction of any addition to the existing Improvements, a

13

 

completed value, “All Risk” Builder’s Risk form or “Course of Construction” insurance policy
in non-reporting form, in an amount approved by Lender, shall be required. The maximum deductible
shall be $25,000.00.

          (i) When required by applicable law, ordinance or other regulation, Worker’s Compensation
and Employer’s Liability Insurance covering all persons subject to the worker’s compensation laws
of the state in which the Property is located. Additionally, if Borrower has direct employees,
Hired and Non-Owned Auto Insurance is required in an amount equal to $1,000,000 per occurrence.
The maximum deductible shall be $25,000.00.

          (j) In addition to the specific risk coverage required herein, general business income (loss
of rents) insurance in amounts sufficient to compensate Borrower for all Rents and Profits or
income during a period of not less than twelve (12) months. The “actual loss” amount of coverage
shall be adjusted annually to reflect the greater of (i) estimated Rents and Profits or income
payable during the succeeding twelve (12) month period or (ii) the projected operating expenses,
capital expenses and debt service for the Property as approved by Lender in its sole discretion.
Additionally, Lender, in its sole discretion, may require an “Extended Period of Indemnity”
endorsement for an additional six (6) months to allow for re-leasing of the Property. The maximum
deductible shall be $10,000.00.

          (k) Such other insurance on the Property or on any replacements or substitutions thereof or
additions thereto as may from time to time be required by Lender against other insurable hazards
or casualties which at the time are commonly insured against in the case of property similarly
situated including, without limitation, Sinkhole, Mine Subsidence and Environmental insurance, due
regard being given to the height and type of buildings, their construction, location, use and
occupancy.

     
All such insurance shall (i) be with insurers fully licensed and authorized to do business
in the state within which the Premises is located and who have and maintain a rating of at least
(A) A- or higher from Standard & Poors and (B) AV or higher from A.M. Best, (ii) contain the
complete address of the Premises (or a complete legal description), (iii) be for terms of at
least one year, with premium prepaid, and (iv) be subject to the approval of Lender as to
insurance companies, amounts, content, forms of policies, method by which premiums are paid and
expiration dates, and (v) include a standard, non-contributory, mortgagee clause naming EXACTLY:

Wachovia Bank, National Association,

its Successors and Assigns ATIMA

c/o Wachovia Bank, National Association, as Servicer

P.O. Box 563956

Charlotte, North Carolina 28256-3956

(A) as an additional insured under all liability insurance policies, (B) as the first
mortgagee on all property insurance policies and (C) as the loss payee on all loss of
rents or loss of business income insurance policies.

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     Borrower shall, as of the date hereof, deliver to Lender evidence that said insurance
policies have been prepaid as required above and certified copies of such insurance policies and
original certificates of insurance signed by an authorized agent of the applicable insurance
companies evidencing such insurance satisfactory to Lender. Borrower shall renew all such insurance
and deliver to Lender an Accord 28 certificate for proof of commercial property insurance and an
Accord 25 certificate for proof of liability insurance, together with such other certificates
reasonably requested by Lender and policies evidencing such renewals at least thirty (30) days
before any such insurance shall expire. Borrower further agrees that each such insurance policy:
(i) shall provide for at least thirty (30) days’ prior written notice to Lender prior to any policy
reduction or cancellation for any reason other than non-payment of premium and at least ten (10)
days’ prior written notice to Lender prior to any cancellation due to non-payment of premium; (ii)
shall contain an endorsement or agreement by the insurer that any loss shall be payable to Lender
in accordance with the terms of such policy notwithstanding any act or negligence of Borrower which
might otherwise result in forfeiture of such insurance; (iii) shall waive all rights of subrogation
against Lender; and (iv) may be in the form of a blanket policy provided that, in the event that
any such coverage is provided in the form of a blanket policy, Borrower hereby acknowledges and
agrees that failure to pay any portion of the premium therefor which is not allocable to the
Property or by any other action not relating to the Property which would otherwise permit the
issuer thereof to cancel the coverage thereof, would require the Property to be insured by a
separate, single-property policy. The blanket policy must properly identify and fully protect the
Property as if a separate policy were issued for 100% of Replacement Cost at the time of loss and
otherwise meet all of Lender’s applicable insurance requirements set forth in this Section
2.3. The delivery to Lender of the insurance policies or the certificates of insurance as
provided above shall constitute an assignment of all proceeds payable under such insurance policies
relating to the Property by Borrower to Lender as further security for the Debt. In the event of
foreclosure of this Deed of Trust, or other transfer of title to the Property in extinguishment in
whole or in part of the Debt, all right, title and interest of Borrower in and to all proceeds
payable under such policies then in force concerning the Property shall thereupon vest in the
purchaser at such foreclosure, or in Lender or other transferee in the event of such other transfer
of title. Approval of any insurance by Lender shall not be a representation of the solvency of any
insurer or the sufficiency of any amount of insurance. In the event Borrower fails to provide,
maintain, keep in force or deliver and furnish to Lender the policies of insurance required by this
Deed of Trust or evidence of their renewal as required herein, Lender may, but shall not be
obligated to, procure such insurance and Borrower shall pay all amounts advanced by Lender
therefor, together with interest thereon at the Default Interest Rate from and after the date
advanced by Lender until actually repaid by Borrower, promptly upon demand by Lender. Any amounts
so advanced by Lender, together with interest thereon, shall be secured by this Deed of Trust and
by all of the other Loan Documents securing all or any part of the Debt. Lender shall not be
responsible for nor incur any liability for the insolvency of the insurer or other failure of the
insurer to perform, even though Lender has caused the insurance to be placed with the insurer after
failure of Borrower to furnish such insurance. Borrower shall not obtain insurance for the Property
in addition to that required by Lender without the prior written consent of Lender, which consent
will not be unreasonably withheld provided that (i) Lender is a named insured on such insurance,
(ii) Lender receives complete copies of all policies evidencing such insurance, and (iii) such
insurance complies with all of the applicable requirements set forth herein.

15

 

     2.4 Payment of Taxes. Borrower shall pay or cause to be paid, except to the
extent provision is actually made therefor pursuant to Section 3.3 of this Deed of Trust,
all taxes and assessments which are or may become a lien on the Property or which are assessed
against or imposed upon the Property. Borrower shall furnish Lender with receipts (or if receipts
are not immediately available, with copies of canceled checks evidencing payment with receipts to
follow promptly after they become available) showing payment of such taxes and assessments at least
fifteen (15) days prior to the applicable delinquency date therefor. Notwithstanding the foregoing,
Borrower may, in good faith, by appropriate proceedings and upon notice to Lender, contest the
validity, applicability or amount of any asserted tax or assessment so long as (a) such contest is
diligently pursued, (b) Lender determines, in its subjective opinion, that such contest suspends
the obligation to pay the tax and that nonpayment of such tax or assessment will not result in the
sale, loss, forfeiture or diminution of the Property or any part thereof or any interest of Lender
therein, and (c) prior to the earlier of the commencement of such contest or the delinquency date
of the asserted tax or assessment, Borrower deposits in the Impound Account (as hereinafter
defined) an amount determined by Lender to be adequate to cover the payment of such tax or
assessment and a reasonable additional sum to cover possible interest, costs and penalties;
provided, however, that Borrower shall promptly cause to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all interest, costs and penalties
thereon, promptly after such judgment becomes final; and provided further that in any event
each such contest shall be concluded and the taxes, assessments, interest, costs and penalties
shall be paid prior to the date any writ or order is issued under which the Property may be sold,
lost or forfeited.

     2.5 Casualty and Condemnation. Borrower shall give Lender prompt written notice of
(i) the occurrence of any casualty affecting the Property or any portion thereof, (ii) the
institution of any proceedings for eminent domain or for the condemnation of the Property or any
portion thereof or (iii) any written notification threatening the institution of any proceedings
for eminent domain or for the condemnation of the Property or any portion thereof or any written
request to execute a deed in lieu of condemnation affecting the Property or any portion thereof.
All insurance proceeds on the Property, and all causes of action, claims, compensation, awards
and recoveries for any damage, condemnation or taking, or any deed in lieu of condemnation,
affecting all or any part of the Property or for any damage or injury to it for any loss or
diminution in value of the Property, are hereby assigned to and shall be paid to Lender. Lender
may participate in any suits or proceedings relating to any such proceeds, causes of action,
claims, compensation, awards or recoveries, and Lender is hereby authorized, in its own name or
in Borrower’s name, to adjust any loss covered by insurance or any condemnation claim or cause of
action, and to settle or compromise any claim or cause of action in connection therewith, and
Borrower shall from time to time deliver to Lender any instruments required to permit such
participation; provided, however, that, so long as no Event of Default has occurred, and
no event has occurred or failed to occur which with the passage of time, the giving of notice, or
both would constitute an Event of Default (a “Default”), Lender shall not have the right to
participate in the adjustment of any loss which is not in excess of the lesser of (i) five
percent (5%) of the then outstanding principal balance of the Note and (ii) $250,000. Lender
shall apply any sums received by it under this Section first to the payment of all of its costs
and expenses (including,

16

 

but not limited to, reasonable legal fees and disbursements) incurred in obtaining those
sums, and then, as follows:

          (a) In the event that (x) less than fifteen percent (15%), in the case of condemnation, or
thirty percent (30%), in the case of casualty, of the fair market value or net rentable square
footage of the Improvements located on the Premises have been taken or destroyed and (y) Leases
covering in the aggregate at least sixty-five percent (65%) of the total rentable space in the
Property which has been demised under executed and delivered Leases in effect as of the date of the
occurrence of such casualty or condemnation, whichever the case may be, shall remain in full force
and effect during and after the completion of the restoration without abatement of rent beyond the
time required for restoration, the debt service coverage ratio of the Debt as determined by Lender
for the period during which such restoration will occur, and taking into account the proceeds of
business interruption or similar insurance, is not less than 1.10:1.0, then if and so long as:

          (1) no Default or Event of Default has occurred hereunder or under any of the other
Loan Documents, and

          (2) the Property can, in Lender’s reasonable judgment, with diligent restoration or
repair, be returned to a condition at least equal to the condition thereof that existed
prior to the casualty or partial taking causing the loss or damage within the earlier to
occur of (A) six (6) months after the initial receipt of any insurance proceeds or
condemnation awards by either Borrower or Lender but in any event prior to the expiration
or lapse of rent loss or general business income necessary to satisfy current obligations
of the Loan, and (B) six (6) months prior to the stated maturity date of the Note, and

          (3) all necessary governmental approvals can be obtained to allow the rebuilding and
reoccupancy of the Property as described in Section (a)(2) above, and

          (4) there are sufficient sums available (through insurance proceeds or condemnation
awards and contributions by Borrower, the full amount of which shall, at Lender’s option,
have been deposited with Lender) for such restoration or repair (including, without
limitation, for any costs and expenses of Lender to be incurred in administering said
restoration or repair) and for payment of principal and interest to become due and payable
under the Note during such restoration or repair, and

          (5) the economic feasibility of the Improvements after such restoration or repair
will be such that income from their operation is reasonably anticipated to be sufficient
to pay operating expenses of the Property and debt service on the Debt in full with the
same coverage ratio considered by Lender in its determination to make the loan secured
hereby, and

          (6) in the event that the insurance proceeds or condemnation awards received as a
result of such casualty or partial taking exceed the lesser of (i) five percent (5%) of
the then outstanding principal balance of the Note and (ii) $250,000, Borrower

17

 

shall have delivered to Lender, at Borrower’s sole cost and expense, an appraisal
report in form and substance satisfactory to Lender appraising the value of the Property as
proposed to be restored or repaired to be not less than the appraised value of the Property
considered by Lender in its determination to make the loan secured hereby, and

          (7) Borrower so elects by written notice delivered to Lender within five (5) days
after settlement of the aforesaid insurance or condemnation claim.

Lender shall, solely for the purposes of such restoration or repair, advance so much of
the remainder of such sums as may be required for such restoration or repair, and any
funds deposited by Borrower therefor, to Borrower in the manner and upon such terms and
conditions as would be required by a prudent interim construction lender, including, but
not limited to, the prior approval by Lender of plans and specifications, contractors and
form of construction contracts and the furnishing to Lender of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors, in form
and substance satisfactory to Lender in its discretion, with any remainder being applied
by Lender for payment of the Debt in whatever order Lender directs in its absolute sole
discretion, or at the discretion of Lender, the same may be paid, either in whole or in
part, to, or for the benefit of, Borrower for such purposes as Lender shall designate in
its discretion.

          (b) In all other cases, namely, in the event that (w) more than fifteen percent (15%), in the
case of condemnation, or thirty percent (30%), in the case of casualty, of the fair market value
or net rentable square footage of the Improvements located on the Premises have been taken or
destroyed, (x) Leases covering in the aggregate at least sixty-five percent (65%) of the total
rentable space in the Property which has been demised under executed and delivered Leases in
effect as of the date of the occurrence of such casualty or condemnation, whichever the case may
be, will not remain in full force and effect during and after the completion of the restoration
without abatement of rent beyond the time required for restoration, (y) the debt service coverage
ratio of the Debt as determined by Lender for the period during which such restoration will occur
is less than 1.10:1.0, or (z) Borrower does not elect to restore or repair the Property pursuant
to clause (a) above or otherwise fails to meet the requirements of clause (a)
above, then, in any of such events, Lender shall elect, in Lender’s absolute discretion and
without regard to the adequacy of Lender’s security to do either of the following: (1) accelerate
the maturity date of the Note and declare any and all of the Debt to be immediately due and
payable and apply the remainder of such sums received pursuant to this Section to the payment of
the Debt in whatever order Lender directs in its absolute discretion, with any remainder being
paid to Borrower, or (2) notwithstanding that Borrower may have elected not to restore or repair
the Property pursuant to the provisions of Section 2.5(a)(7) above, so long as the
proceeds of any such award with respect to any casualty or condemnation are made available to the
Borrower for restoration, require Borrower to restore or repair the Property in the manner and
upon such terms and conditions as would be required by a prudent interim construction lender,
including, but not limited to, the deposit by Borrower with Lender, within thirty (30) days after
demand therefor, of any deficiency reasonably determined by Lender to be necessary in order to
assure the availability of sufficient funds to pay for such restoration or repair, including
Lender’s costs and expenses to be incurred in connection therewith, the prior approval by Lender
of plans and

18

 

specifications, contractors and form of construction contracts and the furnishing to Lender
of permits, bonds, lien waivers, invoices, receipts and affidavits from contractors and
subcontractors, in form and substance satisfactory to Lender in its discretion, and apply the
remainder of such sums toward such restoration and repair, with any balance thereafter remaining
being applied by Lender for payment of the Debt in whatever order Lender directs in its absolute
sole discretion, or at the discretion of Lender, the same may be paid, either in whole or in part,
to, or for the benefit of, Borrower for such purposes as Lender shall designate in its discretion.

Any reduction in the Debt resulting from Lender’s application of any sums received by it hereunder
shall take effect only when Lender actually receives such sums and elects to apply such sums to the
Debt and, in any event, the unpaid portion of the Debt shall remain in full force and effect and
Borrower shall not be excused in the payment thereof. Partial payments received by Lender, as
described in the preceding sentence, shall be applied first to the final payment due under the Note
and thereafter to installments due under the Note in the inverse order of their due date. If
Borrower elects or Lender directs Borrower to restore or repair the Property after the occurrence
of a casualty or partial taking of the Property as provided above, Borrower shall promptly and
diligently, at Borrower’s sole cost and expense and regardless of whether the insurance proceeds or
condemnation award, as appropriate, shall be sufficient for the purpose, restore, repair, replace
and rebuild the Property as nearly as possible to its value, condition and character immediately
prior to such casualty or partial taking in accordance with the foregoing provisions and Borrower
shall pay to Lender all costs and expenses of Lender incurred in administering said rebuilding,
restoration or repair, provided that Lender makes such proceeds or award available for such
purpose. Borrower agrees to execute and deliver from time to time such further instruments as may
be requested by Lender to confirm the foregoing assignment to Lender of any award, damage,
insurance proceeds, payment or other compensation. Lender is hereby irrevocably constituted and
appointed the attorney-in-fact of Borrower (which power of attorney shall be irrevocable so long as
any portion of the Debt is outstanding, shall be deemed coupled with an interest, shall survive the
voluntary or involuntary dissolution of Borrower and shall not be affected by any disability or
incapacity suffered by Borrower subsequent to the date hereof), with full power of substitution,
subject to the terms of this Section, to settle for, collect and receive any such awards, damages,
insurance proceeds, payments or other compensation from the parties or authorities making the same,
to appear in and prosecute any proceedings therefor and to give receipts and acquittances therefor.

     2.6 Construction Liens. Borrower shall pay when due all claims and demands of
mechanics, materialmen, laborers and others for any work performed or materials delivered for the
Premises or the Improvements; provided, however, that, Borrower shall have the
right to contest in good faith any such claim or demand, so long as it does so diligently, by
appropriate proceedings and without prejudice to Lender and provided that neither the Property
nor any interest therein would be in any danger of sale, loss or forfeiture as a result of such
proceeding or contest. In the event Borrower shall contest any such claim or demand, Borrower
shall promptly notify Lender of such contest and thereafter shall, upon Lender’s request,
promptly provide a bond, cash deposit or other security satisfactory to Lender to protect
Lender’s interest and security should the contest be unsuccessful. If Borrower shall fail to
immediately discharge or provide security against any such claim or demand as aforesaid, Lender
may do so and any and

19

 

all expenses incurred by Lender, together
with interest thereon at the Default Interest Rate
from the date incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower on demand and shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the Debt.

     2.7 Rents and Profits. As additional and collateral security for the payment of the
Debt and cumulative of any and all rights and remedies herein provided for, Borrower hereby
absolutely and presently assigns to Lender all existing and future Rents and Profits. Borrower
hereby grants to Lender the sole, exclusive and immediate right, without taking possession of the
Property, to demand, collect (by suit or otherwise), receive and give valid and sufficient receipts
for any and all of said Rents and Profits, for which purpose Borrower does hereby irrevocably make,
constitute and appoint Lender its attorney-in-fact with full power to appoint substitutes or a
trustee to accomplish such purpose (which power of attorney shall be irrevocable so long as any
portion of the Debt is outstanding, shall be deemed to be coupled with an interest, shall survive
the voluntary or involuntary dissolution of Borrower and shall not be affected by any disability or
incapacity suffered by Borrower subsequent to the date hereof). Lender shall be without liability
for any loss which may arise from a failure or inability to collect Rents and Profits, proceeds or
other payments. However, until the occurrence of an Event of Default under this Deed of Trust or
under any other of the Loan Documents, Borrower shall have a license to collect, receive, use and
enjoy the Rents and Profits when due and prepayments thereof. Prepayments of rent paid more than
one (1) month in advance may be used and enjoyed by Borrower subject to the terms hereof as and
when such rents actually become due and payable under the associated Lease. Upon the occurrence of
an Event of Default, Borrower’s license shall automatically terminate without notice to Borrower
and Lender may thereafter, without taking possession of the Property, collect the Rents and Profits
itself or by an agent or receiver. From and after the termination of such license, Borrower shall
be the agent of Lender in collection of the Rents and Profits, and all of the Rents and Profits so
collected by Borrower shall be held in trust by Borrower for the sole and exclusive benefit of
Lender, and Borrower shall, within one (1) business day after receipt of any Rents and Profits, pay
the same to Lender to be applied by Lender as hereinafter set forth. Neither the demand for or
collection of Rents and Profits by Lender shall constitute any assumption by Lender of any
obligations under any agreement relating thereto. Lender is obligated to account only for such
Rents and Profits as are actually collected or received by Lender. Borrower irrevocably agrees and
consents that the respective payors of the Rents and Profits shall, upon demand and notice from
Lender of an Event of Default, pay said Rents and Profits to Lender without liability to determine
the actual existence of any Event of Default claimed by Lender. Borrower hereby waives any right,
claim or demand which Borrower may now or hereafter have against any such payor by reason of such
payment of Rents and Profits to Lender, and any such payment shall discharge such payor’s
obligation to make such payment to Borrower. All Rents collected or received by Lender may be
applied against all expenses of collection, including, without limitation, reasonable attorneys’
fees, against costs of operation and management of the Property and against the Debt, in whatever
order or priority as to any of the items so mentioned as Lender directs in its sole subjective
discretion and without regard to the adequacy of its security. Neither the exercise by Lender of
any rights under this Section nor the application of any Rents to the Debt shall cure or be deemed
a waiver of any Event of Default. The assignment of Rents and Profits hereinabove granted shall
continue in full force and effect during any period of foreclosure or redemption

20

 

with respect to the Property. Borrower has executed an Assignment of Leases and Rents dated
of even date herewith (the “Lease Assignment”) in favor of Lender covering all of the right, title
and interest of Borrower, as landlord, lessor or licensor, in and to any Leases. All rights and
remedies granted to Lender under the Lease Assignment shall be in addition to and cumulative of
all rights and remedies granted to Lender hereunder.

     2.8 Leases.

          (a) Prior to execution of any Leases of space in the Improvements after the date hereof,
Borrower shall submit to Lender, for Lender’s prior approval, which approval shall not be
unreasonably withheld, a copy of the form Lease Borrower plans to use in leasing space in the
Improvements or at the Property. All such Leases of space in the Improvements or at the Property
shall be on terms consistent with the terms for similar leases in the market area of the Premises,
shall provide for free rent only if the same is consistent with prevailing market conditions, shall
provide for market rents then prevailing in the market area of the Premises and substantially all
of the Leases at the Property shall be for a term of not less than twelve (12) months. Such Leases
shall provide parental guaranties and may also provide for security deposits in reasonable amounts
consistent with prevailing market conditions. Borrower shall also submit to Lender for Lender’s
approval, which approval shall not be unreasonably withheld, prior to the execution thereof, any
proposed Lease of the Improvements or any portion thereof that differs materially and adversely
from the aforementioned form Lease. Borrower shall not execute any Lease for all or a substantial
portion of the Property, except for an actual occupancy by the Tenant, lessee or licensee
thereunder, and shall at all times promptly and faithfully perform, or cause to be performed, all
of the covenants, conditions and agreements contained in all Leases with respect to the Property,
now or hereafter existing, on the part of the landlord, lessor or licensor thereunder to be kept
and performed. Borrower shall furnish to Lender, within ten (10) days after a request by Lender to
do so, but in any event by January I of each year, a current Rent Roll, certified by Borrower as
being true and correct, containing the names of all Tenants with respect to the Property, the terms
of their respective Leases, the spaces occupied and the rentals or fees payable thereunder and the
amount of each Tenant’s security deposit, if any. Upon the request of Lender, Borrower shall
deliver to Lender a copy of each such Lease. Borrower shall not do or suffer to be done any act, or
omit to take any action, that might result in a default by the landlord, lessor or licensor under
any such Lease or allow the Tenant thereunder to withhold payment of rent or cancel or terminate
same and shall not further assign any such Lease or any such Rents and Profits. Borrower, at no
cost or expense to Lender, shall enforce, short of termination, the performance and observance of
each and every condition and covenant of each of the parties under such Leases and Borrower shall
not anticipate, discount, release, waive, compromise or otherwise discharge any rent payable under
any of the Leases except to the extent consistent with prudent collection practices.
Notwithstanding the foregoing, at any time and from time to time, Lender shall be entitled to, and
Borrower hereby grants to Lender the right to, undertake any and all action as may be required (in
the sole discretion of Lender) to cure any default, or event which with the passage of time
following any notice and cure period shall constitute a default by Borrower, under such Leases.
Borrower shall not, without the prior written consent of Lender, modify any of the Leases,
terminate or accept the surrender of any Leases, waive or release any other party from the
performance or observance of any obligation or condition under such Leases except in the normal
course of business in a manner which is

21

 

consistent with sound and customary leasing and management practices for similar properties
in the community in which the Property is located. Borrower represents, warrants and covenants
that no Rents have been anticipated, discounted, released, waived, compromised or otherwise
discharged, except for prepayment of rent of not more than one (1) month prior to the accrual
thereof, except for prepayments for up to thirty percent (30%) of the Leases at the Property
consistent with sound and customary leasing practices for similar properties in the community in
which the Property is located.

          (b) Upon the occurrence of an Event of Default under this Deed of Trust, whether before or
after the whole principal sum secured hereby is declared to be immediately due or whether before or
after the institution of legal proceedings to foreclose this Deed of Trust, forthwith, upon demand
of Lender, Borrower shall surrender to Lender, and Lender shall be entitled to take actual
possession of, the Property or any part thereof personally, or by its agent or attorneys. In such
event, Lender shall have, and Borrower hereby gives and grants to Lender, the right, power and
authority to make and enter into Leases with respect to the Property or portions thereof for such
rents and for such periods of occupancy and upon conditions and provisions as Lender may deem
desirable in its sole discretion, and Borrower expressly acknowledges and agrees that the term of
any such Lease may extend beyond the date of any foreclosure sale of the Property, it being the
intention of Borrower that in such event Lender shall be deemed to be and shall be the
attorney-in-fact of Borrower for the purpose of making and entering into Leases of parts or
portions of the Property for the rents and upon the terms, conditions and provisions deemed
desirable to Lender in its sole discretion and with like effect as if such Leases had been made by
Borrower as the owner in fee simple of the Property free and clear of any conditions or limitations
established by this Deed of Trust. The power and authority hereby given and granted by Borrower to
Lender shall be deemed to be coupled with an interest, shall not be revocable by Borrower so long
as any portion of the Debt is outstanding, shall survive the voluntary or involuntary dissolution
of Borrower and shall not be affected by any disability or incapacity suffered by Borrower
subsequent to the date hereof. In connection with any action taken by Lender pursuant to this
Section, Lender shall not be liable for any loss sustained by Borrower resulting from any failure
to let the Property, or any part thereof, or from any other act or omission of Lender in managing
the Property, nor shall Lender be obligated to perform or discharge any obligation, duty or
liability under any Lease covering the Property or any part thereof or under or by reason of this
instrument or the exercise of rights or remedies hereunder. Borrower shall, and does hereby,
indemnify Lender for, and hold Lender harmless from, any and all claims, actions, demands,
liabilities, loss or damage which may or might be incurred by Lender under any such Lease or under
this Deed of Trust or by the exercise of rights or remedies hereunder and from any and all claims
and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants or agreements
contained in any such Lease other than those finally determined by a court of competent
jurisdiction to have resulted solely from the gross negligence or willful misconduct of Lender.
Should Lender incur any such liability, the amount thereof, including, without limitation, costs,
expenses and reasonable attorneys’ fees, together with interest thereon at the Default Interest
Rate from the date incurred by Lender until actually paid by Borrower, shall be immediately due and
payable to Lender by Borrower on demand and shall be secured hereby and by all of the other Loan
Documents securing all or any part of the Debt. Nothing in this Section shall impose on Lender any
duty, obligation or responsibility for the

22

 

control, care, management or repair of the Property, or for the carrying out of any of the
terms and conditions of any such Lease, nor shall it operate to make Lender responsible or liable
for any waste committed on the Property by the Tenants or by any other parties or for any
dangerous or defective condition of the Property, or for any negligence in the management, upkeep,
repair or control of the Property. Borrower hereby assents to, ratifies and confirms any and all
actions of Lender with respect to the Property taken under this Section.

     2.9 Alienation and Further Encumbrances.

          (a) Borrower acknowledges that Lender has relied upon the principals of Borrower and their experience in owning and operating the Property and properties similar
to the Property in connection with the closing of the loan evidenced by the Note. Accordingly,
except as specifically allowed hereinbelow in this Section and notwithstanding anything to the
contrary contained in Section 6.6 hereof, in the event that the Property or any part thereof
or direct or indirect interest therein or direct or indirect interest in Borrower shall be sold,
conveyed, disposed of, alienated, hypothecated, leased (except to Tenants of space in the Improvements
in accordance with the provisions of Section 2.8 hereof), assigned, pledged, mortgaged,
further encumbered or otherwise transferred or Borrower shall be divested of its title to the
Property or any direct or indirect interest therein, in any manner or way, whether voluntarily or
involuntarily (each, a “Transfer”), without the prior written consent of Lender being first obtained,
which consent may be withheld in Lender’s sole discretion, then the same shall constitute an Event
of Default and Lender shall have the right, at its option, to declare any or all of the
Debt, irrespective of the maturity date specified in the Note, immediately due and payable and
to otherwise exercise any of its other rights and remedies contained in Article V
hereof.

          (b) A Transfer within the meaning of this Section 2.9 shall be deemed to include,
among other things: (i) an installment sales agreement wherein Borrower agrees to sell the
Property or any part thereof for a price to be paid in installments; and (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security
interest in, Borrower’s right, title and interest in and to any Leases or any Rents and Profits.

          (c) Notwithstanding the foregoing, the following Transfers shall be permitted under this
Section 2.9 without the prior consent of Lender: (i) a Transfer of corporate stock,
partnership interests (other than the general partner’s direct interests in Borrower owned by any
SPE Equity Owner) and/or membership interests (other than the managing member’s direct interests
in Borrower owned by any SPE Equity Owner) in Borrower, or in any partner or member of Borrower,
or any direct or indirect legal or beneficial owner of Borrower, so long as following such
Transfer (whether in one or a series of transactions) or, with respect to any creation or
issuance of new limited partnership interests or membership interests, not more than 49% of the
beneficial economic interest in Borrower (whether directly or indirectly) has been transferred in
the aggregate and there is no Change of Control and the persons responsible for the day to day
management of the Property and Borrower remain unchanged following such Transfer, (ii) any
involuntary Transfer caused by the death of Borrower, or any partner, shareholder, joint
venturer, member or beneficial owner of a trust, or any direct or indirect legal or beneficial
owner of Borrower, so long as Borrower is promptly reconstituted, if required,

23

 

following such death and so long as there is no Change of Control and those persons
responsible for the day to day management of the Property and Borrower remain unchanged as a result
of such death or any replacement management or controlling parties are approved by Lender, (iii) a
Transfer comprised of gifts for estate planning purposes of any individual’s interests in Borrower,
or in any of Borrower’s partners, members, shareholders, beneficial owners of a trust or joint
venturers, or any direct or indirect legal or beneficial owner of Borrower, to the spouse or any
lineal descendant of such individual, or to a trust for the benefit of any one or more of such
individual, spouse or lineal descendant, so long as Borrower is reconstituted promptly, if
required, following such gift and so long as there is no Change of Control and those persons
responsible for the day to day management of the Property and Borrower remain unchanged following
such gift and (iv) the contribution by Madiera Group, LLC, a North Carolina limited liability
company (“Madiera”) and TXG, LLC, a South Carolina limited liability company (“TXG”) of their
respective membership interests in Campus Crest Group, LLC, a North Carolina limited liability
company (“Campus Crest”), to MXT Capital, LLC, a North Carolina limited liability company (“MXT”),
in exchange for the issuance by MXT of all of its membership interests to Madiera and TXG, and so
long as there is no Change of Control and those persons responsible for the day-to-day management
of the Property and Borrower remain unchanged following such contribution and issuance of the
membership interests of MXT. Notwithstanding any provision of this Deed of Trust to the contrary,
no person or entity may become an owner of a direct or indirect interest in Borrower, which
interest exceeds forty-nine percent (49%), without Lender’s prior written consent unless Borrower
has complied with the provisions set forth in Section 2.9(d) below. For purposes of this
Section 2.9(c). “Change of Control” shall mean a change in the identity of the individual or
entities or group of individuals or entities who have the right, by virtue of any partnership
agreement, articles of incorporation, by-laws, articles of organization, operating agreement or any
other agreement, with or without taking any formative action, to cause Borrower to take some action
or to prevent, restrict or impede Borrower from taking some action which, in either case, Borrower
could take or could refrain from taking were it not for the rights of such individuals.

          (d) Notwithstanding the foregoing provisions of this Section, Lender shall consent to (x)
one or more Transfers of the Property in its entirety, or (y) one or more Transfers of direct or
indirect interests in the Borrower for which consent is required under this Section 2.9
(any such hereinafter, a “Sale”) to any person or entity provided that, for each
Sale, each of the following terms and conditions are satisfied:

          (1) No Default and no Event of Default is then continuing hereunder or under any of
the other Loan Documents;

          (2) Borrower gives Lender written notice of the terms of such prospective Sale not
less than sixty (60) days before the date on which such Sale is scheduled to close and,
concurrently therewith, gives Lender all such information concerning the proposed
transferee of the Property or the proposed owner of the direct or indirect interest in the
Borrower for which consent is required under this Section 2.9, as applicable
(hereinafter, “Buyer”) as Lender would require in evaluating an initial extension of
credit to a borrower (it being acknowledged and agreed that (x) such information required
to be delivered with respect to the related Buyer shall not be

24

 

materially more extensive than the corresponding information provided by the initial
Borrower and initial Indemnitor and (y) the initial Borrower and initial Indemnitor shall
not be required to deliver any additional information with respect to such initial
Borrower, Indemnitor or their respective members or partners which are not then currently
required to be delivered by the initial Borrower and initial Indemnitor pursuant to the
terms hereof or of any other Loan Document), including, without limitation, information
evidencing the Buyer’s compliance with the provisions of Section 2.30 and
Section 2.31 hereof and pays to Lender a non-refundable application fee in the
amount of $5,000. Lender shall have the right to approve or disapprove the proposed Buyer.
In determining whether to give or withhold its approval of the proposed Buyer, Lender shall
consider the Buyer’s experience and track record in owning and operating facilities similar
to the Property, the Buyer’s financial strength, the Buyer’s general business standing and
the Buyer’s relationships and experience with contractors, vendors, tenants, lenders and
other business entities; provided, however, that, notwithstanding Lender’s
agreement to consider the foregoing factors in determining whether to give or withhold such
approval, such approval shall be given or withheld based on what Lender determines to be
commercially reasonable in Lender’s sole discretion and, if given, may be given subject to
such conditions as Lender may deem appropriate; provided, further, however, notwithstanding
the foregoing, Lender shall evaluate the proposed Buyer and any replacement Indemnitor
pursuant to this clause (d) as if it were evaluating an initial extension of credit to a
borrower pursuant to permanent market underwriting standards and without regard to the
financial or other condition of the Borrower or any current Indemnitor and without regard
to the impact on the trust which owns the Loan in connection with any Secondary Market
Transaction or any class of Securities issued thereunder;

          (3) Borrower pays Lender, concurrently with the closing of such Sale, a
non-refundable assumption fee in an amount equal to all out-of-pocket costs and expenses,
including, without limitation, reasonable attorneys’ fees and Rating Agency fees, incurred
by Lender in connection with the Sale, plus an amount equal to one percent (1.0%) of the
then outstanding principal balance of the Note;

          (4) In the event that such Sale is a Transfer of the Property in its entirety, the
Buyer assumes and agrees to pay the Debt subject to the provisions of Section 6.27
hereof and, in all cases (whether such Sale is a Transfer of the Property in its entirety
or a Transfer of direct or indirect interests in the Borrower for which consent is
required under this Section 2.9), prior to or concurrently with the closing of
such Sale, the Buyer executes, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate said assumption
and delivers such legal opinions (including, without limitation, a REMIC opinion) as
Lender may require;

          (5) A party associated with the Buyer approved by Lender in its sole discretion
assumes the obligations of the current Indemnitor under its guaranty or indemnity
agreement and environmental indemnity agreement and such party associated with the Buyer
executes, without any cost or expense to Lender, a substitution agreement

25

 

or a new guaranty or indemnity agreement or environmental indemnity agreement in form
and substance satisfactory to Lender and delivers such legal opinions as Lender may
require; provided, however, in connection with an assumption of the Loan, (x) the Buyer
shall not be required to post any additional collateral with Lender or deposit any
additional reserves with Lender beyond that in effect immediately prior to the related
assumption and (y) the party associated with the Buyer which enters into such substitution
agreement or new guaranty or indemnity agreement or environmental indemnity shall not be
required to maintain evidence of credit worthiness greater than that required by permanent
market underwriting standards;

          (6) Borrower and the Buyer execute, without any cost or expense to Lender, new
financing statements or financing statement amendments (and new financing statements as may
be necessary) and any additional documents reasonably requested by Lender;

          (7) Borrower delivers to Lender, without any cost or expense to Lender, such
replacement policy or endorsements to Lender’s title insurance policy, hazard insurance
policy endorsements or certificates and other similar materials as Lender may deem
necessary at the time of the Sale, all in form and substance satisfactory to Lender,
including, without limitation, a replacement policy or an endorsement or endorsements to
Lender’s title insurance policy insuring the lien of this Deed of Trust, extending the
effective date of such policy to the date of execution and delivery (or, if later, of
recording) of the assumption agreement referenced above in subparagraph (4) of this
Section, with no additional exceptions added to such policy, and, in the event that such
Sale is a Transfer of the Property in its entirety, insuring that fee simple title to the
Property is vested in the Buyer;

          (8) Borrower and any current Indemnitor execute and deliver to Lender, without any
cost or expense to Lender, a release of Lender, its officers, directors, employees and
agents, from all claims and liability relating to the transactions evidenced by the Loan
Documents, through and including the date of the closing of the Sale, which agreement
shall be in form and substance satisfactory to Lender and shall be binding upon the Buyer
and any new Indemnitor;

          (9) Subject to the provisions of Section 6.27 hereof, such Sale is not
construed so as to relieve Borrower of any personal liability under the Note or any of the
other Loan Documents for any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale, whether or not same is discovered prior or
subsequent to the closing of such Sale, and Borrower executes, without any cost or expense
to Lender, such documents and agreements as Lender shall reasonably require to evidence
and effectuate the ratification of said personal liability. In the event that such
Transfer is a Sale of the Property in its entirety, Borrower shall be released from and
relieved of any personal liability under the Note or any of the other Loan Documents for
any acts or events occurring or obligations arising after the closing of such Sale which
are not caused by or arising out of any acts or events occurring or obligations arising
prior to or simultaneously with the closing of such Sale;

26

 

          (10) Such Sale is not construed so as to relieve any current Indemnitor of its obligations under any guaranty or
indemnity agreement for any acts or events occurring or obligations arising prior to or simultaneously with the closing of
such Sale, and each such current Indemnitor executes, without any cost or expense to Lender,
such documents and agreements as Lender shall reasonably require to evidence and
effectuate the ratification of each such guaranty and indemnity agreement. In the event that
such Transfer is a Sale of the Property in its entirety, each such current Indemnitor
shall be released from and relieved of any of its obligations under any guaranty or
indemnity agreement executed in connection with the loan secured hereby for any acts or
events occurring or obligations arising after the closing of such Sale which are not
caused by or arising out of any acts or events occurring or obligations arising prior
to or simultaneously with the closing of such Sale;

          (11) The Buyer shall furnish, if the Buyer is a corporation, partnership or other
entity, all appropriate papers evidencing the Buyer’s capacity and good standing, and the
qualification of the signers to execute the assumption of the Debt, which papers shall
include certified copies of all documents relating to the organization and formation of the
Buyer and of the entities, if any, which are partners of the Buyer. In the event that such
Sale is a Transfer of the Property in its entirety, the Buyer shall be a Single Purpose
Entity whose formation documents shall be approved by counsel to Lender, and who shall
comply with the requirements set forth in Section 2.29 hereof;

          (12) Borrower delivers to Lender confirmation in writing (a “No-Downgrade
Confirmation”) from each Rating Agency that such Sale will not result in a qualification,
downgrade or withdrawal of any ratings issued in connection with any Secondary Market
Transaction (as hereinafter defined) or, in the event the Secondary Market Transaction has
not yet occurred, Lender shall, in its sole discretion, have approved the Sale; and

          (13) The applicable transfer will not result in an increase in the real property
taxes for the Premises and Improvements that would cause the debt service coverage ratio
of the Debt with respect to the immediately succeeding twelve (12) month period to be less
than the debt service coverage ratio of the Debt for the twelve (12) month period
immediately preceding such transfer, in each case as determined by Lender.

     2.10 Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay when due
all utility charges which are incurred by Borrower or which may become a charge or lien against
any portion of the Property for gas, electricity, water and sewer services furnished to the
Premises and/or the Improvements and all other assessments or charges of a similar nature, or
assessments payable pursuant to any restrictive covenants, whether public or private, affecting
the Premises and/or the Improvements or any portion thereof, whether or not such assessments or
charges are or may become liens thereon.

     2.11 Access Privileges and Inspections. Lender and the agents, representatives and
employees of Lender shall, subject to the rights of Tenants, have full and free access to the

27

 

Premises and the Improvements and any other location where books and records concerning the
Property are kept at all reasonable times and, except in the event of an emergency, upon not less
than 24 hours prior notice (which notice may be telephonic) for the purposes of inspecting the
Property and of examining, copying and making extracts from the books and records of Borrower
relating to the Property. Borrower shall lend assistance to all such agents, representatives and
employees of Lender.

     2.12 Waste; Alteration of Improvements. Borrower shall not commit, suffer or permit
any waste on the Property nor take any actions that might invalidate any insurance carried on the
Property. Borrower shall maintain the Property in good condition and repair. No part of the
Improvements may be removed, demolished or materially altered, without the prior written consent of
Lender other than in connection with non-structural day to day maintenance and except for tenant
improvements under Leases. Without the prior written consent of Lender, Borrower shall not commence
construction of any improvements on the Premises other than improvements required for the
maintenance or repair of the Property. Lender reserves the right to condition its consent to any
material alteration, removal, demolition or new construction on the following: (i) such conditions
as would be required by a prudent interim construction lender, including, but not limited to, the
prior approval by Lender of plans and specifications, construction budgets, contractors and form of
construction contracts and the furnishing to Lender of evidence regarding funds, permits,
approvals, bonds, insurance, lien waivers, title endorsements, appraisals, surveys, certificates of
occupancy, certificates regarding completion, invoices, receipts and affidavits from contractors
and subcontractors, in form and substance satisfactory to Lender in its discretion, (ii) the
delivery of an opinion from counsel satisfactory to Lender in its discretion and in form and
substance satisfactory to Lender in its discretion opining as to such matters as Lender may
reasonably require, including, without limitation, an opinion that such alteration, removal,
demolition or new construction will not have an adverse effect on the status of any trust formed in
connection with a Secondary Market Transaction a “real estate mortgage investment conduit” within
the meaning of Section 860D of the Code (“REMIC”), and (iii) Borrower’s agreement to pay all fees,
costs and expenses incurred by Lender in granting such consent, including, without limitation,
reasonable attorneys’ fees and expenses.

     2.13 Zoning. Without the prior written consent of Lender, Borrower shall not seek,
make, suffer, consent to or acquiesce in any change in the zoning or conditions of use of the
Premises or the Improvements. Borrower shall comply with and make all payments required under the
provisions of any covenants, conditions or restrictions affecting the Premises or the
Improvements. Borrower shall comply with all existing and future requirements of all governmental
authorities having jurisdiction over the Property. Borrower shall keep all licenses, permits,
franchises and other approvals necessary for the operation of the Property in full force and
effect. Borrower shall operate the Property as a student housing complex for so long as the Debt
is outstanding. If, under applicable zoning provisions, the use of all or any part of the
Premises or the Improvements is or becomes a nonconforming use, Borrower shall not cause or
permit such use to be discontinued or abandoned without the prior written consent of Lender.
Further, without Lender’s prior written consent, Borrower shall not file or subject any part of
the Premises or the Improvements to any declaration of condominium or co-operative or convert any
part of the Premises or the Improvements to a condominium, co-operative or other form of multiple
ownership and governance.

28

 

     2.14 Financial Statements and Books and Records. Borrower shall keep accurate books
and records of account of the Property and its own financial affairs sufficient to permit the
preparation of financial statements therefrom in accordance with generally accepted accounting
principles. Lender and its duly authorized representatives shall have the right to examine, copy
and audit Borrower’s records and books of account at all reasonable times. So long as this Deed of
Trust continues in effect, Borrower shall provide to Lender, in addition to any other financial
statements required hereunder or under any of the other Loan Documents, the following financial
statements and information, all of which must be certified to Lender as being true and correct by
Borrower or the person or entity to which they pertain, as applicable, and be in form and substance
acceptable to Lender:

          (a) copies of all tax returns filed by Borrower, within thirty (30) days after the date of
filing;

          (b) monthly operating statements for the Property, within twenty (20) days after the end of
each of the first (1st) twelve (12) calendar months following the date hereof;

          (c) quarterly operating statements for the Property and a Rent Roll, within thirty (30) days
after the end of each March, June, September and December commencing with the first (1st) of such
months to occur following the first (1st) anniversary of the date hereof;

          (d) annual balance sheets for the Property and annual financial statements for Borrower, and
each Indemnitor, within ninety (90) days after the end of each calendar year;

          (e) such other information with respect to the Property, Borrower, the principals or general
partners in Borrower, and each Indemnitor, which may be reasonably requested from time to time by
Lender, within a reasonable time after the applicable request; and

          (f) If, at the time one or more Disclosure Documents (as defined below) are being prepared
for a securitization, Lender expects that Borrower alone or Borrower and one or more affiliates
of Borrower collectively, or the Property alone or the Property and any other parcei(s) of real
property, together with improvements thereon and personal property related thereto, that is
“related”, within the meaning of the definition of Significant Obligor, to the Property (a
“Related Property”) collectively, will be a Significant Obligor, Borrower shall furnish to Lender
upon request (i) the selected financial data or, if applicable, net operating income, required
under Item 1112(b)(1) of Regulation AB and meeting the requirements thereof, if Lender expects
that the principal amount of the Loan, together with any loans made to an affiliate of Borrower
or secured by a Related Property that is included in a securitization with the Loan (a “Related
Loan”), as of the cut-off date for such securitization may, or if the principal amount of the
Loan together with any Related Loans as of the cut-off date for such securitization and at any
time during which the Loan and any Related Loans are included in a securitization does, equal or
exceed ten percent (10%) (but less than twenty percent (20%)) of the aggregate principal amount
of all mortgage loans included or expected to be included, as applicable, in the securitization
or (ii) the financial statements required under Item 1112(b)(2) of Regulation AB and meeting the
requirements thereof, if Lender expects that the principal amount of the Loan

29

 

together with any Related Loans as of the cut-off date for such securitization may, or if the
principal amount of the Loan together with any Related Loans as of the cut-off date for such
securitization and at any time during which the Loan and any Related Loans are included in a
securitization does, equal or exceed twenty percent (20%) of the aggregate principal amount of all
mortgage loans included or expected to be included, as applicable, in the securitization. Such
financial data or financial statements shall be furnished to Lender (A) within ten (10) Business
Days after notice from Lender in connection with the preparation of Disclosure Documents for the
securitization, (B) not later than thirty (30) days after the end of each fiscal quarter of
Borrower and (C) not later than seventy-five (75) days after the end of each fiscal year of
Borrower; provided, however, that Borrower shall not be obligated to furnish financial data or
financial statements pursuant to clauses (B) or (C) of this sentence with respect to any period for
which a filing pursuant to the Securities Exchange Act of 1934 in connection with or relating to
the securitization (an “Exchange Act Filing”) is not required. As used herein, “Regulation AB”
shall mean Regulation AB under the Securities Act of 1933 and the Securities Exchange Act of 1934
(as amended). As used herein, “Disclosure Document” shall mean a prospectus, prospectus supplement,
private placement memorandum, or similar offering memorandum or offering circular, in each case in
preliminary or final form, used to offer securities in connection with a securitization. As used
herein, “Significant Obligor” shall have the meaning set forth in Item 1101(k) of Regulation AB.

If any of the aforementioned materials are not furnished to Lender within the applicable time
periods, are not prepared in accordance with generally accepted accounting principles or Lender
is dissatisfied with the form of any of the foregoing and has notified Borrower of its
dissatisfaction, in addition to any other rights and remedies of Lender contained herein and
provided Lender has given Borrower at least ten (10) days notice of such failure and opportunity
to cure, (i) Borrower shall pay to Lender upon demand, at Lender’s option and in its sole
discretion, an amount equal to $2,500 per reporting period, and (ii) Lender shall have the right,
but not the obligation, to obtain the same by means of an audit by an independent certified
public accountant selected by Lender, in which event Borrower agrees to pay, or to reimburse
Lender for, any expense of such audit and further agrees to provide all necessary information to
said accountant and to otherwise cooperate in the making of such audit.

     2.15 Further Assurances. Borrower shall, on the request of Lender and at the expense
of Borrower: (a) promptly correct any defect, error or omission which may be discovered in the
contents of this Deed of Trust or in the contents of any of the other Loan Documents; (b)
promptly execute, acknowledge, deliver and record or file such further instruments (including,
without limitation, further mortgages, deeds of trust, security deeds, security agreements,
financing statements, continuation statements and assignments of rents or leases) and promptly do
such further acts as may be necessary, desirable or proper to carry out more effectively the
purposes of this Deed of Trust and the other Loan Documents and to subject to the liens and
security interests hereof and thereof any property intended by the terms hereof and thereof to be
covered hereby and thereby, including specifically, but without limitation, any renewals,
additions, substitutions, replacements or appurtenances to the Property; (c) promptly execute,
acknowledge, deliver, procure and record or file any document or instrument (including
specifically, without limitation, any financing statement) deemed advisable by Lender to protect,
continue or perfect the liens or the security interests hereunder against the rights or interests
of

30

 

third persons; and (d) promptly furnish to Lender, upon Lender’s request, a duly acknowledged
written statement and estoppel certificate addressed to such party or parties as directed by
Lender and in form and substance supplied by Lender, setting forth all amounts due under the Note,
stating whether any Default or Event of Default has occurred hereunder, stating whether any
offsets or defenses exist against the Debt and containing such other matters as Lender may
reasonably require.

     2.16 Payment of Costs; Reimbursement to Lender. Borrower shall pay all costs and
expenses of every character reasonably incurred in connection with the closing of the loan
evidenced by the Note and secured hereby, attributable or chargeable to Borrower as the owner of
the Property or otherwise attributable to any consent requested of Lender or any Rating Agency
under the terms hereof or any other Loan Document, including, without limitation, customary
servicing and consent fees, appraisal fees, recording fees, documentary, stamp, mortgage or
intangible taxes, brokerage fees and commissions, title policy premiums and title search fees,
uniform commercial code/tax lien/litigation search fees, escrow fees, consultants’ fees,
No-Downgrade Confirmations and reasonable attorneys’ fees. If Borrower defaults in any such
payment, which default is not cured within any applicable grace or cure period, Lender may pay the
same and Borrower shall reimburse Lender on demand for all such costs and expenses incurred or paid
by Lender, together with such interest thereon at the Default Interest Rate from and after the date
of Lender’s making such payment until reimbursement thereof by Borrower. Any such sums disbursed by
Lender, together with such interest thereon, shall be additional indebtedness of Borrower secured
by this Deed of Trust and by all of the other Loan Documents securing all or any part of the Debt.
Further, Borrower shall promptly notify Lender in writing of any litigation or threatened
litigation affecting the Property, or any other demand or claim which, if enforced, could impair or
threaten to impair Lender’s security hereunder. Without limiting or waiving any other rights and
remedies of Lender hereunder, if Borrower fails to perform any of its covenants or agreements
contained in this Deed of Trust or in any of the other Loan Documents and such failure is not cured
within any applicable grace or cure period, or if any action or proceeding of any kind (including,
but not limited to, any bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding) is commenced which might affect Lender’s interest in the Property or Lender’s right to
enforce its security, then Lender may, at its option, with or without notice to Borrower, make any
appearances, disburse any sums and take any actions as may be necessary or desirable to protect or
enforce the security of this Deed of Trust or to remedy the failure of Borrower to perform its
covenants and agreements (without, however, waiving any default of Borrower). Borrower agrees to
pay on demand all expenses of Lender or Trustee incurred with respect to the foregoing (including,
but not limited to, reasonable fees and disbursements of counsel), together with interest thereon
at the Default Interest Rate from and after the date on which Lender or Trustee incurs such
expenses until reimbursement thereof by Borrower. Any such expenses so incurred by Lender, together
with interest thereon as provided above, shall be additional indebtedness of Borrower secured by
this Deed of Trust and by all of the other Loan Documents securing all or any part of the Debt. The
necessity for any such actions and of the amounts to be paid shall be determined by Lender in its
discretion. Lender is hereby empowered to enter and to authorize others to enter upon the Property
or any part thereof for the purpose of performing or observing any such defaulted term, covenant or
condition without thereby becoming liable to Borrower or any person in possession holding under
Borrower. Borrower hereby acknowledges and agrees that the remedies set forth

31

 

in this Section 2.16 shall be exercisable by Lender, and any and all payments made or costs
or expenses incurred by Lender in connection therewith shall be secured hereby and shall be,
without demand, immediately repaid by Borrower with interest thereon at the Default Interest Rate,
notwithstanding the fact that such remedies were exercised and such payments made and costs
incurred by Lender after the filing by Borrower of a voluntary case or the filing against Borrower
of an involuntary case pursuant to or within the meaning of the Bankruptcy Reform Act of 1978, as
amended, Title 11 U.S.C, or after any similar action pursuant to any other debtor relief law
(whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable to Borrower, Lender, any Indemnitor, the
Debt or any of the Loan Documents. Borrower hereby indemnifies and holds Lender harmless from and
against all loss, cost and expenses with respect to any Event of Default hereof, any liens (i.e.,
judgments, mechanics’ and materialmen’s liens, or otherwise), charges and encumbrances filed
against the Property, and from any claims and demands for damages or injury, including claims for
property damage, personal injury or wrongful death, arising out of or in connection with any
accident or fire or other casualty on the Premises or the Improvements or any nuisance made or
suffered thereon, except those that are due to Lender’s gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction, including, without limitation, in any
case, reasonable attorneys’ fees, costs and expenses as aforesaid, whether at pretrial, trial or
appellate level, and such indemnity shall survive payment in full of the Debt. This Section shall
not be construed to require Lender to incur any expenses, make any appearances or take any actions.

     2.17 Security Interest. This Deed of Trust is also intended to encumber and create a
security interest in, and Borrower hereby grants to Lender a security interest in, all sums on
deposit with Lender pursuant to the provisions of Article III hereof or any other Section
hereof or of any other Loan Document and all fixtures, chattels, accounts, equipment, inventory,
contract rights, general intangibles and other personal property included within the Property,
all renewals, replacements of any of the aforementioned items, or articles in substitution
therefor or in addition thereto or the proceeds thereof (said property is hereinafter referred to
collectively as the “Collateral”) whether or not the same shall be attached to the
Premises or the Improvements in any manner. It is hereby agreed that to the extent permitted by
law, all of the foregoing property is to be deemed and held to be a part of and affixed to the
Premises and the Improvements. The foregoing security interest shall also cover Borrower’s
leasehold interest in any of the foregoing property which is leased by Borrower. Notwithstanding
the foregoing, but except as permitted under Section 2.29(a)(9) of this Deed of Trust
concerning permitted purchase money financing for equipment, electronics, and other ancillary
personal property, all of the foregoing property shall be owned by Borrower and no leasing or
installment sales or other financing or title retention agreement in connection therewith shall
be permitted without the prior written approval of Lender. Borrower shall, from time to time upon
the request of Lender, supply Lender with a current inventory of all of the property in which
Lender is granted a security interest hereunder, in such detail as Lender may reasonably require.
Borrower shall promptly replace all of the Collateral subject to the lien or security interest of
this Deed of Trust when worn or obsolete with Collateral comparable to the worn out or obsolete
Collateral when new and will not, without the prior written consent of Lender, remove from the
Premises or the Improvements any of the Collateral subject to the lien or security interest of
this Deed of Trust except such as is replaced by an article of equal suitability and value as
above provided, owned by Borrower free and clear

32

 

of any lien or security interest except that created by this Deed of Trust and the other Loan
Documents. All of the Collateral shall be kept at the location of the Premises except as otherwise
required by the terms of the Loan Documents. Borrower shall not use any of the Collateral in
violation of any applicable statute, ordinance or insurance policy.

     2.18 Security Agreement. This Deed of Trust constitutes a security agreement between
Borrower and Lender with respect to the Collateral in which Lender is granted a security interest
hereunder, and, cumulative of all other rights and remedies of Lender hereunder, Lender shall have
all of the rights and remedies of a secured party under any applicable Uniform Commercial Code.
Borrower hereby agrees to execute and deliver on demand and hereby irrevocably constitutes and
appoints Lender the attorney-in-fact of Borrower to execute and deliver and, if appropriate, to
file with the appropriate filing officer or office, such security agreements, financing statements,
continuation statements or other instruments as Lender may request or require in order to impose,
perfect or continue the perfection of the lien or security interest created hereby. To the extent
specifically provided herein, Lender shall have the right of possession of all cash, securities,
instruments, negotiable instruments, documents, certificates and any other evidences of cash or
other property or evidences of rights to cash rather than property, which are now or hereafter a
part of the Property, and Borrower shall promptly deliver the same to Lender, endorsed to Lender,
without further notice from Lender. Borrower agrees to furnish Lender with notice of any change in
the name, identity, organizational structure, residence, or principal place of business or mailing
address of Borrower within ten (10) days of the effective date of any such change. Upon the
occurrence of any Event of Default, Lender shall have the rights and remedies as prescribed in this
Deed of Trust, or as prescribed by general law, or as prescribed by any applicable Uniform
Commercial Code, all at Lender’s election. Any disposition of the Collateral may be conducted by an
employee or agent of Lender. Any person, including both Borrower and Lender, shall be eligible to
purchase any part or all of the Collateral at any such disposition. Expenses of retaking, holding,
preparing for sale, selling or the like (including, without limitation, Lender’s reasonable
attorneys’ fees and legal expenses), together with interest thereon at the Default Interest Rate
from the date incurred by Lender until actually paid by Borrower, shall be paid by Borrower on
demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing
all or any part of the Debt. Lender shall have the right to enter upon the Premises and the
Improvements or any real property where any of the property which is the subject of the security
interest granted herein is located to take possession of, assemble and collect the same or to
render it unusable, or Borrower, upon demand of Lender, shall assemble such property and make it
available to Lender at the Premises, or at a place which is mutually agreed upon or, if no such
place is agreed upon, at a place reasonably designated by Lender to be reasonably convenient to
Lender and Borrower. If notice is required by law, Lender shall give Borrower at least ten (10)
days’ prior written notice of the time and place of any public sale of such property, or
adjournments thereof, or of the time of or after which any private sale or any other intended
disposition thereof is to be made, and if such notice is sent to Borrower, as the same is provided
for the mailing of notices herein, it is hereby deemed that such notice shall be and is reasonable
notice to Borrower. No such notice is necessary for any such property which is perishable,
threatens to decline speedily in value or is of a type customarily sold on a recognized market. Any
sale made pursuant to the provisions of this Section shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held contemporaneously with a foreclosure sale as
provided in Section 5.1(e) hereof

33

 

upon giving the same notice with respect to the sale of the Property hereunder as is required
under said Section 5.1(e). Furthermore, to the extent permitted by law, in conjunction
with, in addition to or in substitution for the rights and remedies available to Lender pursuant
to any applicable Uniform Commercial Code:

          (a) In the event of a foreclosure sale, the Property may, at the option of Lender, be sold as
a whole; and

          (b) It shall not be necessary that Lender take possession of the aforementioned Collateral,
or any part thereof, prior to the time that any sale pursuant to the provisions of this Section is
conducted and it shall not be necessary that said Collateral, or any part thereof, be present at
the location of such sale; and

          (c) Lender may appoint or delegate any one or more persons as agent to perform any act or
acts necessary or incident to any sale held by Lender, including the sending of notices and the
conduct of the sale, but in the name and on behalf of Lender. The name and address of Borrower (as
Debtor under any applicable Uniform Commercial Code) are as set forth on the first page hereof.
The name and address of Lender (as Secured Party under any applicable Uniform Commercial Code) are
as set forth on the first page hereof.

     2.19 Easements and Rights-of-Way. Borrower shall not grant any easement or
right-of-way with respect to all or any portion of the Premises or the Improvements without the
prior written consent of Lender. Borrower shall comply with all easements affecting the Property.
The purchaser at any foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of this Deed of Trust and may take
immediate possession of the Property free from, and despite the terms of, such grant of easement
or right-of-way. If Lender consents to the grant of an easement or right-of-way, Lender agrees to
grant such consent without charge to Borrower other than expenses, including, without limitation,
reasonable attorneys’ fees, incurred by Lender in the review of Borrower’s request and in the
preparation of documents effecting the subordination.

     2.20 Compliance with Laws. Borrower shall at all times comply with all statutes,
ordinances, regulations and other governmental or quasi-governmental requirements and private
covenants now or hereafter relating to the ownership, construction, use or operation of the
Property, including, but not limited to, those concerning employment and compensation of persons
engaged in operation and maintenance of the Property and any environmental or ecological
requirements, even if such compliance shall require structural changes to the Property;
provided, however, that. Borrower may, upon providing Lender with security
satisfactory to Lender, proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, regulation or requirement so long as during such
contest the Property shall not be subject to any lien, charge, fine or other liability and shall
not be in danger of being forfeited, lost or closed. Borrower shall not use or occupy, or allow
the use or occupancy of, the Property in any manner which violates any Lease of or any other
agreement applicable to the Property or any applicable law, rule, regulation or order or which
constitutes a public or private nuisance or which makes void, voidable or cancelable, or
increases the premium of, any insurance then in force with respect thereto.

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     2.21 Additional Taxes. In the event of the enactment after the date hereof of any law
of the state in which the Property is located or of any other governmental entity deducting from
the value of the Property for the purpose of taxing any lien or security interest thereon, or
imposing upon Lender the payment of the whole or any part of the taxes or assessments or charges or
liens herein required to be paid by Borrower, or changing in any way the laws relating to the
taxation of deeds of trust, mortgages or security agreements or debts secured by deeds of trust,
mortgages or security agreements or the interest of the beneficiary, mortgagee or secured party in
the property covered thereby, or the manner of collection of such taxes, so as to adversely affect
this Deed of Trust or the Debt or Lender, then, and in any such event, Borrower, upon demand by
Lender, shall pay such taxes, assessments, charges or liens, or reimburse Lender therefor;
provided, however, that if in the opinion of counsel for Lender (a) it
might be unlawful to require Borrower to make such payment, or (b) the making of such payment might
result in the imposition of interest beyond the maximum amount permitted by law, then and in either
such event, Lender may elect, by notice in writing given to Borrower, to declare all of the Debt to
be and become due and payable in full thirty (30) days from the giving of such notice, and, in
connection with the payment of such Debt, no prepayment premium or fee shall be due unless, at the
time of such payment, an Event of Default or a Default shall have occurred, which Default or Event
of Default is unrelated to the provisions of this Section 2.21, in which event any
applicable prepayment premium or fee in accordance with the terms of the Note shall be due and
payable.

     2.22 Secured Indebtedness. It is understood and agreed that this Deed of Trust shall
secure payment of not only the indebtedness evidenced by the Note but also any and all
substitutions, replacements, renewals and extensions of the Note, any and all indebtedness and
obligations arising pursuant to the terms hereof and any and all indebtedness and obligations
arising pursuant to the terms of any of the other Loan Documents, all of which indebtedness is
equally secured with and has the same priority as any amounts advanced as of the date hereof. It
is agreed that any future advances made by Lender to or for the benefit of Borrower from time to
time under this Deed of Trust or the other Loan Documents and whether or not such advances are
obligatory or are made at the option of Lender, or otherwise, made for any purpose, and all
interest accruing thereon, shall be equally secured by this Deed of Trust and shall have the same
priority as all amounts, if any, advanced as of the date hereof and shall be subject to all of
the terms and provisions of this Deed of Trust.

     2.23 Borrower’s Waivers. To the full extent permitted by law, Borrower agrees that
Borrower shall not at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, valuation, stay, moratorium or
extension, or any law now or hereafter in force providing for the reinstatement of the Debt prior
to any sale of the Property to be made pursuant to any provisions contained herein or prior to
the entering of any decree, judgment or order of any court of competent jurisdiction, or any
right under any statute to redeem all or any part of the Property so sold. Borrower, for Borrower
and Borrower’s successors and assigns, and for any and all persons ever claiming any interest in
the Property, to the full extent permitted by law, hereby knowingly, intentionally and
voluntarily, with and upon the advice of competent counsel: (a) waives, releases, relinquishes
and forever forgoes all rights of valuation, appraisement, stay of execution, reinstatement and
notice of election or intention to mature or declare due the Debt (except such notices as are
specifically

35

 

provided for herein); (b) waives, releases, relinquishes and forever forgoes all right to a
marshaling of the assets of Borrower, including the Property, to a sale in the inverse order of
alienation, or to direct the order in which any of the Property shall be sold in the event of
foreclosure of the liens and security interests hereby created and agrees that any court having
jurisdiction to foreclose such liens and security interests may order the Property sold as an
entirety; and (c) waives, releases, relinquishes and forever forgoes all rights and periods of
redemption provided under applicable law. To the full extent permitted by law, Borrower shall not
have or assert any right under any statute or rule of law pertaining to the exemption of homestead
or other exemption under any federal, state or local law now or hereafter in effect, the
administration of estates of decedents or other matters whatever to defeat, reduce or affect the
right of Lender under the terms of this Deed of Trust to a sale of the Property, for the collection
of the Debt without any prior or different resort for collection, or the right of Lender under the
terms of this Deed of Trust to the payment of the Debt out of the proceeds of sale of the Property
in preference to every other claimant whatever. Furthermore, Borrower hereby knowingly,
intentionally and voluntarily, with and upon the advice of competent counsel, waives, releases,
relinquishes and forever forgoes all present and future statutes of limitations as a defense to any
action to enforce the provisions of this Deed of Trust or to collect any of the Debt to the fullest
extent permitted by law. Borrower covenants and agrees that upon the commencement of a voluntary or
involuntary bankruptcy proceeding by or against Borrower, Borrower shall not seek a supplemental
stay or otherwise shall not seek pursuant to 11 U.S.C. §105 or any other provision of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory,
common law, case law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against any guarantor or indemnitor of the secured
obligations or any other party liable with respect thereto by virtue of any indemnity, guaranty or
otherwise.

     2.24 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

          (a) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION
IN THE STATE IN WHICH THE PREMISES IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THE NOTE, THIS DEED OF TRUST OR ANY OTHER OF THE LOAN DOCUMENTS, (ii)
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION SITTING IN THE COUNTY IN WHICH THE PREMISES IS LOCATED, (iii) SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL
NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE
RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).

          (b) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND

36

 

UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE DEBT
OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH
LENDER OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.

     2.25 Attorney-in-Fact Provisions. With respect to any provision of this Deed of Trust
or any other Loan Document whereby Borrower grants to Lender a power-of-attorney, provided no
Default or Event of Default has occurred under this Deed of Trust, Lender shall first give
Borrower written notice at least three (3) days prior to acting under such power, which notice
shall demand that Borrower first take the proposed action within such period and advising Borrower
that if it fails to do so, Lender will so act under the power; provided, however, that, in the
event that a Default or an Event of Default has occurred, or if necessary to prevent imminent
death, serious injury, damage, loss, forfeiture or diminution in value to the Property or any
surrounding property or to prevent any adverse affect on Lender’s interest in the Property, Lender
may act immediately and without first giving such notice. In such event, Lender will give Borrower
notice of such action as soon thereafter as reasonably practical.

     2.26 Management. The management of the Property shall be by either: (a) Borrower or
an entity affiliated with Borrower approved by Lender for so long as Borrower or said affiliated
entity is managing the Property in a first class manner; or (b) a professional property management
company approved by Lender. Such management by an affiliated entity or a professional property
management company shall be pursuant to a written agreement approved by Lender. In no event shall
any manager be removed or replaced or the terms of any management agreement modified or amended
without the prior written consent of Lender; provided, however, Borrower shall, so long as no
Event of Default shall have occurred and be continuing, be permitted to replace any manager with a
Qualified Manager without the prior written consent of Lender so long as Borrower delivers to
Lender notice of such replacement of any manager with a Qualified Manager. After an Event of
Default or a default under any management contract then in effect, which default is not cured
within any applicable grace or cure period or if at any time during the term of the Loan the debt
service coverage ratio of the Property is ever less than 1.10:1, as determined by Lender, Lender
shall have the right to terminate, or to direct Borrower to terminate, such management contract
upon thirty (30) days’ notice and to retain, or to direct Borrower to retain, a new management
agent approved by Lender. All Rents and Profits generated by or derived from the Property shall
first be utilized solely for current expenses directly attributable to the ownership and operation
of the Property, including, without limitation, current expenses relating to Borrower’s
liabilities and obligations with respect to this Deed of Trust and the other Loan Documents, and
none of the Rents and Profits generated by or derived from the Property shall be diverted by
Borrower and utilized for any other purposes unless all such current expenses attributable to the
ownership and operation of the Property have been fully paid and satisfied.

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     For purposes herein, “Qualified Manager” shall mean a reputable and experienced professional
management organization which manages, together with its affiliates, first class multi-family
residential complexes of a type and size similar to the Property, totaling in the aggregate no less
than 1,000 residential units, exclusive of the Property; provided, however, if Lender with respect
to any Qualified Manager which is an affiliate of Borrower, Borrower shall be required to deliver
to Lender a revised Non-Consolidation Opinion if one was delivered in connection with the closing
of the Loan.

     2.27 Hazardous Waste and Other Substances.

          (a) Except as otherwise may be disclosed in that certain Phase I Environmental Site
Assessment, dated December 12, 2006 and prepared by IVI Due Diligence Services, Inc., Borrower
hereby represents and warrants to Lender that, as of the date hereof: (i) to the best of Borrower’s
knowledge, information and belief, none of Borrower nor the Property nor any Tenant at the Premises
nor the operations conducted thereon is in direct or indirect violation of or otherwise exposed to
any liability under any local, state or federal law, rule or regulation or common law duty
pertaining to human health, natural resources or the environment, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601
et seq.) (“CERCLA”), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq.), the Clean Air Act (42 U.S.C
§7401 et seq.), the Emergency Planning and Community-Right-to-Know Act (42 U.S.C. §11001 et seq.),
the Endangered Species Act (16 U.S.C. §1531 et seq.), the Toxic Substances Control Act (15 U.S.C.
§2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. §651 et seq.) and the Hazardous
Materials Transportation Act (49 U.S.C. §1801 et seq.), regulations promulgated pursuant to said
laws, all as amended from time to time (collectively, “Environmental Laws”) or otherwise exposed to
any liability under any Environmental Law relating to or affecting the Property, whether or not
used by or within the control of Borrower; (ii) no hazardous, toxic or harmful substances, wastes,
materials, pollutants or contaminants (including, without limitation, asbestos or
asbestos-containing materials, lead based paint, Toxic Mold (as hereinafter defined)
polychlorinated biphenyls, petroleum or petroleum products or byproducts, flammable explosives,
radioactive materials, infectious substances or raw materials which include hazardous constituents)
or any other substances or materials which are included under or regulated by Environmental Laws
(collectively, “Hazardous Substances”) are located on, in or under or have been handled, generated,
stored, processed or disposed of on or released or discharged from the Property (including
underground contamination), except for those substances used by Borrower or any Tenant in the
ordinary course of their respective businesses and in compliance with all Environmental Laws and
where such Hazardous Substances could not reasonably be expected to give rise to liability under
Environmental Laws; (iii) radon is not present at the Property in excess or in violation of any
applicable thresholds or standards or in amounts that require disclosure under applicable law to
any tenant or occupant of or invitee to the Property or to any governmental agency or the general
public; (iv) the Property is not subject to any private or governmental lien or judicial or
administrative notice or action arising under Environmental Laws; (v) there is no pending, nor, to
Borrower’s knowledge, information or belief, threatened litigation arising under Environmental Laws
affecting Borrower or the Property; (vi) there are no and have been no existing or closed
underground storage tanks or other underground storage

38

 

receptacles for Hazardous Substances or landfills or dumps on the Property; (vii) Borrower has
received no notice of, and to the best of Borrower’s knowledge and belief, there exists no
investigation, action, proceeding or claim by any agency, authority or unit of government or by any
third party which could result in any liability, penalty, sanction or judgment under any
Environmental Laws with respect to any condition, use or operation of the Property, nor does
Borrower know of any basis for such an investigation, action, proceeding or claim; and (viii)
Borrower has received no notice of and, to the best of Borrower’s knowledge and belief, there has
been no claim by any party that any use, operation or condition of the Property has caused any
nuisance or any other liability or adverse condition on any other property, nor does Borrower know
of any basis for such an investigation, action, proceeding or claim. For the purposes hereof,
“Toxic Mold” shall mean any mold or fungus at the Property which is of a type (i) that might pose a
significant risk to human health or the environment or (ii) that would negatively impact the value
of the Property.

          (b) Borrower has not received nor to the best of Borrower’s knowledge, information and belief
has there been issued, any notice, notification, demand, request for information, citation,
summons, or order in any way relating to any actual, alleged or potential violation or liability
arising under Environmental Laws.

          (c) Neither the Property, nor to the best of Borrower’s knowledge, information and belief,
any property to which Borrower has, in connection with the maintenance or operation of the
Property, directly or indirectly transported or arranged for the transportation of any Hazardous
Substances is listed or, to the best of Borrower’s knowledge, information and belief, proposed for
listing on the National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined in
CERCLA) or on any similar federal or state list of sites requiring environmental investigation or
clean-up.

          (d) Borrower shall comply with all applicable Environmental Laws. Borrower shall keep the
Property or cause the Property to be kept free from Hazardous Substances (except those substances
used by Borrower or any Tenant in the ordinary course of their respective businesses and except in
compliance with all Environmental Laws and where such Hazardous Substances could not reasonably be
expected to give rise to liability under Environmental Laws) and in compliance with all
Environmental Laws, Borrower shall not install or use any underground storage tanks, shall
expressly prohibit the use, generation, handling, storage, production, processing and disposal of
Hazardous Substances by all Tenants in quantities or conditions that would violate or give rise to
any obligation to take remedial or other action under any applicable Environmental Laws. Without
limiting the generality of the foregoing, during the term of this Deed of Trust, Borrower shall
not install in the Improvements or permit to be installed in the Improvements any asbestos or
asbestos-containing materials.

          (e) Borrower shall promptly notify Lender if Borrower shall become aware of (i) the actual
or potential existence of any Hazardous Substances on the Property other than those occurring in
the ordinary course of Borrower’s business and which do not violate, or would not otherwise give
rise to liability under Environmental Laws, (ii) any direct or indirect violation of, or other
exposure to liability under, any Environmental Laws, (iii) any lien, action or notice affecting
the Property or Borrower resulting from any violation or alleged violation of or liability

39

 

or alleged liability under any Environmental Laws, (iv) the institution of any investigation,
inquiry or proceeding concerning Borrower or the Property pursuant to any Environmental Laws or
otherwise relating to Hazardous Substances, or (v) the discovery of any occurrence, condition or
state of facts which would render any representation or warranty contained in this Deed of Trust
incorrect in any respect if made at the time of such discovery. Immediately upon receipt of same,
Borrower, shall deliver to Lender copies of any and all requests for information, complaints,
citations, summonses, orders, notices, reports or other communications, documents or instruments in
any way relating to any actual, alleged or potential violation or liability of any nature
whatsoever arising under Environmental Laws and relating to the Property or to Borrower. Borrower
shall remedy or cause to be remedied in a timely manner (and in any event within the time period
permitted by applicable Environmental Laws) any violation of Environmental Laws or any condition
that could give rise to liability under Environmental Laws. Without limiting the foregoing,
Borrower shall, promptly and regardless of the source of the contamination or threat to the
environment or human health, at its own expense, take all actions as shall be necessary or prudent,
for the clean-up of any and all portions of the Property or other affected property, including,
without limitation, all investigative, monitoring, removal, containment and remedial actions in
accordance with all applicable Environmental Laws (and in all events in a manner satisfactory to
Lender) and shall further pay or cause to be paid, at no expense to Lender, all clean-up,
administrative and enforcement costs of applicable governmental agencies which may be asserted
against the Property. In the event Borrower fails to do so, Lender may, but shall not be obligated
to, cause the Property or other affected property to be freed from any Hazardous Substances or
otherwise brought into conformance with Environmental Laws and any and all costs and expenses
incurred by Lender in connection therewith, together with interest thereon at the Default Interest
Rate from the date incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower on demand and shall be secured by this Deed of Trust and by all of the other Loan
Documents securing all or any part of the Debt. Borrower hereby grants to Lender and its agents and
employees access to the Property and a license to remove any items deemed by Lender to be Hazardous
Substances and to do all things Lender shall deem necessary to bring the Property into conformance
with Environmental Laws.

          (f) Borrower covenants and agrees, at Borrower’s sole cost and expense, to indemnify, defend
(at trial and appellate levels, and with attorneys, consultants and experts acceptable to
Lender), and hold Lender harmless from and against any and all liens, damages (including without
limitation, punitive or exemplary damages), losses, liabilities (including, without limitation,
strict liability), obligations, settlement payments, penalties, fines, assessments, citations,
directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or of any nature whatsoever (including, without limitation,
reasonable attorneys’, consultants’ and experts’ fees and disbursements actually incurred in
investigating, defending, settling or prosecuting any claim, litigation or proceeding) which may
at any time be imposed upon, incurred by or asserted or awarded against Lender or the Property,
and arising directly or indirectly from or out of: (i) any violation or alleged violation of, or
liability or alleged liability under, any Environmental Law; (ii) the presence, release or threat
of release of or exposure to any Hazardous Substances or radon on, in, under or affecting all or
any portion of the Property or any surrounding areas, regardless of whether or not caused by or
within the control of Borrower; (iii) any transport,

40

 

treatment, recycling, storage, disposal or arrangement therefor of Hazardous Substances
whether on the Property, originating from the Property, or otherwise associated with Borrower or
any operations conducted on the Property at any time; (iv) the failure by Borrower to comply fully
with the terms and conditions of this Section 2.27; (v) the breach of any representation or
warranty contained in this Section 2.27; or (vi) the enforcement of this Section
2.27, including, without limitation, the cost of assessment, investigation, containment,
removal and/or remediation of any and all Hazardous Substances from all or any portion of the
Property or any surrounding areas, the cost of any actions taken in response to the presence,
release or threat of release of any Hazardous Substances on, in, under or affecting any portion of
the Property or any surrounding areas to prevent or minimize such release or threat of release so
that it does not migrate or otherwise cause or threaten danger to present or future public health,
safety, welfare or the environment, and costs incurred to comply with Environmental Laws in
connection with all or any portion of the Property or any surrounding areas. The indemnity set
forth in this Section 2.27 shall also include any diminution in the value of the security
afforded by the Property or any future reduction in the sales price of the Property by reason of
any matter set forth in this Section 2.27. The foregoing indemnity shall specifically not
include any such costs relating to Hazardous Substances which are initially placed on, in or under
the Property after foreclosure or other taking of title to the Property by Lender or its successor
or assigns. Lender’s rights under this Section shall survive payment in full of the Debt and shall
be in addition to all other rights of Lender under this Deed of Trust, the Note and the other Loan
Documents.

          (g) Upon Lender’s request, at any time after the occurrence of an Event of Default or at such
other time as Lender has reasonable grounds to believe that Hazardous Substances are or have been
released, stored or disposed of on the Property, or on property contiguous with the Property, or
that the Property may be in violation of the Environmental Laws, Borrower shall perform or cause
to be performed, at Borrower’s sole cost and expense and in scope, form and substance satisfactory
to Lender, an inspection or audit of the Property prepared by a hydrogeologist or environmental
engineer or other appropriate consultant approved by Lender indicating the presence or absence of
Hazardous Substances on the Property, the compliance or non-compliance status of the Property and
the operations conducted thereon with applicable Environmental Laws, or an inspection or audit of
the Property prepared by an engineering or consulting firm approved by Lender indicating the
presence or absence of friable asbestos or substances containing asbestos or lead or substances
containing lead or lead based paint (“Lead Based Paint”) on the Property. If Borrower fails to
provide reports of such inspection or audit within thirty (30) days after such request, Lender may
order the same, and Borrower hereby grants to Lender and its employees and agents access to the
Property and an irrevocable license to undertake such inspection or audit. The cost of such
inspection or audit, together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by Borrower on
demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing
all or any part of the Debt.

          (h) Reference is made to that certain Environmental Indemnity Agreement of even date
herewith by and among Borrower and any other principal signatory named therein in favor of Lender
(the “Environmental Indemnity Agreement”). The provisions of this Deed of

41

 

Trust and the Environmental Indemnity Agreement shall be read together to maximize the coverage
with respect to the subject matter thereof, as determined by Lender.

          (i) If prior to the date hereof, it was determined that the Property contains
asbestos-containing materials (“ACM’s”), Borrower covenants and agrees to institute, within thirty
(30) days after the date hereof, an operations and maintenance program (the “Maintenance Program”)
designed by an environmental consultant, satisfactory to Lender, with respect to ACM’s, consistent
with “Guidelines for Controlling Asbestos-Containing Materials in Buildings” (USEPA, 1985) and
other relevant guidelines, and such Maintenance Program will hereafter continuously remain in
effect until the Debt secured hereby is repaid in full. In furtherance of the foregoing, Borrower
shall inspect and maintain all ACM’s on a regular basis and ensure that all ACM’s shall be
maintained in a condition that prevents exposure of residents to ACM’s at all times. Without
limiting the generality of the preceding sentence, Lender may require (i) periodic notices or
reports to Lender in form, substance and at such intervals as Lender may specify, (ii) an
amendment to such operations and maintenance program to address changing circumstances, laws or
other matters, (iii) at Borrower’s sole expense, supplemental examination of the Property by
consultants specified by Lender, and (iv) variation of the operations and maintenance program in
response to the reports provided by any such consultants.

          (j) If, prior to the date hereof, it was determined that the Property contains Lead Based
Paint, Borrower had prepared an assessment report describing the location and condition of the
Lead Based Paint (a “Lead Based Paint Report”). If, at any time hereafter, Lead Based Paint is
suspected of being present on the Property, Borrower agrees, at its sole cost and expense and
within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by
an expert, and in form, scope and substance, acceptable to Lender. Borrower agrees that if it has
been, or if at any time hereafter it is, determined that the Property contains Lead Based Paint,
on or before thirty (30) days following (i) the date hereof, if such determination was made prior
to the date hereof or (ii) such determination, if such determination is hereafter made, as
applicable, Borrower shall, at its sole cost and expenses, develop and implement, and thereafter
diligently and continuously carry out (or cause to be developed and implemented and thereafter
diligently and continually to be carried out), an operations, abatement and maintenance plan for
the Lead Based Paint on the Property, which plan shall be prepared by an expert, and be in form,
scope and substance, acceptable to Lender (together with any Lead Based Paint Report, the “O&M
Plan”). (If an Q&M Plan has been prepared prior to the date hereof, Borrower agrees to diligently
and continually carry out (or cause to be carried out) the provisions thereof.) Compliance with
the O&M Plan shall require or be deemed to require, without limitation, the proper preparation
and maintenance of all records, papers and forms required under the Environmental Laws.

     2.28 Indemnification; Subrogation.

          (a) Borrower shall indemnify, defend and hold Lender harmless against: (i) any and all
claims for brokerage, leasing, finders or similar fees which may be made relating to the Property
or the Debt, and (ii) any and all liability, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses (including Lender’s reasonable attorneys’ fees) of whatever
kind or nature which may be asserted against, imposed on or incurred by Lender in

42

 

connection with the Debt, this Deed of Trust, the Property, or any part thereof, the exercise
by Lender of any rights or remedies granted to it under this Deed of Trust or arise from the
information provided in accordance with the terms hereof; provided, however, that
nothing herein shall be construed to obligate Borrower to indemnify, defend and hold harmless
Lender from and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs and expenses enacted against, imposed on or incurred by Lender by reason of
Lender’s willful misconduct or gross negligence.

          (b) If Lender is made a party defendant to any litigation or any claim is threatened or
brought against Lender concerning the Debt, this Deed of Trust, the Property, or any part thereof,
or any interest therein, or the construction, maintenance, operation or occupancy or use thereof,
then Borrower shall indemnify, defend and hold Lender harmless from and against all liability by
reason of said litigation or claims, including reasonable attorneys’ fees and expenses incurred by
Lender in any such litigation or claim, whether or not any such litigation or claim is prosecuted
to judgment. If Lender commences an action against Borrower to enforce any of the terms hereof or
to prosecute any breach by Borrower of any of the terms hereof or to recover any sum secured
hereby, Borrower shall pay to Lender its reasonable attorneys’ fees and expenses. The right to
such attorneys’ fees and expenses shall be deemed to have accrued on the commencement of such
action, and shall be enforceable whether or not such action is prosecuted to judgment. If Borrower
breaches any term of this Deed of Trust, Lender may engage the services of an attorney or
attorneys to protect its rights hereunder, and in the event of such engagement following any
breach by Borrower, Borrower shall pay Lender reasonable attorneys’ fees and expenses incurred by
Lender, whether or not an action is actually commenced against Borrower by reason of such breach.
All references to “attorneys” in this Subsection and elsewhere in this Deed of Trust shall
include, without limitation, any attorney or law firm engaged by Lender and Lender’s in-house
counsel, and all references to “fees and expenses” in this Subsection and elsewhere in this Deed
of Trust shall include, without limitation, any fees of such attorney or law firm, any appellate
counsel fees, if applicable, and any allocation charges and allocation costs of Lender’s in-house
counsel.

          (c) A waiver of subrogation shall be obtained by Borrower from its insurance carrier and,
consequently, Borrower waives any and all right to claim or recover against Lender, its officers,
employees, agents and representatives, for loss of or damage to Borrower, the Property,
Borrower’s property or the property of others under Borrower’s control from any cause insured
against or required to be insured against by the provisions of this Deed of Trust.

     2.29 Covenants with Respect to Existence, Indebtedness, Operations, Fundamental Changes
of Borrower. (a) Borrower, and any general partner, manager or managing member of Borrower,
as applicable, have each done since the date of their formation and shall do or cause to be done
all things necessary to (i) preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently conducted by it, (iii)
obtain and maintain all licenses, and (iv) qualify to do business and remain in good standing
under the laws of each jurisdiction, in each case as and to the extent required for the
ownership, maintenance, management and operation of the Property. Borrower hereby represents,
warrants and covenants as of the date hereof and until such time as the Debt is paid in full,
that each of Borrower and its manager has been, since the date of its formation, is, and shall
remain a Single-

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Purpose Entity (as hereinafter defined). A “Single-Purpose Entity” or “SPE” means a
corporation, limited partnership or limited liability company that:

          (1) was and will be organized solely for the purpose of (i) owning an interest in the
Property, (ii) acting as a general partner of a limited partnership that owns an interest in the
Property, or (iii) acting as the manager of a limited liability company that owns an interest in
the Property;

          (2) will not, nor will any partner, limited or general, member or shareholder thereof, as
applicable, amend, modify or otherwise change its partnership certificate, partnership agreement,
articles of incorporation, by-laws, operating agreement, articles of organization, or other
formation agreement or document, as applicable, in any material term or manner, or in a manner
which adversely affects Borrower’s existence as a Single Purpose Entity;

          (3) will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into
any transaction of merger or consolidation, or acquire by purchase or otherwise all or
substantially all the business or assets of, or any stock or other evidence of beneficial
ownership of any entity;

          (4) will not, nor will any partner, limited or general, member or shareholder thereof, as
applicable, violate the terms of its partnership certificate, partnership agreement, articles of
incorporation, by-laws, operating agreement, articles of organization, or other formation
agreement or document, as applicable;

          (5) has not and will not guarantee, pledge its assets for the benefit of, or otherwise
become liable on or in connection with, any obligation of any other person or entity;

          (6) does not own and will not own any asset other than (i) the Property, and (ii) incidental
personal property necessary for the operation of the Property;

          (7) is not engaged and will not engage, either directly or indirectly, in any business other
than the ownership, management and operation of the Property;

          (8) will not enter into any contract or agreement with any general partner, principal,
affiliate or member of Borrower, as applicable, or any affiliate of any general partner,
principal or member of Borrower, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis with third parties
other than an affiliate;

          (9) has not incurred and will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (i) the Debt, (ii) normal trade payables or
accrued expenses incurred in the ordinary course of business of operating the Property
customarily satisfied within thirty (30) days and in an aggregate amount not to exceed two
percent (2.0%) of the existing principal balance of the Note, and (iii) purchase money
indebtedness incurred to acquire equipment, electronics and other ancillary personal property
used at the Property (excluding any furniture, fixtures or room furnishings) and lease
obligations

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in the normal course of business, and no other debt will be secured (senior, subordinate or
pari passu) by the Property;

          (10) has not made and will not make any loans or advances to any third party (including any
affiliate);

          (11) is and will be solvent and pay its debts from its assets as the same shall become due;

          (12) has done or caused to be done and will do all things necessary to preserve its
existence, and will observe all formalities applicable to it;

          (13) will conduct and operate its business in its own name and as presently conducted and
operated; provided, that, Borrower may contract with any property manager for the Property for (i)
the rights under a nonexclusive license authorizing Borrower to use various service marks, trademarks, and tradenames (e.g. “The Grove,” “Go Grove,” and “Campus Crest”) for purposes of
marketing the Property to prospective tenants, (ii) the use by such property manager of such
licensed service marks, trademarks and trade names on behalf of the Borrower for purposes of
marketing the Property to potential tenants, and (iii) space on a nonexclusive website which
advertises the Property to potential tenants along with other properties managed by such property
manager that are also licensed to use such service marks, trademarks and tradenames;

          (14) will maintain financial statements, books and records and bank accounts separate from
those of its affiliates, including, without limitation, its general partners or members, as
applicable;

          (15) will be, and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including, without limitation, any affiliate,
general partner, or member, as applicable, or any affiliate of any general partner or member of
Borrower, as applicable) and will correct any known misunderstanding concerning its separate
identity;

          (16) will file its own tax returns;

          (17) will maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business operations;

          (18) will establish and maintain an office through which its business will be conducted
separate and apart from those of its affiliates or shall allocate fairly and reasonably any
overhead and expense for shared office space;

          (19) will not commingle the funds and other assets of Borrower with those of any general
partner, member, affiliate, principal or any other person;

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          (20) has and will maintain its assets in such a manner that it is not costly or difficult to
segregate, ascertain or identify its individual assets from those of any affiliate or any other
person;

          (21) does not and will not hold itself out to be responsible for the debts or obligations of
any other person;

          (22) will pay the salaries of its own employees (if any) from its own funds and maintain a
sufficient number of employees (if any) in light of its contemplated business operations;

          (23) will pay any liabilities out of its own funds, including salaries of its employees, not
funds of any affiliate; and

          (24) will use stationery, invoices, and checks separate from its affiliates; provided, that,
the foregoing shall not limit the ability of any property manager under a management agreement
acting on behalf of the Borrower to use such manager’s own stationery and invoices provided that,
in matters affecting legal rights and obligations of the Borrower or the Property, such manager
shall identify its representative capacity of the Borrower and/or the Property so as to avoid any
misunderstanding of the Borrower’s separate identity.

          (b) In the event Borrower is a single-member Delaware limited liability company, the limited
liability company agreement of Borrower (the “LLC Agreement”) shall provide that (i) upon the
occurrence of any event that causes the sole member of Borrower (“Member”) to cease to be the
member of Borrower (other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee, or (B) the resignation of
Member and the admission of an additional member in either case in accordance with the terms of
the Loan Documents and the LLC Agreement), any person acting as a “springing” or “special” member
of Borrower shall without any action of any other Person and simultaneously with the Member
ceasing to be the member of Borrower, automatically be admitted to Borrower (“Special Member”)
and shall continue Borrower without dissolution and (ii) Special Member may not resign from
Borrower or transfer its rights as Special Member unless a successor Special Member has been
admitted to Borrower as Special Member in accordance with requirements of Delaware law. The LLC
Agreement shall further provide that (i) Special Member shall automatically cease to be a member
of Borrower upon the admission to Borrower of a substitute Member, (ii) Special Member shall be a
member of Borrower that has no interest in the profits, losses and capital of Borrower and has no
right to receive any distributions of Borrower assets, (iii) pursuant to Section 18-301 of the
Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make
any capital contributions to Borrower and shall not receive a limited liability company interest
in Borrower, (iv) Special Member, in its capacity as Special Member, may not bind Borrower, and
(v) except as required by any mandatory provision of the Act, Special Member, in its capacity as
Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, Borrower, including, without limitation, the merger, consolidation or
conversion of Borrower; provided, however, such prohibition shall not limit the
obligations of Special Member to vote on such matters required by the Loan Documents or the LLC

46

 

Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall
execute a counterpart to the LLC Agreement. Prior to its admission to Borrower as Special Member,
Special Member shall not be a member of Borrower.

          (c) Upon the occurrence of any event that causes the Member to cease to be a member of
Borrower, to the fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the continued membership
of Member in Borrower, agree in writing (i) to continue Borrower and (ii) to the admission of the
personal representative or its nominee or designee, as the case may be, as a substitute member of
Borrower, effective as of the occurrence of the event that terminated the continued membership of
Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member
under any creditors rights laws shall not cause Member or Special Member to cease to be a member of
Borrower and upon the occurrence of such an event, the business of Borrower shall continue without
dissolution. The LLC Agreement shall provide that each of Member and Special Member waives any
right it might have to agree in writing to dissolve Borrower upon the occurrence of any action
initiated by or brought against Member or Special Member under any creditors rights laws, or the
occurrence of an event that causes Member or Special Member to cease to be a member of Borrower.

     2.30
Embargoed Person. At all times throughout the term of the Loan, including after
giving effect to any Sale hereunder, (a) none of the funds or assets of Indemnitor that are used
to repay the Loan or of Borrower shall constitute property of, or shall be beneficially owned
directly or, to Borrower’s best knowledge, indirectly, by any person subject to sanctions or trade
restrictions under United States law (“Embargoed Person” or “Embargoed Persons”) that are
identified on (1) the “List of Specially Designated Nationals and Blocked Persons” maintained by
the Office of Foreign Assets Control (OFAC), U.S. Department of the Treasury, and/or to Borrower’s
best knowledge, information and belief, as of the date thereof, on any other similar list
maintained by OFAC pursuant to any authorizing statute including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§
1701 et seq., The Trading with the Enemy
Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with
the result that the investment in Borrower or any Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law, or the Loan made by Lender would be in violation of law, or (2)
Executive Order 13224 (September 23, 2001) issued by the President of the United States
(“Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism”), any related enabling legislation or any other similar Executive
Orders, and (b) no Embargoed Person shall have any direct interest, and to Borrower’s best
knowledge, as of the date hereof, based upon reasonable inquiry by Borrower, indirect interest, of
any nature whatsoever in Borrower or any Indemnitor, as applicable, with the result that the
investment in Borrower or any Indemnitor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.

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     2.31 Anti-Money Laundering. At all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan Documents, none of
the funds of Borrower or any Indemnitor, as applicable, that are used to repay the Loan shall be
derived from any unlawful activity, with the result that the investment in Borrower or any
Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in
violation of law.

     2.32 ERISA.

          (a) Borrower shall not engage in any transaction which would cause any obligation, or action
taken or to be taken, hereunder (or the exercise by Lender of any of its rights under the Note,
this Deed of Trust or any of the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.

          (b) Borrower further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout the term of this Deed of Trust, as requested by Lender in
its sole discretion, that (i) Borrower is not an “employee benefit plan” as defined in Section
3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning
of Section 3(32) of ERISA; (ii) Borrower is not subject to Federal or state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and (iii) one or more of
the following circumstances is true:

     (1) Equity interests in Borrower are publicly offered securities within the meaning
of 29 C.F.R. Section 2510.3-101(b)(2);

     (2) Less than 25 percent of each outstanding class of equity interests in Borrower
are held by “benefit plan investors” within the meaning of 29 C.F.R. Section
2510.3-101(f)(2); or

     (3) Borrower qualifies as an “operating company” within the meaning of 29 C.F.R.
Section 2510.3-101 or an investment company registered under the Investment Company Act of
1940.

          (c) Borrower shall indemnify Lender and defend and hold Lender harmless
from and against all civil penalties, excise taxes, or other loss, cost damage and expense
(including, without limitation, reasonable attorneys’ fees and disbursements and costs
incurred in
the investigation, defense and settlement of claims and losses incurred in correcting any
prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, in Lender’s sole
discretion)
that Lender may incur, directly or indirectly, as a result of a default under this Section.
This indemnity shall survive any termination, satisfaction or foreclosure of this Deed of Trust.

ARTICLE III.
 RESERVES

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     3.1 Reserves Generally.

          (a) As additional security for the payment and performance by Borrower of all duties,
responsibilities and obligations under the Note and the other Loan Documents, Borrower hereby
unconditionally and irrevocably assigns, conveys, pledges, mortgages, transfers, delivers,
deposits, sets over and confirms unto Lender, and hereby grants to Lender a security interest in,
(i) the Payment Reserve, the Impound Account, the Replacement Reserve, the Economic Occupancy
Reserve, and the Holdback Reserve, as applicable (each as hereinafter defined) and any other
reserve or escrow account established pursuant to the terms hereof or of any other Loan Document
(collectively, the “Reserves”), (ii) the accounts into which the Reserves have been deposited,
(iii) all insurance on said accounts, (iv) all accounts, contract rights and general intangibles or
other rights and interests pertaining thereto, (v) all sums now or hereafter held therein or
represented thereby, (vi) all replacements, substitutions or proceeds thereof, (vii) all
instruments and documents now or hereafter evidencing the Reserves or such accounts, (viii) all
powers, options, rights, privileges and immunities pertaining to the Reserves (including the right
to make withdrawals therefrom), and (ix) all proceeds of the foregoing. Borrower hereby authorizes
and consents to the account into which the Reserves have been deposited being held in Lender’s name
or the name of any entity servicing the Note for Lender and hereby acknowledges and agrees that
Lender, or at Lender’s election, such servicing agent, shall have exclusive control over said
account. Notice of the assignment and security interest granted to Lender herein may be delivered
by Lender at any time to the financial institution wherein the Reserves have been established, and
Lender, or such servicing entity, shall have possession of all passbooks or other evidences of such
accounts. Borrower hereby assumes all risk of loss with respect to amounts on deposit in the
Reserves. Funds on deposit in the Replacement Reserve and the Holdback Reserve shall bear interest
at a rate equal to the then prevailing commercial money market rate. All amounts deemed earned on
funds contributed to the Replacement Reserve and the Holdback Reserve at the rate referenced in the
immediately preceding sentence shall be retained by Lender and accumulated for the benefit of
Borrower and added to the balance in the Replacement Reserve and the Holdback Reserve and shall be
disbursed for payment of the items for which other funds in the Replacement Reserve and the
Holdback Reserve are to be disbursed. Borrower shall not be entitled to earn any interest with
respect to funds on deposit in the Payment Reserve, the Economic Occupancy Reserve and the Impound
Account. Borrower hereby knowingly, voluntarily and intentionally stipulates, acknowledges and
agrees that the advancement of the funds from the Reserves as set forth herein is at Borrower’s
direction and is not the exercise by Lender of any right of set-off or other remedy upon a Default
or an Event of Default. Borrower hereby waives all right to withdraw funds from the Reserves except
as provided for in this Deed of Trust. If an Event of Default shall occur hereunder or under any
other of the Loan Documents Lender may, without notice or demand on Borrower, at its option: (A)
withdraw any or all of the funds (including, without limitation, interest) then remaining in the
Reserves and apply the same, after deducting all costs and expenses of safekeeping, collection and
delivery (including, but not limited to, reasonable attorneys’ fees, costs and expenses) to the
Debt or any other obligations of Borrower under the other Loan Documents in such manner as Lender
shall deem appropriate in its sole discretion, and the excess, if any, shall be paid to Borrower,
(B) exercise any and all rights and remedies of a secured party under any applicable Uniform
Commercial Code, or (C) exercise any other remedies available at law or in equity. No such use or
application of the funds contained in the

49

 

Reserves shall be deemed to cure any Default or Event of Default.

          (b) The Reserves shall not, unless otherwise explicitly required by applicable law, be or be
deemed to be escrow or trust funds, but, at Lender’s option and in Lender’s discretion, may either
be held in a separate account or be commingled by Lender with the general funds of Lender. The
Reserves are solely for the protection of Lender and entail no responsibility on Lender’s part
beyond the payment of the respective items for which they are held following receipt of bills,
invoices or statements therefor in accordance with the terms hereof and beyond the allowing of due
credit for the sums actually received. Upon assignment of this Deed of Trust by Lender, any funds
in the Reserves shall be turned over to the assignee and any responsibility of Lender, as assignor,
with respect thereto shall terminate. If the funds in the applicable Reserve shall exceed the
amount of payments actually applied by Lender for the purposes and items for which the applicable
Reserve is held, such excess may be credited by Lender on subsequent payments to be made hereunder
or, at the option of Lender, refunded to Borrower. If, however, the applicable Reserve shall not
contain sufficient funds to pay the sums required by the dates on which such sums are required to
be on deposit in such account, Borrower shall, within ten (10) days after receipt of written notice
thereof, deposit with Lender the full amount of any such deficiency. If Borrower shall fail to
deposit with Lender the full amount of such deficiency as provided above, Lender shall have the
option, but not the obligation, to make such deposit, and all amounts so deposited by Lender,
together with interest thereon at the Default Interest Rate from the date so deposited by Lender
until actually paid by Borrower, shall be immediately paid by Borrower on demand and shall be
secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of
the Debt. If there is an Event of Default under this Deed of Trust, Lender may, but shall not be
obligated to, apply at any time the balance then remaining in any or all of the Reserves against
the Debt in whatever order Lender shall subjectively determine. No such application of any or all
of the Reserves shall be deemed to cure any Event of Default. Upon full payment of the Debt in
accordance with its terms or at such earlier time as Lender may elect, the balance of any or all of
the Reserves then in Lender’s possession shall be paid over to Borrower and no other party shall
have any right or claim thereto.

     3.2 Payment Reserve.

          (a) Contemporaneously with the execution hereof, Borrower has established with Lender a
reserve in the amount of the first (1st) payment of principal, interest and deposits for any
applicable reserves or escrow accounts required under the terms of this Deed of Trust or the
other Loan Documents as calculated by Lender (the “Payment Reserve”). Borrower understands and
agrees that, notwithstanding the establishment of the Payment Reserve as herein required, all of
the proceeds of the Note have been, and shall be considered, fully disbursed and shall bear
interest and be payable on the terms provided therein.

          (b) For so long as no Event of Default has occurred hereunder or under any of the other Loan
Documents, Lender shall, on the First Payment Date (as defined in the Note) under the Note,
advance from the Payment Reserve to itself the amount of the monthly installment due and payable
by Borrower under the Note on the First Payment Date and shall also advance from the Payment
Reserve into the Impound Account the amount of any deposit for

50

 

taxes and insurance premiums and into the Replacement Reserve (as hereinafter defined) the amount
of any deposit for Repairs (as hereinafter defined) and into any other reserve account the amount
of any deposit in accordance with the terms of any other Loan Document required to be paid by
Borrower concurrently with such monthly installment pursuant to the terms hereof and thereof.
Provided no Default or Event of Default has occurred, after the scheduled disbursement from the
Payment Reserve, any amounts then remaining in the Payment Reserve shall be paid to Borrower.
Nothing contained herein, including, without limitation, the existence of the Payment Reserve,
shall release Borrower of any obligation to make payments under the Note, this Deed of Trust or the
other Loan Documents strictly in accordance with the terms hereof or thereof and, in this regard,
without limiting the generality of the foregoing, should the amounts contained in the Payment
Reserve not be sufficient to pay in full the monthly installments and the Impound Account,
Replacement Reserve and any other applicable reserve account deposits referenced above in this
subparagraph, Borrower shall be responsible for paying such deficiency on the First Payment Date.

     3.3 Impound Account.
Borrower shall establish and maintain at all times while this
Deed of Trust continues in effect an impound account (the “Impound Account”) with Lender for
payment of real estate taxes and assessments and insurance on the Property and as additional
security for the Debt. Simultaneously with the execution hereof, Borrower shall deposit in the
Impound Account an amount determined by Lender to be necessary to ensure that there will be on
deposit with Lender an amount which, when added to the monthly payments subsequently required to
be deposited with Lender hereunder on account of real estate taxes, assessments and insurance
premiums, will result in there being on deposit with Lender in the Impound Account an amount
sufficient to pay the next due installment of real estate taxes and assessments on the Property at
least one (1) month prior to the earlier of (a) the due date thereof or (b) any such date by which
Borrower or Lender is required by law to pay same and the next due annual insurance premiums with
respect to the Property at least one (1) month prior to the due date thereof. Commencing on the
first monthly payment date under the Note and continuing thereafter on each monthly payment date
under the Note, Borrower shall pay to Lender, concurrently with and in addition to the monthly
payment due under the Note and until the Debt is fully paid and performed, deposits in an amount
equal to one-twelfth (1/12) of the amount of the annual real estate taxes and assessments that
will next become due and payable on the Property, plus one-twelfth (1/12) of the amount of the
annual premiums that will next become due and payable on insurance policies which Borrower is
required to maintain hereunder, each as estimated and determined by Lender. So long as no Default
or Event of Default has occurred, and no event has occurred or failed to occur which with the
passage of time, the giving of notice, or both would constitute an Event of Default (a “Default”),
all sums in the Impound Account shall be held by Lender in the Impound Account to pay said taxes,
assessments and insurance premiums before the same become delinquent. Borrower shall be
responsible for ensuring the receipt by Lender, at least twenty (20) days prior to the respective
due date for payment thereof, of all bills, invoices and statements for all taxes, assessments and
insurance premiums to be paid from the Impound Account, and so long as no Event of Default has
occurred, Lender shall pay the governmental authority or other party entitled thereto directly to
the extent funds are available for such purpose in the Impound Account. In making any payment from
the Impound Account, Lender shall be entitled to rely on any bill, statement or estimate procured
from the appropriate public office or insurance company or agent without any inquiry into the
accuracy of such bill, statement or

51

 

estimate and without any inquiry into the accuracy, validity, enforceability or contestability of
any tax, assessment, valuation, sale, forfeiture, tax lien or title or claim thereof.

     3.4 Intentionally Deleted.

     3.5 Replacement Reserve. As additional security for the Debt, Borrower shall establish
and maintain at all times while this Deed of Trust continues in effect a repair reserve (the
“Replacement Reserve”) with Lender for payment of costs and expenses incurred by Borrower in
connection with the performance of work to the roofs, chimneys, gutters, downspouts, paving, curbs,
ramps, driveways, balconies, porches, patios, exterior walls, exterior doors and doorways, windows,
elevators and mechanical and HVAC equipment (collectively, the “Repairs”). Commencing on the first
monthly Payment Date under the Note and continuing thereafter on each monthly Payment Date under
the Note, Borrower shall pay to Lender, concurrently with and in addition to the monthly payment
due under the Note and until the Debt is fully paid and performed, a deposit to the Replacement
Reserve in an amount equal to $5,002.67 per month. So long as no Event of Default has occurred, all
sums in the Replacement Reserve shall be held by Lender in the Replacement Reserve to pay the costs
and expenses of Repairs. So long as no Default or Event of Default has occurred, Lender shall, to
the extent funds are available for such purpose in the Replacement Reserve, disburse to Borrower
the amount paid or incurred by Borrower in performing such Repairs within ten (10) days following:
(a) the receipt by Lender of a written request from Borrower for disbursement from the Replacement
Reserve and a certification by Borrower in a form approved in writing by Lender that the applicable
item of Repair has been completed; (b) the delivery to Lender of invoices, receipts or other
evidence satisfactory to Lender, verifying the cost of performing the Repairs; (c) for disbursement
requests in excess of $25,000.00, the delivery to Lender of affidavits, lien waivers or other
evidence reasonably satisfactory to Lender showing that all materialmen, laborers, subcontractors
and any other parties who might or could claim statutory or common law liens and are furnishing or
have furnished material or labor to the Property have been paid all amounts due for labor and
materials furnished to the Property; (d) for disbursement requests in excess of $25,000.00,
delivery to Lender of a certification from an inspecting architect or other third party acceptable
to Lender describing the completed Repairs and verifying the completion of the Repairs and the
value of the completed Repairs; and (e) for disbursement requests in excess of $25,000.00, delivery
to Lender of a new certificate of occupancy for the portion of the Improvements covered by such
Repairs, if said new certificate of occupancy is required by law, or a certification by Borrower
that no new certificate of occupancy is required. Lender shall not be required to make advances
from the Replacement Reserve more frequently than once in any thirty (30) day period. In making any
payment from the Replacement Reserve, Lender shall be entitled to rely on such request from
Borrower without any inquiry into the accuracy, validity or contestability of any such amount.
Lender may, at Borrower’s expense, make or cause to be made during the term of this Deed of Trust
an annual inspection of the Property to determine the need, as determined by Lender in its
reasonable judgment, for further Repairs of the Property. In the event that such inspection reveals
that further Repairs of the Property are required, Lender shall provide Borrower with a written
description of the required Repairs and Borrower shall complete such Repairs to the reasonable
satisfaction of Lender within ninety (90) days after the receipt of such description from Lender,
or such later date as may be approved by Lender in its sole discretion.

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     3.6 Economic Occupancy Reserve.

          (a) Contemporaneously with the execution hereof, Borrower has provided
Lender with an irrevocable, standby “evergreen” letter of credit that satisfies the terms of
this
subparagraph (b) (“Letter of Credit”) in the principal amount of $1,800,000.00
(the “Economic
Occupancy Reserve”).

          (b) The issuer of the Letter of Credit (“Letter of Credit Issuer”) shall maintain
a financial rating of at least “A” from Standard and Poors or a comparable rating of a
comparable
nationally recognized rating agency, and the Letter of Credit shall be in a form and
substance
acceptable to Lender. After deposited by Borrower with Lender, the Letter of Credit shall be
held by Lender in the Economic Occupancy Reserve and held as security for the Loan. In the
event that at any time the financial rating of the Letter of Credit Issuer shall fall below
“A” of
Standard and Poors or a comparable rating of a comparable nationally recognized rating
agency,
then within fifteen (15) days after demand by Lender, Borrower shall replace the Letter of
Credit
with another letter of credit issued by an issuer acceptable to Lender and meeting the
foregoing
requirements in the same amount as is then available under the Letter of Credit. Upon an
Event
of Default or if Borrower shall fail to replace the Letter of Credit as provided above when
requested by Lender or if the Letter of Credit shall not be renewed or extended or replaced
before the Letter of Credit’s stated expiration date or if Borrower shall not deliver to
Lender or
its designee a replacement Letter of Credit meeting the requirements of this Deed of Trust
before
the expiration of the Letter of Credit, Lender may draw on the Letter of Credit for all or
part of
its balance and hold the proceeds of such draws in the Economic Occupancy Reserve as
additional security for the Loan, or, if an Event of Default exists, such proceeds may be
applied
by Lender in accordance with the Note and this Deed of Trust; and

          (c) Provided that no Event of Default shall have occurred and be continuing,
Borrower shall be entitled to a release of the Letter of Credit when Lender has received
evidence
reasonably acceptable to Lender that Net Operating Income (as hereinafter defined below) for
the Property has achieved and maintained for twelve (12) consecutive months prior to
Borrower’s request for a release of the Letter of Credit an actual debt service coverage
ratio (the
“DSCR”) of at least 1.20:1.00 based upon the then current outstanding balance of the Loan,
utilizing a thirty (30) year amortization. For the purposes hereof, “Net Operating Income”
shall
be defined as the sum of (a) base rent from Tenants at the Property and currently paying
Rent under Leases, based on a trailing twelve (12) month basis and a certified Rent Roll
delivered by
Borrower to Lender consistent therewith and (b) any income from other sources, including but
not limited to income from parking, storage income, utility charges, escalations, forfeited
security deposits, interest on credit accounts, service fees or charges, less (v) currently
due and
payable real estate taxes, (w) currently due and payable insurance premiums, (x) management
fees equal to the assumed management fees equal to three percent (3.0%) of gross income from
operations, (y) Reserves and (z) any other actual operating expenses for the trailing twelve
(12) months (but excluding capital improvements and any one-time, non-recurring expenditures).

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     3.7 Holdback Reserve. Contemporaneously with the execution hereof, Borrower has
established with Lender a reserve in the amount of $23,910.50 (the
“Holdback Reserve”). This amount
represents the total amount required to complete the remaining landscaping work necessary to comply
with the requirements of the landscaping plan approved by the City of Asheville (the “Landscaping
WorK”). Borrower understands and agrees that notwithstanding the establishment of the Holdback
Reserve as herein required, all the proceeds of the Note have been, and shall be considered, fully
disbursed and shall bear interest and be payable on the terms described therein. The Holdback
Reserve and any interest earned thereon in accordance with Section 3.1 above shall be
disbursed to Borrower when Lender has received evidence reasonably acceptable to Lender of the
following: (a) the receipt by Lender of a written request from Borrower for disbursement from the
Holdback Reserve and a certification by Borrower in a form approved in writing by Lender that the
Landscaping Work has been completed; (b) the delivery to Lender of invoices, receipts or other
evidence satisfactory to Lender, verifying the cost of completing the Landscaping Work; (c) the
delivery to Lender of affidavits, lien waivers or other evidence reasonably satisfactory to Lender
showing that all materialmen, laborers, subcontractors and any other parties who might or could
claim statutory or common law liens and are furnishing or have furnished material or labor to the
Property have been paid all amounts due for labor and materials furnished to the Property in
connection with the Landscaping Work; (d) delivery to Lender of documentation from the City of
Asheville verifying the completion of the Landscaping Work and confirming that the Property is in
compliance with the landscaping plan approved by the City of Asheville.

ARTICLE IV.
 EVENTS OF DEFAULT

     4.1 Events of Default. The occurrence of any of the following events shall be an Event
of Default hereunder:

          (a) Borrower (x) fails to pay any payments due under the Note or to the Reserves on the date
when the same is due and payable, or (y) fails to pay any money to Lender required hereunder at
the time or within any applicable grace period set forth herein, or if no grace period is set
forth herein, then within seven (7) days of the date such payment is due (except those regarding
payments to be made under the Note or to the Reserves, which failure is not subject to any grace
or cure period).

          (b) Borrower fails to provide insurance as required by Section 2.3 hereof or fails
to perform any covenant, agreement, obligation, term or condition set forth in Section 2.27
or Section 2.29 hereof.

          (c) Borrower fails to perform any other covenant, agreement, obligation, term or condition
set forth herein, other than those otherwise described in this
Section 4.1, and, to the
extent such failure or default is susceptible of being cured, the continuance of such failure or
default for thirty (30) days after written notice thereof from Lender to Borrower;
provided, however, that if such default is susceptible of cure but such cure
cannot be accomplished with reasonable diligence within said period of time, and if Borrower
commences to cure such default

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promptly after receipt of notice thereof from Lender, and thereafter prosecutes the curing of
such default with reasonable diligence, such period of time shall be extended for such period of
time as may be necessary to cure such default with reasonable diligence, but not to exceed an
additional sixty (60) days.

          (d) Any representation or warranty made herein, in or in connection with any application or
commitment relating to the Loan evidenced by the Note, or in any of the other Loan Documents to
Lender by Borrower, by any principal, general partner, manager or member in Borrower, or by any
Indemnitor is determined by Lender to have been false or misleading in any material respect at the
time made.

          (e) There shall be a sale, conveyance, disposition, alienation, hypothecation, leasing,
assignment, pledge, mortgage, granting of a security interest in or other transfer or further
encumbrancing of the Property, Borrower or its general partners or managing members, or any
portion thereof or any interest therein, in violation of Section 2.9 hereof.

          (f) A default occurs under any of the other Loan Documents which has not been cured within
any applicable grace or cure period therein provided.

          (g) Borrower, general partner or managing member in Borrower or any Indemnitor becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of
creditors, or files a petition in bankruptcy, or is voluntarily adjudicated insolvent or bankrupt
or admits in writing the inability to pay its debts as they mature, or petitions or applies to any
tribunal for or consents to or fails to contest the appointment of a receiver, trustee, custodian
or similar officer for Borrower, for any such general partner or managing member of Borrower or
for any Indemnitor or for a substantial part of the assets of Borrower, of any such general
partner or managing member of Borrower or of any Indemnitor, or commences any case, proceeding or
other action under any bankruptcy, reorganization, arrangement, readjustment or debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or hereafter in effect.

          (h) A petition is filed or any case, proceeding or other action is commenced against
Borrower, against any general partner or managing member of Borrower or against any Indemnitor
seeking to have an order for relief entered against it as debtor or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its debts or other
relief under any law relating to bankruptcy, insolvency, arrangement, reorganization,
receivership or other debtor relief under any law or statute of any jurisdiction, whether now or
hereafter in effect, or a court of competent jurisdiction enters an order for relief against
Borrower, against any general partner or managing member of Borrower or against any Indemnitor,
as debtor, or an order, judgment or decree is entered appointing, with or without the consent of
Borrower, of any such general partner or managing member of Borrower or of any Indemnitor, a
receiver, trustee, custodian or similar officer for Borrower, for any such general partner or
managing member of Borrower or for any Indemnitor, or for any substantial part of any of the
properties of Borrower, of any such general partner or managing member of Borrower or of any
Indemnitor, and if any such event shall occur, such petition, case, proceeding, action, order,
judgment or decree is not dismissed within sixty (60) days after being commenced.

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          (i) The Property or any part thereof is taken on execution or other process of law in
any action against Borrower.

          (j) Borrower abandons all or a portion of the Property.

          (k) The holder of any lien or security interest on the Property (without implying the consent
of Lender to the existence or creation of any such lien or security interest), whether superior or
subordinate to this Deed of Trust or any of the other Loan Documents, declares a default and such
default is not cured within any applicable grace or cure period set forth in the applicable
document or such holder institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder.

          (1) The Property, or any part thereof, is subjected to waste or to removal, demolition or
material alteration so that the value of the Property is materially diminished thereby and Lender
determines that it is not adequately protected from any loss, damage or risk associated therewith.

          (m) Any dissolution, termination, partial or complete liquidation, merger or consolidation
of Borrower, any general partner or any managing member, or any Indemnitor.

ARTICLE V. 
 REMEDIES

     5.1 Remedies Available. If there shall occur an Event of Default under this Deed of
Trust, then this Deed of Trust is subject to foreclosure as provided by law and Lender may, at
its option and by or through a trustee, nominee, assignee or otherwise (including, without
limitation, the Trustee), to the fullest extent permitted by law, exercise any or all of the
following rights, remedies and recourses, either successively or concurrently:

          (a) Acceleration. Accelerate the maturity date of the Note and declare any or all of
the Debt to be immediately due and payable without any presentment, demand, protest, notice or
action of any kind whatever (each of which is hereby expressly waived by Borrower), whereupon the
same shall become immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the Note and any
applicable prepayment fee provided for in the Note shall then be immediately due and payable.

          (b) Entry on the Property. Either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a court and without regard to
the adequacy of its security, enter upon and take possession of the Property, or any part
thereof, without force or with such force as is permitted by law and without notice or process or
with such notice or process as is required by law, unless such notice and process is waivable, in
which case Borrower hereby waives such notice and process, and do any and all acts and perform
any and all work which may be desirable or necessary in Lender’s judgment to complete any

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unfinished construction on the Premises, to preserve the value, marketability or rentability
of the Property, to increase the income therefrom, to manage and operate the Property or to protect
the security hereof, and all sums expended by Lender therefor, together with interest thereon at
the Default Interest Rate, shall be immediately due and payable to Lender by Borrower on demand and
shall be secured hereby and by all of the other Loan Documents securing all or any part of the
Debt.

          (c) Collect Rents and Profits. With or without taking possession of the Property, sue
or otherwise collect the Rents and Profits, including those past due and unpaid.

          (d) Appointment of Receiver. Upon, or at any time prior or after, initiating the
exercise of any power of sale, instituting any judicial foreclosure or instituting any other
foreclosure of the liens and security interests provided for herein or any other legal proceedings
hereunder, make application to a court of competent jurisdiction for appointment of a receiver for
all or any part of the Property, as a matter of strict right and without notice to Borrower and
without regard to the adequacy of the Property for the repayment of the Debt or the solvency of
Borrower or any person or persons liable for the payment of the Debt, and Borrower does hereby
irrevocably consent to such appointment, waive any and all notices of and defenses to such
appointment and agree not to oppose any application therefor by Lender, but nothing herein is to
be construed to deprive Lender of any other right, remedy or privilege Lender may now have under
the law to have a receiver appointed, provided, however, that the appointment of
such receiver, trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of Lender to receive payment of the Rents
and Profits pursuant to other terms and provisions hereof. Any such receiver shall have all of the
usual powers and duties of receivers in similar cases, including, without limitation, the full
power to hold, develop, rent, lease, manage, maintain, operate and otherwise use or permit the use
of the Property upon such terms and conditions as said receiver may deem to be prudent and
reasonable under the circumstances as more fully set forth in Section 5.3 below. Such
receivership shall, at the option of Lender, continue until full payment of all of the Debt or
until title to the Property shall have passed by foreclosure sale under this Deed of Trust or deed
in lieu of foreclosure.

          (e) Foreclosure. Immediately commence an action to foreclose this Deed of Trust or
to specifically enforce its provisions with respect to any of the Debt, pursuant to the statutes
in such case made and provided, and sell the Property or cause the Property to be sold in
accordance with the requirements and procedures provided by said statutes in a single parcel or
in several parcels at the option of Lender. In the event foreclosure proceedings are instituted
by Lender, all expenses incident to such proceedings, including, but not limited to, reasonable
attorneys’ fees and costs, shall be paid by Borrower and secured by this Deed of Trust and by all
of the other Loan Documents securing all or any part of the Debt. The Debt and all other
obligations secured by this Deed of Trust, including, without limitation, interest at the Default
Interest Rate any prepayment charge, fee or premium required to be paid under the Note in order
to prepay principal (to the extent permitted by applicable law), reasonable attorneys’ fees and
any other amounts due and unpaid to Lender under the Loan Documents, may be bid by Lender in the
event of a foreclosure sale hereunder. In the event of a judicial sale pursuant to a

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foreclosure decree, it is understood and agreed that Lender or its assigns may become the
purchaser of the Property or any part thereof.

          (f) Judicial Remedies. Proceed by suit or suits, at law or in equity, instituted by or
on behalf of Lender, to enforce the payment of the Debt or the other obligations of Borrower
hereunder or pursuant to the Loan Documents, to foreclose the liens and security interests of this
Deed of Trust as against all or any part of the Property, and to have all or any part of the
Property sold under the judgment or decree of a court of competent jurisdiction. This remedy shall
be cumulative of any other non-judicial remedies available to Lender with respect to the Loan
Documents. Proceeding with the request or receiving a judgment for legal relief shall not be or be
deemed to be an election of remedies or bar any available non-judicial remedy of Lender.

          (g)
Sale of Property, (i) Trustee, at the request of Lender, shall have the power to
sell the Property or any part thereof at public auction, in such manner, at such time, and place,
upon such terms and conditions, and upon five (5) days notice to Borrower and such public notice
as Lender may deem best for the interest of Lender or as may be required or permitted by
applicable law, consisting of advertisement in a newspaper of general circulation in the
jurisdiction and for such period as applicable law may require and at such other times and by such
other methods, if any, as may be required by law to convey the Property in fee simple by trustee’s
deed with special warranty of title to and at the cost of the purchaser, who shall not be liable
to see to the application of the purchase money. The proceeds or avails of any sale made under or
by virtue of this paragraph, together with any other sums which then may be held by Lender under
this Deed of Trust, whether under the provisions of this paragraph or otherwise, shall be applied
as provided in Section 5.2 hereof. Lender, Trustee and any receiver or custodian of the
Property or any part thereof shall be liable to account for only those rents, issues, proceeds and
profits actually received by it.

          (ii) Lender and Trustee, as applicable, may adjourn from time to time any sale by it
to be made under or by virtue of this Deed of Trust by announcement at the time and place
appointed for such sale or for such adjourned sale or sales and, except as otherwise
provided by any applicable law, Lender or Trustee, without further notice or publication,
may make such sale at the time and place to which the same shall be so adjourned.

          (iii) Upon the completion of any sale or sales ordered by Lender and made by Trustee
under or by virtue of this paragraph, Lender or Trustee, or any officer of any court
empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a
good and sufficient instrument, or good and sufficient instruments, granting, conveying,
assigning and transferring all estate, right, title and interest in and to the property
and rights sold. Trustee is hereby irrevocably appointed the true and lawful
attorney-in-fact for Borrower (coupled with an interest), in its name and stead, to make
all necessary conveyances, assignments, transfers and deliveries of the property and
rights so sold and for that purpose Trustee may execute all necessary instruments of
conveyance, assignment, transfer and delivery, and may substitute one or more persons with
like power, Borrower hereby ratifying and confirming all that its said attorney-in-

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fact or such substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, Borrower, if so requested by Trustee or Lender, shall ratify and confirm any
such sale or sales by executing and delivering to Lender, or to such purchaser or
purchasers all such instruments as may be advisable, in the sole judgment of Lender, for
such purpose, and as may be designated in such request. Any such sale or sales made under
or by virtue of this paragraph, whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or a judgment or decree of foreclosure and sale,
shall operate to divest all the estate, right, title, interest, claim and demand
whatsoever, whether at law or in equity, of Borrower in and to the property and rights so
sold, and shall, to the fullest extent permitted under law, be a perpetual bar both at law
and in equity against Borrower and against any and all persons claiming or who may claim
the same, or any part thereof, from, through or under Borrower.

          (iv) In the event of any sale made under or by virtue of this Deed of Trust (whether
made under the power of sale herein granted or under or by virtue of judicial proceedings
or a judgment or decree of foreclosure and sale), the entire Debt relative to the
Property, immediately thereupon shall, anything in the Note, this Deed of Trust or any
other of the Loan Documents to the contrary notwithstanding, become due and payable.

          (v) Upon any sale under or by virtue of this Deed of Trust (whether made under the
power of sale herein granted or under or by virtue of judicial proceedings or a judgment
or decree of foreclosure and sale), Lender may bid for and acquire the Property or any
part thereof and in lieu of paying cash therefor may make settlement for the purchase
price by crediting the Debt to and against the net sales price after deducting therefrom
the expenses of the sale and the costs of the action.

          (vi) No recovery of any judgment by Lender and no levy of an execution under any
judgment upon the Property or any part thereof or upon any other property of Borrower
shall release the lien of this Deed of Trust upon the Property or any part thereof, or any
liens, rights, powers or remedies of Lender hereunder, but such liens, rights, powers and
remedies of Lender shall continue unimpaired until the entire Debt is paid in full.

          (h) Other. Exercise any other right or remedy available hereunder, under any of the
other Loan Documents or at law or in equity.

     5.2 Application of Proceeds. To the fullest extent permitted by law, the proceeds of
any sale under this Deed of Trust shall be applied, to the extent funds are so available, to the
following items in such order as Lender in its discretion may determine:

          (a) To payment of the reasonable costs, expenses and fees of taking possession of the
Property, and of holding, operating, maintaining, using, leasing, repairing, improving, marketing
and selling the same and of otherwise enforcing Lender’s rights and remedies hereunder and under
the other Loan Documents, including, but not limited to,

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receivers’ fees, court costs, attorneys’, accountants’, appraisers’, managers’ and other
professional fees, title charges and transfer taxes.

          (b) To payment of all sums expended by Lender under the terms of any of the Loan Documents
and not yet repaid, together with interest on such sums at the Default Interest Rate.

          (c) To payment of the Debt and all other obligations secured by this Deed of Trust,
including, without limitation, interest at the Default Interest Rate and, to the extent permitted
by applicable law, any prepayment fee, charge or premium required to be paid under the Note in
order to prepay principal, in any order that Lender chooses in its sole discretion.

          (d) The remainder, if any, of such funds shall be disbursed to Borrower or to the person or
persons legally entitled thereto.

     5.3 Right and Authority of Receiver or Lender in the Event of Default; Power of
Attorney. Upon the occurrence of an Event of Default, and entry upon the Property pursuant to
Section 5.1(b) hereof or appointment of a receiver pursuant to Section 5.1(d)
hereof, and under such terms and conditions as may be prudent and reasonable under the
circumstances in Lender’s or the receiver’s sole discretion, all at Borrower’s expense, Lender or
said receiver, or such other persons or entities as they shall hire, direct or engage, as the case
may be, may do or permit one or more of the following, successively or concurrently: (a) enter upon
and take possession and control of any and all of the Property; (b) take and maintain possession of
all documents, books, records, papers and accounts relating to the Property; (c) exclude Borrower
and its agents, servants and employees wholly from the Property; (d) manage and operate the
Property; (e) preserve and maintain the Property; (f) make repairs and alterations to the Property;
(g) complete any construction or repair of the Improvements, with such changes, additions or
modifications of the plans and specifications or intended disposition and use of the Improvements
as Lender may in its sole discretion deem appropriate or desirable to place the Property in such
condition as will, in Lender’s sole discretion, make it or any part thereof readily marketable or
rentable; (h) conduct a marketing or leasing program with respect to the Property, or employ a
marketing or leasing agent or agents to do so, directed to the leasing or sale of the Property
under such terms and conditions as Lender may in its sole discretion deem appropriate or desirable;
(i) employ such contractors, subcontractors, materialmen, architects, engineers, consultants,
managers, brokers, marketing agents, or other employees, agents, independent contractors or
professionals, as Lender may in its sole discretion deem appropriate or desirable to implement and
effectuate the rights and powers herein granted; (j) execute and deliver, in the name of Lender as
attorney-in-fact and agent of Borrower or in its own name as Lender, such documents and instruments
as are necessary or appropriate to consummate authorized transactions; (k) enter such leases,
whether of real or personal property, or tenancy agreements, under such terms and conditions as
Lender may in its sole discretion deem appropriate or desirable; (1) collect and receive the Rents
and Profits from the Property; (m) eject tenants or repossess personal property, as provided by
law, for breaches of the conditions of their leases or other agreements; (n) initiate a cause of
action for unpaid Rents and Profits, payments, income or proceeds in the name of Borrower or
Lender; (o) maintain actions in forcible entry and detainer, ejectment for possession and actions
in distress for rent; (p) compromise or give acquittance for Rents and Profits, payments, income

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or proceeds that may become due; (q) delegate or assign any and all rights and powers given to
Lender by this Deed of Trust; and (r) do any acts which Lender in its sole discretion deems
appropriate or desirable to protect the security hereof and use such measures, legal or equitable,
as Lender may in its sole discretion deem appropriate or desirable to implement and effectuate the
provisions of this Deed of Trust. This Deed of Trust shall constitute a direction to and full
authority to any lessee, or other third party who has heretofore dealt or contracted or may
hereafter deal or contract with Borrower or Lender, at the request of Lender, to pay all amounts
owing under any Lease, contract, concession, license or other agreement to Lender without proof of
the Event of Default relied upon. Any such lessee or third party is hereby irrevocably authorized
to rely upon and comply with (and shall be fully protected by Borrower in so doing) any request,
notice or demand by Lender for the payment to Lender of any Rents and Profits or other sums which
may be or thereafter become due under its Lease, contract, concession, license or other agreement,
or for the performance of any undertakings under any such Lease, contract, concession, license or
other agreement, and shall have no right or duty to inquire whether any Event of Default under this
Deed of Trust or under any of the other Loan Documents has actually occurred or is then existing.
Borrower hereby constitutes and appoints Lender, its assignees, successors, transferees and
nominees, as Borrower’s true and lawful attorney-in-fact and agent, with full power of substitution
in the Property, in Borrower’s name, place and stead, to do or permit any one or more of the
foregoing described rights, remedies, powers and authorities, successively or concurrently, and
said power of attorney shall be deemed a power coupled with an interest and irrevocable so long as
any portion of the Debt is outstanding. Any money advanced by Lender in connection with any action
taken under this Section 5.3, together with interest thereon at the Default Interest Rate
from the date of making such advancement by Lender until actually paid by Borrower, shall be a
demand obligation owing by Borrower to Lender and shall be secured by this Deed of Trust and by
every other instrument securing all or any portion of the Debt.

     5.4 Occupancy After Foreclosure. In the event there is a foreclosure sale hereunder
and at the time of such sale, Borrower or Borrower’s representatives, successors or assigns, or
any other persons claiming any interest in the Property by, through or under Borrower (except
tenants of space in the Improvements subject to leases entered into prior to the date hereof), are
occupying or using the Property, or any part thereof, then, to the extent not prohibited by
applicable law, each and all shall, at the option of Lender or the purchaser at such sale, as the
case may be, immediately become the tenant of the purchaser at such sale, which tenancy shall be a
tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable
rental per day based upon the value of the Property occupied or used, such rental to be due daily
to the purchaser. Further, to the extent permitted by applicable law, in the event the tenant
fails to surrender possession of the Property upon the termination of such tenancy, the purchaser
shall be entitled to institute and maintain an action for unlawful detainer of the Property in the
appropriate court of the county in which the Premises is located.

     5.5 Notice to Account Debtors. Lender may, at any time after an Event of Default,
notify the account debtors and obligors of any accounts, chattel paper, negotiable instruments or
other evidences of indebtedness to Borrower included in the Property to pay Lender directly.
Borrower shall at any time or from time to time upon the request of Lender provide to Lender a
current list of all such account debtors and obligors and their addresses.

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     5.6 Cumulative Remedies. All remedies contained in this Deed of Trust are
cumulative and Lender shall also have all other remedies provided at law and in equity or in any
other Loan Documents. Such remedies may be pursued separately, successively or concurrently at the
sole subjective direction of Lender and may be exercised in any order and as often as occasion
therefor shall arise. No act of Lender shall be construed as an election to proceed under any
particular provisions of this Deed of Trust to the exclusion of any other provision of this Deed of
Trust or as an election of remedies to the exclusion of any other remedy which may then or
thereafter be available to Lender. No delay or failure by Lender to exercise any right or remedy
under this Deed of Trust shall be construed to be a waiver of that right or remedy or of any Event
of Default. Lender may exercise any one or more of its rights and remedies at its option without
regard to the adequacy of its security.

     5.7 Payment of Expenses. Borrower shall pay on demand all of Lender’s expenses
incurred in any efforts to enforce any terms of this Deed of Trust, whether or not any lawsuit is
filed and whether or not foreclosure is commenced but not completed, including, but not limited
to, reasonable legal fees and disbursements, fees of any Rating Agency, fees related to any
No-Downgrade Confirmation, foreclosure costs and title charges, together with interest thereon
from and after the date incurred by Lender until actually paid by Borrower at the Default Interest
Rate, and the same shall be secured by this Deed of Trust and by all of the other Loan Documents
securing all or any part of the Debt.

ARTICLE VI. 
 MISCELLANEOUS TERMS AND CONDITIONS

     6.1 Time of Essence. Time is of the essence with respect to all provisions of this
Deed of Trust.

     6.2 Release of Deed of Trust. If all of the Debt shall be paid, then and in that
event only, all rights under this Deed of Trust, except for those provisions hereof which by their
terms survive, shall terminate and the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be promptly released of
record by Lender in due form at Borrower’s cost. No release of this Deed of Trust or the lien
hereof shall be valid unless executed by Lender.

     6.3 Certain Rights of Lender. Without affecting Borrower’s liability for the payment
of any of the Debt, Lender may from time to time and without notice to Borrower: (a) release any
person liable for the payment of the Debt; (b) extend or modify the terms of payment of the Debt;
(c) accept additional real or personal property of any kind as security or alter, substitute or
release any property securing the Debt; (d) recover any part of the Property; (e) consent in
writing to the making of any subdivision map or plat thereof; (f) join in granting any easement
therein; or (g) join in any extension agreement of this Deed of Trust or any agreement
subordinating the lien hereof.

     6.4 Waiver of Certain Defenses. No action for the enforcement of the lien hereof or
of any provision hereof shall be subject to any defense which would not be good and available to

62

 

the party interposing the same in an action at law upon the Note or any of the other Loan
Documents.

     6.5 Notices. All notices, demands, requests or other communications to be sent by one
party to the other hereunder or required by law shall be in writing and shall be deemed to have
been validly given or served by delivery of the same in person to the intended addressee, or by
depositing the same with Federal Express or another reputable private courier service for next
business day delivery, or by depositing the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, in any event addressed to the intended
addressee at its address set forth on the first page of this Deed of Trust or at such other
address as may be designated by such party as herein provided, together with, in the case of
notices to Borrower, a copy to: Bradley Arant Rose & White LLP, One Federal Place, 1819 Fifth
Avenue North, Birmingham, Alabama 35203-2104, Attention: Dawn H. Sharff. All notices, demands and
requests shall be effective upon such personal delivery, or one (1) business day after being
deposited with the private courier service, or two (2) business days after being deposited in the
United States mail as required above. Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was given as herein required shall be deemed
to be receipt of the notice, demand or request sent. By giving to the other party hereto at least
fifteen (15) days’ prior written notice thereof in accordance with the provisions hereof, the
parties hereto shall have the right from time to time to change their respective addresses and
each shall have the right to specify as its address any other address within the United States of
America.

     6.6
Successors and Assigns; Joint and Several Liability. The terms, provisions,
indemnities, covenants and conditions hereof shall be binding upon Borrower and the successors
and assigns of Borrower, including all successors in interest of Borrower in and to all or any
part of the Property, and shall inure to the benefit of Lender, its directors, officers,
shareholders, employees and agents and their respective successors and assigns and shall
constitute covenants running with the land. All references in this Deed of Trust to Borrower or
Lender shall be deemed to include all such parties’ successors and assigns, and the term
“Lender” as used herein shall also mean and refer to any lawful holder or owner,
including pledgees and participants, of any of the Debt. If Borrower consists of more than one
person or entity, each is jointly and severally liable to perform the obligations of Borrower
hereunder and all representations, warranties, covenants and agreements made by Borrower
hereunder are joint and several.

     6.7 Severability. A determination that any provision of this Deed of Trust is
unenforceable or invalid shall not affect the enforceability or validity of any other provision,
and any determination that the application of any provision of this Deed of Trust to any person
or circumstance is illegal or unenforceable shall not affect the enforceability or validity of
such provision as it may apply to any other persons or circumstances.

     6.8 Gender. Within this Deed of Trust, words of any gender shall be held and
construed to include any other gender, and words in the singular shall be held and construed to
include the plural, and vice versa, unless the context otherwise requires.

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     6.9 Waiver; Discontinuance of Proceedings. Lender may waive any single Event
of Default by Borrower hereunder without waiving any other prior or subsequent Event of Default.
Lender may remedy any Event of Default by Borrower hereunder without waiving the Event of Default
remedied. Neither the failure by Lender to exercise, nor the delay by Lender in exercising, any
right, power or remedy upon any Event of Default by Borrower hereunder shall be construed as a
waiver of such Event of Default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Lender of any right, power or remedy
hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every
such right, power or remedy hereunder may be exercised at any time and from time to time. No
modification or waiver of any provision hereof nor consent to any departure by Borrower therefrom
shall in any event be effective unless the same shall be in writing and signed by Lender, and then
such waiver or consent shall be effective only in the specific instance and for the specific
purpose given. No notice to nor demand on Borrower in any case shall of itself entitle Borrower to
any other or further notice or demand in similar or other circumstances. Acceptance by Lender of
any payment in an amount less than the amount then due on any of the Debt shall be deemed an
acceptance on account only and shall not in any way affect the existence of an Event of Default. In
case Lender shall have proceeded to invoke any right, remedy or recourse permitted hereunder or
under the other Loan Documents and shall thereafter elect to discontinue or abandon the same for
any reason, Lender shall have the unqualified right to do so and, in such an event, Borrower and
Lender shall be restored to their former positions with respect to the Debt, the Loan Documents,
the Property and otherwise, and the rights, remedies, recourses and powers of Lender shall continue
as if the same had never been invoked.

     6.10 Section Headings. The headings of the sections and paragraphs of this Deed of
Trust are for convenience of reference only, are not to be considered a part hereof and shall not
limit or otherwise affect any of the terms hereof.

     6.11 GOVERNING LAW. THIS DEED OF TRUST WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED, PROVIDED THAT TO THE
EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW
SHALL SO GOVERN AND BE CONTROLLING, AND PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE
PREMISES IS LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND
SECURITY INTERESTS IN THE PROPERTY LOCATED IN SUCH STATE.

     6.12 Counting of Days. The term “days” when used herein shall mean calendar days. If
any time period ends on a Saturday, Sunday or holiday officially recognized by the state within
which the Premises is located, the period shall be deemed to end on the next succeeding business
day. The term “business day” when used herein shall mean a weekday, Monday through Friday, except
a legal holiday or a day on which banking institutions in New York, New York are authorized by
law to be closed.

     6.13  Relationship of the Parties. The relationship between Borrower and Lender is
that
of a borrower and a lender only and neither of those parties is, nor shall it hold itself
out to be,
the agent, employee, joint venturer or partner of the other party.

64

 

     6.14 Application of the Proceeds of the Note. To the extent that proceeds of the Note
are used to pay indebtedness secured by any outstanding lien, security interest, charge or prior
encumbrance against the Property, such proceeds have been advanced by Lender at Borrower’s request
and Lender shall be subrogated to any and all rights, security interests and liens owned by any
owner or holder of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances are released.

     6.15 Unsecured Portion of Indebtedness. If any part of the Debt cannot be lawfully
secured by this Deed of Trust or if any part of the Property cannot be lawfully subject to the
lien and security interest hereof to the full extent of such indebtedness, then all payments made
shall be applied on said indebtedness first in discharge of that portion thereof which is
unsecured by this Deed of Trust.

     6.16 Cross Default. An Event of Default hereunder which has not been cured within any
applicable grace or cure period shall be a default under each of the other Loan Documents.

     6.17 Interest After Sale. In the event the Property or any part thereof shall be sold
upon foreclosure as provided hereunder, to the extent permitted by law, the sum for which the same
shall have been sold shall, for purposes of redemption (pursuant to the laws of the state in which
the Premises is located), bear interest at the Default Interest Rate.

     6.18 Inconsistency with Other Loan Documents. In the event of any inconsistency
between the provisions hereof and the provisions in any of the other Loan Documents, it is
intended that the provisions of the Note shall control over the provisions of this Deed of Trust,
and that the provisions of this Deed of Trust shall control over the provisions of the Lease
Assignment, the Indemnity and Guaranty Agreements, the Environmental Indemnity Agreement, and the
other Loan Documents.

     6.19 Construction of this Document. This document may be construed as a mortgage,
security deed, deed of trust, chattel mortgage, conveyance, assignment, security agreement,
pledge, financing statement, hypothecation or contract, or any one or more of the foregoing, in
order to fully effectuate the liens and security interests created hereby and the purposes and
agreements herein set forth.

     6.20 No Merger. It is the desire and intention of the parties hereto that this Deed
of Trust and the lien hereof do not merge in fee simple title to the Property. It is hereby
understood and agreed that should Lender acquire any additional or other interests in or to the
Property or the ownership thereof, then, unless a contrary intent is manifested by Lender as
evidenced by an appropriate document duly recorded, this Deed of Trust and the lien hereof shall
not merge in such other or additional interests in or to the Property, toward the end that this
Deed of Trust may be foreclosed as if owned by a stranger to said other or additional interests.

     6.21 Rights With Respect to Junior Encumbrances. Any person or entity purporting to
have or to take a junior mortgage or other lien upon the Property or any interest therein shall
be subject to the rights of Lender to amend, modify, increase, vary, alter or supplement this
Deed of

65

 

Trust, the Note or any of the other Loan Documents, and to extend the maturity date of the Debt,
and to increase the amount of the Debt, and to waive or forebear the exercise of any of its rights
and remedies hereunder or under any of the other Loan Documents and to release any collateral or
security for the Debt, in each and every case without obtaining the consent of the holder of such
junior lien and without the lien or security interest of this Deed of Trust losing its priority
over the rights of any such junior lien.

     6.22 Lender May File Proofs of Claim. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting
Borrower or the principals, general partners or managing members in Borrower, or their respective
creditors or property, Lender, to the extent permitted by law, shall be entitled to file such
proofs of claim and other documents as may be necessary or advisable in order to have the claims
of Lender allowed in such proceedings for the entire Debt at the date of the institution of such
proceedings and for any additional amount which may become due and payable by Borrower hereunder
after such date.

     6.23 Fixture Filing. This Deed of Trust shall be effective from the date of its
recording as a financing statement filed as a fixture filing with respect to all goods
constituting part of the Property which are or are to become fixtures. This Deed of Trust shall
also be effective as a financing statement covering minerals or the like (including oil and gas)
and is to be filed for record in the real estate records of the county where the Premises is
situated. The mailing address of Borrower and the address of Lender from which information
concerning the security interests may be obtained are set forth in Section 2.18 above.

     6.24 After-Acquired Property. All property acquired by Borrower after the date of
this Deed of Trust which by the terms of this Deed of Trust shall be subject to the lien and the
security interest created hereby, shall immediately upon the acquisition thereof by Borrower and
without further mortgage, conveyance or assignment become subject to the lien and security
interest created by this Deed of Trust. Nevertheless, Borrower shall execute, acknowledge,
deliver and record or file, as appropriate, all and every such further mortgages, security
agreements, financing statements, assignments and assurances as Lender shall require for
accomplishing the purposes of this Deed of Trust.

     6.25 No Representation. By accepting delivery of any item required to be observed,
performed or fulfilled or to be given to Lender pursuant to the Loan Documents, including, but
not limited to, any officer’s certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, legality, effectiveness or legal effect of
the same, or of any term, provision or condition thereof, and such acceptance of delivery thereof
shall not be or constitute any warranty, consent or affirmation with respect thereto by Lender.

     6.26 Counterparts. This Deed of Trust may be executed in any number of counterparts,
each of which shall be effective only upon delivery and thereafter shall be deemed an original,
and all of which shall be taken to be one and the same instrument, for the same effect as if all
parties hereto had signed the same signature page. Any signature page of this Deed of Trust may
be detached from any counterpart of this Deed of Trust without impairing the legal

66

 

effect of any signatures thereon and may be attached to another counterpart of this Deed of
Trust identical in form hereto but having attached to it one or more additional signature pages.

     6.27 Personal Liability. Notwithstanding anything to the contrary contained in this
Deed of Trust, the liability of Borrower and its officers, directors, general partners,
managers,
members and principals for the Debt and for the performance of the other agreements,
covenants
and obligations contained herein and in the Loan Documents shall be limited as set forth in
the
Note.

     6.28 Recording and Filing. Borrower will cause the Loan Documents and all amendments
and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and re-filed
in such manner and in such places as Lender shall reasonably request, and will pay on demand all
such recording, filing, re-recording and re-filing taxes, fees and other charges. Borrower shall
reimburse Lender, or its servicing agent, for the costs incurred in obtaining a tax service
company to verify the status of payment of taxes and assessments on the Property.

     6.29 Entire Agreement and Modifications. This Deed of Trust and the other Loan
Documents contain the entire agreements between the parties relating to the subject matter hereof
and thereof and all prior agreements relative hereto and thereto which are not contained herein or
therein are terminated. This Deed of Trust and the other Loan Documents may not be amended,
revised, waived, discharged, released or terminated orally but only by a written instrument or
instruments executed by the party against which enforcement of the amendment, revision, waiver,
discharge, release or termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to any party.

     6.30 Intentionally Reserved.

     6.31 Secondary Market. Lender may sell, transfer and deliver the Note and the Loan
Documents to one or more investors in the secondary mortgage market (a “Secondary Market
Transaction”). In connection with such sale, Lender may retain or assign responsibility for
servicing the loan evidenced by the Note or may delegate some or all of such responsibility
and/or obligations to a servicer, including, but not limited to, any subservicer or master
servicer, on behalf of the Investors (as hereinafter defined). All references to Lender herein
shall refer to and include, without limitation, any such servicer, to the extent applicable.

     6.32 Dissemination of Information. If Lender determines at any time to sell,
transfer or assign the Note, this Deed of Trust and the other Loan Documents, and any or all
servicing rights with respect thereto, or to grant participations therein (the “Participations”)
or issue mortgage pass-through certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement (the “Securities”), Lender may forward
to each purchaser, transferee, assignee, servicer, participant, investor, or their respective
successors in such Participations and/or Securities (collectively, the “Investors”) or any rating
agency rating such Securities (each a “Rating Agency”), each prospective Investor and each of the
foregoing’s respective counsel, all documents and information which Lender now has or may
hereafter acquire relating to the Debt, to Borrower, any guarantor, any indemnitor, and the
Property, which

67

 

shall have been furnished by Borrower and any Indemnitor, as Lender determines necessary or
desirable.

     6.33 Attorneys’ Fees. Notwithstanding anything to the contrary set forth in this
Deed of Trust or in any of the other Loan Documents, Borrower’s obligation to pay attorneys’ and
paralegals’ fees under such instruments shall be limited to reasonable attorneys’ and paralegals’
fees incurred at customary billing rates calculated upon the number of hours billed and without
regard to the statutory presumption under §6-21.2 of the North Carolina General Statutes.

     6.34 REMIC Opinions. In the event Borrower requests Lender’s consent with respect to
any proposed action or Borrower proposes to take any action not otherwise requiring Lender’s
specific consent under the Loan Documents, which Lender determines, in its discretion, may affect
(i) the “REMIC” status of Lender, its successors or assigns, or (ii) the status of this Deed of
Trust as a “qualified mortgage” as defined in Section 860G of the Internal Revenue Code of 1986
(or any succeeding provision of such law), Lender reserves the right to require Borrower, at
Borrower’s sole expense, to obtain, from counsel satisfactory to Lender in its discretion, an
opinion, in form and substance satisfactory to Lender in its discretion, that no adverse tax
consequences will arise as a result of the proposed course of action.

ARTICLE VII. 
 CONCERNING THE TRUSTEE

     7.1 Certain Rights. With the approval of Lender, Trustee shall have the right to
take any and all of the following actions: (i) to select, employ and consult with counsel (who
may be, but need not be, counsel for Lender) upon any matters arising hereunder, including the
preparation, execution and interpretation of the Loan Documents, and shall be fully protected in
relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and
powers hereof and to perform any duty hereunder either directly or through his or her agents or
attorneys, (iii) to select and employ, in and about the execution of his or her duties hereunder,
suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate
or individual, not regularly in the employ of Trustee (and Trustee shall not be answerable for
any act, default, negligence, or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act
done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances
whatsoever, except for Trustee’s gross negligence or bad faith), and (iv) any and all other
lawful action that Lender may instruct Trustee to take to protect or enforce Lender’s rights
hereunder. Trustee shall not be personally liable in case of entry by Trustee, or anyone entering
by virtue of the powers herein granted to Trustee, upon the Property for debts contracted for or
liability or damages incurred in the management or operation of the Property. Trustee shall have
the right to rely on any instrument, document, or signature authorizing or supporting any action
taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be
genuine. Trustee shall be entitled to reimbursement for expenses incurred by Trustee in the
performance of Trustee’s duties hereunder and to reasonable compensation for such of Trustee’s
services hereunder as shall be rendered. Borrower will, from time to time, pay the compensation
due to Trustee hereunder and reimburse Trustee for, and save and hold Trustee harmless against,
any

68

 

and all liability and expenses which may be incurred by Trustee in the performance of Trustee’s
duties.

     7.2 Retention of Money. All moneys received by Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were received, and
shall be
segregated from any other moneys of Trustee.

     7.3 Successor Trustees. Trustee may resign by the giving of notice of such
resignation in writing to Lender. If Trustee shall die, resign or become disqualified from
acting
in the execution of this trust, or if, for any reason, Lender, in Lender’s sole discretion
and with or
without cause, shall prefer to appoint a substitute trustee or multiple substitute trustees,
or successive substitute trustees or successive multiple substitute trustees, to act instead of
the aforenamed Trustee, Lender shall have full power to appoint a substitute trustee (or, if
preferred, multiple substitute trustees) in succession who shall succeed (and if multiple substitute
trustees are appointed, each of such multiple substitute trustees shall succeed) to all the estates,
rights, powers and duties of the aforenamed Trustee. Such appointment may be executed by any
authorized agent of Lender, and if such Lender be a corporation and such appointment be
executed on its behalf by any officer of such corporation, such appointment shall be
conclusively
presumed to be executed with authority and shall be valid and sufficient without proof of any
action by the board of directors or any superior officer of the corporation. Borrower hereby
ratifies and confirms any and all acts which the aforenamed Trustee, or his or her successor
or successors in this trust, shall do lawfully by virtue hereof. If multiple substitute trustees
are appointed, each of such multiple substitute trustees shall be empowered and authorized to act
alone without the necessity of the joinder of the other multiple substitute trustees,
whenever any action or undertaking of such substitute trustees is requested or required under or pursuant
to this Deed of Trust or applicable law. Any prior election to act jointly or severally shall not
prevent either or both of such multiple substitute Trustees from subsequently executing, jointly or
severally, any or all of the provisions hereof.

     7.4 Perfection of Appointment. Should any deed, conveyance, or instrument of any
nature be required from Borrower by any Trustee or substitute Trustee to more fully and certainly
vest in and confirm to Trustee or substitute Trustee such estates, rights, powers, and duties,
then, upon request by Trustee or substitute trustee, any and all such deeds, conveyances and
instruments shall be made, executed, acknowledged, and delivered and shall be caused to be
recorded and/or filed by Borrower.

     7.5 Succession Instruments. Any substitute trustee appointed pursuant to any of the
provisions hereof shall, without any further act, deed or conveyance, become vested with all the
estates, properties, rights, powers, and trusts of its, his or her predecessor in the rights
hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the
written request of Lender or of the substitute trustee, the Trustee ceasing to act shall execute
and deliver any instrument transferring to such substitute trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to
act, and shall duly assign, transfer and deliver any of the property and moneys held by such
Trustee to the substitute trustee so appointed in such Trustee’s place.

69

 

     7.6 No Representation by Trustee or Lender. By accepting or approving anything
required to be observed, performed, or fulfilled or to be given to Trustee or Lender pursuant to
the Loan Documents, including, without limitation, any officer’s certificate, balance sheet,
Statement of profit and loss or other financial statement, survey, appraisal or insurance policy,
neither Trustee nor Lender shall be deemed to have warranted, consented to, or affirmed 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 affirmation with respect thereto by Trustee or Lender.

[THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

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     IN WITNESS WHEREOF, Borrower has executed this Deed of Trust on the day and year first
written above.

	 	 	 	 	 
	 	BORROWER:

CAMPUS CREST AT ASHEVILLE, LLC,
 a Delaware
limited liability company

 	 
	 	By:  	Campus Crest Asheville Manager, LLC,

 a Delaware limited liability company,

 its Manager
 	 
	 	 	 	 
	 	 	 
	 	By:  	/s/ Michael S. Hartnett
 	 
	 	 	Name:  	Michael S. Hartnett 	 
	 	 	Title:  	Director 	 

 

	 	 	 	 	 

	 	 	 	 	 	 	 

	STATE OF North Carolina

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss:
	COUNTY OF Hecklenburg

	 	 	)	 	 	 

     I certify that the following person(s) personally appeared before me this day, and (I have
personal knowledge of the identity of the principal(s)) (I have seen satisfactory evidence of
the principal’s identity, by a Current state or federal identification with the principal’s
photograph in the form of a ____________________) (a credible witness has sworn to the identity of the
principal(s)); each acknowledging to me that he or she voluntarily signed the foregoing document
for the purpose stated therein and in the capacity indicated: MICHAEL S. HARTNETT.

	 	 	 	 	 
	Date: March 7, 2007 	
 	 
	 	Notary Public  	 
	 	Print Name : Illegible	 
	 
	[OFFICIAL SEAL] 	My Commission Expires: April 9, 2011exv10w47

Exhibit
10.47

LOAN AGREEMENT

by and between

CAMPUS CREST AT MOBILE, LLC

CAMPUS CREST AT JACKSONVILLE, AL, LLC

CAMPUS CREST AT NACOGDOCHES, LP

CAMPUS CREST AT ABILENE, LP

CAMPUS CREST AT GREELEY, LLC

CAMPUS CREST AT ELLENSBURG, LLC

and

SILVERTON BANK, N.A.,

a national banking association

Dated as of February 29, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I
	 	DEFINITIONS; CONSTRUCTION	 	 	1	 
	Section 1.01
	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II
	 	LOAN	 	 	7	 
	Section 2.01
	 	Disbursment	 	 	7	 
	Section 2.02
	 	Note; Repayment of Principal and Interest	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III
	 	GENERAL TERMS	 	 	7	 
	Section 3.01
	 	Closing Fee	 	 	7	 
	Section 3.02
	 	Payments, Prepayments and Computations	 	 	7	 
	Section 3.03
	 	Collateral	 	 	7	 
	Section 3.04
	 	Agreements Regarding Interest and Other Charges	 	 	8	 
	Section 3.05
	 	Property Release Privilege	 	 	8	 
	Section 3.06
	 	Substitution of Collateral	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE IV
	 	REPRESENTATIONS AND WARRANTIES	 	 	12	 
	Section 4.01
	 	Organization; Authorization; Valid and Binding Obligations	 	 	12	 
	Section 4.02
	 	Actions Pending	 	 	12	 
	Section 4.03
	 	Title to Land	 	 	12	 
	Section 4.04
	 	Taxes	 	 	12	 
	Section 4.05
	 	Conflicting Agreements and Other Matters	 	 	13	 
	Section 4.06
	 	Governmental Consent	 	 	13	 
	Section 4.07
	 	Disclosure	 	 	13	 
	Section 4.08
	 	Improvements	 	 	13	 
	Section 4.09
	 	No Default	 	 	13	 
	Section 4.10
	 	Compliance with Requirements :	 	 	13	 
	Section 4.11
	 	Condition of Land and Improvements	 	 	13	 
	Section 4.12
	 	Personality	 	 	13	 
	Section 4.13
	 	Zoning	 	 	14	 
	Section 4.14
	 	Restrictions	 	 	14	 
	Section 4.15
	 	Status of Service Contracts	 	 	14	 
	Section 4.16
	 	Status of Leases	 	 	14	 
	Section 4.17
	 	Encroachments	 	 	15	 
	Section 4.18
	 	Access	 	 	15	 
	Section 4.19
	 	Availability of Utilities	 	 	15	 
	Section 4.20
	 	Brokerage Commissions	 	 	15	 
	Section 4.21
	 	Composition of Property	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE V
	 	AFFIRMATIVE COVENANTS	 	 	15	 
	Section 5.01
	 	Records and Accounts	 	 	15	 
	Section 5.02
	 	Financial Statements, Certificates and Information	 	 	15	 
	Section 5.03
	 	Inspection of Projects and Books	 	 	16	 
	Section 5.04
	 	Maintenance of Existence, Properties, Licenses, Etc.	 	 	17	 
	Section 5.05
	 	Payment of Taxes and Claims	 	 	17	 

i 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	Section 5.06
	 	Parking Requirements	 	 	17	 
	Section 5.07
	 	Expenses	 	 	17	 
	Section 5.08
	 	Indemnity	 	 	17	 
	Section 5.09
	 	Notices	 	 	18	 
	Section 5.10
	 	Fiscal Year	 	 	19	 
	Section 5.11
	 	Estoppel Certificates	 	 	19	 
	Section 5.12
	 	Replacement of Note	 	 	19	 
	Section 5.13
	 	Notification of Name Change; Location	 	 	19	 
	Section 5.14
	 	No Joint Venture	 	 	19	 
	Section 5.15
	 	New Appraisals	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE VI
	 	NEGATIVE COVENANTS	 	 	20	 
	Section 6.01
	 	Restrictions on Indebtedness	 	 	20	 
	Section 6.02
	 	Restrictions on Liens, Etc.	 	 	20	 
	Section 6.03
	 	Restrictions on Investments	 	 	21	 
	Section 6.04
	 	Distributions	 	 	22	 
	Section 6.05
	 	Merger, Consolidation	 	 	22	 
	Section 6.06
	 	Liquidation; Change in Name; Etc.	 	 	22	 
	Section 6.07
	 	Transactions with Affiliates and Officers	 	 	22	 
	 
	 	 	 	 	 	 
	ARTICLE VII
	 	FINANCIAL COVENANTS	 	 	23	 
	Section 7.01
	 	Debt Coverage Ratio	 	 	23	 
	Section 7.02
	 	Debt Yield	 	 	23	 
	Section 7.03
	 	LTV Ratio	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE VIII
	 	EVENTS OF DEFAULT	 	 	24	 
	Section 8.01
	 	Events of Default	 	 	24	 
	Section 8.02
	 	Remedies	 	 	26	 
	Section 8.03
	 	Costs and Expenses	 	 	27	 
	Section 8.04
	 	Remedies Cumulative	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE IX
	 	JOINT BORROWER PROVISIONS	 	 	27	 
	Section 9.01
	 	Joint Borrower Provisions	 	 	27	 
	Section 9.02
	 	Waivers by the Borrowers	 	 	28	 
	Section 9.03
	 	Benefit of Guaranty	 	 	29	 
	Section 9.04
	 	Subordination of Subrogation, Etc.	 	 	29	 
	Section 9.05
	 	Election of Remedies	 	 	29	 
	Section 9.06
	 	Limitation	 	 	29	 
	Section 9.07
	 	Contribution with Respect to Guaranty Obligations	 	 	30	 
	Section 9.08
	 	Liability Cumulative	 	 	31	 
	Section 9.09
	 	Accommodation	 	 	31	 
	Section 9.10
	 	Independent Obligations	 	 	31	 
	Section 9.11
	 	Fraudulent Conveyance	 	 	31	 
	 
	 	 	 	 	 	 
	ARTICLE X
	 	MISCELLANEOUS	 	 	32	 
	Section 10.01
	 	Notices	 	 	32	 
	Section 10.02
	 	No Waiver; Remedies Cumulative	 	 	33	 
	Section 10.03
	 	Successors and Assigns; Sale of Interest	 	 	33	 
	Section 10.04
	 	Modification	 	 	33	 

ii 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	Section 10.05
	 	Time of Essence	 	 	33	 
	Section 10.06
	 	Governing Law	 	 	33	 
	Section 10.07
	 	Counterparts	 	 	33	 
	Section 10.08
	 	Effectiveness; Survival	 	 	34	 
	Section 10.09
	 	Severability	 	 	34	 
	Section 10.10
	 	Independence of Covenants	 	 	34	 
	Section 10.11
	 	Headings Descriptive	 	 	34	 
	Section 10.12
	 	Termination of Agreement	 	 	34	 
	Section 10.13
	 	Entire Agreement	 	 	34	 
	Section 10.14
	 	Jury Trial Waiver; Consent to Forum	 	 	35	 

iii 

 

LOAN AGREEMENT

THIS AGREEMENT is made and entered into as of February 29, 2008 by and among CAMPUS CREST AT
MOBILE, LLC, an Alabama limited liability company, CAMPUS CREST AT JACKSONVILLE, AL, LLC, an
Alabama limited liability company, CAMPUS CREST AT NACOGDOCHES, LP, a Delaware limited
partnership, CAMPUS CREST AT ABILENE, LP, a Delaware limited partnership, CAMPUS CREST AT GREELEY,
LLC, a Delaware limited liability company, and CAMPUS CREST AT ELLENSBURG, LLC, a Delaware limited
liability company (collectively, “Borrowers”), and SILVERTON BANK, N.A., a national banking
association (“Lender”).

WITNESSETH:

          WHEREAS, Borrowers have requested that Lender make that certain loan (the “Loan”) to
Borrowers in the principal amount of $104,000,000; and

          WHEREAS, Lender is willing to make the Loan to Borrowers on the terms and subject to the
conditions and requirements set forth in this Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the parties to this Agreement hereby agree as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

     Section 1.01 Definitions. For purposes of this Agreement, the following terms shall
have the indicated meanings as set forth below:

          “Affiliate” shall mean any corporation, limited liability company, partnership or other
entity which is controlling of, controlled by or under common control with a Person or the estate
of such Person. For purposes hereof, a trust for the benefit of (i) Ricker, Hartnett or Rollins,
(ii) a spouse of Ricker, Hartnett or Rollins, or (iii) the lineal descendants of Ricker, Hartnett
or Rollins shall be deemed an Affiliate of such Person if such Person is the sole trustee of such
trust.

          “Agreement” shall mean this Loan Agreement, as amended, supplemented or modified from time to
time.

          “Appraisal” shall mean an appraisal of the fair market of real property, in full compliance
with FIRREA, taking into account the current permissible uses of such property under existing laws
and applications applicable thereto, independently and impartially prepared in writing by a
qualified appraiser selected by Lender, who is not employed by the Borrowers or an Affiliate of the
Borrowers, the form and substance of such appraisal to be reviewed and approved by Lender.

 

 

          “Appraised Value” shall mean, with respect to any Project, the fair market “As Is” value
determined by the most recent Appraisal of such Project.

          “Assignment of Management Agreement” shall mean collectively the Assignments, Consent and
Subordination Regarding Management Agreement executed this date by Borrowers in favor of Lender
with respect to the Management Agreements, and any modifications or replacements thereof or
therefor.

          “Assignment of Rents and Leases” shall mean collectively the Assignments of Rents and Leases
executed this date by Borrowers in favor of Lender.

          “Bed” shall mean a bedroom in a Rental Unit.

          “Borrower Parties” shall mean collectively the Borrowers and the Guarantors, and each may be
referred to herein as a Borrower Party.

          “Borrowers” shall have the meaning given such term in the preamble to this Agreement and each
may be referred to herein as a Borrower.

          “Business Day” shall mean any day excluding Saturday, Sunday and any other day on which banks
in Atlanta, Georgia are customarily closed.

          “Campus Crest GP” shall mean Campus Crest GP, LLC, a Delaware limited liability company.

          “CCP” shall mean Campus Crest Properties, LLC, a North Carolina limited liability company.

          “Change of Control” shall mean Ricker, Hartnett and Rollins and their Affiliates cease to own
and control, collectively, at least fifty-one percent (51%) of the equity interests of each
Borrower and each manager or general partner, as applicable, of each Borrower that are entitled to
vote with respect to the management of the business and affairs of such Persons.

          “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

          “Collaterar” shall mean any and all of the property which is granted, pledged or assigned to
Lender or in which Lender is otherwise granted a Lien to secure the obligations pursuant to any
and all of the Security Documents.

          “Debt Service” shall mean, for any period, the sum of all scheduled interest payments of
Borrowers plus all scheduled principal payments paid with respect to all indebtedness for money
borrowed by Borrowers; provided, however, that for purposes of this definition, the Loan will be
assumed to be an amortizing loan (a fixed payment each month that

2

 

includes principal and interest) based on a thirty (30) year amortization and the actual interest
rate for the Loan.

          “Debt Service Coverage Ratio” shall mean, for any period, the ratio of (x) NOI to (y) Debt
Service.

          “Debt Yield Percentage” shall mean the ratio, expressed as a percentage, of (x) NOI for any
twelve (12) month period (or lesser period that may be annualized as set forth in Section 7.02) to
(y) the average outstanding principal balance of the Loan during such period.

          “Default’’ shall mean any condition or event which, with notice or lapse of time or both,
would constitute an Event of Default.

          “Distributions” shall mean with respect to any Person, the declaration or payment of any
cash, cash flow, dividend or distribution, other than for the payment of taxes, on or in respect
of any shares of any class of capital stock, partner’s interest, member’s interest or other
beneficial interest of such Person; the purchase, redemption, exchange or other retirement of any
shares of any class of capital stock, partner’s interest, member’s interest or other beneficial
interest of such Person, directly or indirectly through a subsidiary of such Person or otherwise;
the return of capital by a Person to its shareholders, partners, members or other beneficial
owners as such; or any other distribution on or in respect of any shares of any class of capital
stock, partner’s interest, member’s interest or other beneficial interest of such Person.

          “Environmental Indemnification Agreement” shall mean collectively the Environmental
Indemnification Agreements executed this date by Borrowers and the Guarantors in favor of Lender,
and any extensions, renewals, modifications or replacements thereof or therefor.

          “Event of Default” shall have the meaning provided in Article VIII hereof.

          “FIRREA” shall mean Title XI of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 (12 U.S.C. §3331 et seq.) as amended from time to time.

          “Guarantors” shall mean collectively Hartnett, Ricker, Rollins, Madiera, and TXG and each may
be referred to as Guarantor.

          “Guaranty” shall mean the Limited Guaranty Agreement executed this date by Guarantors in
favor of Lender, as the same may be modified or amended from time to time hereafter.

          “Hartnett” shall mean Michael S. Hartnett, an individual resident of the State of North
Carolina.

          “Improvements” shall mean all improvements constructed on the Land.

3

 

          “Investments” shall mean with respect to any Person, all shares of capital stock, partnership
interests, limited liability company interests, evidences of indebtedness and other securities
issued by any other Person, all loans, advances, or extensions of credit to, or contributions to
the capital of, any other Person, all purchases of the securities or business or integral part of
the business of any other Person and commitments and options to make such purchases, all interests
in real property, and all other investments; provided, however, that the term “Investment”
shall not include (i) equipment, vehicles, construction equipment, heavy machines, tools, building
materials, fixtures, appliances, inventory and other tangible personal property acquired in the
ordinary course of business or used in the development of the Land, or (ii) current trade and
customer accounts receivable for services rendered in the ordinary course of business and payable
in accordance with customary trade terms.

          “Land” shall mean, collectively, all of the real property described and defined as “Land” in
the Mortgage.

          “Leases” shall have the meaning given such term in the Security Instruments.

          “Lender” shall have the meaning given such term in the preamble to this Agreement.

          “Lien” shall mean any mortgage, deed to secure debt, Mortgage, pledge, security interest,
security deposit, encumbrance, lien or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction).

          “Loan” shall have the meaning given such term in the preamble to this Agreement.

          “Loan Documents” shall mean, collectively, this Agreement, the Note, the Security
Documents, the Guaranty, and any other certificates or written undertakings of a Borrower Party
in favor of Lender delivered contemporaneously with the delivery of this Agreement, other than
the Environmental Indemnification Agreement.

          “LTV Ratio” shall mean, at any time, the ratio (expressed as a percentage) of (x) the
outstanding principal balance of the Loan to (y) the sum of the Appraised Values of the Property
then subject to the Mortgage.

          “Madiera” shall mean Madiera Group, LLC, a North Carolina limited liability company.

          “Management Agreements” shall mean those certain Property Management Agreements between The
Grove Student Properties, LLC and each Borrower with respect to management of such Borrower’s
Project.

4

 

          “Material Adverse Effect” shall mean a material adverse effect upon, or a material adverse
change in, any of the (i) results of operations, properties, or financial condition of any
Borrower Party, (ii) validity, binding effect or enforceability of any Loan Document or the
Environmental Indemnification Agreement, or (iii) ability of any Borrower Party to perform its
payment obligations or other Obligations under the Loan Documents or the Environmental
Indemnification Agreement.

          “Mortgage” shall mean collectively the Deeds of Trust/Mortgages, Security Agreements,
Financing Statements and Fixture Filings dated on or about this date by Borrowers for the benefit
of Lender, to be recorded in the real estate records of the county where the Property is located,
and any extensions, renewals, modifications or replacements thereof or therefor.

          “NOI” shall mean, for any period, an amount equal to (i) the sum of Borrowers’ aggregate
rental income plus aggregate ancillary income, minus (ii) Borrowers’ aggregate operating expenses,
and minus (iii) reserves equal to $115 per Bed.

          “Note” shall mean that certain Promissory Note executed by Borrowers and payable to the order
of Lender in the original principal amount of $104,000,000 as evidence of the Loan, and any
extensions, renewals, modifications or replacements thereof or therefor.

          “Obligations” shall mean, collectively, all amounts now or hereafter owing to Lender by
Borrowers pursuant to the terms of or as a result of this Agreement, the Note, or any other Loan
Documents or the Environmental Indemnification Agreement, including without limitation, the unpaid
principal balance of the Loan and all interest, fees, expenses and other charges relating thereto
or accruing thereon, as well as any and all other indebtedness, liabilities, covenants, duties and
obligations of Borrowers, whether direct or indirect, absolute or contingent, or liquidated or
unliquidated, monetary or non-monetary, which may be now existing or may hereafter arise under or
as a result of any of the Loan Documents, the Environmental Indemnification Agreement, and
together with any and all renewals, extensions, or modifications of any of the foregoing.

          “Permitted Indebtedness” shall have the meaning set forth in Section 6.01.

          “Permitted Liens” shall have the meaning set forth in Section 6.02

          “Person” shall mean any individual, partnership, limited partnership, limited liability
company, firm, corporation, association, joint venture, trust or other entity, or any government
or political subdivision or agency, department or instrumentality thereof.

          “Projects” shall mean the residential apartment developments located on the parcels of
Property. The initial Projects are described on Schedule 1 attached hereto.

          “Property” shall mean, collectively, the property, including the Land and all Improvements,
fixtures and related personal property located thereon. The initial parcels comprising the
Property are described on Schedule 1 attached hereto.

5

 

          “Requirements” shall have the meaning given such term in Section 4.10 hereof.

          “Rental Unit” shall mean each of the apartments in the Projects.

          “Richer” shall mean Carl H. Ricker, Jr., an individual resident of the State of North
Carolina.

          “Rollins” shall mean Ted W. Rollins, an individual resident of the State of Florida.

          “Security Documents” shall mean, collectively, the Security Instruments, the Assignment of
Management Agreement, and each other affidavit, certificate, security, mortgage, assignment,
financing statements or other collateral document, whether now existing or hereafter executed and
delivered in connection with, or securing any or all of, the Obligations.

          “Security Instruments” shall mean, collectively, the Mortgage, the Assignment of Rents and
Leases, the UCC Financing Statements, and other security instruments executed this date by
Borrower in favor of Lender, to be recorded in the real estate records of the county where the
Property is located, and any extensions, renewals, modifications or replacements thereof or
therefor.

          “Tax Distributions” shall mean for any period, the aggregate Distributions made by a Borrower
to its members, partners or shareholders to pay the actual or estimated aggregate federal, state
and local income taxes of such members, partners or shareholders with respect to such members’ or
shareholders’ interests in such Person, as applicable, to the extent such members or shareholders
have not already received Distributions during such period in excess of such taxes, to be
determined by using the highest marginal tax rates applicable to any such member or shareholder.

          “Taxes” shall mean any present or future taxes, levies, imposts, duties, fees, assessments,
deductions, withholdings or other charges of whatever nature, now or hereafter imposed or levied
by the United States of America, or any state or local government or by any department, agency or
other political subdivision or taxing authority thereof or therein and all interest, penalties,
additions to tax and similar liabilities with respect thereto other than taxes on the income of
Lender.

          “TXG” shall mean TXG, LLC, a South Carolina limited liability company.

     Section 1.02 Other Definitional Terms. The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this Agreement as a whole,
and not to any particular provision of this Agreement. Any pronoun used herein shall be deemed to
cover all genders and all singular terms used herein shall include the plural and vice versa. A
reference to any Person includes its or his permitted successors and permitted assigns. Unless
otherwise expressly indicated herein, all references herein to a period of time which runs “from”
or “through” a particular date shall be deemed to include such date,

6

 

and all references herein to a period of time which runs “to” or “until” a particular date shall
be deemed to exclude such date.

ARTICLE II

 LOAN

     Section 2.01 Disbursement. Subject to the terms and conditions of this Agreement,
Lender agrees to advance to Borrowers the Loan to be evidenced by and subject to the terms and
provisions of the Note.

     Section 2.02 Note; Repayment of Principal and Interest. Borrowers’ obligations to pay
to Lender the principal of and interest on the Loan shall be evidenced by the Note. The Loan shall
bear interest at the rate or rates per annum specified in the Note and such interest shall be
calculated and shall be paid and shall accrue in the manner specified in the Note.

ARTICLE III

GENERAL TERMS

     Section 3.01 Closing Fee. In consideration of Lender’s entering into this Agreement
and making the Loan hereunder, Borrowers agree to pay to Lender, on the date of the initial
funding of the Loan hereunder, a closing fee in the amount of $1,040,000, which closing fee shall
be deemed fully earned upon Lender’s execution and delivery of this Agreement and the initial
funding of the Loan.

     Section 3.02 Payments, Prepayments and Computations. Except as may be otherwise
specifically provided herein, all payments by Borrowers with respect to the Loan or any other
Obligations under this Agreement or any of the other Loan Documents or the Environmental
Indemnification Agreement shall be made without defense, set-off or counterclaim to Lender not
later than 2:00 p.m. (Eastern Time) on the date when due and shall be made in lawful money of the
United States of America in immediately available funds. Any payment received by Lender on a
non-Business Day or after 2:00 p.m. (Eastern Time) on any Business Day shall be deemed received by
Lender at the opening of its business on the next Business Day. Whenever any payment to be made
hereunder or under the Note or any of the other Loan Documents or the Environmental
Indemnification Agreement shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the applicable rate during such extension.
Interest shall be calculated on the basis of a year consisting of 360 days and with twelve
thirty-day months, except that interest due and payable for less than a full month shall be
calculated by multiplying the actual number of days elapsed in such period by a daily interest
rate based on a 360-day year. The Loan may be prepaid in whole or in part as specifically provided
in the Note.

     Section 3.03 Collateral. The Obligations shall be secured pursuant to any or all
Security Documents. Borrowers also shall execute or deliver (or cause to be executed and delivered)
any and all financing statements and such other documents as Lender may reasonably

7

 

request from time to time in order to perfect or maintain the perfection of Lender’s Liens
under such Security Documents.

     Section 3.04 Agreements Regarding Interest and Other Charges. Borrowers and Lender
hereby agree that the only charges imposed or to be imposed by Lender upon Borrowers for the use
of money in connection with the Loan is and will be the interest required to be paid under the
provisions of this Agreement as well as the related provisions of the Note. In no event shall the
amount of interest due and payable under this Agreement, the Note or any of the other Loan
Documents or the Environmental Indemnification Agreement exceed the maximum rate of interest
allowed by applicable law. It is the express intent hereof that Borrowers not pay and Lender not
receive, directly or indirectly or in any manner, interest in excess of that which may be lawfully
paid under applicable law. Any and all charges, fees, and other amounts payable hereunder not
identified as “interest” are not intended, and shall not be deemed, to be interest. All interest,
and all other charges, fees or other amounts deemed to be interest notwithstanding the preceding
sentence, which are paid or agreed to be paid to Lender under this Agreement, the Note or any of
the other Loan Documents shall, to the maximum extent permitted by applicable law, be amortized,
allocated and spread on a pro rata basis throughout the entire actual term of the Loan
(including any extension or renewal period), or at Lender’s election and to the extent permitted
by applicable law, credited as a payment of principal.

     Section 3.05 Property Release Privilege. Provided no Event of Default (as hereinafter
defined) exists, Borrowers shall be allowed to partially prepay the Loan, upon thirty (30) days
prior written notice to Lender (“Release Request”), and to thereby obtain a release of the
Mortgage of any parcel of Property securing the Loan (the “Release Privilege”) subject to the
following conditions:

          (i) Borrowers shall provide Lender with a pro forma Compliance Certificate as described in
Section 5.02(c) below that demonstrates compliance with the financial covenants set forth in
Article VII after giving effect to the Release Request and the proposed partial prepayment of the
Loan to made in conjunction with the Release Request;

          (ii) Borrowers shall pay all costs, fees and expenses associated with the Release Privilege,
including without limitation, one hundred percent (100%) of all attorneys’ fees and expenses
incurred by or on behalf of Lender in connection therewith, and all such sums shall be due and
payable on the date of closing and delivery of the release documentation by Lender;

          (iii) Borrowers shall provide Lender with an endorsement to its loan title policies (as to
the Mortgage) with respect to the remaining parcels in form and substance satisfactory to Lender
in its sole discretion insuring the Loan through the date and time of recording of the release and
modification instrument, with no new exceptions since the date of this Agreement unless approved
by Lender in writing.

Nothing contained herein shall be deemed to require from the Borrowers in conjunction with a
Release Request hereunder a principal prepayment in excess of that amount necessary to cause the
Borrowers to be in compliance with the financial covenants set forth in Article VII hereof after
giving effect to the Release Request.

8

 

     Section 3.06 Substitution of Collateral. Notwithstanding the provisions of this
Agreement or any of the Loan Documents to the contrary, Borrowers may submit a written request
(“Substitution Request”), upon at least ninety (90) days prior notice, that Lender permit a
substitution (each a “Substitution”) of a substitute property (each a “Substitute Property”)
(which previously has not been the subject of inclusion in the Collateral for the Loan) for any
individual Property then serving as Collateral for the Loan (in such capacity a “Replaced
Property”) upon and subject to the following terms and conditions:

          (a) Borrowers must submit a Substitution Request, identifying the proposed Substitute
Property and the proposed Replaced Property at least ninety (90) days prior to the proposed
closing date for the Substitution. Lender shall evaluate the request for the proposed Substitution
and the proposed Substitute Property pursuant to its then customary underwriting and pricing
criteria. In its underwriting and pricing analysis, Lender may review items such as, but not
limited to, location, occupancy, lease term, rollover, tenant exposure, average Rental Unit rates
and operating statements.

          (b) The owner of the Substitute Property must be a single purpose entity owned and controlled
in such manner that inclusion of such owner as a Borrower would not result in a Change of Control
and such owner must execute a joinder agreement in the form of Exhibit A to join this
Agreement as a Borrower. No properties will be permitted other than multi-family student oriented
rental housing properties. The Substitute Property must be located in the continental United
States.

          (c) Lender in its sole discretion shall acknowledge within ten (10) business days of the
Lender’s receipt of the Substitution Request whether the proposed Substitute Property appears to
be acceptable to permit the Substitution. If Lender approves the Substitution Request, the
Substitution will be subject to the other conditions outlined in this Section 3.06.

          (d) Borrowers shall pay a loan fee to Lender equal to one-half of one percent (0.5%) of an
amount equal to eighty percent (80%) of the appraised fair market “As Is” value of the Substitute
Property at closing of each approved Substitution; provided, however, that such fee shall be
$50,000 with respect to each of the first three (3) Substitutions. A “Substitution Deposit” of
$25,000.00 shall be required with submission of a Substitution Request, which deposit shall be
applied to the loan fee at closing of the Substitution. The deposit and loan fee contemplated by
this subsection are in addition to attorneys’ fees and expenses incurred in the documentation of
such Substitution and in the review of due diligence.

          (e) All improvements on the Substitute Property shall have been completed in a good and
workmanlike manner and in compliance, in all material respects, with all applicable governmental
requirements. The Substitute Property must be lien free (except for easements and other matters of
record acceptable to Lender) and all land, improvements and personal property must be paid for in
full.

          (f) The appraised fair market “As Is” value of the Substitute Property shall be equal to or
greater than the greater of (x) the then appraised fair market value, or gross sales proceeds, as
the case may be, of the Replaced Property, and (y) the original appraised value of

9

 

the Replaced Property as set forth in the appraisal delivered to Lender in connection with the
closing of the loan on the Replaced Property; provided, however, that, Borrowers may prepay the
Loan by the amount of any shortfall in the appraised fair market “As Is” value of the Substitute
Property with respect to the foregoing requirement.

          (g) Borrowers must demonstrate to Lender’s satisfaction that, after giving effect to such
Substitution (and any proposed prepayment of the Loan to be made in conjunction therewith, if
applicable), the Borrowers will be in compliance with the financial covenants set forth in Article
VII.

          (h) Lender’s outside counsel shall prepare and Borrowers shall execute (1) amendments to the
Note, the Mortgage, the Assignments of Rents and Leases, the Environmental Indemnification
Agreement, and this Agreement to the extent deemed necessary or appropriate by Lender, and (2) all
Loan Documents Lender shall deem necessary or appropriate, including, but not limited to, any new
security instrument, assignment of rents and leases, environmental indemnities, etc. relating to
the Substitute Property (all of which documentation shall be substantially in the form of the
applicable documents executed in connection with the closing of the Loan with such changes thereto
as Lender reasonably deems appropriate to reflect the terms and circumstances of the Substitution
and Substitute Property) (collectively, the “Substitute Loan Documents”). The Substitution Loan
Documents shall be cross-defaulted and cross-collateralized with the existing Loan Documents for
the Loan.

          (i) Borrowers shall be required to supply for Lender’s review and approval due diligence
materials relating to the Substitute Property prior to closing of the Substitution similar to
those items required for closing of this Loan, and such other materials as may then be customarily
required as part of its then current commercial loan closing policies, procedures, standards and
practices for properties of similar type and in similar locations as the Substitute Property,
including, without limitation, a current as-built ALTA survey, proof of adequate insurance, title
insurance in conformance with the requirements for the closing of this Loan, proof of compliance
with governmental regulations, tenant estoppel certificates, subordination, non-disturbance and
attornment agreements, franchise agreements and comfort letters. The Lender shall, at the
Borrowers’ sole cost and expense, receive for its review and approval all additional due diligence
materials in any way relating to the Substitute Property, including but not limited to, appraisal,
hazardous substance report, seismic report and engineer report as required by Lender in its
reasonable discretion. The items listed in this subsection are not exhaustive.

          (j) The Substitute Loan Documents, financing statements, and other instruments required to
perfect the liens in the Substitute Property and all collateral under such documents shall be
recorded, registered and filed (as applicable) in such manner as may be required by law to create
a valid, perfected lien and security interest with respect to the Substitute Property and the
personal property related thereto. The liens created by the Substitute Loan Documents shall be
first liens and security interests on the Substitute Property and the personal property related
thereto, subject only to such exceptions as Lender shall approve in its reasonable discretion. At
closing of the Substitution, Borrowers shall have good and marketable title to the Substitute
Property and good and valid title to any personal property located thereon

10

 

or used in connection therewith, in each case satisfactory to the Lender. The title policies to
the remaining parcels of Property in the Loan must also be endorsed to bring forward the effective
dates thereof through the dates and times of recording of the modification instruments and showing
no new exceptions since the original Loan closing unless approved by Lender in writing and
continuing all coverage provided in the original Loan title policy.

          (k) Lender shall receive (1) a confirmation and reaffirmation of all Loan Documents by the
Borrowers for the remaining Property, (2) a consent to such Substitution by the Guarantors, and
(3) such other instruments and agreements and such certificates and opinions of counsel, in form
and substance satisfactory to the Lender in connection with such Substitution as it may reasonably
request.

          (1) Borrowers shall be responsible for all documentary stamp and intangible taxes on the
Substitution and the Mortgage encumbering the Substitute Property and all other parcels of
Property in the Loan that shall arise in connection with such Substitution. Lender shall require
payment of all such documentary stamp and intangibles taxes required by law and authorities having
jurisdiction as a condition of closing the Substitution and the corresponding loan modifications
to the Loan, regardless of whether the taxing authority imposes taxes duplicative of those
incurred at the original closing of the Loan.

          (m) No Event of Default shall have occurred and be continuing hereunder or under any other
Loan Documents for the Loan on the date of Substitution Request or at closing of the Substitution.

          (n) Lender shall be satisfied that no material adverse change in the financial condition,
operations or prospects of any Borrower Party has occurred since the closing of the Loan.

          (o) Borrowers shall pay all reasonable out-of-pocket costs and expenses incurred in connection
with any such Substitution .and the reasonable out-of-pocket fees and expenses incurred by Lender,
its outside counsel and its loan correspondent and servicer in connection therewith. Without
limiting the generality of the foregoing, Borrowers shall, in connection with, and as a condition
to, each Substitution, pay the reasonable fees and expenses of Lender’s counsel, the reasonable
fees and expenses of Lender’s engineers, appraisers, construction consultants, insurance
consultants and other due diligence consultants and contractors, recording charges, title insurance
charges, and documentary stamp and/or mortgage or similar taxes, transfer taxes.

Nothing contained herein shall be deemed to require from the Borrowers in conjunction with a
Substitution Request hereunder a principal prepayment in excess of that amount necessary to cause
the Borrowers to be in compliance with the financial covenants set forth in Article VII hereof
after giving effect to the Substitution.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Borrowers hereby jointly and severally represent and warrant to Lender as follows:

     Section 4.01 Organization; Authorization; Valid and Binding Obligations. Each Borrower
is a limited liability company or limited partnership duly organized and validly existing under the
laws of the State of Delaware, or in the case of Campus Crest at Mobile, LLC and Campus Crest at
Jacksonville, AL, LLC, the State of Alabama. CCP is the manager of each Borrower that is a limited
liability company and is duly organized and validly existing under the laws of the State of North
Carolina. Campus Crest GP is the general partner of each Borrower that is a limited partnership and
is duly organized and validly existing under the laws of the State of Delaware. Each Borrower is
duly qualified and authorized to do business and is in good standing in all other states and
jurisdictions where the ownership of property or the nature of the business transacted by it, makes
such qualification necessary, including, without limitation, the state where the Property of such
Borrower is located. Each Borrower has all requisite power and authority to execute and deliver the
Loan Documents and the Environmental Indemnification Agreement, to perform its obligations under
such Loan Documents and the Environmental Indemnification Agreement and to own its property and
carry on its business. The Loan Documents and the Environmental Indemnification Agreement have been
duly authorized by all requisite partnership or limited liability company action on the part of
each Borrower and duly executed and delivered by authorized officers, partners, managers or other
representatives (as the case may be) of such Borrower. Each of the Loan Documents and the
Environmental Indemnification Agreement constitutes a valid obligation of each Borrower party
thereto, legally binding upon and enforceable against such Borrower in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights generally or by general
principles of equity.

     Section 4.02 Actions Pending. There is no action, suit, investigation or proceeding
pending or, to the knowledge of Borrowers, threatened against Borrowers, any properties, assets or
rights of Borrowers including, without limitation, the Property, by or before any court,
arbitrator or administrative or governmental body that would have a material adverse effect on
Borrowers if resulting in a decision not in favor of Borrowers.

     Section 4.03 Title to Land. The Land is free and clear of all liens and encumbrances,
except for the Permitted Liens and except as specifically set forth in the mortgagee title
policy(ies) delivered to Lender in connection with the Loan, and except for unrecorded leases
provided to Lender.

     Section 4.04 Taxes. Borrowers have filed all federal, state and other income tax
returns prior to the required filing date which, to the knowledge of Borrowers, are required to be
filed, and has paid all Taxes as shown on such returns and on all assessments received by it to
the extent that such Taxes have become due, except such Taxes as are not due or which are being
contested in good faith by Borrowers by appropriate proceedings for which adequate reserves have
been established in accordance with sound accounting practices consistently applied.

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     Section 4.05 Conflicting Agreements and Other Matters. Neither the execution nor
delivery of this Agreement, nor fulfillment of or compliance with the terms and provisions of this
Agreement, will conflict with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the creation of any Lien
(other than any Lien arising under any Loan Document) upon the Property or any other properties or
assets of Borrowers, the charter or by-laws or other organizational documents of Borrowers, any
award of any arbitrator or any agreement, instrument, order, judgment, decree, statute, law, rule
or regulation to which Borrowers, the Property or any other properties or assets of Borrowers is
subject.

     Section 4.06 Governmental Consent. Except for any recording or filing which may be
required by applicable law to perfect or maintain the perfection of Lender’s Liens in the
Collateral, no consent, approval or authorization of, or declaration or filing with, any
governmental authority is required for the valid execution, delivery and performance by Borrowers
of the Loan Documents or the Environmental Indemnification Agreement or the consummation of any of
the transactions contemplated by the Loan Documents.

     Section 4.07 Disclosure. Neither this Agreement nor any other document, certificate
or statement furnished to Lender by Borrowers in connection herewith contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not materially misleading.

     Section 4.08 Improvements. All certificates, permits and licenses required in
connection with the ownership, operation and occupancy of the Property have been issued and are in
full force and effect.

     Section 4.09 No Default. The Loan Documents and the Environmental Indemnification
Agreement have been complied with and are in full force and effect and no defaults or events of
default exist thereunder; Borrowers have no knowledge of any facts or circumstances, which with
the giving of notice or passage of time (or both) would constitute a default or event of default
thereunder, and all obligations and agreements required to be performed by Borrowers thereunder
have been performed.

     Section 4.10 Compliance with Requirements. The Improvements have been constructed
free from material faults and defects, and in all material respects conform to and comply with all
valid and applicable laws, ordinances, regulations and rules of all governmental entities having
jurisdiction over, and all covenants, conditions, restrictions and reservations affecting the Land
and the Improvements (the “Requirements”).

     Section 4.11 Condition of Land and Improvements. Neither the Land nor the Improvements
have been injured or damaged by fire or other casualty which has not been restored.

     Section 4.12 Personalty. Except as otherwise expressly provided in the Leases and
except with respect to certain office equipment located at the Property that is leased by

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Borrowers (as lessee) in the ordinary course of business, title to all goods, materials, supplies,
equipment, machinery and other personal property and fixtures used in the operation or maintenance
of the Property, is vested in Borrowers free and clear of all liens, encumbrances and security
interests, other than Permitted Liens, and Borrowers have not executed any security agreement,
purchase order or other contract or agreement under which any person or other entity is granted or
reserves the right to retain title to, remove or repossess any of such goods, materials, supplies,
equipment, machinery or other personal property or fixtures.

     Section 4.13 Zoning. Under the applicable zoning ordinance of each jurisdiction in
which each parcel of Land is located, each parcel of Land is zoned in a zoning classification that
permits the use of the Land and Improvements for all purposes as currently used, without any
conditions other than with respect to which such conditions have been complied in full and without
exception. Furthermore in the event the Improvements were damaged or destroyed, the Improvements
could be restored or reconstructed as they now exist without the requirement of any zoning variance
or waiver.

     Section 4.14 Restrictions. To the best of Borrowers’ knowledge, the Land is not
subject to: (i) any use or occupancy restrictions, except those imposed by applicable zoning laws
and regulations, any such restrictions described in the mortgagee title policy(ies) delivered to
Lender in connection with the Loan, and those restrictions set forth in the Security Instruments;
(ii) special assessments except as may be described in the mortgage title policy(ies) delivered to
Lender in connection with the Loan; (iii) utility tap-in fees, except those generally applicable
throughout the tax districts in which the Land is located; or (iv) other material charges or
restrictions, whether existing of record or arising by operation of law, unrecorded agreement, the
passage of time or otherwise, except any such charges or restrictions described in the mortgagee
title policy(ies) delivered to Lender in connection with the Loan.

     Section 4.15 Status of Service Contracts. Borrowers are not in default under any
development, management, service or other agreements and contracts relating to the operation or
management of the Property in a manner which could reasonably be expected to have a Material
Adverse Effect; there is no material default on the part of any other party to any of such
contracts or the existence of any facts or circumstances, which with the giving of notice or
passage of time (or both), would constitute a material default under any of such contracts, which
defaults could reasonably be expected to have a Material Adverse Effect. Such contracts have not
been modified or amended in any material respect since the date true and correct copies of the
same were delivered to Lender by Borrowers. Borrowers have not done or omitted to do any act so as
to be estopped from exercising any of its rights under any of such contracts, and there is no
assignment of any of Borrowers’ rights under any of such contracts to any person or entity, other
than Lender.

     Section 4.16 Status of Leases. Borrowers are not in default under any of the Leases,
and there is no default on the part of any other party to any Lease, which defaults, in either
case, could reasonably be expected to have a Material Adverse Effect. None of the Leases have been
modified or amended in any material respect since the date true and correct copies of the same
were delivered to Lender by Borrowers. Borrowers have not done or omitted to do any act so as to
be estopped from exercising any of its rights under any of the Leases, and there is no

14

 

assignment of any of Borrowers’ right under any of such contracts to any person or entity other
than Lender.

     Section 4.17 Encroachments. Except as shown on those certain surveys previously
delivered to Lender in connection with the Loan, there are no encroachments on the Land; there
are no strips or gores within or affecting the boundaries of the Land; and all Improvements are
situated entirely within the boundaries of the Land and within any applicable building lines.

     Section 4.18 Access. All streets and roads necessary for access to the Land have
been completed and are either dedicated to public use and accepted for maintenance by all
necessary governmental entities or subject to recorded, insurable easements that benefit the
Land.

     Section 4.19 Availability of Utilities. All utility facilities and services
necessary for the full use, occupancy and operation of the Improvements are available to the Land
through public or private easements or rights-of-way at the boundaries of the Land, including,
without limitation, water, storm and sanitary sewer, electricity and telephone.

     Section 4.20 Brokerage Commissions. All real estate and land brokerage commissions
payable in connection with the acquisition of the Land, construction of the Improvements and the
Loan, and all brokerage commissions or finders fees due and payable in connection with the
current terms of any of the Leases, have been paid in full, or will be paid in full upon the
execution of this Agreement.

     Section 4.21 Composition of Property. Subject to the matters disclosed in the title
policies delivered to Lender in connection with the Loan, the Property includes all improvements
and land, and other estates and rights (including, without limitation, any appurtenant easement .
rights and covenants and restrictions) which are necessary to allow for the continued use thereof
as residential apartments, or other uses presently in effect as of the date of this Agreement, and
as may be required by any of the Requirements, or to satisfy all tenant requirements under the
Leases.

ARTICLE V

AFFIRMATIVE COVENANTS

          For so long as this Agreement is in effect, and unless Lender expressly consents in writing
to the contrary, Borrowers jointly and severally covenant and agree to comply with the following
covenants:

     Section 5.01 Records and Accounts. Borrowers will keep (a) true and accurate records
and books of account in which true, correct and complete entries will be made in accordance with
Generally Accepted Accounting Principles, and (b) adequate reserves for all taxes (including
income and real estate taxes), contingencies and other reserves.

     Section 5.02 Financial Statements, Certificates and Information. Borrowers will deliver
to Lender:

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     (a) As soon as practicable, but in any event not later than one hundred twenty (120)
days after the end of each fiscal year of Borrowers, the balance sheets, statements of income,
changes in capital and cash flows for such year for each Borrower, each setting forth in
comparative form the figures for the previous fiscal year and all such statements to be in
reasonable detail, prepared in accordance with Generally Accepted Accounting Principles, and
reviewed by an accounting firm reasonably acceptable to Lender (and for purposes hereof, Lender
agrees that Easley, Endres, Parkhill & Brackendorff, P.C. is an acceptable accounting firm), and
any other information Lender may reasonably require to complete a financial analysis of Borrowers,
together with a certification by the principal financial or accounting officer of Borrowers that
the information contained in such financial statements fairly presents the financial position of
Borrowers on the date thereof;

     (b) As soon as practicable, but in any event not later than sixty (60) days after the end of
each fiscal quarter of Borrowers, the balance sheets of each Borrower and the related consolidated
statements of income, changes in capital and cash flows for the portion of the fiscal year then
elapsed on an aggregated basis, all (except for the changes in capital and cash flows) prepared in
accordance with Generally Accepted Accounting Principles, together with a certification by the
principal financial or accounting officer of Borrowers that the information contained in such
financial statements fairly presents the financial position of the Borrowers on the date thereof
(subject to year end adjustments);

     (c) Simultaneously with the delivery of the financial statements referred to in subsections
(a) and (b) above, a statement (a “Compliance Certificate”) certified by the chief
executive officer, chief financial officer, principal finance or accounting officer of Borrowers
in the form of Exhibit B hereto evidencing compliance with covenants contained in Article
VII and the other covenants described therein and further certifying that such officer has caused
this Agreement to be reviewed and has no knowledge of any Default or Event of Default in the
performance or observance of any of the provisions hereof during such Fiscal Quarter or at the end
of such year, or, if such officer has such knowledge, specifying each Default or Event of Default
and the nature thereof;

     (d) Simultaneously with the delivery of the financial statements referred to in subsection
(b) above, a current rent roll for each Project and a status report on leasing activities at each
Project, in such form and containing such detail as Lender shall reasonable require; and

     (e) From time to time such other financial data and information in the possession of the
Borrowers (including without limitation auditors’ management letters, market comparable studies,
property inspection and environmental reports and information as to zoning and other legal and
regulatory changes affecting Borrowers) as Lender may reasonably request.

     Section 5.03 Inspection of Projects and Books. Lender, or any representative
designated by Lender, may inspect any Project, any books and records of the Borrowers (and make
copies thereof and extracts therefrom) and discuss the affairs, finances and accounts of the
Borrowers with, and to be advised as to the same by, its officers at its reasonable discretion
during normal business hours upon prior notice to the Borrowers to confirm compliance with this
Agreement. Lender and its representative shall conduct any on-site inspection so as to avoid
interference with ongoing work and operations at a Project or leasing efforts with respect
thereto.

16

 

The reasonable out-of-pocket expenses of one such inspection per calendar year during the Loan
term plus any such inspections while a Default or Event of Default is in existence shall be at the
expense of the Borrowers, and Lender shall provide the Borrowers with invoices for such expenses.
Any other such inspections shall be at Lender’s expense.

     Section 5.04 Maintenance of Existence, Properties, Licenses, Etc. Except to the
extent otherwise permitted hereby, Borrowers will do or cause to be done all things reasonably
necessary to preserve, renew and keep in full force and effect the corporate, partnership or other
legal existence of Borrowers and the patents, trademarks, service marks, trade names, service
names, copyrights, licenses, leases, permits, franchises and other rights, that continue to be
useful in some material respect to the business of Borrowers or to the operation of the Property.

     Section 5.05 Payment of Taxes and Claims. Borrowers will pay and discharge or cause
to be paid and discharged all Taxes, assessments and governmental charges or levies imposed upon
it or upon its respective income and profits or upon any of its property, real, personal or mixed
or upon any part thereof, before the same shall become in default as well as all lawful claims for
labor, materials and supplies or otherwise, which, if unpaid, might become a Lien or charge upon
such properties or any part thereof. Notwithstanding anything contained herein to the contrary,
Borrowers shall not be required to pay or discharge any Taxes, assessments and governmental
charges or levies and liens for labor, materials, supplies or otherwise so long as Borrowers shall
in good faith contest the same or the validity thereof by appropriate legal proceedings which
shall operate to prevent the collection of the levy, lien or imposition so contested and the sale
of the Property, or any part thereof, to satisfy any obligation arising therefrom, provided that
the Borrowers shall give such security as may be demanded by the Lender to insure such payments
and prevent any sale or forfeiture of the Property by reason of such nonpayment, failure of
performance or contest by Borrowers. Any such contest shall be prosecuted with due diligence and
Borrowers shall promptly after final determination thereof pay the amount of any levy, lien or
imposition so determined, together with all interest and penalties, which may be payable in
connection therewith. Notwithstanding the provisions of this paragraph, Borrowers shall (and if
Borrowers shall fail so to do, Lender may but shall not be required to) pay any such levy, lien or
imposition notwithstanding such contest if in the reasonable opinion of Lender, the Property shall
be in jeopardy or in danger of being forfeited or foreclosed. If requested by Lender, Borrowers
shall provide periodic endorsements to Lender’s mortgagee title policies to reflect timely payment
of ad valorem property Taxes on the Property.

     Section 5.06 Parking Requirements. At all times during the terms of the Loan, there
shall be sufficient parking spaces to satisfy requirements of all Leases, parking or cross-parking
agreements, and applicable zoning requirements and other Requirements.

     Section 5.07 Expenses. Borrowers shall pay all cost, fees, documentary stamp taxes,
intangibles taxes and charges of closing of the Loan, including, without limitation, Lender’s
attorneys’ fees, recording costs, environmental audit costs, survey and appraisal costs, title
examination fees, and title insurance premiums.

     Section 5.08 Indemnity. Borrowers covenant and agree to indemnify and hold Lender
harmless from and against any and all claims for brokerage fees or commissions with respect to

17

 

the making or consummation of the Loan, and all claims, actions, suits, proceedings, costs,
expenses, losses, damages and liabilities of any kind, including but not limited to attorneys’
fees, expenses, penalties and interest, which may be asserted against or incurred by Lender by
reason of any matter relating directly to the Loan, and arising out of the ownership, condition,
development, construction, sale, rental or financing of the Property or any part thereof, other
than to the extent arising as a direct result of the gross negligence or willful misconduct of
Lender. The foregoing indemnity shall survive the payment and performance of all Obligations to
Lender under the Loan Documents, and should Lender incur any liability for or in defense of any of
the foregoing matters, the amount thereof (and all costs, expenses and attorneys’ fees incurred by
Lender in connection therewith) shall be added to the principal amount of the Loan and shall bear
interest at the Default Rate (as defined in the Note) to the extent permitted by applicable law.
Furthermore, Borrowers covenant that, upon notice from Lender that any action or proceeding has
been brought against Lender by reason of any such matters, Borrowers shall promptly resist or
defend such action or proceeding in a manner satisfactory to Lender at Borrowers’ expense.

     Section 5.09 Notices.

     (a) Defaults. Upon discovery thereof, Borrowers will promptly notify Lender in
writing of the occurrence of any Default or Event of Default.

     (b) Notification of Claims Against Collateral. Borrowers will, promptly upon becoming
aware thereof, notify Lender in writing of any setoff, claims (including, with respect to the
Property, environmental claims), withholdings or other defenses to which any of the Collateral, or
the rights of Lender with respect to the Collateral, are subject in excess of $250,000 (other than
Permitted Liens).

     (c) Notice of Litigation and Judgments. Borrowers will give notice to Lender in
writing within thirty (30) days of becoming aware of any litigation or proceedings threatened in
writing or any pending litigation and proceedings affecting any Borrower Party or to which any of
such Persons is or is to become a party involving an uninsured claim against any of such Persons
that is reasonably likely to result in liability to such Person in excess of $250,000 and stating
the nature and status of such litigation or proceedings, in any case above that has not previously
been disclosed in writing to Lender. Borrowers will give notice to Lender, in writing, in form and
detail satisfactory to Lender within ten (10) Business Days of any judgment, whether final or
otherwise, against the Borrowers in an amount not covered by insurance in excess of $250,000.

     (d) Notice of Material Adverse Effect. Borrowers will give notice to Lender in
writing within ten (10) Business Days of becoming aware of the occurrence of any event or
circumstance which would reasonably be likely to result in a Material Adverse Effect.

     (e) Notice of Microbial Impact, Casualty or Condemnation. Borrowers will promptly give
notice to Lender in writing upon any Borrower obtaining knowledge or otherwise becoming aware of
any mold condition affecting any Improvement. Borrowers will give notice to Lender in writing
within ten (10) Business Days of becoming aware of any casualty to or condemnation of all or any
portion of any Project having a value in excess of $250,000.

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     Section 5.10 Fiscal Year. Borrowers shall not change their fiscal year except upon
prior written notice to Lender.

     Section 5.11 Estoppel Certificates. Borrowers shall, from time to time, upon request
by Lender, promptly execute, acknowledge and deliver to Lender a certificate of Borrowers stating
the amount of principal and interest then owing on the Obligations, whether or not any setoffs or
defenses exist with respect to all or any part of the Obligations, and, if any such setoffs or
defenses exist, stating in detail the specific facts relating to each such setoff or defense. Any
such certificate may be relied upon by any prospective assignee of Lender.

     Section 5.12 Replacement of Note. Upon receipt of notice from Lender of the loss,
theft, destruction or mutilation of the Note, Borrowers shall execute and deliver, in lieu
thereof, a replacement note identical in form and substance to the Note and dated as of the date
of the Note, except that such replacement note shall state on its face that it is a replacement
and upon such execution and delivery all references in the Loan Documents and the Environmental
Indemnification Agreement, to such Note so replaced shall be deemed to refer to such replacement
note.

     Section 5.13 Notification of Name Change; Location. Borrowers shall furnish Lender
with notice of any change in any Borrower’s name or address or principal place of business within
fifteen (15) days of the effective date of such change, and Borrowers shall promptly execute any
financing statements or other instruments deemed necessary by Lender to prevent any filed financing
statement from becoming misleading or losing its perfected status.

     Section 5.14 No Joint Venture. Neither the provisions of any of the Loan Documents or
the Environmental Indemnification Agreement nor the acts of the parties thereto shall be construed
to create a partnership or joint venture between Borrowers and Lender.

     Section 5.15 New Appraisals. Upon request of Lender at any time during which an Event
of Default exists, or if deemed reasonably necessary by Lender because of regulatory requirements,
Borrowers will obtain, at Borrowers’ expense, new, revised or updated Appraisals of the Property
or portions thereof. In addition, Lender may obtain, at Lender’s expense, new, revised or updated
Appraisals of the Property or portions thereof at any time, and Lender agrees to provide to
Borrowers a copy of any such Appraisals.

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ARTICLE VI

NEGATIVE COVENANTS

     For so long as this Agreement is in effect, and unless Lender expressly consents in writing
to the contrary, Borrowers jointly and severally agree to comply with the following covenants:

     Section 6.01 Restrictions on Indebtedness. No Borrower will create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect to any indebtedness
other than the following (collectively, the “Permitted Indebtedness”):

     (a) indebtedness to the Lender arising under any of the Loan Documents;

     (b) current liabilities of such Persons incurred in the ordinary course of business but not
incurred through (i) the borrowing of money or (ii) the obtaining of credit except for credit on
an open account basis customarily extended and in fact extended in connection with normal
purchases of goods and services;

     (c) indebtedness in respect of Taxes and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made in accordance with the
provisions of Section 5.05;

     (d) indebtedness in respect of judgments or awards that do not give rise to an Event of
Default under Section 8.01(j);

     (e) endorsements for collection, deposit or negotiation and warranties of products or
services, in each case incurred in the ordinary course of business; and

     (f) purchase money indebtedness with respect to purchases of equipment in the ordinary course
of each Borrower’s business up to a maximum outstanding amount at any time with respect to each
Borrower of $100,000.00.

     Section 6.02 Restrictions on Liens, Etc. No Borrower will create or incur or suffer to
be created or incurred or to exist any Lien of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits therefrom,
provided that such Persons may create or incur or suffer to be created or incurred or to
exist (collectively, the “Permitted Liens”):

          (i) Liens on properties to secure (A) Taxes and other governmental charges not overdue or (B)
claims for labor, material or supplies in respect of obligations not overdue, except Liens being
contested in good faith and by appropriate proceedings or otherwise related to unpaid Taxes and
other governmental charges permitted by Section 5.05;

          (ii) nonmonetary encumbrances on properties (including the Collateral) consisting of
easements, rights of way, zoning restrictions, mineral rights reservations, restrictions on the use
of real property, landlord’s or lessor’s liens under leases to which such Person is a party, and
other minor non-monetary liens or encumbrances none of which interferes

20

 

materially with the use, marketability or development of the property effected in the ordinary
conduct of the business of such Person, which encumbrances or liens do not individually or in the
aggregate have a Material Adverse Effect.

          (iii) Liens in favor of the Lender under the Loan Documents to secure the Obligations; and

          (iv) Liens and encumbrances on the Property expressly permitted under the terms of the
Mortgage (including any permitted exceptions set forth on Schedule B of any Title Policy) relating
thereto and approved by Lender;

          (v) Liens of banks (including rights of set-off), carriers, warehousemen, landlords,
mechanics, vendors, laborers and materialmen incurred in the ordinary course of business for sums
not yet due or being diligently contested in good faith, if reserves or appropriate provisions
shall have been made therefor;

          (vi) Liens incurred in the ordinary course of business in connection with worker’s
compensation and unemployment insurance, social security obligations, assessments or government
charges which are not overdue for more than sixty (60) days;

          (vii) Liens to secure performance of statutory obligations, surety or appeal bonds,
performance bonds, bids or tenders; or

          (viii) Liens arising in connection with the Permitted Indebtedness described in Section
6.01(f) above.

     Section 6.03 Restrictions on Investments. No Borrower will make or permit to exist or
to remain outstanding any Investment except Investments in:

     (a) marketable direct or guaranteed obligations of the United States of America that mature
within one (1) year from the date of purchase by such Person;

     (b) marketable direct obligations of any of the following: Federal Home Loan Mortgage
Corporation, Student Loan Marketing Association, Federal Home Loan Lenders, Federal National
Mortgage Association, Government National Mortgage Association, Lender for Cooperatives, Federal
Intermediate Credit Lenders, Federal Financing Lenders, Export-Import Lender of the United States,
Federal Land Lenders, or any other agency or instrumentality of the United States of America;

     (c) demand deposits, certificates of deposit, bankers acceptances and time deposits of United
States banks having total assets in excess of $100,000,000; provided, however, that
the aggregate amount at any time so invested with any single bank having total assets of less than
$1,000,000,000 will not exceed $200,000;

     (d) securities commonly known as “commercial paper” issued by a corporation organized and
existing under the laws of the United States of America or any State which at the time of purchase
are rated by Moody’s Investors Service, Inc. or by Standard & Poor’s

21

 

Corporation at not less than “P 1” if then rated by Moody’s Investors Service, Inc., and not less
than “A 1”, if then rated by Standard & Poor’s Corporation;

     (e) mortgage-backed securities guaranteed by the Government National Mortgage Association, the
Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and other
mortgage-backed bonds which at the time of purchase are rated by Moody’s Investors Service, Inc. or
by Standard & Poor’s Corporation at not less than “AA” if then rated by Moody’s Investors Service,
Inc. and not less than “AA” if then rated by Standard & Poor’s Corporation; and

     (f) shares of so-called “money market funds” registered with the SEC under the Investment
Company Act of 1940 which maintain a level per-share value, invest principally in investments
described in the foregoing subsections (a) through (f) and have total assets in excess of
$50,000,000;

     Section 6.04 Distributions. During any period during which a Default or Event of
Default exists, no Borrower shall pay any Distributions except for Tax Distributions.

     Section 6.05 Merger, Consolidation. No Borrower shall become a party to any merger,
consolidation or other business combination, or agree to effect any asset acquisition, stock
acquisition or other acquisition.

     Section 6.06 Liquidation; Change in Name; Etc. No Borrower shall at any time:

     (a) Liquidate or dissolve itself (or suffer any liquidation or dissolution) or otherwise wind
up its business;

     (b) Become a partner or joint venturer with any third party; or

     (c) Change its company name without giving Lender thirty (30) days prior written notice of
its intention to do so and complying with all reasonable requirements of Lender in regard thereto.

     Section 6.07 Transactions with Affiliates and Officers. No Borrower shall:

     (a) enter into any transaction, including without limitation, the purchase, sale or exchange
of property or the rendering of any services, with any Affiliate or any officer or director
thereof, or enter into, assume or suffer to exist any employment or consulting contract with any
Affiliate or an officer or director thereof, except the Management Agreements and except for
services agreements with Campus Crest Construction, LLC for renovation, maintenance and repair
work on the Projects so long as the consideration to be paid under such agreements is comparable
to consideration that would be paid to a non-Affiliate in an arms-length agreement;

     (b) make any advance or loan to any Affiliate or any director or officer thereof or to any
trust of which any of the foregoing is a beneficiary, or guarantee any such loan to any such
Person; or

22

 

     (c) pay any fees or expenses to, or reimburse or assume any obligation for the reimbursement
of any expenses incurred by, any Affiliate or any officer or director thereof except for any fees
or expenses incurred in connection with the Management Agreements and in connection with those
other transactions permitted in Section 6.07(a) above.

ARTICLE VII

FINANCIAL COVENANTS

     For so long as this Agreement is in effect, and unless Lender expressly consents in writing
to the contrary, Borrowers jointly and severally agree to comply with the following covenants:

     Section 7.01 Debt Coverage Ratio. Borrowers shall maintain a Debt Service Coverage
Ratio of not less than 1.20 to 1.0. Compliance with this covenant will be tested at the end of
each calendar quarter beginning with the quarter ending December 31, 2008 based upon NOI and Debt
Service for the most recently completed twelve (12) month period, except that (i) for the period
ending December 31, 2008, NOI and Debt Service for the most recently completed three (3) month
period will be multiplied by four (4) for purposes of determining compliance with this covenant,
(ii) for the period ending March 31, 2009, NOI and Debt Service for the most recently completed
six (6) month period will be multiplied by two (2) for purposes of determining compliance with
this covenant, and (iii) for the period ending June 30, 2009, NOI and Debt Services for the most
recently completed nine (9) month period will be multiplied by 1.33 for purposes of determining
compliance with this covenant.

     Section 7.02 Debt Yield. Borrowers shall maintain a Debt Yield Percentage of not less
than 9.0%. This covenant shall be tested at the end of each calendar quarter beginning with the
quarter ending December 31, 2008 based upon NOI for the most recently completed twelve (12) month
period, except that (i) for the period ending December 31, 2008, NOI for the most recently
completed three (3) month period will be multiplied by four (4) for purposes of determining
compliance with this covenant, (ii) for the period ending March 31, 2009, NOI for the most recently
completed six (6) month period will be multiplied by two (2) for purposes of determining compliance
with this covenant, and (iii) for the period ending June 30, 2009, NOI for the most recently
completed nine (9) month period will be multiplied by 1.33 for purposes of determining compliance
with this covenant.

     Section 7.03 LTV Ratio. Borrowers shall maintain a LTV Ratio of not more than eighty
percent (80%).

Provided, however, that with respect to each covenant in this Article VII, Borrowers shall have a
period of thirty (30) days to cure any non-compliance with these covenants before it becomes an
Event of Default by prepaying the Loan, providing additional Collateral acceptable to Lender in
its sole discretion, providing other evidence of cure satisfactory to Lender in its sole
discretion, or any one or more of the foregoing.

23

 

ARTICLE VIII

EVENTS OF DEFAULT

     Section 8.01 Events of Default. Each of the following events shall constitute an
Event of Default under this Agreement:

     (a) Borrowers shall fail to pay any principal of the Loan when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date of maturity or at any
other date fixed for payment;

     (b) Borrowers shall fail to pay any interest on the Loans within five (5) days of the date
due or if any Borrower or any Guarantor shall fail to pay any other fees or sums due hereunder or
under any of the other Loan Documents, when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any other date fixed for
payment;

     (c) Borrowers shall fail to comply with any covenant contained in Sections 5.03, 5.08, 5.10,
or 5.11, Article VI or Article VII (subject to the last sentence of such Article) or in any
Security Document which are applicable to them;

     (d) Any Borrower Party shall fail to perform any other term, covenant or agreement contained
herein or in any of the other Loan Documents (not specified in subsection (a), (b) or (c) above)
that are applicable to them and such failure continues for thirty (30) days after the earlier of
any Borrower Party having knowledge of such failure or written notice thereof to Borrowers from
Lender; provided, however, that if such failure is not subject, in Lender’s determination, to cure
within such thirty (30) day period but Borrowers are proceeding in good faith diligently to effect
such cure, such cure period will be extended for an additional thirty (30) days.

     (e) Any representation or warranty made by or on behalf of any Borrower Party in any Loan
Document, or in any report, certificate, financial statement or in any other document or
instrument delivered pursuant to or in connection with this Agreement, or any other Loan Document
shall prove to have been false in any material respect upon the date when made or deemed to have
been made or repeated;

     (f) Any Borrower Party shall fail to pay at maturity, or within any applicable period of
grace, any obligation for borrowed money or credit received or other indebtedness, in each case, in
excess of $250,000, or fail to observe or perform any material term, covenant or agreement
contained in any agreement by which it is bound (including any event or condition that requires
such debt to be prepaid or redeemed), evidencing or securing any such borrowed money or credit
received or other indebtedness, in each case, in excess of $250,000 for such period of time as
would permit (assuming the giving of appropriate notice if required) the holder or holders thereof
or of any obligations issued thereunder to accelerate the maturity thereof;

24

 

     (g) Any Borrower Party (i) shall make an assignment for the benefit of creditors, or
admit in writing its general inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of any such Person or of any substantial part of the assets of any thereof,
(ii) shall commence any case or other proceeding relating to any such Person under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or (iii) shall take any action to
authorize or in furtherance of any of the foregoing;

     (h) A petition or application shall be filed for the appointment of a trustee or other
custodian, liquidator or receiver of any Borrower Party or any substantial part of the assets of
any thereof, or a case or other proceeding shall be commenced against any such Person under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, and any such Person
shall indicate its approval thereof, consent thereto or acquiescence therein or such petition,
application, case or proceeding shall not have been dismissed within ninety (90) days following the
filing or commencement thereof;

     (i) A decree or order is entered appointing any such trustee, custodian, liquidator or
receiver or adjudicating any Borrower Party bankrupt or insolvent, or approving a petition in any
such case or other proceeding, or a decree or order for relief is entered in respect of any
Borrower Party in an involuntary case under federal bankruptcy laws as now or hereafter
constituted;

     (j) There shall remain in force, undischarged, unsatisfied and unstayed, for more than sixty
(60) days, whether or not consecutive, any uninsured final judgment against any Borrower Party
that, with other outstanding uninsured final judgments, undischarged, against any such Person or
other Borrower Parties exceeds in the aggregate at any time outstanding $500,000;

     (k) If all or any portion of the Loan Documents shall be canceled, terminated, revoked or
rescinded other than in accordance with the terms thereof or with the express prior written
agreement, consent or approval of Lender, or any action at law, suit in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of any Borrower Party or any of their respective stockholders, partners, members or
beneficiaries, or any such Person shall assert that any of the Loan Documents do not apply to
future advances under this Agreement or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents is
illegal, invalid or unenforceable in accordance with their respective terms;

     (l) Any suit or proceeding shall be filed against any of the Borrower Parties or any
Collateral which in the good faith business judgment of Lender after giving consideration to the
likelihood of success of such suit or proceeding and the availability of insurance to cover any
judgment with respect thereto and based on the information available to them, if adversely
determined, would result in an uninsured judgment or settlement that would have a Material Adverse
Effect;

25

 

     (m) Any Guarantor denies that such Guarantor has any liability or obligation under the
Guaranty or any Environmental Indemnity Agreement pursuant to the terms of such document, or shall
notify Lender of such Guarantor’s intention to attempt to cancel or terminate the Guaranty or any
Environmental Indemnity Agreement, or shall fail to observe or comply with any term, covenant,
condition or agreement under this Agreement, the Guaranty or any Environmental Indemnity Agreement
after the expiration of any applicable cure periods provided therein, if any;

     (n) The occurrence of a Change of Control;

     (o) Any “Event of Default”, as defined in any of the other Loan Documents, shall occur;

     (p) Any Borrower Party shall be indicted for a federal crime, a punishment for which could
include the forfeiture of any assets of such Person, including the Collateral;

     (q) The occurrence of both (i) the death of any Guarantor that is an individual or the
dissolution, liquidation, consolidation or other termination of existence of any Guarantor that is
a corporation, partnership or limited liability company, and (ii) the failure to provide Lender
with a substitute guarantor, additional collateral or other assurances satisfactory to Lender in
its sole discretion within ninety (90) days thereafter; or

     (r) Any amendment to or termination of a financing statement naming any Borrower as debtor
and Lender as secured party, or any correction statement with respect thereto, is filed in any
jurisdiction by, or caused by, or at the instance of any Borrower or by, or caused by, or at the
instance of any principal, member, general partner or officer of any Borrower without the prior
written consent of Lender.

     Section 8.02 Remedies. Upon the occurrence and during the continuance of an Event of
Default, Lender may, in its discretion, exercise one or more of the following remedies:

     (a) Accelerate the maturity of the Obligations and declare the entire unpaid principal
balance of, and any unpaid interest then accrued on, the Note, without demand or notice of any
kind to Borrowers or any other Person, to be immediately due and payable;

     (b) Take all, any or any combination of the actions Lender may take under any of the other
Loan Documents or the Environmental Indemnification Agreement upon the occurrence of a default or
an event of default thereunder, notwithstanding the fact that the event that is an Event of Default
hereunder may not constitute a default or an event of default under any such other Loan Document or
the Environmental Indemnification Agreement, including, without limitation acceleration of the
Obligations evidenced by the Note and foreclosure and sale of the Land and the Improvements under
the Security Instruments;

     (c) Perform, or cause to be performed, any obligation, covenant or agreement that Borrowers
have failed to perform or comply with, and in such event all costs and expenses incurred by Lender
in performing any such obligation, covenant or agreement shall be added to the Obligations and
shall be secured by the Security Instruments, and shall bear interest at the

26

 

Default Rate (as defined in the Note) from the date paid or incurred by Lender, and the interest
thereon shall also be added to and become a part of the Obligations and shall be secured by the
Security Instruments;

     (d) Continue to act, with respect to Borrowers and the Loan, as if no Event of Default had
occurred, which continuance shall not be or be construed as a waiver of Lender’s rights; and
assert the Event of Default and take any action provided for herein at any time after the
occurrence and during the existence of the Event of Default;

     (e) Proceed as authorized by law to obtain payment of the Loan; or

     (f) Take all, any, or any combination of the actions Lender may take under applicable law or
equity.

No failure or delay on the part of Lender to exercise any right or remedy hereunder or under the
Loan Documents or the Environmental Indemnification Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any right or remedy hereunder preclude any further
exercise thereof or the exercise of any further right or remedy hereunder or under the Loan
Documents or the Environmental Indemnification Agreement. No exercise by Lender of any remedy under
the other Loan Documents or the Environmental Indemnification Agreement shall operate as a
limitation on any rights or remedies of Lender under this Agreement, except to the extent of moneys
actually received by Lender under the other Loan Documents or the Environmental Indemnification
Agreement.

     Section 8.03 Costs and Expenses. All costs and expenses incurred by Lender in
connection with any of the actions authorized in this Article, after an Event of Default,
including without limitation attorneys’ fees, shall be and constitute a portion of the Loan,
secured in the same manner and to the same extent as the Loan, even though such costs and expenses
may cause the amount of the Loan to exceed the face amount of the Note. Whenever the terms of this
Agreement require Borrowers to pay attorneys’ fees of Lender, such obligation shall extend only to
reasonable attorneys’ fees, without regard to statutory interpretations, actually incurred at
normal hourly rates.

     Section 8.04 Remedies Cumulative. The foregoing remedies are cumulative of, and in
addition to, and not restrictive or in lieu of, the other remedies provided for herein and the
remedies provided for or allowed by the other Loan Documents or the Environmental Indemnification
Agreement, or provided for or allowed by law, or in equity.

ARTICLE IX

JOINT BORROWER PROVISIONS.

     Section 9.01 Joint Borrower Provisions.

     (a) Each Borrower hereby agrees that such Borrower is jointly and severally liable for, and
hereby absolutely and unconditionally guarantees to Lender and its successors and

27

 

assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise)
and performance of, all Obligations owed or hereafter owing to Lender by each other Borrower. Each
Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and
performance and not of collection, that its obligations under this Article IX shall not be
discharged until payment and performance, in full, of the Obligations has occurred, and that its
obligations under this Article IX shall be absolute and unconditional, irrespective of, and
unaffected by,

          (i) the genuineness, validity, regularity, enforceability or any future amendment of, or
change in, this Agreement, any other Loan Document or any other agreement, document or instrument
to which any Borrower is or may become a party;

          (ii) the absence of any action to enforce this Agreement (including this Article IX) or any
other Loan Document or the waiver or consent by Lender with respect to any of the provisions
thereof;

          (iii) the existence, value or condition of, or failure to perfect its Lien against, any
security for the Obligations or any action, or the absence of any action, by Lender in respect
thereof (including the release of any such security);

          (iv) the insolvency of any Borrower Party; or

          (v) any other action or circumstances that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor.

     Each Borrower shall be regarded, and shall be in the same position, as principal debtor with
respect to the Obligations guaranteed hereunder.

     (b) Each Borrower expressly represents and acknowledges that it is part of a common enterprise
with the other Borrowers and that any financial accommodations by Lender, to any other Borrower
hereunder and under the other Loan Documents are and will be of direct and indirect interest,
benefit and advantage to all Borrowers. Each of the Borrowers acknowledges and agrees that, for
purposes of the Loan Documents, it receives a benefit from the availability of credit under this
Agreement to all of the Borrowers.

     Section 9.02 Waivers by the Borrowers. Each Borrower expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Lender to marshal assets or to proceed in respect of the Obligations
guaranteed hereunder against any other Borrower Party, any other party or against any security for
the payment and performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower and Lender that the foregoing
waivers are of the essence of the transaction contemplated by this Agreement and the other Loan
Documents and that, but for the provisions of this Article and such waivers, Lender would decline
to enter into this Agreement. Each of the Borrowers waives all defenses arising under the laws of
suretyship; to the extent such laws are applicable, in connection with its joint and several
obligations under this Agreement.

28

 

     Section 9.03 Benefit of Guaranty. Each Borrower agrees that the provisions of this
Article are for the benefit of Lender and its successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as between any other Borrower and Lender, the obligations
of such other Borrower under the Loan Documents.

     Section 9.04 Subordination of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set forth in Section 9.07,
each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and
all rights at law or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in cash. Each
Borrower acknowledges and agrees that this subordination is intended to benefit Lender and shall
not limit or otherwise affect such Borrower’s liability hereunder or the enforceability of this
Article IX, and that Lender and its successors and assigns are intended third party beneficiaries
of the waivers and agreements set forth in this Article IX.

     Section 9.05 Election of Remedies. If Lender may, under applicable law, proceed to
realize its benefits under any of the Loan Documents giving Lender a Lien upon any Collateral,
whether owned by any Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, Lender may, at its sole option, determine which of its remedies or
rights it may pursue without affecting any of its rights and remedies under this Article IX. If, in
the exercise of any of its rights and remedies, Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any other Person,
whether because of any applicable laws pertaining to “election of remedies” or the like, each
Borrower hereby consents to such action by Lender and waives any claim based upon such action, even
if such action by Lender shall result in a full or partial loss of any rights of subrogation that
each Borrower might otherwise have had but for such action by Lender. Any election of remedies that
results in the denial or impairment of the right of the Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower’s obligation to pay the full amount of the
Obligations. In the event Lender shall bid at any foreclosure or trustee’s sale or at any private
sale permitted by law or the Loan Documents, Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale, whether Lender or any other party
is the successful bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance of the Obligations
shall be conclusively deemed to be the amount of the Obligations guaranteed under this Article IX,
notwithstanding that any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which Lender might otherwise be entitled but for
such bidding at any such sale.

     Section 9.06 Limitation. Notwithstanding any provision herein contained to the
contrary, each Borrower’s liability under this Article IX shall be limited to an amount not to
exceed as of any date of determination the greater of:

     (a) the amount of the Loan advanced to such Borrower;

29

 

     (b) the net amount the Loan advanced to another Borrower under this Agreement and then
re-loaned or otherwise transferred to, or for the benefit of, such Borrower; and

     (c) the amount that could be claimed by Lender from such Borrower under this Article IX
without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar foreign or domestic statute or common law after taking into account,
among other things, such Borrower’s right of contribution and indemnification from each other
Borrower under Section 9.07.

     Section 9.07 Contribution with Respect to Guaranty Obligations.

     (a) To the extent that any Borrower shall make a payment under this Article IX of all or any
of the Obligations (other than the portion of the Loan made to that Borrower for which it is
primarily liable) (a “Guarantor Payment”) that, taking into account all other Guarantor
Payments then previously or concurrently made by any other Borrower, exceeds the amount that such
Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied
by such Guarantor Payment in the same proportion that such Borrower’s “Allocable Amount” (as
defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate
Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such
Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations, such
Borrower shall be entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor Payment.

     (b) As of any date of determination, the “Allocable Amount” of any Borrower shall be
equal to the maximum amount of the claim that could then be recovered from such Borrower under this
Article IX without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of
the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.

     (c) This Section 9.07 is intended only to define the relative rights of Borrowers and nothing
set forth in this Section 9.07 is intended to or shall impair the obligations of Borrowers,
jointly and severally, to pay any amounts as and when the same shall become due and payable in
accordance with the terms of this Agreement, including Section 9.01. Nothing contained in this
Section 9.07 shall limit the liability of any Borrower to pay the portion of the Loan made
directly or indirectly to that Borrower and accrued interest, fees and expenses with respect
thereto for which such Borrower shall be primarily liable.

     (d) The parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of the Borrowers to which such contribution and indemnification
is owing.

     (e) The rights of the indemnifying Borrowers against other Borrowers under this Section 9.07
shall be exercisable upon the full and indefeasible payment of the Obligations.

30

 

     Section 9.08 Liability Cumulative. The liability of Borrowers under this Article IX
is in addition to and shall be cumulative with all liabilities of each Borrower to Lender under
this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any
Obligations or obligation of the other Borrowers, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically provides to the
contrary.

     Section 9.09 Accommodation. It is understood and agreed that the handling of this
credit facility on a joint borrowing basis as set forth in this Agreement is solely as an
accommodation to the Borrowers and at their request. Accordingly, Lender is entitled to rely, and
shall be exonerated from any liability for relying upon, any request made by a purported officer
of any Borrower without the need for any consent or other authorization of any other Borrower and
upon any information or certificate provided on behalf of any Borrower by a purported officer of
such Borrower.

     Section 9.10 Independent Obligations. The obligation of each Borrower hereunder is
independent of the obligation of each other Borrower and, in the event of any event of default
under the Loan Documents, a separate action or actions may be brought and prosecuted against any
Borrower whether or not said Borrower is the alter ego of another Borrower or any Guarantor and
whether or not any other Borrower or any Guarantor is joined therein or a separate action or
actions are brought against any other Borrower or any Guarantor. Lender’s rights hereunder shall
not be exhausted until all of the Obligations have been fully paid and performed.

     Section 9.11 Fraudulent Conveyance. Anything in this Agreement to the contrary
notwithstanding, it is the intention of the Borrowers and Lender that the Borrowers’ Obligations
hereunder or any liens or security interest granted by any Borrower securing this Agreement not be
a Fraudulent Conveyance as defined below. Consequently, Lender and Borrowers agree that if the
liability of any Borrower hereunder or any liens or security interests granted by such Borrower
securing its obligations hereunder would, but for the application of this sentence, constitute a
Fraudulent Conveyance which could be set aside as of the date of such determination, the liability
of such Borrower and the liens and security interests granted by such Borrower securing this
Agreement shall be valid and enforceable only to the extent of the Maximum Obligation and the
liability of said Borrower under this Agreement shall automatically be deemed to have been amended
accordingly. For purposes of this provision, the “Maximum Obligation” shall mean the
aggregate amount due hereunder, but in no event higher than the maximum amount for which that
Borrower could be liable hereunder without rendering its obligation hereunder or the granting of
liens and security interests in connection herewith void under applicable law as a Fraudulent
Conveyance. A “Fraudulent Conveyance” shall mean a fraudulent conveyance under title 11 of
the United States Code as amended or under applicable state law regarding fraudulent conveyances,
fraudulent transfer or other similar law in effect from time to time. In making such determination,
the parties agree that the Maximum Obligation may increase from time to time as the maximum amount
for which any Borrower could be liable without rendering its obligations hereunder void under
applicable law as a Fraudulent Conveyance increases.

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ARTICLE X

MISCELLANEOUS

     Section 10.01 Notices.

          (a) All notices, demands, requests, and other communications desired or required to be given
hereunder (“Notices”), shall be in writing and shall be given by: (i) hand delivery to the address
for Notices; (ii) delivery by overnight courier service to the address for Notices; or (iii)
sending the same by United States mail, postage prepaid, certified mail, return receipt requested,
addressed to the address for Notices.

          (b) All Notices shall be deemed given and effective upon the earlier to occur of (i) the hand
delivery of such Notice to the address for Notices; (ii) one business day after the deposit of
such Notice with an overnight courier service by the time deadline for next day delivery addressed
to the address for Notices; or (iii) three business days after depositing the Notice in the United
States mail as set forth in (a)(iii) above. All Notices shall be addressed to the following
addresses:

	 	 	 

	Borrowers:

	 	c/o Campus Crest Group, LLC
	 

	 	2100 Rexford Road
	 

	 	Suite 414
	 

	 	Charlotte, NC 28211
	 

	 	Attention: F. Brian Schneiderman
	 
	 	 
	With a copy to:

	 	Bradley Arant Rose & White LLP
	 

	 	One Federal Place 
	 
	 	1819 Fifth Avenue North 

Birmingham, AL 35203
	 

	 	Attention: Dawn Helms Sharff
	 
	 	 
	Lender:

	 	Silverton Bank, N.A.
	 

	 	3284 Northside Parkway
	 

	 	Atlanta, GA 30327-2245
	 

	 	Attention: CRE Apartment
	 
	 	 
	With a copy to:

	 	Powell Goldstein LLP
	 

	 	One Atlantic Center

 Fourteenth Floor
	 

	 	1201 West Peachtree Street, NW
	 

	 	Atlanta, Georgia 30309-3488
	 

	 	Attention: Gerald Blanchard, Esq.

or to such other persons or at such other place as any party hereto may by Notice designate as a
place for service of Notice; provided, however, that the “copy to” Notice to be given as
set forth above is a courtesy copy only; and a Notice given to such person is not sufficient to
effect giving

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a Notice to the principal party, nor does a failure to give such a courtesy copy of a Notice
constitute a failure to give Notice to the principal party.

     Section 10.02 No Waiver; Remedies Cumulative. No failure or delay on the part of
Lender in exercising any right or remedy hereunder and no course of dealing between Borrowers and
Lender shall operate as a waiver thereof, nor shall any single or partial exercise of any right or
remedy hereunder or under the Note preclude any other or further exercise thereof or the exercise
of any other right or remedy hereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which Lender would otherwise have. No
notice to or demand on Borrowers not required hereunder or under any other Loan Document in any
case shall entitle Borrowers to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of Lender to any other or further action in any
circumstances without notice or demand.

     Section 10.03 Successors and Assigns; Sale of Interest. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective legal
representatives, successors and permitted assigns of the parties hereto; provided that
Borrowers may not assign or transfer any of its rights or obligations hereunder without the prior
written consent of Lender, other than to the extent expressly permitted by the Security
Instruments. Lender may sell, assign, or sell or grant participations in all or any part of
Lender’s rights, title or interests hereunder and under the other Loan Documents or the
Environmental Indemnification Agreement without the prior written consent of Borrowers;
provided, however that any such assignment or sale shall not increase any of the
obligations of Borrowers under the Loan Documents or the Environmental Indemnification Agreement.
In that event, such successor or assignee shall be entitled to all of the rights of Lender under
the Loan Documents or the Environmental Indemnification Agreement, subject to the terms of any
sale, assignment or participation agreement.

     Section 10.04 Modification. This Agreement shall not be modified or amended in any
respect except by a written agreement executed by the parties in the same manner as this Agreement
is executed.

     Section 10.05 Time of Essence. Time is of the essence of this Agreement and each of
the other Loan Documents and the Environmental Indemnification Agreement.

     Section 10.06 Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of the State of
Alabama, without regard to principles of conflicts of laws thereof.

     Section 10.07 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together constitute one and the
same instrument.

33

 

     Section 10.08 Effectiveness; Survival.

     (a) This Agreement shall become effective on the date on which all of the parties hereto
shall have signed a copy hereof (whether the same or different copies) and Lender shall have
received the same.

     (b) All representations and warranties made herein, in the certificates, reports, notices,
and other documents delivered pursuant to this Agreement shall survive the execution and delivery
of this Agreement, the other Loan Documents, the Environmental Indemnification Agreement, and such
other agreements and documents, the making of the Loan hereunder and the execution and delivery of
the Note, and shall terminate at such time as the Obligations have been paid and satisfied in
full; provided, however, that the Environmental Indemnification Agreement shall
remain in full force and effect in accordance with the terms thereof notwithstanding any payment
and dissatisfaction of the Obligations.

     Section 10.09 Severability. In case any provision in or Obligation under this
Agreement or the other Loan Documents or the Environmental Indemnification Agreement shall be
invalid, illegal or unenforceable, in whole or in part, in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

     Section 10.10 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant, shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists. To the extent any of the terms of this
Agreement conflicts with the terms of the other Loan Documents, the terms of this Agreement shall
control.

     Section 10.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.

     Section 10.12 Termination of Agreement. At such time as all Obligations have been
paid and satisfied in full, this Agreement shall terminate; provided however, that any and
all indemnity obligations of Borrowers to Lender arising hereunder or under any of the other Loan
Documents, which are expressly stated to survive satisfaction of the Obligations shall survive the
termination of this Agreement or such other Loan Documents, and provided further that all
indemnity obligations under the Environmental Indemnification Agreement shall survive such payment
and satisfaction of the Obligations to the extent contemplated in the Environmental Indemnification
Agreement.

     Section 10.13 Entire Agreement. This Agreement and the other Loan Documents and the
Environmental Indemnification Agreement constitute the entire agreement between Borrowers and
Lender with respect to the Loan, the other Obligations and the Collateral and

34

 

supersede all prior agreements, representations and understandings related to such subject
matters.

     Section 10.14 Jury Trial Waiver; Consent to Forum.

     (a) TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH BORROWER IRREVOCABLY WAIVES ALL RIGHT OF
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ENVIRONMENTAL INDEMNIFICATION AGREEMENTS OR
ANY MATTER ARISING HEREUNDER OR THEREUNDER.

     (b) EACH BORROWER ALSO AGREES THAT ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ENVIRONMENTAL INDEMNIFICATION AGREEMENTS OR TO
ENFORCE ANY JUDGMENT OBTAINED AGAINST SUCH BORROWER IN CONNECTION WITH THIS AGREEMENT OR SUCH OTHER
LOAN DOCUMENT, MAY BE BROUGHT BY LENDER IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF THE
STATE IN WHICH LENDER’S ADDRESS SHOWN ABOVE IS LOCATED, OR IN ANY ONE OR MORE OTHER STATE OR
FEDERAL COURTS SITTING IN ANY COUNTY AND STATE IN WHICH ANY OF THE PROPERTY IS LOCATED. EACH
BORROWER IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE AFORESAID STATE AND FEDERAL COURTS, AND
IRREVOCABLY WAIVES ANY PRESENT OR FUTURE OBJECTION TO VENUE IN ANY SUCH COURT, AND ANY PRESENT OR
FUTURE CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM, IN CONNECTION WITH ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE ENVIRONMENTAL
INDEMNIFICATION AGREEMENTS.

[SIGNATURES BEGIN ON FOLLOWING PAGE]

35

 

     IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly
executed and delivered on their behalf as of the date first above stated.

	 	 	 	 	 
	 	BORROWERS:

CAMPUS CREST AT MOBILE, LLC, an

Alabama limited liability company

 	 
	 	By:  	Campus Crest Properties, LLC, a North 
Carolina limited liability company 	 
	 	Its: 	Manager 	 
	 	 	 
	 	By:  	/s/ F. Brian Schneiderman 	 
	 	 	Name:  	F. Brian Schneiderman 	 
	 	 	Title:  	Manager 	 
	 
	 	CAMPUS CREST AT JACKSONVILLE, AL, LLC, an Alabama limited liability company
 	 
	 	By:  	Campus Crest Properties, LLC, a North 
Carolina limited liability company 	 
	 	Its: 	Manager 	 
	 	 	 
	 	By:  	/s/ F. Brian Schneiderman 	 
	 	 	Name:  	F. Brian Schneiderman 	 
	 	 	Title:  	Manager 	 
	 
	 	CAMPUS CREST AT GREELEY, LLC, a

Delaware limited liability company

 	 
	 	By:  	Campus Crest Properties, LLC, a North 
Carolina limited liability company 	 
	 	Its: 	Manager 	 
	 	 	 
	 	By:  	/s/ F. Brian Schneiderman 	 
	 	 	Name:  	F. Brian Schneiderman 	 
	 	 	Title:  	Manager 	 
	 

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Silverton — Campus Crest Loan Agreement

 

 

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	 	 	 	 	 
	 	CAMPUS CREST AT ELLENSBURG, LLC, a

Delaware limited liability company

 	 
	 	By:  	Campus Crest Properties, LLC, a North 
Carolina limited liability company 	 
	 	Its: 	Manager 	 
	 	 	 
	 	By:  	/s/ F. Brian Schneiderman
 	 
	 	 	Name:  	F. Brian Schneiderman 	 
	 	 	Title:  	Manager 	 
	 
	 	CAMPUS CREST AT ABILENE, LP, a

Delaware limited partnership

 	 
	 	By:  	Campus Crest GP, LLC, a Delaware limited 
liability company  	 
	 	Its: 	General Partner 	 
	 	 	 
	 	By:  	/s/ F. Brian Schneiderman 	 
	 	 	Name:  	F. Brian Schneiderman 	 
	 	 	Title:  	 Manager 	 
	 
	 	

CAMPUS CREST AT NACOGDOCHES, LP, a

Delaware limited partnership

 	 
	 	By:  	Campus Crest GP, LLC, a Delaware limited 
liability company  	 
	 	Its: 	General Partner 	 
	 	 	 
	 	By:  	/s/ F. Brian Schneiderman 	 
	 	 	Name:  	F. Brian Schneiderman 	 
	 	 	Title:  	Manager 	 
	 

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

 

 

[SIGNATURES CONTINUED FROM PREVIOUS PAGE]

	 	 	 	 	 
	 	LENDER:

SILVERTON BANK, N.A.

 	 
	 	By:  	/s/ Jason D. Brown
 	 
	 	 	Name:  	Jason D. Brown 	 
	 	 	Title:  	SVP

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