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Exhibit 10.3
 
May 4, 2011
 
 
Mr. Bob Raiford
Chief Financial Officer
ENGlobal Corporation
654 N. Sam Houston Parkway E, Suite 400
Houston, TX  77060
 
 
Dear Bob:
 
We have learned of the following breach of the terms of ENGlobal's Credit Agreement with WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) dated as of December 29, 2009 (the "Agreement"):
 
Fixed Charge Coverage Ratio not less than 1.75 to 1.00
 
Subject to the terms and conditions set forth herein, the Bank has decided to waive its default rights with respect to this breach for the first quarter of 2011 only.  This waiver applies only to the specific instance described above.  It is not a waiver of any subsequent breach of the same provision of the Agreement, nor is it a waiver of any breach of any other provision of the Agreement.
 
In consideration of the Bank providing this waiver and as a condition to its effectiveness, ENGlobal shall pay to the Bank a non-refundable fee of $10,000.  If the Bank has not received payment in full of said fee by the close of business on May 6th, 2011, this waiver shall immediately terminate without further notice and the Bank may exercise any and all rights, powers and remedies available under the Agreement.
 
Except as expressly stated in this letter, the Bank reserves all of the rights, powers and remedies available to the Bank under the Agreement and any other contracts or instruments, including the right to cease making advances and the right to accelerate any of ENGlobal's indebtedness, if the breach described above is not cured by May 6th, 2011 or if any subsequent breach of the same provision or any other provision of the Agreement should occur.
 
	
					
	 
	 
	 
	Sincerely,
	 

	 
	 
	 
	WELLS FARGO BANK,
	 

	 
	 
	 
	NATIONAL ASSOCIATION
	 

	 
	 
	 
	 
	 

	 
	 
	 
	By: /s/ H. David Jones
	 

	 
	 
	 
	H. David Jones
	 

	 
	 
	 
	 
	 

	 
	 
	 
	Title: Vice Presidentexv10w1

Exhibit 10.1

LOAN AGREEMENT

     THIS LOAN AGREEMENT (the “Loan Agreement”) is entered into effective the 4th day of
March 2011, by and between CAMPUS CREST AT COLUMBIA, LLC, a Delaware limited liability company (the
“Borrower”), CAMPUS CREST COMMUNITIES, INC., a Maryland corporation (the “Guarantor”), and BOKF, NA
dba BANK OF OKLAHOMA (the “Lender”).

W I T N E S S E T H:

     IN CONSIDERATION of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency all of which are hereby acknowledged, it is agreed as
follows:

	1.	 	LENDING AGREEMENT. Subject to the terms and conditions hereinafter set forth, Lender
agrees to lend to Borrower and the Borrower agrees to borrow from the Lender from time to time
on the Borrower’s request, up to the lesser of (i) seventy percent (70%) of the total cost of
the Improvements (as hereafter defined); or (ii) SEVENTEEN MILLION FORTY-SIX THOUSAND SIX
HUNDRED EIGHTY-TWO AND 00/100 DOLLARS ($17,046,682.00) (the “Loan Commitment”), as evidenced
by the Note (as defined below), and the Letters of Credit (as defined below), which funds
advanced under such Note will be used by the Borrower solely for providing a portion of the
costs of constructing and furnishing a 216-unit apartment complex consisting of eleven (11)
separate buildings (the “Improvements”) to be located on the real property described at
Exhibit “A” hereto, to be known as “The Grove at Columbia” (the “Building Site”), all in
accordance with the Construction Budget, as defined below (the Improvements and the Building
Site are collectively referred to herein as the “Project”), together with all fees and
expenses required to be paid to the Lender hereunder, and which Letters of Credit will be
issued solely for the benefit of vendors of furniture, fixtures and equipment to be installed
in the Improvements or for the benefit of governmental entities in connection with the
development of the Improvements. The unpaid principal balance of funds advanced under the
Loan Commitment, as evidenced by the Note, and all accrued interest thereon will be due and
payable thirty-six (36) months after the date hereof on March 4, 2014 (the “Maturity Date”),
unless the Maturity Date is extended pursuant to Section 2 hereof.
	 
	2.	 	BORROWER’S NOTE. The Loan Commitment will be evidenced by (a) a Promissory Note of
even date herewith in the principal face amount of SEVENTEEN MILLION FORTY-SIX THOUSAND SIX
HUNDRED EIGHTY-TWO AND 00/100 DOLLARS ($17,046,682.00), which Note shall be in form and
substance and payable on terms approved by the Lender (the “Note”); and (b) letters of credit
issued by the Lender from time to time for the account of the Borrower up to an aggregate
amount not to exceed Five Hundred Thousand Dollars ($500,000.00) for the benefit of vendors
selling furniture, fixtures and equipment to be installed in the Improvements or for the
benefit of governmental entities in connection with the development of the Improvements, which
letters of credit will be on terms satisfactory to the Lender, including but not limited to
the payment of a fee in the

 

 

	 	 	amount of one percent (1%) of the face amount of each such letter of credit (the “Letters of
Credit”). The entire unpaid principal balance of the Note and the total face amount of all
outstanding Letters of Credit that have been issued by the Lender will not at any time
exceed $17,046,682.00. If any drafts are drawn on any Letters of Credit, the Lender is
authorized to promptly thereafter advance on the Note to reimburse the Lender for the amount
of any such drafts that have been paid by the Lender. Interest on the Note will be paid at
the interest rate equal to the greater of (a) the Libor Rate plus three percent (3.00%) per
annum, which interest rate will be adjusted on the first day of each month; or (b) four and
fifty hundredths percent (4.50%) per annum (the “Interest Rate”). “Libor Rate” means the
one month London Interbank Offered rate as published in the Wall Street Journal. Monthly
installments of interest only will be paid on the Note for twenty-four (24) months after the
date hereof commencing on April 4, 2011 and on the 4th day of each month
thereafter. Commencing on April 4, 2013 and on the 4th day of each month
thereafter, monthly installments of principal and interest will be paid on the Note based on
a thirty (30) year amortization at the Interest Rate in accordance with the terms of the
Note. The entire unpaid principal balance of the Note plus all accrued interest owing on
the Note shall be due and payable on the Maturity Date. Borrower will have the option to
extend the Maturity Date an additional twelve (12) months having the same payment terms
resulting in the date of maturity of March 4, 2015 (the “First Extended Maturity Date”) as
long as all of the following conditions are satisfied: (i) Borrower shall have paid to the
Lender an extension fee equal to $25,000.00; (ii) there shall be no uncured continuance of a
Default (as hereinafter defined); (iii) Borrower gives Lender written notice of Borrower’s
election to extend the maturity date at least fifteen (15) days prior to the Maturity Date;
and (iv) Borrower executes such additional documents and provides such additional assurances
as may be reasonably required by the Lender to evidence such extension (the “First Extension
Conditions”). All interest hereon shall be calculated for the actual number of days elapsed
at a per diem charge based on a year consisting of 360 days.
	 
	3.	 	RECOURSE. The Note will be full recourse to the Borrower and recourse to the
Guarantor (as defined below) to the extent as set forth in the Guaranty Agreement (as defined
below).
	 
	4.	 	COLLATERAL SECURITY. The performance of all covenants and agreements contained in
this Loan Agreement and in the other documents executed or delivered as a part of this
transaction and the payment of the Note and all renewals, amendments and modifications
thereof, all interest thereon and expenses of collection thereof shall be secured by the
following:

	 	4.1	 	Deed of Trust. The Borrower shall grant Lender a first priority deed
of trust and security interest covering the Project, which will be evidenced by a Deed
of Trust, Security Agreement, Fixture Filing and Assignment of Leases and Rents on the
Project in form and substance approved by and satisfactory to the Lender (the “Deed of
Trust”) and by a UCC Financing Statement and a Fixture Filing Financing Statement (the
“Financing Statements”).
	 
	 	4.2	 	Assignment of Rents. The Borrower will assign all leases and rents
related to the Project to the Lender as evidenced by a certain Assignment of Lessor’s
Interest in

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	 	 	 	Rents and Leases in form and substance satisfactory to the Lender (the “Assignment
of Rents”).
	 
	 	4.3	 	Guaranty Agreement. The Guarantor shall execute and deliver a certain
Guaranty Agreement to the Lender in form and substance satisfactory to the Lender (the
“Guaranty Agreement”).
	 
	 	4.4	 	Environmental Indemnification. The Borrower and the Guarantor shall
execute and deliver to Lender an Environmental Indemnification Agreement in form and
substance satisfactory to Lender (the “Environmental Indemnity”).
	 
	 	4.5	 	Building Laws Indemnification. The Borrower and the Guarantor shall
execute and deliver to Lender a Building Laws Indemnification Agreement in form and
substance satisfactory to Lender (the “Building Laws Indemnity”).
	 
	 	4.6	 	Assignment of Architectural Agreement. The Borrower shall execute and
deliver an assignment of its interest under the Architectural Agreement between the
Borrower and James L. Browning, Architect (the “Architect”) for the design of the
Project, which assignment will be in form and substance satisfactory to the Lender and
which assignment shall also be signed by the Architect (the “Architectural Agreement
Assignment”).
	 
	 	4.7	 	Assignment of Construction Contract. The Borrower shall execute and
deliver an assignment of its interest under the contract between Borrower and Campus
Crest Construction, LLC (the “General Contractor”) for the construction of the Project,
which assignment shall be in form and substance satisfactory to the Lender and which
assignment shall also be signed by the General Contractor (the “Construction Contract
Assignment”).
	 
	 	4.8	 	Assignment of Plans and Specifications. The Borrower shall execute and
deliver an assignment of plans and specifications prepared by the engineer and
architect for the Project, which assignment will be in form and substance satisfactory
to the Lender (the “Assignment of Plans”).
	 
	 	4.9	 	Assignment of Property Management Agreement. The Borrower shall
execute and deliver an assignment of its interest under the Property Management
Agreement between Borrower and The Grove Student Properties, LLC (the “Property
Manager”) for the management of the Project, which assignment shall be in form and
substance satisfactory to the Lender and which assignment shall also be signed by the
Property Manager (the “Assignment of Property Management Agreement”).

	5.	 	REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that:

	 	5.1	 	Borrower’s Existence. Borrower is and will continue to be a limited
liability company, duly organized, validly existing and in good standing under the laws
of the State of Delaware and authorized to do business in the State of Missouri; the

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	 	 	 	Borrower has adequate power, authority and legal right to own and hold the Project;
the Borrower is duly authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on its business in
the ownership, construction and operation of the Project, and is or will be duly
authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its business in the
management, operation and control of the Project as an apartment complex; the
Borrower has adequate authority, power and legal right to enter into and carry out
the provisions of this Loan Agreement and other documents contemplated herein and to
consummate the transactions contemplated hereby.
	 
	 	5.2	 	Litigation. There is no action, suit proceeding or investigation
pending, or, to the Borrower’s knowledge, threatened against the Borrower, any of the
members of the Borrower, or the Guarantor, which, if adversely determined, would
adversely affect the Borrower or the Project or impair the ability of the Borrower to
carry on its business substantially as now conducted or contemplated or result in any
substantial liability not adequately covered by insurance.
	 
	 	5.3	 	No Default. The making and performance by the Borrower of this Loan
Agreement or the Loan Documents (as defined below) to be executed in connection
herewith will not violate any provision or constitute a default under any indenture,
agreement or instrument to which the Borrower or the Project is bound or affected.
	 
	 	5.4	 	Ownership. The Borrower is a single purpose entity, and owns good
marketable fee title to the Building Site, and Borrower has or will have good title to
all of its other properties and assets, real or personal, tangible or intangible, which
are or are to be constructed, owned, installed, or used in connection with the Project,
except for those title exceptions reflected on the Lender’s mortgagee’s title insurance
policy issued by First American Title Insurance Company (the “Title Insurer”) insuring
the first priority status of the Deed of Trust, which are approved by the Lender, and
none of such properties or assets is or will be subject to any deed of trust, pledge,
security interest, encumbrance, lien or charge of any kind excluding only: (i) liens
for property taxes not yet due; (ii) encumbrances in favor of the Lender; (iii) liens
associated with isolated pieces of office equipment leased in the ordinary course of
business; and (iv) the title exceptions referenced above. Borrower will not engage in
any business other than the ownership, construction, operation and maintenance of the
Project, and will not own any assets other than the Project and the other property
described in the Deed of Trust.
	 
	 	5.5	 	Financial Statements. The financial statements of the Borrower and the
Guarantor and the operating statements for the Project heretofore delivered or to be
delivered hereafter to Lender are and will be true and correct in all respects, have
been prepared in accordance with generally accepted accounting principles (or in the
case of the Borrower and the operating statements for the Project, sound accounting
principles) consistently applied, and fully and accurately present or will present the
financial condition reflected therein without material change since the dates thereof.

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	 	5.6	 	Full Disclosure. To the Borrower’s knowledge, neither this Loan
Agreement, nor any statements or documents referred to herein or delivered by the
Borrower pursuant to this Loan Agreement, contain any untrue statement or omits to
state a material fact necessary to make the statement herein or therein not misleading.
	 
	 	5.7	 	Survival of Representations and Warranties. All covenants,
representations and warranties made herein and under all documents executed pursuant
hereto shall survive the making of the loan hereunder and the delivery of the Note and
other instruments executed in connection therewith until complete repayment of the Note
and all renewals and modifications thereof, and all other indebtedness of Borrower to
Lender under the terms of this Loan Agreement. Each request by Borrower for an advance
hereunder shall constitute an affirmation that the foregoing representations and
warranties remain true and correct in all material respects as of the date of such
request.

	6.	 	CONDITIONS PRECEDENT TO LOAN. The Lender will make advances under the Note, subject
to the satisfaction and performance of the following conditions precedent; provided that
notwithstanding anything contained herein to the contrary, the Lender will not be obligated to
advance any amount in excess of the Loan Commitment. As soon as all of the conditions set
forth at Section 6.1 through 6.26 hereof have been satisfied, and so long as no Default has
occurred and is continuing, the Lender will advance to the Borrower up to the entire amount of
the Loan Commitment from time to time, subject to the terms and conditions of this Loan
Agreement, for the purposes and in accordance with the terms set forth in Section 1 hereof.
Borrower shall perform the following covenants and deliver or cause to be delivered to the
Lender the following items, all of which will be in form and substance satisfactory to Lender,
and, where necessary, duly executed and acknowledged, all of which are conditions precedent to
any advance under the Loan Commitment.

	 	6.1	 	Loan Documents. This Loan Agreement, the Note, the Deed of Trust, the
Assignment of Rents, the Guaranty Agreement, the Environmental Indemnity, the Building
Laws Indemnity, the Financing Statements, the Construction Contract Assignment, the
Architectural Agreement Assignment, the Assignment of Plans, the Assignment of Property
Management Agreement, the Developer’s Fee Deferral Agreement (as hereafter defined),
and all other documents executed pursuant thereto or in connection therewith as might
be required by the Lender shall have been duly authorized, issued, executed, and
delivered to Lender (all of the foregoing are collectively referred to herein as the
“Loan Documents”).
	 
	 	6.2	 	Authority. A current certificate for the Borrower authorizing the
execution and delivery of all of the Loan Documents, as applicable, and all other
documents evidencing the due formation, existence and good standing of the Borrower and
the authorization of the Borrower to do business in the State of Missouri shall have
been delivered to the Lender.
	 
	 	6.3	 	Guarantor Authority. A current certificate for the Guarantor,
authorizing the execution and delivery of all of the Loan Documents to which it is a
party and all

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	 	 	 	other documents evidencing the due formation, existence and good standing of the
Guarantor shall have been delivered to the Lender.
	 
	 	6.4	 	Title. A title commitment for a $17,046,682.00 mortgagee’s title
insurance policy insuring the first priority status of the Deed of Trust shall have
been issued to the Lender by the Title Insurer satisfactory to the Lender reflecting
only those title exceptions approved by the Lender and containing survey protection,
mechanic’s lien coverage and such endorsements as may be required by the Lender,
including but not limited to a comprehensive endorsement, an access endorsement, a
variable rate endorsement, a zoning endorsement, a one tax parcel endorsement, a survey
endorsement, and the removal of the arbitration provision.
	 
	 	6.5	 	Liability Insurance. Borrower shall have acquired and will hereafter
maintain the following insurance issued by a company and on terms satisfactory to
Lender for personal injury, bodily injury, death, accident, and property damages
(collectively, the “Liability Insurance”);

	 	a.	 	Public liability insurance, including commercial general
liability insurance;
	 
	 	b.	 	Owned (if any), hired, and non-owned automobile liability
insurance; and
	 
	 	c.	 	Umbrella liability insurance as necessary.

	 	 	 	Liability Insurance shall provide coverage of at least one million dollars
($1,000,000.00) per occurrence and two million dollars ($2,000,000.00) in annual
aggregate. If any Liability Insurance also covers other location(s) with a shared
aggregate limit, the minimum annual aggregate limit stated in the preceding sentence
shall be increased by two million dollars ($2,000,000.00). Liability Insurance
shall include coverage for liability arising from premises and operations,
elevators, escalators, independent contractors, contractual liability (including
liability assumed under Contracts and Leases), and products and completed
operations. Borrower shall have provided Lender with an endorsement evidencing the
existence of such Liability Insurance naming the Lender as an additional insured.
	 
	 	6.6	 	Compliance with Governmental Regulations. Evidence to the satisfaction
of Lender that the Project complies in all material respects with all applicable
zoning, subdivision, environmental, air quality, flood hazard, fire safety, planning,
building and other governmental laws, ordinances, codes, regulations or private use
restrictions shall have been delivered to the Lender, including but not limited to,
zoning of the Project for use as an apartment complex.
	 
	 	6.7	 	Environmental Report. At Borrower’s expense, the Lender must have
received a Phase I Environmental Report (the “Environmental Report”) covering the
Building Site reflecting environmental conditions satisfactory to the Lender.
	 
	 	6.8	 	Zoning. The Lender shall have received written evidence that the
Building Site has been properly zoned for use as an apartment complex.

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	 	6.9	 	Survey. At Borrower’s expense, an ALTA survey of the Project prepared
by a licensed civil engineer or a surveyor certified to and approved by the Lender
shall have been delivered to Lender, which survey shall be prepared in compliance with
the requirements of the Lender, and which shall be acceptable to the Lender.
	 
	 	6.10	 	Financial Statements. The current financial statements of the Borrower
and the Guarantor shall have been delivered to and approved by Lender.
	 
	 	6.11	 	Opinion of Borrower’s Counsel. An opinion from Borrower’s counsel in
form and substance reasonably satisfactory to Lender shall have been delivered to
Lender, which opinion shall include, but not be limited to, opinions as to the due
formation, existence and good standing of the Borrower, the authority of the Borrower
to do business in the State of Missouri, the due formation, existence and good
standing of the Guarantor, the due authorization of the Borrower to execute all of the
Loan Documents, the due authorization of the Guarantor to execute all of the Loan
Documents, as applicable, and the validity and enforceability of the Deed of Trust and
Assignment of Rents.
	 
	 	6.12	 	Origination Fee. The Borrower shall have paid the origination fee as
set forth in Section 13.1 hereof.
	 
	 	6.13	 	Borrower’s Cash Equity. The Borrower shall have provided Lender with
documentation satisfactory to Lender evidencing the Borrower’s payment in cash of at
least $3,766,471.00 for the costs of construction of the Improvements as determined by
the Lender.
	 
	 	6.14	 	Building Site Equity. The Borrower shall have provided Lender with
documentation satisfactory to Lender evidencing an equity valuation for the Building
Site of $3,539,250.00.
	 
	 	6.15	 	Appraisal. At Borrower’s expense, Lender shall employ an MAI appraiser
to perform an “as stabilized” appraisal of the Project and Lender shall have received
such “as stabilized” appraisal in form and substance satisfactory to Lender and
reflecting a Project value satisfactory to Lender.
	 
	 	6.16	 	Site Inspections. The Building Site shall have been inspected and
approved by the Lender.
	 
	 	6.17	 	Builders Risk Insurance. The Borrower or the General Contractor shall
have acquired builders risk insurance issued by a company and on terms reasonably
satisfactory to the Lender, and Borrower shall have delivered to Lender an endorsement
evidencing such coverage and naming the Lender as a loss payee.
	 
	 	6.18	 	Building Permit. The Borrower shall have obtained a land disturbance
permit and the approvals necessary to pull the building permits for the development and
construction of the Improvements and delivered copies of the same to the Lender.

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	 	6.19	 	Soil Testing. A soil test report, the results of which shall have been
delivered to and approved by Lender and Lender’s inspector, Norton & Schmidt Consulting
Engineers, LLC (the “Inspector”), from Borrower’s engineer stating that the foundations
and structural members of the Improvements have been adequately designed considering
soil conditions at the Project (the “Soil Report”).
	 
	 	6.20	 	Construction and Architect Contracts. Copies of the Borrower’s
construction contract and the architectural contract, both of which are either in a
fixed price or guaranteed maximum price amount not greater than that reflected on the
Construction Budget relating to the Project, shall have been delivered to the Lender
and shall have been approved by the Lender and Inspector, and Borrower and the General
Contractor shall have executed and delivered the Construction Contract Assignment to
Lender and Borrower and the Architect shall have executed and delivered the
Architectural Agreement Assignment to Lender.
	 
	 	6.21	 	Inspector. An agreement between the Lender and the Inspector shall
have been executed and delivered to the Lender, and the Borrower agrees to pay monthly
billings from the Inspector for inspection services pursuant to the terms thereof.
Notwithstanding (a) the Borrower’s payment of monthly billings issued by the Inspector
for inspection services, and/or (b) any prior written or verbal statements to the
contrary, Borrower acknowledges and agrees that (i) the services provided by the
Inspector are solely for the benefit of the Lender in connection with the Lender’s
administration of the loan contemplated hereby; and (ii) the Inspector shall owe no
duty, contractual or otherwise, to Borrower in connection with the services provided by
the Inspector to Lender.
	 
	 	6.22	 	Plans and Specifications. Complete copies of the final plans and
specifications relating to the Project signed by the General Contractor (the “Plans and
Specifications”) which will be assigned to Lender as additional security shall have
been delivered to and approved by the Lender and the Inspector, and the Borrower shall
have executed and delivered to Lender the Assignment of Plans and Specifications. The
Plans and Specifications may be changed at any time without Lender’s consent if such
changes do not result in an increase in the Construction Budget or the Borrower’s
construction contract with the General Contractor; provided that if such changes will
result in such increase, the Borrower must obtain Lender’s prior written consent which
consent may be conditioned on the deposit of cash in a restricted account in the amount
of such increase.
	 
	 	6.23	 	Construction Budget. The Construction Budget for the Project attached
at Exhibit “B” hereto shall have been approved by the Lender and Inspector (the
“Construction Budget”). All advances requested by the Borrower and made by the Lender
under the Note relating to construction of the Improvements shall only be for up to the
itemized
amounts as set forth on the Construction Budget, provided that the Borrower may
amend the Construction Budget if (a) the Borrower gives the Lender written notice
thereof, (b) the total amount of the Construction Budget and the

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	 	 	 	Borrower’s
construction contract with the General Contractor will not be increased, and (c) the
amount of the Loan Commitment will not be increased.
	 
	 	6.24	 	Payment and Performance Bonds. The Borrower shall have provided Lender
with payment and performance bonds issued by insurance companies satisfactory to the
Lender having an AM Best rating of “A, Class VII” or higher for the site work
contractor and for each subcontractor who will perform work in an amount which exceeds
10% of the Construction Budget, all of which bonds shall include a rider which names
the Lender as a dual obligee without a “savings” clause or similar “conditions
precedent” clause. Borrower agrees to comply with all terms, conditions and covenants
contained in such bonds.
	 
	 	6.25	 	Lien Waiver. The General Contractor shall have executed, prior to the
commencement of construction of the Improvements, a lien waiver covering the Project in
favor of the Borrower and the Lender.
	 
	 	6.26	 	Advance Conditions. Prior to the funding of any advance under the Loan
Commitment, all of the conditions and requirements as set forth in Section 9 hereof
must also be satisfied and performed.

	7.	 	COVENANTS. Until payment in full of the Note and all renewals and modifications
thereof, and performance of all obligations owing to Lender under this Loan Agreement and the
Loan Documents, unless the Lender shall otherwise consent in writing, the Borrower hereby
covenants and agrees as follows:

	 	7.1	 	Performance of Obligations. The Borrower will promptly and punctually
perform all of the obligations hereunder and under the Loan Documents, and under all
other instruments executed or delivered pursuant thereto, and under the material terms
of any other contract or agreement entered into by the Borrower in connection with the
completion of the Improvements.
	 
	 	7.2	 	Information. The Borrower will promptly furnish to the Lender all
requested information concerning the Project and the financial status of the Borrower
and shall furnish on request updated budgets and disbursement schedules relating to the
Project. Beginning with the quarter ending December 31, 2011, and quarterly
thereafter, the Borrower will provide Lender with (i) Borrower’s financial statements
within forty-five (45) days following the end of each calendar quarter for the
immediately preceding calendar quarter; and (ii) a quarterly rent roll for the Project
within fifteen (15) days following the end of each calendar quarter for the immediately
preceding calendar quarter. Beginning with the calendar year ending December 31, 2011,
and every year thereafter, the Borrower will provide the Lender with Borrower’s annual
financial statements within ninety (90) days after the end of each calendar year. All
financial statements to be provided by the Borrower must
consist of at least a balance sheet, income statement, and such other statements as
may be reasonably required by Lender. The Guarantor will provide the Lender with
quarterly financial statements for the Guarantor, within forty-five (45) days after
the close of each of the first three calendar quarters for the immediately preceding

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	 	 	 	calendar quarter and annual statements within ninety (90) days after the close of
each calendar year for the immediately preceding calendar year. The Borrower and
the Guarantor will provide the Lender with copies of the Borrower’s and the
Guarantor’s annual filed tax returns for each year on or before October 31 of each
year; it being acknowledged that a copy of the quarterly financials and annual audit
report filed by the Guarantor with the Securities and Exchange Commission will
satisfy the foregoing requirements.
	 
	 	7.3	 	Litigation. The Borrower will promptly furnish to the Lender written
notice of any litigation in which the Borrower is involved and litigation affecting the
Project, the Building Site or relating to the Improvements.
	 
	 	7.4	 	Construction Standards. The Borrower will construct the Improvements
in substantial compliance with the Plans and Specifications as determined by Lender and
Inspector, and in compliance with applicable ordinances, building codes, zoning
regulations and other governmental requirements, including but not limited to the
Americans With Disabilities Act, and free from encroachment upon building lines,
easements and property lines.
	 
	 	7.5	 	No Liens or Indebtedness. The Borrower shall not incur any
indebtedness, or create, assume or suffer to exist any deed of trust, mortgage, pledge,
lien, charge or encumbrance on the Project, excluding only indebtedness and
encumbrances in favor of the Lender, tenant leases, utility easements that are
non-blanket in nature and are necessary in conjunction with the development of the
Project and which will not encroach on any of the buildings to be located on the
Project, and trade payables incurred in the ordinary course of business.
	 
	 	7.6	 	Use of Loan Proceeds. The Borrower shall not permit any funds advanced
to the Borrower under this Loan Agreement to be used for any purpose other than the
purposes set forth in Section 1 hereof.
	 
	 	7.7	 	Estoppel Certificates. On request by Lender, either verbally or in
writing, Borrower shall furnish promptly a written statement or affidavit, in such form
as shall be satisfactory to Lender, stating the unpaid balance of the Note and that
there are no offsets or defenses against full payment of the Note, or if there are such
offsets and defenses, specifying the same.
	 
	 	7.8	 	Guarantor Covenants. Until such time as the Borrower provides the
Lender with certificates of occupancy for all eleven (11) buildings to be located on
the Project (the “Global Covenant Expiration Date”), the Guarantor agrees to comply
with all of the Guarantor’s financial covenants, borrowing base covenants, and maximum
permitted investment covenants as agreed to with Citibank, N.A. (the “Citibank
Covenants”)
under a certain Credit Agreement dated October 19, 2010, as the same may be amended
from time to time (the “Credit Agreement”), which Citibank Covenants are set forth
in a certain Borrowing Base Certificate dated November 12, 2010, attached as Exhibit
“C” hereto (the “Citibank Certificate”). At all times after the Lender has been
provided with certificates of occupancy for all eleven (11)

10

 

	 	 	 	buildings located on the
Project, the Guarantor agrees to comply with the following financial covenants as
set forth in the Credit Agreement: (a) Maximum Leverage Ratio; (b) Maximum Secured
Recourse Debt Ratio; (c) Minimum Fixed Charge Coverage Ratio; (d) Minimum Borrowing
Base Debt Service Coverage Ratio; and (e) Minimum Weighted Average Occupancy of
Borrowing Base Assets (the “BOK/Citibank Covenants”). All of such Citibank
Covenants referenced in the Citibank Certificate are hereby incorporated herein by
reference and the Guarantor agrees with the Lender to comply with all of such
Citibank Covenants, as they may be amended from time to time until the Global
Covenant Expiration Date, and thereafter Guarantor agrees with the Lender to comply
with all of the BOK/Citibank Covenants. All terms used in the Citibank Certificate
that are defined in the Credit Agreement will have the same meaning herein. The
Guarantor will also provide the Lender with a compliance certificate evidencing the
calculation of the Citibank Covenants and the BOK/Citibank Covenants, as applicable,
at the same time and for the same periods that Guarantor is required to provide the
same to Citibank, N.A. pursuant to the reporting requirements under the Credit
Agreement.
	 
	 	7.9	 	Debt Service Coverage Ratio. Commencing with the calendar quarter
ending March 31, 2013, and tested as of the last day of every third month thereafter
for the three-month period ending on such date, a Debt Service Coverage Ratio of at
least 1.20 to 1.00 will be maintained during the term of the Note and all renewals and
modifications thereof. For purposes of Sections 7.9 and 7.10 hereof only, the term
“Debt Service Coverage Ratio” means the ratio of (i) the Borrower’s net operating
income for the Project for the three-month period ending on the testing date (with
expenses being adjusted to reflect a three months’ proration of the annual expenses for
real estate taxes and insurance) divided by (ii) the total of all the Borrower’s debt
service payable by the Borrower to the Lender during such three month period ending on
the testing date.
	 
	 	7.10	 	Compliance Certificates; Default and Remedies. The Borrower will
provide the Lender with Compliance Certificates commencing on April 30, 2013 and on the
30th day of every third month thereafter reflecting the computation of the
Debt Service Coverage Ratio as of the last day of the immediately preceding calendar
quarter (the “Compliance Certificates”). If any of the Compliance Certificates reflect
a Debt Service Coverage Ratio of less than 1.20 to 1.00, the Borrower will be required
to either deposit cash with the Lender (the “Cash Deposit”) within three (3) business
days or provide a standby letter of credit for the benefit of the Lender (the
“Collateral Letter of Credit”) within fifteen (15) business days after the date of such
Compliance Certificate, which Cash Deposit or Collateral Letter of Credit will be in an
amount that results in a Debt Service Coverage Ratio of at least 1.20 to 1.00, which
amount for purposes of the Debt Service Coverage Ratio calculation will be deemed to be
additional net operating income. If a Cash Deposit is made, such Cash Deposit will
be made into a restricted deposit account with the Lender, and the Borrower will
execute a Security Agreement covering such Cash Deposit as additional collateral to
secure payment of the indebtedness evidenced by the Note, all renewals and
modifications thereof, interest thereon and expenses of collection thereof. If a

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	 	 	 	Collateral Letter of Credit is provided, such Collateral Letter of Credit must be
provided by a financial institution and be on terms satisfactory to the Lender,
which terms will include but not be limited to an expiration date thirty (30) days
after the Maturity Date, with annual automatic extensions until a final expiration
of thirty (30) days after the First Extended Maturity Date, and drafts to be paid
based only on Lender’s signed statement that Lender is entitled to draw. After the
initial Cash Deposit or Collateral Letter of Credit is provided, the required
amounts thereof will either be reduced and released, amended or increased from time
to time thereafter as necessary to provide a Debt Service Coverage Ratio of at least
1.20 to 1.00.
	 
	 	7.11	 	Completion of Construction. The Borrower will complete construction of
at least eight (8) of the ten (10) residential apartment buildings contained within the
Project in accordance with the Construction Budget and the Plans and Specifications,
and shall have obtained certificates of occupancy for such eight (8) buildings on or
before September 15, 2011, subject to reasonable delays caused by any force majeure
event.
	 
	 	7.12	 	Payment of Taxes And Insurance. All taxes, insurance, assessments and
governmental charges or levies imposed on the Borrower or on any of Borrower’s assets,
income or profits will be paid prior to the date on which penalties attach thereto. On
Lender’s request after a Default has occurred and is continuing hereunder, Borrower
will be required to make monthly deposits for real estate taxes, insurance, assessments
and similar charges equal to one-twelfth (1/12) of the annual charges estimated by
Lender or accumulate authorized funds with Lender to pay such impositions thirty (30)
days prior to their due dates, such deposits to be held by Lender in an interest
bearing account, with any balance remaining therein being returned to Borrower after
the payment in full of all indebtedness owing by Borrower to Lender.
	 
	 	7.13	 	Books and Records. The Borrower will keep and maintain accurate books
and records of accounts in regard to the Project, which will be kept in accordance with
sound accounting principles consistently applied.
	 
	 	7.14	 	Lender’s Access. Borrower will at all reasonable times (after advance
notice to Borrower unless a Default exists) and as often as Lender may request, permit
any of Lender’s officers and employees, and any authorized representative of Lender,
including but not limited to the Inspector, to visit and inspect Borrower’s offices and
the Project, to enter upon the Building Site, the Improvements during and after
construction, and the Project, to inspect the construction progress of the Improvements
and all materials to be used in connection with the Improvements, to examine and make
copies of, or take extracts from, Borrower’s books of account, records or other papers
relating to the Project, and to be advised of the business,
operation and financial affairs of the Project by appropriate representatives of the
Borrower.
	 
	 	7.15	 	Membership List. Commencing on the date hereof and annually hereafter
or otherwise as requested by Lender, the Borrower will provide Lender with a current,
complete, certified list of the names and addresses of all members of the Borrower.

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	 	7.16	 	Membership Interests. The Borrower will not issue any new membership
interests to any parties other than the current members of the Borrower unless the
Lender has consented to such issuance in writing. Except as expressly permitted in the
Deed of Trust, the current members of the Borrower will not transfer any of their
membership interests in the Borrower unless the Lender has consented to such transfer
in writing.
	 
	 	7.17	 	Post Completion Survey. Promptly after completion of the construction
of all of the foundations of the Improvements, the Borrower shall furnish to the
Lender, in form and substance acceptable to the Lender, a survey of the Project showing
the location of such foundations and all easements on and appurtenant to the Project in
addition to those items which were required by the Lender to be shown in the initial
survey.
	 
	 	7.18	 	Soil Report. The Borrower will comply with all recommendations
contained in the Soil Report with respect to the construction of the Improvements.
	 
	 	7.19	 	Bank Accounts. So long as any indebtedness is owing by Borrower to
Lender, the Borrower’s bank account related to the Improvements will be maintained with
the Lender.
	 
	 	7.20	 	No Distributions. After the occurrence and continuation of a Default,
the Borrower will not make any distributions to any of its members without the prior
written consent of the Lender.
	 
	 	7.21	 	Development Fee Deferral. The Borrower and Campus Crest Development,
LLC (the “Developer”) shall execute and deliver to the Lender an agreement which
provides for a deferral of $250,000.00 of Developer’s development fee related to the
Project until such time as construction of all of the Improvements is completed to the
Lender’s satisfaction and Borrower has provided Lender with copies of the Certificates
of Occupancy for each of the eleven (11) buildings constructed on the Project (the
“Developer’s Fee Deferral Agreement”).
	 
	 	7.22	 	Single Asset Entity. The Borrower agrees that Borrower will not own
any property other than the Project and personal property associated therewith and will
not engage in any other business other than the ownership, construction and operation
of the Project.
	 
	 	7.23	 	Insurance. The Borrower will maintain or cause to be maintained at all
times the insurance coverage required by the provisions of Section 6.5 hereof and this
Section 7.23.

	 	7.23.1	 	Special Perils Insurance. Promptly after substantial completion of
the Project and before the expiration of the builders risk coverage at the
Project, Borrower will acquire and will thereafter maintain property insurance
issued by an insurance company and on terms satisfactory to the Lender against
all risks of loss to the Project customarily covered by “All Risk” or “Special
Perils Form” policies as available in the insurance market (the “Special Perils
Insurance”). Special Perils Insurance shall cover at least the following
perils: building collapse, fire, flood, tornado, impact of vehicles and
aircraft,

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	 	 	 	lightning, malicious mischief, mudslide, subsidence, vandalism, water
damage, and windstorm. Each Special Perils Insurance policy shall cover:

	 	a.	 	The additional expense of demolition and
increased cost of construction including increased cost from any
changes in laws on restoration, all of which shall have a $1,000,000.00
limit;
	 
	 	b.	 	At least one hundred percent (100%) of the
replacement value of the Improvements located on the Project; and
	 
	 	c.	 	All tenant improvements and betterments that
any of the leases on the Project require the Borrower to insure (the
“Insured Leasehold Property”).
	 
	 	d.	 	Any Special Perils Insurance policy shall
contain an agreed amount endorsement or a coinsurance waiver and
replacement cost value endorsement without reduction for depreciation.
Such Special Perils Insurance will also cover damage caused by acts of
terrorists.

	 	7.23.2	 	Flood Insurance. If any of the Improvements located on the Project
are located in an area designated as “flood prone” or a “special flood hazard
area” under the regulations for the National Flood Insurance Act of 1968 and
the Flood Disaster Protection Act of 1973, 42 U.S.C. §4001 et seq., Borrower
shall acquire as soon as it is available and thereafter maintain at least the
maximum coverage for the Project available under the federal flood insurance
plan (“Flood Insurance”).
	 
	 	7.23.3	 	Rent Loss Insurance. Upon issuance of the Special Perils
Insurance, as an extension to Special Perils Insurance and Flood Insurance,
Borrower shall acquire and will thereafter maintain rental loss insurance on an
“actual loss sustained” basis (“Rental Loss Insurance”). (“Property Insurance”
means all insurance the previous sentence mentions.) Borrower shall maintain
Rental Loss Insurance equal to at least twelve (12) months of Borrower’s actual
gross rentals, including percentage rent, escalations, and all other recurring
sums payable by tenants under leases covering the Project or otherwise derived
from Borrower’s operation of the Project. In addition, Rental Loss
Insurance shall be endorsed to include an extended period of indemnity of 90
days, as Lender shall require from time to time.
	 
	 	7.23.4	 	Statutory Employees’ InsuranceU. Promptly after completion of the
Project and prior to Borrower’s employment of any employees, Borrower shall
acquire and will thereafter maintain workers’ compensation and disability
insurance as required by law (“Statutory Employees’ Insurance”).
	 
	 	7.23.5	 	Documentation. For all Property Insurance, Borrower shall cause
Lender to be named as “Lender Loss Payee” or “Mortgagee” on a standard
mortgagee

14

 

	 	 	 	endorsement (or its equivalent) naming Lender or its designee as the
party to receive insurance proceeds. Borrower shall provide such additional
evidence of Lender’s interest under insurance required to be provided under
this Loan Agreement as Lender shall reasonably require from time to time,
including the following (the “Evidence of Insurance”):

	 	a.	 	Endorsements for all Property Insurance and
Builder’s Risk Insurance reflecting the Lender as a loss payee and
mortgagee.
	 
	 	b.	 	Borrower shall deliver to Lender, promptly upon
issuance, copies of the insurance policies (or Evidence of Insurance)
for all insurance required to be provided by Borrower or the General
Contractor under this Loan Agreement, together with all endorsements
required hereunder, certified as true and complete by the carrier or
its authorized representative. Borrower shall deliver evidence of
renewal of all insurance policies in compliance with the Loan Documents
within ten (10) days after receipt thereof.
	 
	 	c.	 	If at any time Lender has not received
satisfactory written evidence that Borrower maintains and has paid for
all insurance required to be provided by Borrower or the General
Contractor under this Loan Agreement, then without limiting Lender’s
remedies, Lender may (but shall have absolutely no obligation to) force
place any such insurance or take such other actions as Lender shall
deem appropriate to protect its interests. Lender’s costs of doing so
shall constitute loans to the Borrower, all of which Borrower agrees
will be secured by the Loan Documents.
	 
	 	d.	 	Borrower may provide any insurance required to
be provided hereunder under a blanket policy or policies covering the
Project and other property and assets, provided that:

	 	i.	 	The blanket policy otherwise
meets all requirements for insurance as set forth herein, and,
except in the case of Liability Insurance, specifies how much
coverage, and which sublimits, apply exclusively to the Project;
and
	 
	 	ii.	 	The amount allocated to the
Project equals or exceeds the required coverages hereunder.

	8.	 	MECHANIC’S LIENS. Borrower and Guarantor hereby jointly and severally agree to
indemnify and hold harmless the Lender from and against any and all loss, liability, claims,
demands, debts, damages, actions, causes of actions, lawsuits, expenses, attorneys’ fees, and
costs of any kind or character whatsoever, known or unknown, suspected or unsuspected, in
contract or in tort, for indemnity or contribution, at law or in equity, which any person or
party (the “Claimant”) now has or may hereafter have against the Lender for or by reason of

15

 

	 	 	any mechanic’s or materialman’s lien which relates to or arises out of work performed or
services provided to or equipment, materials or supplies being provided to the Project.
	 
	9.	 	ADMINISTRATION OF LOAN. Lender shall make disbursements under the Note to fund the
itemized amounts set forth in the Construction Budget and for the other purposes set forth in
Section 1 hereof, subject to the following conditions in addition to those conditions set
forth in Section 6 hereof and the subsections thereunder.

	 	9.1	 	Purpose. The amounts to be disbursed under the Note shall be used only
for the purposes set forth in Section 1 hereof.
	 
	 	9.2	 	Request for Advance. For each advance under the Loan Commitment, the
Borrower shall deliver to Lender, an AIA G702 and G703 form of Request for Advance (the
“Request for Advance”), and stating the amount of disbursement requested, at least five
(5) business days before the requested date of disbursement. Each Request for Advance
shall be approved, signed and notarized by the Borrower and the General Contractor, and
shall be accompanied by billing statements, vouchers, invoices, lien waivers and such
other documents as required by Lender and the Inspector. Each Request for Advance will
expressly warrant that the work for which the advance is requested is for actual costs
incurred for the construction of the Improvements as set forth in the Construction
Budget, provided that any request for payment of all or any portion of a “contingency”
item in the Construction Budget will not be funded without the Lender’s prior written
approval, it being understood that the advance by Lender of any portion of a
“contingency” item in the Construction Budget pursuant to a Request for Advance shall
constitute Lender’s prior written approval for purposes hereof. Each Request for
Advance shall constitute an affirmation that all representations and warranties made by
Borrower remain true and correct as of the date of such Request for Advance.
	 
	 	9.3	 	Conditions. The following conditions must be satisfied before the
Lender will be obligated to fund a Request for Advance:

	 	9.3.1	 	proof, satisfactory to the Lender and the Inspector, that all
invoices for labor and materials have been paid, except those contained in the
current Request for Advance;
	 
	 	9.3.2	 	lien waivers from all payees under previous Requests for
Advances;
	 
	 	9.3.3	 	a monthly inspection report signed by the General Contractor
and the Inspector, which shall specify the estimated percentage of completion
of the Improvements, together with detailed comments on the specific work
performed since the date of the last report rendered to the Lender, and which
will certify that all work previously performed in connection with the
Improvements has been completed in substantial accordance with the Plans and
Specifications and that all subcontractors who have provided materials and/or
labor in connection therewith have been paid in full or will be paid in

16

 

	 	 	 	full
with the loan proceeds advanced pursuant to any outstanding Request for
Advance, subject to any applicable retainage;
	 
	 	9.3.4	 	an endorsement to the Lender’s mortgagee’s title insurance
policy, extending the effective date of the policy to the date of the
endorsement, showing no liens of record or additional encumbrances not
acceptable to Lender that were not previously shown on the policy, and
increasing the effective amount of the coverage to the total amount outstanding
under the Note;
	 
	 	9.3.5	 	a foundation survey shall have been delivered within a
reasonable time after completion of the foundations before any advances will be
made for work above the footings stage, which foundation survey must show all
construction to be within the property lines and disclosing no encroachments or
violations of setback or other restrictions, and disclosing no easements within
the foundation;
	 
	 	9.3.6	 	verification that the actual Project costs do not exceed the
budgeted costs on an itemized basis as shown in the Construction Budget subject
to Section 6.23, and such other itemization and information with respect to
such costs as may be requested by Lender;
	 
	 	9.3.7	 	if requested by Lender, a schedule, satisfactory to the Lender
and the Inspector, of the estimated amount and time of disbursements of the
cash advances to be made hereunder; and
	 
	 	9.3.8	 	if requested by the Lender, evidence, satisfactory to Lender,
that Borrower has sufficient financial resources to complete the Improvements
to any extent by which the costs shall exceed the unadvanced portion of the
Note.

	 	 	 	All of the above information shall be obtained and submitted to the Lender at the
Borrower’s expense.
	 
	 	9.4	 	Inspection. Lender may, at Lender’s option, cause the Project to be
inspected by the Inspector or other representative of the Lender, at Borrower’s
expense, before making any advance for a reasonable time prior to making such advance,
and the Lender shall not be required to make any advance until such inspection has been
made.
	 
	 	9.5	 	Disbursements. The Lender shall, on the date the requested advance is
to be made or as soon thereafter as all conditions precedent to such advance have been
satisfactorily met, deposit such advance in the Borrower’s special account with the
Lender into which all advances hereunder may be deposited, and against which only
checks shall be drawn for payment of the approved costs of the Improvements and other
costs incidental thereto and approved herein, or, at the discretion of the Lender, such
advance may be made by delivering checks to approved payees whose invoices are entitled
to be paid from the proceeds of the advance. Advances under the Note shall not be made
more often than twice monthly and advances under the Note may,

17

 

	 	 	 	at the option of the
Lender, be recorded on the Note and/or by deposits to the foregoing account, and such
records shall be conclusive evidence of all advances made under the Note.
Notwithstanding the foregoing disbursement procedure, the Lender may, at its
discretion, make all disbursements to a title company escrow account, and such title
company will draw checks on such account for payment of the items approved by the
Lender. Any expense incurred because of the disbursement through a controlled title
company escrow account shall be paid by the Borrower.
	 
	 	9.6	 	Retainage. An amount equal to 10% of that portion of each requested
disbursement which is payable to the General Contractor or any subcontractor for work
performed on construction of the Improvements or materials delivered to the Building
Site, shall be retained by the Lender (herein called the “Retainage”); provided,
however, Lender shall withhold Retainage only to the extent the Borrower has withheld
retainage. The Retainage shall be disbursed by the Lender to the Borrower upon the
expiration of thirty (30) days after the completion of the Improvements in accordance
with the plans and specifications as certified by the Lender’s Inspector, provided:

	 	9.6.1	 	a Request for Advance shall have been submitted with respect
to the Retainage;
	 
	 	9.6.2	 	all governmental requirements shall have been satisfied, and a
certificate of occupancy and other certificates evidencing completion of the
Improvements shall have been issued, if appropriate;
	 
	 	9.6.3	 	final endorsements to the Lender’s title insurance policy
shall have been issued without reflecting any liens or encumbrances as
exceptions to coverage, and which provides affirmative coverage against liens;
	 
	 	9.6.4	 	the representations and warranties made in this Loan Agreement
shall be true and correct on the date of disbursement of the Retainage;
	 
	 	9.6.5	 	there shall be no Default (as defined below) under this Loan
Agreement or any of the Loan Documents, and all other conditions enumerated in
this Loan Agreement shall have been strictly satisfied.

	 	9.7	 	Termination of Advances. Advances shall not be made under the Note if:
(i) any of the Loan Documents cease to be in full force and effect or are revoked;
(ii) loan funds
available are not equal to or greater than the remaining cost to complete
construction of the Project; (iii) a Default exists under the terms of this Loan
Agreement or any of the Loan Documents; or (iv) all of the conditions set forth in
Sections 6.21 through 6.26 have not been satisfied or performed.

	10.	 	ANTI-MONEY LAUNDERING AND INTERNATIONAL TRADE CONTROLSU.

	 	10.1	 	Compliance with International Trade Control Laws and OFAC RegulationsU.
Borrower represents, warrants and covenants to Lender that:

18

 

	 	10.1.1	 	Borrower is not now nor shall the Borrower be at any time until after the
Note, and all renewals and modifications thereof, is fully repaid a person with
whom a U.S. person, including a financial institution, is prohibited from
transacting business of the type contemplated by this Loan Agreement, whether
such prohibition arises under U.S. law, regulation, executive orders or lists
published by the Office of Foreign Assets Control (“OFAC”) of the Department of
the Treasury of the United States of America (including those executive orders
and lists published by OFAC with respect to Specially Designated Nationals and
Blocked Persons) or otherwise;
	 
	 	10.1.2	 	No member of the Borrower and, to the Borrower’s knowledge, no person who
owns a direct or indirect interest in the Borrower is now nor shall be at any
time until after the Note, and all renewals and modifications thereof, is fully
repaid a person with whom a U.S. person, including a financial institution, is
prohibited from transacting business of the type contemplated by this Loan
Agreement, whether such prohibition arises under U.S. law, regulation,
executive orders or lists published by the OFAC (including those executive
orders and lists published by OFAC with respect to Specially Designated
Nationals and Blocked Persons) or otherwise.

	 	10.2	 	Borrower’s Funds. Borrower represents, warrants and covenants to
Lender that:

	 	10.2.1	 	The Borrower has taken, and shall continue to take until after the Note, and
all renewals and modifications thereof, is fully repaid, such measures as are
required by law to verify that the funds invested in the Borrower are derived
(a) from transactions that do not violate U.S. law nor, to the extent such
funds originate outside the United States, do not violate the laws of the
jurisdiction in which they originated; and (b) from permissible sources under
U.S. law and to the extent such funds originate outside the United States,
under the laws of the jurisdiction in which they originated;
	 
	 	10.2.2	 	Neither the Borrower, nor any member of the Borrower, nor, to the Borrower’s
knowledge, any holder of a direct or indirect interest in the Borrower nor any
person providing funds to Borrower (a) is under investigation by any
governmental authority for, or has been charged with, or convicted of, money
laundering, drug trafficking, terrorist-related activities,
any crimes which in the United States would be predicate crimes to money
laundering, or any violation of any state or federal anti-money laundering
laws; (b) has been assessed civil or criminal penalties under any state or
federal anti-money laundering laws; or (c) has had any of its/his/her funds
seized or forfeited in any action under any state or federal anti-money
laundering laws;
	 
	 	10.2.3	 	Borrower shall make payments on the loan evidenced by the Loan Documents
using funds invested in Borrower, operating revenues or insurance proceeds
unless otherwise agreed to by Lender;

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	 	10.2.4	 	As of the initial funding of the loan and at all times during the term of the
Note, all operating revenues are and will be derived from lawful business
activities of Borrower or other permissible sources under U.S. law; and
	 
	 	10.2.5	 	On the Maturity Date, the Borrower will take reasonable steps to verify that
funds used to repay the loan in full (whether in connection with a refinancing,
asset sale or otherwise) are from sources permissible under U.S. law and to the
extent such funds originate outside the United States, permissible under the
laws of the jurisdiction in which they originated.

	11.	 	DEFAULT. Each of the following shall constitute a default hereunder and under each
of the Loan Documents (“Default”):

	 	11.1	 	Nonpayment of Note. Failure to make payment of any interest on or
principal of the Note or any renewals or modifications thereof within five (5) days
after the due date thereof; or
	 
	 	11.2	 	Other Nonpayment. Failure to make payment of any other amount payable
under the terms of this Loan Agreement or any of the Loan Documents within five (5)
days after the due date thereof; or
	 
	 	11.3	 	Breach of Covenants. Breach by the Borrower or the Guarantor in the
performance or observance of any covenant made under this Loan Agreement or any of the
Loan Documents, or under the terms of any other instrument delivered to Lender in
connection with this Loan Agreement; provided that with respect to any of the
Borrower’s covenants which are non-monetary in nature, the Borrower will have
forty-five (45) days to cure the breach of such covenant after written notice thereof
is given by the Lender to the Borrower before such occurrence will constitute a Default
hereunder (except with respect to a breach of the covenants set forth at Sections 7.8,
7.9, 7.10 and 7.11 hereof for which no additional cure period is provided other than
those set forth in the Credit Agreement and in Section 7.10, as applicable), and with
respect to any of the Guarantor’s Citibank Covenants the Guarantor will be entitled to
the same notice and cure provisions, if any, as are provided to the Guarantor under the
Credit Agreement; or
	 
	 	11.4	 	Creation of Liens. The creation or enforcement of any lien, deed of
trust, pledge, security interest, encumbrances or other lien (including a lien of
attachment, judgment or execution) securing a charge or obligation affecting any or all
of the Project other than encumbrances in favor of the Lender, and except with respect
to materialmen’s liens which have been duly discharged by the Borrower within thirty
(30) days after the filing thereof; or
	 
	 	11.5	 	Ownership. The assignment, sale, transfer, encumbrance or conveyance
of all or any portion of the Project without the prior written consent of Lender, or if
the ownership or control of the Project becomes vested in a person or entity other than
the Borrower without the prior written consent of Lender, or if any of the membership
interests in the Borrower are conveyed to a third party who is not a member of the
Borrower as

20

 

	 	 	 	of the date hereof; provided that any transfers of a direct or indirect
interest in Campus Crest Properties, LLC (“CCP”) will not constitute a prohibited
transfer hereunder so long as (a) CCP continues to be the Manager of the Borrower and
continues to have an ownership interest in the Borrower and (b) Campus Crest
Communities Operating Partnership, LP continues to be the indirect owner of at least
51% of the membership interest in CCP; or
	 
	 	11.6	 	Liquidation, Merger or Disposition of Assets. The liquidation,
dissolution or entering into any consolidation, merger, partnership, joint venture,
syndicate, pool, operating agreement, or other combination, or conveyance, sale,
assignment or lease of any part of the assets or business of the Borrower (except for
the lease of space in the Project in the ordinary course of Borrower’s business); or
	 
	 	11.7	 	Judgment. Entry by any court of final judgment (and the expiration of
all appeals) against the Borrower or the Guarantor in excess of U.S. $100,000.00, or an
attachment of any property of the Borrower or the Guarantor which is not discharged to
the satisfaction of Lender within thirty (30) days thereof; or
	 
	 	11.8	 	Casualty Loss; Condemnation. Substantial damage or destruction by
casualty or taking by rights of eminent domain of all or any substantial portion of the
Project so as to materially affect the Borrower’s ability to perform the Borrower’s
obligations under the Loan Documents if the Borrower is not entitled to use insurance
or condemnation proceeds to restore and rebuild the Project pursuant to the provisions
of Section 2.8(c) or Section 2.9(c), as applicable, of the Deed of Trust; or
	 
	 	11.9	 	Variance from Plans and Specifications. Subject to the terms of
Section 6.22, any changes in the Plans and Specifications without the Lender’s prior
written consent; or
	 
	 	11.10	 	Work Stoppage. The abandonment or cessation of the work on the
Project for a period of ten (10) consecutive days, unless such cessation is a result of
a force majeure event; or
	 
	 	11.11	 	Bankruptcy. The occurrence of any of the following events: (i) the
institution of bankruptcy, reorganization, liquidation or receivership proceedings by
the Borrower
or the Guarantor; or (ii) the institution of involuntary bankruptcy, reorganization,
liquidation or receivership proceedings against the Borrower or the Guarantor,
provided that any such involuntary proceeding resulting in a Default may be cured if
dismissed or discharged within sixty (60) days after the filing thereof; or (iii)
the making of any assignment for the benefit of creditors by or against the Borrower
or the Guarantor; or (iv) if the Borrower or the Guarantor becomes insolvent; or (v)
any admission by the Borrower or the Guarantor of its or their inability to pay its
or their debts as such debts mature; or
	 
	 	11.12	 	Termination of Existence. The Borrower ceases to be a validly
existing Delaware limited liability company authorized to do business in the State of
Missouri; or

21

 

	 	11.13	 	Governmental Requirements. Failure to comply with any order, decree
or judgment pursuant to any judicial or administrative proceeding declaring that the
Improvements or the construction thereof, or the Project or the operation thereof is in
material violation of any federal, state or local law, ordinance, rule or regulation
within sixty (60) days after the issuance thereof; or
	 
	 	11.14	 	Representations. Any representation, warranty, statement,
certificate, schedule or report made or furnished to the Lender by the Borrower under
any of the Loan Documents or otherwise proves to be false or erroneous in any material
respect at the time of the making thereof; or
	 
	 	11.15	 	Loan Documents. Any of the Loan Documents cease to be valid, legally
binding or enforceable; or
	 
	 	11.16	 	Revocation of Loan Documents. The revocation or termination by the
Borrower or the Guarantor of any of the Loan Documents; or
	 
	 	11.17	 	Material Adverse Change. The occurrence of a material adverse change
in the financial condition or business operation of the Borrower or the value of the
Project; or
	 
	 	11.18	 	Termination Notice. The receipt by the Lender of a notice sent by the
Borrower pursuant to Section 443.055(6) of the Missouri Statutes whereby the Borrower
terminates the operation of the Deed of Trust as security for future advances; or
	 
	 	11.19	 	Debt Service Coverage Default. Borrower’s failure to provide the Cash
Deposit within three (3) business days or the Letter of Credit within fifteen (15)
business days after the date of any Compliance Certificate which reflects a Debt
Service Coverage Ratio of less 1.20 to 1.00; or
	 
	 	11.20	 	Developer’s Fee. A breach by the Borrower or Campus Crest
Development, LLC of the Developer’s Fee Deferral Agreement.

	12.	 	REMEDIES. On the occurrence of a Default, as defined in Section 11 of this Loan
Agreement, the Lender may, at its option:

	 	12.1	 	Acceleration of Note. Terminate making advances under the Note, and
declare the Note or any renewals or modifications thereof to be immediately due and
payable whereupon the Note or any renewals or modifications thereof shall become
forthwith due and payable without presentment, demand, protest or notice of any kind,
and the Lender shall be entitled to draw on the Collateral Letter of Credit, and
proceed simultaneously or selectively and successively to enforce its rights under the
Note, the Deed of Trust, the Assignment of Rents, this Loan Agreement, and any or all
of the Loan Documents, and any of the instruments executed pursuant to the terms
thereof, or in connection therewith to evidence or secure the obligations of the
Borrower, and all renewals and modifications thereof. Nothing contained herein shall
limit Lender’s rights and remedies available under applicable law.

22

 

	 	12.2	 	Selective Enforcement. In the event the Lender shall elect to
selectively and successively enforce its rights under any of the Loan Documents, such
action shall not be deemed a waiver or discharge of any other lien, encumbrance or
security instrument securing payment of the Note until such time as the Lender shall
have been paid in full all sums advanced under the Note. The foreclosure of any lien
provided pursuant to the terms of the Loan Documents without the simultaneous
foreclosure of all such liens shall not merge the liens granted which are not
foreclosed with any interest which the Lender might obtain as a result of such
selective and successive foreclosure.
	 
	 	12.3	 	Completion by Lender. Subject to applicable law, the Lender shall have
the right, but shall not be obligated, to take possession of the Project and proceed to
complete the Improvements. In connection therewith, the Borrower hereby appoints the
Lender as the Borrower’s true and lawful attorney-in-fact with the full power of
substitution (which appointment is coupled with an interest and irrevocable) to
complete, or cause to be completed, the Improvements in Borrower’s name and shall
empower the Lender as follows: to use any funds of Borrower, including any balance
which may be held in escrow and any funds which remain unadvanced under the Note for
the purpose of completing the Improvements; to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required; to pay, settle or compromise
all existing bills and claims which are or may be liens against the Project or any part
thereof or may be necessary or desirable for completion of the work or the clearance of
title; to execute all applications and certificates in Borrower’s name which may be
required by any contract relating to construction of the Project; and to do any and
every act with respect to construction of the Project which Borrower may do on its own
behalf. It is understood and agreed that this power of attorney shall be deemed to be
a power coupled with an interest that cannot be revoked. The Lender, as Borrower’s
attorney-in-fact, shall also have the power to prosecute and defend all actions or
proceedings in connection with the Improvements on the Building Site and to take such
action and require such performance as is deemed necessary. At the time the Lender
takes possession of the Project, all proceeds to complete the Improvements, and all
materials on or near the Building Site or Improvements shall become the property of the
Lender to be used in said completion. The cost of said completion shall become an
obligation payable to the Lender by Borrower. The
Lender is authorized to add all costs necessary to complete the Improvements to
Borrower’s indebtedness owing to the Lender, holding the instruments executed in
connection with this loan as security for the payment thereof, irrespective of
whether the aggregate amount of such costs and the sums previously advanced
hereunder exceed the Loan Commitment.
	 
	 	12.4	 	Appointment of Receiver. The Lender will be entitled to obtain a Court
appointed receiver for the Project without notice to the Borrower or the Guarantor,
which notice is hereby waived.

	13.	 	MISCELLANEOUS. It is further agreed as follows:

23

 

	 	13.1	 	Origination Fee. A loan origination fee in the amount of $170,466.82
must be paid by Borrower to Lender contemporaneously with the execution, closing and
delivery of this Loan Agreement.
	 
	 	13.2	 	Expenses. Whether or not advances under this Loan Agreement are
actually made, the Borrower agree to pay all fees, expenses and charges in respect to
the loan contemplated by this Loan Agreement and the Loan Documents, including, without
limiting the generality thereof, the following:

	 	13.2.1	 	the reasonable fees and expenses of legal counsel employed by the Lender in
connection with the negotiation and preparation of the Loan Documents and the
closing of this loan;
	 
	 	13.2.2	 	all expenses incidental to obtaining a first priority Deed of Trust lien on
the Project, including but not limited to abstracting costs, title examination
fees, title insurance premiums, Deed of Trust taxes, documentary stamp taxes,
and closing costs;
	 
	 	13.2.3	 	survey costs, appraisal costs and costs for environmental reports, soil
reports, and structural design reports;
	 
	 	13.2.4	 	recording and filing fees, UCC search fees and notary fees;
	 
	 	13.2.5	 	other fees and expenses involved in the closing of this loan;
	 
	 	13.2.6	 	In addition to the legal fees described at Section 13.2.1, all reasonable
attorneys’ fees and expenses payable by the Lender which are incidental to (a)
the enforcement or defense of any or all of the Loan Documents or any renewals
or modifications thereof, and any instrument executed pursuant thereto; (b) the
negotiation and preparation of any renewals or modifications of the Loan
Documents; and (c) rendering any advice to the Lender related to the Loan
Documents, and any transactions contemplated thereby or related to the
enforcement or defense thereof; and

	 	13.3	 	Late Fees. Except with respect to the final payment due under the Note
on its maturity date, to the extent any payment due under the Note or any of the Loan
Documents is not paid within ten (10) calendar days after the due date therefor, in
addition to any interest or other fees and charges due under the Note or any of the
Loan Documents, the Borrower shall pay a late fee equal to 5% of the amount of the
payment that was required to have been made.
	 
	 	13.4	 	Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by a nationally
recognized overnight courier or by registered or certified mail, postage prepaid,
return receipt requested and addressed as listed below or to such other address as the
party concerned may substitute by written notice to the other. All notices shall be
deemed received on the date of personal delivery, the date of confirmation of receipt
of a

24

 

	 	 	 	facsimile transmission, or within three days (excluding Saturdays, Sundays and
holidays recognized in the United States) after being mailed:

	 	 	 	 	 

	 

	 	To the Borrower:
	 	Campus Crest at Columbia, LLC
	 

	 	 	 	2100 Rexford Road, Suite 414
	 

	 	 	 	Charlotte, North Carolina 28111
	 

	 	 	 	Attn: Donnie Bobbitt
	 

	 	 	 	Fax: (704) 973-0965
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Dawn Helms Sharff
	 

	 	 	 	Bradley Arant Boult Cummings, LLP
	 

	 	 	 	One Federal Place
	 

	 	 	 	1819 Fifth Avenue North
	 

	 	 	 	Birmingham, Alabama 35203-2119
	 

	 	 	 	Fax: (205) 488-6200
	 

	 	 	 	E-mail: dsharff@babc.com
	 
	 	 	 	 
	 

	 	To the Lender:
	 	BOKF, NA dba Bank of Oklahoma
	 

	 	 	 	9520 N. May Avenue
	 

	 	 	 	Oklahoma City, Oklahoma 73102
	 

	 	 	 	Attn: Bryan Geiger
	 

	 	 	 	Fax No.: (405) 936-3984
	 
	 	 	 	 
	 

	 	With a copy to:
	 	John W. Funk, Esq. and Justin L. Pybas, Esq.
	 

	 	 	 	Conner & Winters, LLP
	 

	 	 	 	One Leadership Square
	 

	 	 	 	211 N. Robinson, Suite 1700
	 

	 	 	 	Oklahoma City, Oklahoma 73102
	 

	 	 	 	Fax No.: (405) 232-2695

	 	13.5	 	Amendment and Waiver. This Loan Agreement and the Loan Documents may
not be amended or modified in any way, except by an instrument in writing executed by
all of the parties thereto; provided, however, Lender may, in writing: (i) extend the
time
for performance of any of the obligations of Borrower; (ii) waive any Default by the
Guarantor or the Borrower; and (iii) waive the satisfaction of any condition that is
precedent to the performance of Lender’s obligations under this Loan Agreement. In
the event of a waiver of a Default by Lender, such specific event of Default shall
be deemed to have been cured and not continuing, but no such waiver shall extend to
the reoccurrence of the same Default or any subsequent or other Default or impair
any consequence of such subsequent or other Default.
	 
	 	13.6	 	Non-Waiver; Cumulative Remedies. No failure on the part of Lender to
exercise and no delay in exercising any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Lender of any right hereunder
preclude any other or further right of exercise thereof. The remedies herein provided
are cumulative and not alternative.

25

 

	 	13.7	 	Applicable Law. This Loan Agreement, all of the Loan Documents and all
other documents executed pursuant thereto and in connection therewith to evidence or
secure the loan contemplated hereby shall be deemed to be a contract made under the
laws of the State of Oklahoma and will be governed by Oklahoma law, except for the Deed
of Trust and the Assignment of Rents which will be governed by Missouri law. Nothing
in this Loan Agreement shall be construed to constitute the Lender as a joint venturer
with the Borrower or to constitute a partnership among any of such parties.
	 
	 	13.8	 	Descriptive Headings. The descriptive headings of the paragraphs of
this Loan Agreement are for convenience only and shall not be used in the construction
of the terms hereof.
	 
	 	13.9	 	Integrated Agreement. This Loan Agreement, all of the Loan Documents,
and the other loan documents executed pursuant hereto or in connection herewith
supercede all prior letters, agreements, term sheets, and understandings among the
parties hereto, and constitute the entire agreement between the parties hereto, and
there are no agreements, understandings, warranties or representations between the
parties regarding the financing of the Project other than those set forth in the Loan
Documents.
	 
	 	13.10	 	Time of Essence. Time is of the essence of this Loan Agreement.
	 
	 	13.11	 	Binding Effect. This Loan Agreement shall be binding on and inure to
the benefit of the parties hereto, and their respective successors, personal
representatives, legal representatives and assigns.
	 
	 	13.12	 	Third Party Beneficiary. Nothing in this Loan Agreement, express or
implied, is intended to confer on any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of this
Loan Agreement.
	 
	 	13.13	 	Right to Defend. Lender shall have the right, but not the obligation,
at Borrower’s expense, to commence, to appear in or to defend any action or proceeding
(initiated by a third party against the Borrower) purporting to affect the rights or
duties of the parties hereunder and in connection therewith pay out of the funds of the
loan all necessary expenses, including fees of counsel, if Borrower fails to so
commence, appear in or defend any such action or proceedings with counsel satisfactory
to Lender.
	 
	 	13.14	 	Participation. Lender is authorized to sell participation interests
in the loan evidenced by this Loan Agreement to other financial institutions; and
Borrower agrees that subject to the terms of the agreements of participation, each
holder of a participation interest will be entitled to rely on the terms of the Loan
Documents executed in connection herewith as if such holder had been named as an
original party to the Loan Documents. The Borrower hereby ratifies and authorizes the
delivery by the Lender either before or after closing of any and all financial and
other

26

 

	 	 	 	information regarding the Borrower and the Guarantor, together with copies of the
Loan Documents, to any potential or actual participant.
	 
	 	13.15	 	Accuracy of Information. This Loan Agreement has been entered into by
the Lender based upon the information, data and representations furnished by the
Borrower to the Lender, and the Lender’s obligation to close and fund the loan is
subject to the continued accuracy of all matters submitted to the Lender herewith. By
acceptance hereof, the Borrower warrants to the Lender that all such information, data
and representations heretofore and hereafter furnished to the Lender are complete and
accurate in all material respects and there is contained therein no untrue statement of
a material fact or omission to state a material fact necessary in order to make the
statements made in light of the circumstances under which they were made not
misleading, and this warranty shall be true at the time the loan is closed and shall
survive closing.
	 
	 	13.16	 	Maximum Legal Rate of Interest. Notwithstanding any other provisions
of this Loan Agreement or any of the Loan Documents to the contrary, the total interest
charges incurred by the Borrower pursuant to the Note shall not exceed the maximum
legal rate of interest under Oklahoma law. If the holder of the Note shall ever be
entitled to receive, collect or apply, as interest on the loans, any amount in excess
of the maximum legal rate of interest permitted to be charged by applicable law, and,
in the event any holder of the Note ever receives, collects or applies, as interest,
any such excess, such amount which would be excessive interest shall be applied to the
reduction of the unpaid principal balance of the Note, and if the principal balance is
paid in full, any remaining excess shall be forthwith paid to Borrower. In determining
whether or not the interest paid or payable under any specific contingency exceeds the
highest lawful rate, Borrower and Lender shall, to the maximum extent permitted, under
applicable law: (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest; (b) exclude voluntary prepayments and the effects
thereof; (c) “spread” the total amount of interest on the
Note throughout the entire term of the Note so that the interest rate is uniform
throughout the entire term of the Note.
	 
	 	13.17	 	No Responsibility of Lender. No acceptance or approval (if any) by
Lender or anyone acting on Lender’s behalf, of the Improvements or the Project shall in
any way be deemed an express or implied warranty or representation or approval by
Lender or any one on behalf of Lender, that such Improvements or the Project: (a) are
or will be structurally sound, (b) are in good or workmanlike condition, repair or
state or maintenance, (c) have any particular use or purpose, or (d) have any
particular value, and Borrower and the Guarantor hereby jointly and severally indemnify
and hold Lender harmless from any such claims that might be made by any party.
Further, notwithstanding any term or provision of the Loan Documents, Lender shall not
have any obligation or responsibility for the management, conduct or operation of the
business and affairs of Borrower. No provision hereof or of any of the other Loan
Documents shall be construed or interpreted to create any relationship between Borrower
and Lender other than that of debtor and creditor.

27

 

	 	13.18	 	Notice of Title Protection. The Lender is obtaining its own title
protection in this transaction, and Borrower should seek competent advice as to whether
the Borrower should obtain any additional title protection to protect the Borrower.
	 
	 	13.19	 	Jurisdiction and Venue. The Borrower hereby submits to the
jurisdiction of any state or federal court located in Oklahoma County, Oklahoma, or
Boone County, Missouri, as elected by the Lender, in connection with any action or
proceeding commenced for the collection, enforcement, or defense of this Loan
Agreement, the Note, the Deed of Trust, or any of the other Loan Documents, and hereby
waives all objections to venue or any objections based on the theory of non-convenient
forum in connection therewith.
	 
	 	13.20	 	Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be an original instrument, but all of which taken
together will constitute one agreement.

[The remainder of this page is intentionally blank.]

28

 

     IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed as of the day
and year first above written.

	 	 	 	 	 	 	 	 	 

	 	 	CAMPUS CREST AT COLUMBIA, LLC,
 a Delaware limited
liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	CAMPUS CREST PROPERTIES, LLC,
 a North Carolina
limited liability company, 
Manager and Sole
Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

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

DONALD L. BOBBITT, JR., 
Manager
	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(the “Borrower”)	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CAMPUS CREST COMMUNITIES, INC., 
a Maryland
corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Donald L. Bobbitt, Jr.	 	 
	 	 	 	 	 	 	 
	 	 	 	 	DONALD L. BOBBITT, JR., 
Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(the “Guarantor”)	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BOKF, NA dba BANK OF OKLAHOMA	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Bryan G. Geiger 	 
	 	 	 	 	 	 	 
	 

	 	Name:	 	Bryan G. Geiger 	 
	 	 	 	 	 	 	 
	 

	 	Title:	 	Sr. Vice President 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	(the “Lender”)	 	 

29

 

EXHIBIT “A”

Legal Description

30

 

EXHIBIT A

Lot one
(1) of The Grove at Columbia, Plat 1, as shown by Plat of The Grove at Columbia,
Plat 1 recorded in Plat Book 45 at Page 3 of the Real Estate Records of Boone County, Missouri. 

 

 

EXHIBIT “B”

The Construction Budget

31

 

32

 

EXHIBIT “C”

Borrowing Base Certificate

33

 

Campus Crest Communities, Inc.

Borrowing Base Certificate 

Dated 11/12/2010

Citibank, N.A., as Administrative Agent under the Credit Agreement referred to below

1615 Brett Road

New Castle, Delaware 19720

Attention: Bank Loan Syndications Department

Pursuant to provisions of the Credit Agreement dated as of October 19, 2010 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”;
the terms defined therein, unless otherwise defined herein, being used herein as therein defined),
among Campus Crest Communities Operating Partnership, LP, a Delaware limited partnership (the
“Borrower”), Campus Crest Communities, Inc. (the “Parent Guarantor”), the Subsidiary Guarantors
party thereto, the Lender Parties thereto, Citibank, N.A., as Collateral Agent and as
Administrative Agent for the Lenders and such other lender parties and the Arrangers party thereto,
the undersigned, the Chief Financial Officer of the Parent Guarantor, hereby certifies and
represents and warrants on behalf of the Borrower as follows:

	1.	 	The information contained in this certificate and the information set forth on Schedule I
supporting the calculation of the financial covenants is true, complete and correct as of
the close
of business on September 30, 2010 (the “Calculation Date”) and has been prepared in
accordance
with the provisions of the Credit Agreement. The calculations below give effect to the
making of
the Revolving Credit Advance and the issuance of Letters of Credit through September 30,
2010
(collectively, the “Transaction”).
	 
	2.	 	As of the Calculation Date:

	 	(a)	 	Parent Guarantor Financial Covenants:

	 	(i)	 	Maximum Leverage Ratio. The Leverage Ratio is .43:
1.00, which is not greater than the maximum Leverage Ratio of 0.60:1.00
required by Section 5.04(a) (i) of the Credit Agreement.
	 
	 	(ii)	 	Maximum Secured Recourse Debt Ratio. The Secured
Recourse Debt Ratio is 0.00%, which is not greater than the maximum
Secured Recourse Debt Ratio of 20% required by Section 5.04(a)(ii) of the
Credit Agreement.

1

 

	 	(iii)	 	Minimum Tangible Net Worth. The tangible net worth of the Parent
Guarantor and its Subsidiaries is $286,986,000, which is not less than the
applicable minimum tangible net worth required by Section 5.04(a)(iii) of the
Credit Agreement.
	 
	 	(iv)	 	Minimum Ratio of Fixed Rate Debt for Borrowed Money and Debt for
Borrowed Money Subject to Hedge Agreements to Debt for Borrowed Money. The ratio
of fixed rate Debt for Borrowed Money and Debt for Borrowed Money subject to Hedge
Agreements to all Debt for Borrowed Money is 71%. which is not less than
66.67% as required by Section 5.04(a)(iv) of the Credit Agreement.
	 
	 	(v)	 	Maximum Dividend Payout Ratio. The Dividend Payout Ratio is
0.00%, which is equal to or less than the applicable maximum Dividend Payout
Ratio required by Section 5.04(a)(v) of the Credit Agreement.
	 
	 	(vi)	 	Minimum Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio is 2.95: 1.00, which is not less than the minimum Fixed Charge Coverage
Ratio of 1.50:1.00 as required by Section 5.04(a)(vi) of the Credit Agreement.

	 	(b)	 	Borrowing Base Covenants

	 	(i)	 	Maximum Facility Exposure to Borrowing Base Asset Value. The Facility
Exposure of $53,333,243 does not exceed the Total Borrowing Base Value of
$129,690,000, as required by Section 5.04(b)(i) of the Credit Agreement.
	 
	 	(ii)	 	Minimum Borrowing Base Debt Service Coverage Ratio. The
Borrowing Base Debt Service Coverage Ratio is 3.15: 1.00, which is not less
than the minimum Borrowing Base Debt Service Coverage Ratio of 1.50:1.00 as required
by Section 5.04(b)(ii) of the Credit Agreement.
	 
	 	(iii)	 	Minimum Appraised Value. The Appraised Value of the Borrowing
Base Assets is $216,150,000, which is not less than $130,000,000 as required
by Section 5.04(b)(iii) of the Credit Agreement.
	 
	 	(iv)	 	Minimum Number of Borrowing Base Assets. The number of Campus
Housing Assets comprising the Borrowing Base Assets is 12, which is not fewer than 10
as required by Section 5.04(b)(iv) of the Credit Agreement.
	 
	 	(v)	 	Maximum Size of Individual Borrowing Base Asset. The
individual Borrowing Base Asset with the highest Appraised Value (which is The
Grove at San Marcos, whose Appraised Value of $24,350,000) represents 11%
of the

2

 

	 	 	 	Appraised Value of the Borrowing Base Assets in the aggregate, which does not
exceed 15% as required by Section 5.04(b)(v) of the Credit Agreement.
	 
	 	(vi)	 	Minimum Weighted Average Occupancy of Borrowing Base Assets.
The average occupancy of the Borrowing Base Assets, weighted based upon the number of
beds comprising each Borrowing Base Asset, is 87%, which is equal to or
greater than 80% as required by Section 5.04(b)(vi) of the Credit Agreement.

	 	(c)	 	Maximum Permitted Investments

	 	(i)	 	The aggregate amount of Investments in unimproved land and Development
Assets (including such assets that such Person has contracted to purchase for
development with or without options to terminate the purchase agreement but, in such
instances, limited solely to non-refundable deposits under such contracts and, to the
extent a Loan Party is obligated under any such contract, the amount of such
obligation), calculated on the basis of the greater of actual cost or budgeted cost is
0.00% and .17% of Total Asset Value, respectively, and does not exceed
10% and 20%, respectively, of Total Asset Value as required by Section 5.02(f)(iv)(A)
of the Credit Agreement.
	 
	 	(ii)	 	The aggregate amount outstanding, without duplication, of Investments
in Joint Ventures of any Loan Party is 4.44% of Total Asset Value and does not
exceed 15% of Total Asset Value as required by Section 5.02(f)(iv)(B) of the Credit
Agreement.
	 
	 	(iii)	 	The aggregate amount of Investments permitted under 5.02(f) of the Credit
Agreement, other than the items of Investments referred to in clauses (i) and (ii)
above is 0.00% of Total Asset Value and does not exceed 10% of Total Asset
Value as required by Section 5.02(f)(iv)(C) of the Credit Agreement.
	 
	 	(iv)	 	The aggregate amount, without duplication, of Investments consisting of the
above items (i), (ii), and (iii) is 4.61% of Total Asset Value and does not
exceed: (1) 35% of Total Asset Value during the period from the Closing Date
through the fiscal quarter of the Parent Guarantor ending on June 30, 2011, (2) 30%
of Total Asset Value during the period thereafter ending with the fiscal quarter of
the Parent Guarantor ending on June 30, 2012 or (3) 25% of Total Asset Value, at
any time thereafter, as applicable and as required by Section 5.02(f)(iv) of the
Credit Agreement.

3

 

	 	 	In each case, with supporting information showing the computations used in determining
compliance with such covenants set forth on Schedule I attached hereto.
	 
	3.	 	The Borrowing Base Assets comply with all Borrowing Base
Conditions (other than those
previously waived: in writing by the Required Lenders).

	 	 	 	 	 
	 	CAMPUS CREST COMMUNITIES, INC.

 	 
	 	By:  	/s/ Donald L. Bobbitt, Jr.
	 
	 	 	Name:  	Donald L. Bobbitt, Jr. 	 
	 	 	Title:  	Chief Financial Officer 	 

4

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