Document:

exv10w52

Exhibit
10.52

PREPARED BY AND WHEN RECORDED,

PLEASE RETURN TO:

H. Daniel Smith

Smith, Gardner, Slusky,

Lazer, Pohren & Rogers, LLP

8712 West Dodge Road

Suite 400

Omaha, NE 68114

(402) 392-0101

(402) 392-1011

dsmith@smithgardnerslusky.com

FIRST AMENDMENT TO CONSTRUCTION LOAN AGREEMENT

     This Agreement is made and entered into this 19th day of March, 2009, by and between CAMPUS
CREST AT LAWRENCE, LLC, a Delaware limited liability company, 2100 Rexford Road, Suite 414,
Charlotte, NC 28211 (herein, “Borrower”), and MUTUAL OF OMAHA BANK, a federally chartered savings
bank, and its successors and/or assigns 3333 Farnam Street, Omaha, Nebraska 68131, Attn: Dwayne
W. Sieck (the “Lender”).

PRELIMINARY STATEMENT

     WHEREAS, on the 13th day of February, 2009, the parties made and entered into certain Loan
Documents as defined in the Construction Loan Agreement (“Loan Agreement”), including but not
limited to the Loan Agreement, Promissory Note, and a Combination Mortgage, Security Agreement,
Assignment of Leases and Rents, and Fixture Financing Statement (the “Mortgage”) dated February 13,
2009 and recorded February 19, 2009, at Record Book 1045, Page 1447 in the office of the Register
of Deeds of Douglas County, Kansas together with certain other agreements under which Lender was
granted a first lien security interest in and to the Mortgaged Property as described in the
Mortgage and as also described on the attached and incorporated Exhibit A hereto, the
purpose of which was to secure the indebtedness of the Promissory Note in the face amount of
Sixteen Million and No/100ths Dollars ($16,000,000.00); and

     WHEREAS, the Lender has agreed to consent to the following requested actions (the “Requested
Actions”): Lender agrees to issue a Letter of Credit in the face amount of $205,325.00 for the
benefit of the City of Lawrence, Kansas in connection with certain public improvements in
connection with the Project, subject to the terms and conditions set forth herein.

 

 

     NOW THEREFORE, the parties agree:

ARTICLE 1 
 ACKNOWLEDGMENTS, WARRANTIES AND REPRESENTATIONS

     As a material inducement to Lender to enter into this Agreement and to consent to the
Requested Actions, Borrower acknowledges, warrants, represents and agrees to and with Lender as
follows:

     1.1 Incorporation of Recitals. All of the facts set forth in the Preliminary
Statement of this Agreement are true and correct and incorporated into this Agreement by
reference.

     1.2 Authority of Borrower. Campus Crest at Lawrence, LLC is duly organized and
validly existing limited liability company in good standing under the laws of the State of
Delaware, and authorized to do business in Kansas. The execution and delivery of, and performance
under, this Agreement by Campus Crest at Lawrence, LLC has been duly and properly authorized
pursuant to all requisite company action and will not (i) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award presently in effect
having applicability to Campus Crest at Lawrence, LLC or the Articles of Organization or Operating
Agreement or any other organizational document of Campus Crest at Lawrence, LLC or (ii) result in
a breach of or constitute or cause a default under any indenture, agreement, lease or instrument
to which Campus Crest at Lawrence, LLC is a party or by which the Project may be bound or
affected.

     1.3 HSRE-CAMPUS CREST I, LLC (“Borrower Member”) is a duly organized and validly existing
limited liability company in good standing under the laws of the State of Delaware and is the
member of Borrower. Campus Crest Ventures III, LLC, is a duly organized and validly existing
limited liability company in good standing under the laws of the State of Delaware and is a Member
of Borrower Member, and is authorized to act for Borrower. Campus Crest Properties, LLC is a duly
organized and validly existing limited liability company in good standing under the laws of the
State of North Carolina and is the Manager of Campus Crest Ventures III, LLC and is authorized to
act for Campus Crest Ventures III, LLC. Michael S. Hartnett (“Authorized Officer”) is the Manager
of the Campus Crest Properties, LLC and is authorized to act for Campus Crest Properties, LLC, and
further, acting alone without the joinder of any other person or entity, has the power and
authority to execute this Agreement on behalf of and to duly bind Borrower Member and Borrower
under this Agreement. The execution and delivery of, and performance under, this Agreement by
Authorized Officer on behalf of Borrower Member has been duly and properly authorized pursuant to
all requisite corporate action and will not (i) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award presently in effect having
applicability to Borrower Member or the articles of organization or formation or operating
agreement or any other organizational document of Borrower, Borrower Member or any of the

2

 

constituent entities or (ii) result in a breach of or constitute or cause a default under any
indenture, agreement, lease or instrument to which Borrower, Borrower Member or any of the
constituent entities is a party or by which the Project may be bound or affected.

     1.4 Compliance with Laws. To Borrower’s knowledge, all permits, licenses, franchises
or other evidences of authority to use and operate the Project as it is presently being operated
and as contemplated by the Loan Documents are current, valid and in full force and effect.
Borrower has not received any written notice from any governmental entity claiming that Borrower
or the Project is not presently in compliance with any laws, ordinances, rules and regulations
bearing upon the use and operation of the Project, including, without limitation, any notice
relating to any violations of zoning, building, environmental, fire, health, or other laws,
ordinances, rules, codes or regulations.

     1.5 Title to Project and Legal Proceedings. Borrower is the current owners of fee
title in the Project. There are no pending or threatened suits, judgments, arbitration
proceedings, administrative claims, executions or other legal or equitable actions or proceedings
against Borrower or the Project, or any pending or threatened condemnation proceedings or
annexation proceedings affecting the Project, or any agreements to convey any portion of the
Project, or any rights thereto to any person, entity, or government body or agency not disclosed
in this Agreement.

     1.6 Loan Documents. The Loan Documents constitute valid and legally binding
obligations of Borrower enforceable against Borrower, as limited herein, and the Project in
accordance with their terms. Borrower acknowledges and agrees that nothing contained in this
Agreement, nor the Requested Actions, shall release or relieve Borrower from its obligations,
agreements, duties, liabilities, covenants and undertakings under the Loan Documents arising prior
to the date hereof. Borrower has no defenses, setoffs, claims, counterclaims or causes of action
of any kind or nature whatsoever against Lender or any of Lender’s predecessors in interest, and
any subsidiary or affiliate of Lender and all of the past, present and future officers, directors,
contractors, employees, agents, attorneys, representatives, participants, successors and assigns
of Lender and Lender’s predecessors in interest (collectively, “Lender Parties”) or with respect
to (i) the Loan, (ii) the Loan Documents, or (iii) the Project. To the extent Borrower would be
deemed to have any such defenses, setoffs, claims, counterclaims or causes of action as of the
date hereof, Borrower knowingly waives and relinquishes them.

     1.7 Bankruptcy. Borrower has no intent to (i) file any voluntary petition under any
Chapter of the Bankruptcy Code, Title 11, U.S.C.A. (“Bankruptcy Code”), or in any manner to seek
any proceeding for relief, protection, reorganization, liquidation, dissolution or similar relief
for debtors (“Debtor Proceeding”) under any local, state, federal or other insolvency law or laws
providing relief for debtors, (ii) directly or indirectly to cause any involuntary petition under
any Chapter of the Bankruptcy Code to be filed against Borrower or any partners thereof or (iii)
directly or indirectly to cause the Project or any portion or any interest of Borrower in the
Project to become the property of any bankrupt estate or the subject of any Debtor Proceeding.

3

 

     1.8 No Default. To Borrower’s knowledge, no event, fact or circumstance has
occurred or failed to occur which constitutes, or with the lapse or passage of time, giving of
notice or both, could constitute a default or Event of Default under the Loan Documents.

     1.9 Reaffirmation. Borrower reaffirms and confirms the truth and accuracy of all
representations and warranties set forth in the Loan Documents, in all material respects, as if
made on the date hereof.

ARTICLE 2 
 ADDITIONAL PROVISIONS

     2.1 Consent of Lender. Subject to the terms of this Agreement, Lender hereby consents
to the Requested Actions, as follows:

     (a) Additional Loan Documents. The Borrower and Guarantors agree to
execute and deliver to Lender the following documents which shall be included in the
definition of “Loan Documents” for all purposes:

(i) Letter of Credit Application and Agreement.

     (b) Amendment to the Loan Agreement. The Loan Agreement is hereby amended as follows:

(i) New definitions are added as follows:

Letter of Credit: Any letter of credit issued by Lender for the account of
or at the direction of Borrower pursuant to this Agreement.

Letter of Credit Application. An application for stand-by Letter of
Credit, in form and substance acceptable to Lender, executed and delivered by
Borrower to Lender in connection with the issuance of a Letter of Credit.

Letter of Credit Liabilities: At any time, the aggregate total amounts of
all outstanding letters of credit that could be drawn or demanded by any
beneficiary.

(ii) A new unnumbered covenant is added to the Loan Agreement as follows:

Letters of Credit.

      Subject to the terms and conditions of this Agreement and other Loan
Documents, Lender may, in its reasonable discretion, issue one or more Letters of
Credit for the account of Borrower from time to time pursuant to formal
application for same (a “Letter of Credit Application”). All draws, payments or
disbursements made at any time or from time to time by the Lender under any one or
more of the Letters of Credit, and also all charges and expenses in connection
therewith, shall be

4

 

deemed indebtedness of Borrower evidenced by the Note and the Letters of Credit and all such
draws, payments, disbursements, charges and expenses under the Letters of Credit shall be secured
by the Loan Agreement, Mortgage and other Loan Documents. No Letter of Credit shall have an
expiration date less than thirty (30) days before the Maturity Date of the Note or any Letter of
Credit Note unless Borrower provides cash Collateral satisfactory to Lender to secure any such
Letter of Credit. Each Letter of Credit (i) must be satisfactory in form and substance to Lender,
(ii) will be subject to the payment of such Letter of Credit fees as Lender may require, and (iii)
shall be issued pursuant to such conditions, documents and instruments agreed to and/or executed
by Borrower as Lender may require in its sole discretion. Each payment by Lender pursuant to a
drawing under a Letter of Credit is due and payable ON DEMAND, and at the sole option of Lender,
can be charged by Lender as a Loan by Lender to Borrower under the Note and this Agreement as of
the day and time such payment is made by Lender and in the amount of such payment. The proceeds of
the Loan available to the Borrower at any time shall be less all outstanding Letter of Credit
Liabilities, if any, and the Letter of Credit Liabilities shall deducted from any remaining
undisbursed loan proceeds in calculating loan in balance pursuant to this Agreement.

      Borrower’s obligation to reimburse the Lender for payments and disbursements made by Lender
under any one or more of the Letters of Credit honoring a demand for payment made by a beneficiary
thereunder shall be absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which Borrower may have or may have had against
Lender, including any defense based on any non-application or misapplication by the beneficiary of
the proceeds of such drawing or the legality, validity, regularity or enforceability of the Letters
of Credit. Upon the occurrence of an Event of Default, an amount equal to the amount of the then
aggregate contingent liability of the Lender under the Letters of Credit shall, at the option of
the Lender and without notice to the Borrower, be deemed (as between Lender and Borrower) to have
been paid or disbursed by the Lender under the Letters of Credit (notwithstanding that such amount
may not in fact have been so paid or disbursed), and Borrower shall be immediately obligated to
reimburse Lender for the amount deemed to have been so paid or disbursed by Lender. Any amounts so
received by Lender pursuant to the provisions of the foregoing sentence shall be cash collateral
and shall be deposited by Lender in a cash collateral account as collateral security for the
repayment of all obligations and liabilities of Borrower to Lender relating to the Letters of
Credit, howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, or now or hereafter existing, or due or to become due, including under or in connection
with any one or more of this Agreement, the Note, the Mortgage, the Letters of Credit, and the
other Loan Documents, until such time as all of such

5

 

obligations and liabilities are paid, performed and satisfied in full, and
Lender has no further liability or obligation of any kind whatsoever (whether
conditional, contingent or otherwise) hereunder, under or with respect to the
Letters of Credit, or under or with respect to any of the other Loan Documents,
including the Note or Additional Collateral. In the event Lender makes a payment
under a Letter of Credit, Lender shall be entitled, at its option, to apply such
cash collateral to the outstanding indebtedness.

      The Letter of Credit Application may set forth additional terms and conditions
with respect to the Letters of Credit.

All other provisions of the Loan Agreement are ratified and confirmed hereby and shall
remain in full force and effect.

     2.2 No Consent To Other Modifications. Borrowers agree that this Agreement shall not
be deemed an agreement by Lender to consent to any other modification of the Loan Documents, or a
consent to any additional financing, secondary financing or secondary encumbrance on the Project,
or financing of any kind on any future phases of the Project or any other project.

     2.3 References to Loan Documents. All references to the term Loan Documents in the
Mortgage and the other Loan Documents shall hereinafter be modified to include this Agreement and
all documents executed and/or required in connection with the Requested Actions.

     2.4 Filing for Record. This document may be filed for record in Douglas County, State
of Kansas by Lender.

ARTICLE 3 
 MISCELLANEOUS PROVISIONS

     3.1 Defined Terms. All capitalized or defined terms shall have the meaning as set
forth in the Loan Agreement unless the context of this Agreement clearly requires otherwise.

     3.2 No Limitation of Remedies. No right, power or remedy conferred upon or reserved
to or by Lender in this Agreement is intended to be exclusive of any other right, power or remedy
conferred upon or reserved to or by Lender under this Agreement, the Loan Documents or at law, but
each and every remedy shall be cumulative and concurrent, and shall be in addition to each and
every other right, power and remedy given under this Agreement, the Loan Documents or now or
subsequently existing at law.

     3.3 No Waivers. Except as otherwise expressly set forth in this Agreement, nothing
contained in this Agreement shall constitute a waiver of any rights or remedies of Lender under the
Loan Documents or at law. No delay or failure on the part of any party hereto in the exercise of
any right or remedy under this Agreement shall operate as a

6

 

waiver, and no single or partial exercise of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy. No action or forbearance by any
party hereto contrary to the provisions of this Agreement shall be construed to constitute a
waiver of any of the express provisions. Any party hereto may in writing expressly waive any of
such party’s rights under this Agreement without invalidating this Agreement.

     3.4 Successors or Assigns. Whenever any party is named or referred to in this
Agreement, the heirs, executors, legal representatives, successors, successors-in-title and
assigns of such party shall be included. All covenants and agreements in this Agreement shall bind
and inure to the benefit of the heirs, executors, legal representatives, successors,
successors-in-title and assigns of the parties, whether so expressed or not.

     3.5 Construction of Agreement. Each party hereto acknowledges that it has participated
in the negotiation of this Agreement and no provision shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured, dictated or drafted such provision.
Borrowers at all times have had access to an attorney in the negotiation of the terms of and in the
preparation and execution of this Agreement and has had the opportunity to review and analyze this
Agreement for a sufficient period of time prior to execution and delivery. No representations or
warranties have been made by or on behalf of Lender, or relied upon by Borrowers pertaining to the
subject matter of this Agreement, other than those set forth in this Agreement. All prior
statements, representations and warranties, if any, are totally superseded and merged into this
Agreement, which represent the final and sole agreement of the parties with respect to the subject
matters. All of the terms of this Agreement were negotiated at arm’s length, and this Agreement was
prepared and executed without fraud, duress, undue influence or coercion of any kind exerted by any
of the parties upon the others. The execution and delivery of this Agreement is the free and
voluntary act of Borrowers.

     3.6 Fees and Costs of Lender. Borrowers agree to pay all fees and costs incurred by
Lender in connection with this Agreement, including, without limitation, reasonable attorney’s
fees, title premiums, recording costs, escrow fees, mortgage or deed tax, and inspection or survey
costs.

     3.7 Invalid Provision to Affect No Others. If, from any circumstances whatsoever,
fulfillment of any provision of this Agreement or any related transaction at the time performance
of such provision shall be due, shall involve transcending the limit of validity presently
prescribed by any applicable usury statute or any other applicable law, with regard to obligations
of like character and amount, then ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity. If any clause or provision operates or would
prospectively operate to invalidate this Agreement, in whole or in part, then such clause or
provision only shall be deemed deleted, as though not contained herein, and the remainder of this
Agreement shall remain operative and in full force and effect.

7

 

     3.8 Notices. Except as otherwise specifically provided to the contrary, any
and all notices, elections, approvals, consents, demands, requests and responses
(“Notices”) permitted or required to be given under this Agreement and the Loan
Documents shall not be effective unless in writing, signed by or on behalf of the party
giving the same, and sent by certified or registered mail, postage prepaid, return receipt
requested, or by hand delivery or overnight courier service (such as Federal Express), to
the party to be notified at the address of such party set forth below or at such other
address within the continental United States as such other party may designate by notice
specifically designated as a notice of change of address and given in accordance with this
Section. Any Notices shall be effective upon the date sent in the manner indicated in this
Section. Notices shall be deemed effective and received notwithstanding that attempted
delivery is refused or rejected, the date of rejection, shall be deemed the date of receipt.
Notices must be addressed as follows, subject to change as provided above:

	 	 	 

	 
	 	 
	If to Borrower:

	 	Campus Crest at Lawrence, LLC

2100 Rexford Road, Suite 414

Charlotte, NC 28211
 Attn: Crystal A. Bowman
	 
	 	 
	with copy to:

	 	Bradley Arant Boult Cummings LLP

One Federal Place 

1819 Fifth Avenue North 
Birmingham, Alabama 35203

Attn: Dawn Helms Sharff
	 
	 	 
	If to Lender:

	 	Mutual of Omaha Bank

3333 Farnam Street 
Omaha,
NE 68131 
Attn: Dwayne W.
Sieck
	 
	 	 
	with copy to:

	 	Smith, Gardner, Slusky,

Lazer, Pohren & Rogers, LLP 
8712
West Dodge Road 
Suite 400
 Omaha,
NE 68114 
Attn: H. Daniel Smith

     3.9 Governing Law. This Agreement shall be interpreted, construed and enforced in
accordance with the laws of the State of Kansas.

     3.10 Headings; Exhibits. The headings of the articles, sections and subsections of
this Agreement are for the convenience of reference only, are not to be considered a part of this
Agreement and shall not be used to construe, limit or otherwise affect this Agreement.

     3.11 Modifications. The terms of this Agreement may not be changed,
modified, waived, discharged or terminated orally, but only by an instrument or
instruments in writing, signed by the Party against whom the enforcement of the change,

8

 

modification, waiver, discharge or termination is asserted. Lender’s consent to the Requested
Actions shall not be deemed to constitute Lender’s consent to any provisions of the organizational
documents that would be in violation of the terms and conditions of any of the Loan Documents.

     3.12 Time of Essence; Consents. Time is of the essence of this Agreement and the Loan
Documents. Any provisions for consents or approvals in this Agreement shall mean that such
consents or approvals shall not be effective unless in writing and executed by Lender.

     3.13 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which will constitute the same agreement. Any
signature page of this Agreement may be detached from any counterpart of this Agreement without
impairing the legal effect of any signatures thereon and may be attached to another counterpart of
this Agreement identical in form hereto but having attached to it one or more additional signature
pages.

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and
year first above written.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

9

 

	 	 	 	 	 
	 	MUTUAL OF OMAHA BANK, a federally chartered savings bank:

 	 
	 	By  	/s/ Dwayne W. Sieck
 	 
	 	 	Dwayne W. Sieck, Senior Vice President	 
	 	 	 	 
	 

	 	 	 	 	 	 	 

	STATE OF NEBRASKA

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss.
	COUNTY OF DOUGLAS

	 	 	)	 	 	 

     The foregoing instrument was acknowledged before me this 19th day of
March, 2009, by Dwayne W. Sieck, personally known to me to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the entity upon behalf of which he acted,
executed the instrument. He is the Senior Vice President of Mutual of Omaha Bank, a federally
chartered savings bank, for and on behalf of said Mutual of Omaha Bank, and he acknowledged,
signed and delivered the instrument as his free and voluntary act, for the uses and purposes
therein set forth.

	 	 	 	 	 

	

	 	/s/ Rejina L. Gobel	 	 
	 	 	 	 
	 	Notary Public	 	 

Signature page to

First Amendment to Loan Documents

S-1exv10w53

Exhibit
10.53

CONSTRUCTION LOAN AGREEMENT

BETWEEN

CAMPUS CREST AT HUNTSVILLE, LP, 
a Delaware limited partnership

AND

AMEGY MORTGAGE COMPANY, L.L.C. d/b/a Q-10 Amegy Mortgage Capital,

a Texas limited liability company

Loan No. 99-10-71154

 

 

Table of Contents

	 	 	 	 	 	 	 

	ARTICLE I: DEFINITIONS	 	 	1	 
	1.01

	 	Advance
	 	 	1	 
	1.02

	 	Application for Advance
	 	 	1	 
	1.03

	 	Appraisal
	 	 	1	 
	1.04

	 	Approved Budget
	 	 	1	 
	1.05

	 	Assignment of Construction Contracts
	 	 	2	 
	1.06

	 	Assignment of Permits and Licenses
	 	 	2	 
	1.07

	 	Assignment of Purchase Contracts
	 	 	2	 
	1.08

	 	Assignment of Rights to Plans and Specifications
	 	 	2	 
	1.09

	 	Availability of Utilities Letter
	 	 	2	 
	1.10

	 	Borrower’s Equity
	 	 	2	 
	1.11

	 	Closing Date
	 	 	2	 
	1.12

	 	Completion Date
	 	 	2	 
	1.13

	 	Compliance Letter
	 	 	2	 
	1.14

	 	Construction Contract
	 	 	3	 
	1.15

	 	Contractor
	 	 	3	 
	1.16

	 	Current Survey
	 	 	3	 
	1.17

	 	Deed of Trust
	 	 	3	 
	1.18

	 	Depository Bank
	 	 	3	 
	1.19

	 	Design Professional
	 	 	3	 
	1.20

	 	Engineering Reports
	 	 	3	 
	1.21

	 	Event of Default
	 	 	3	 
	1.22

	 	Force Majeure
	 	 	4	 
	1.23

	 	Governmental Authority
	 	 	4	 
	1.24

	 	Governmental Requirements
	 	 	4	 
	1.25

	 	Guarantor
	 	 	4	 
	1.26

	 	Guaranty Agreement
	 	 	5	 
	1.27

	 	Improvements
	 	 	5	 
	1.28

	 	Inspecting Engineers
	 	 	5	 
	1.29

	 	Inspection Certificate
	 	 	5	 
	1.30

	 	Land
	 	 	5	 
	1.31

	 	Letters of Credit
	 	 	5	 
	1.32

	 	Loan
	 	 	5	 
	1.33

	 	Loan Documents
	 	 	5	 
	1.34

	 	Master Plan
	 	 	5	 
	1.35

	 	Note
	 	 	5	 
	1.36

	 	Operating Account
	 	 	6	 
	1.37

	 	Phases
	 	 	6	 
	1.38

	 	Plans
	 	 	6	 
	1.39

	 	Property
	 	 	6	 
	1.40

	 	Purchase Contracts
	 	 	6	 
	1.41

	 	Supervision Professional
	 	 	6	 
	1.42

	 	TCEQ
	 	 	6	 
	1 43

	 	Title Company
	 	 	6	 
	1.44

	 	Title Insurance Policy
	 	 	6	 
	1.45

	 	Title Underwriter
	 	 	6	 
	1.46

	 	Other Terms
	 	 	6	 

i 

 

	 	 	 	 	 	 	 

	ARTICLE II: ADVANCES BY LENDER	 	 	6	 
	2.01

	 	Use of Loan Proceeds
	 	 	6	 
	2.02

	 	Procedure for Advances
	 	 	7	 
	2.03

	 	Requirements for Subsequent Advances
	 	 	10	 
	2.04

	 	Conditions to Subsequent Advances
	 	 	11	 
	2.05

	 	Completion of Improvements
	 	 	12	 
	2.06

	 	No Waiver
	 	 	12	 
	2.07

	 	Conditions Precedent for the Benefit of Lender
	 	 	13	 
	2.08

	 	Subordination
	 	 	13	 
	2.09

	 	Operating Account
	 	 	13	 
	2.10

	 	Letters of Credit
	 	 	13	 
	ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BORROWER	 	 	14	 
	3.01

	 	Representations and Warranties
	 	 	14	 
	3.02

	 	Survival of Representations and Warranties
	 	 	16	 
	3.03

	 	Inducement to Lender
	 	 	16	 
	ARTICLE IV: COVENANTS AND AGREEMENTS OF BORROWER	 	 	16	 
	4.01

	 	Compliance with Governmental Requirements
	 	 	16	 
	4.02

	 	The Construction Contract
	 	 	16	 
	4.03

	 	Construction of the Improvements and Supervision
	 	 	17	 
	4.04

	 	Correction of Construction Defects
	 	 	17	 
	4.05

	 	Storage of Materials
	 	 	17	 
	4.06

	 	Inspection of the Property
	 	 	17	 
	4.07

	 	Notices by Governmental Authority, Fire and Casualty Losses, Etc.
	 	 	17	 
	4.08

	 	Application of Advances
	 	 	17	 
	4.09

	 	Direct Disbursement and Application by Lender
	 	 	17	 
	4.10

	 	Costs and Expenses
	 	 	18	 
	4.11

	 	Change Orders
	 	 	18	 
	4.12

	 	No Liability of Lender
	 	 	18	 
	4.13

	 	No Conditional Sale Contracts, Etc.
	 	 	18	 
	4.14

	 	Defense of Action
	 	 	18	 
	4.15

	 	Assignment of Construction Contract
	 	 	18	 
	4.16

	 	Assignment of Plans
	 	 	19	 
	4.17

	 	Payment of Claims
	 	 	20	 
	4.18

	 	Inspections
	 	 	20	 
	4.19

	 	Indemnity
	 	 	21	 
	4.20

	 	Lender’s Action for its Own Protection Only
	 	 	21	 
	ARTICLE V: RIGHTS AND REMEDIES OF LENDER	 	 	22	 
	5.01

	 	Rights of Lender
	 	 	22	 
	5.02

	 	Cessation of Advances
	 	 	22	 
	5.03

	 	Funds of Lender
	 	 	22	 
	5.04

	 	No Waiver or Exhaustion
	 	 	22	 
	ARTICLE VI: GENERAL TERMS AND CONDITIONS	 	 	22	 
	6.01

	 	Notices
	 	 	23	 
	6.02

	 	Entire Agreement and Modifications
	 	 	23	 
	6.03

	 	Severability
	 	 	23	 
	6.04

	 	Election of Remedies
	 	 	23	 
	6.05

	 	Form and Substance
	 	 	23	 
	6.06

	 	No Third Party Beneficiary
	 	 	23	 
	6.07

	 	Borrower In Control
	 	 	23	 

ii 

 

	 	 	 	 	 	 	 

	6.08

	 	Number and Gender
	 	 	23	 
	6.09

	 	Captions
	 	 	23	 
	6.10

	 	Applicable Law
	 	 	23	 
	6.11

	 	Multiple Counterparts
	 	 	24	 

Exhibits:

Exhibit “A” — Description of Land

Exhibit “B-1” — Draw Request

Exhibit “B-2” — Draw Request Certification

Exhibit “B-3” — AIA Form of Application of Advance

Exhibit “B-4” — Contractor Draw Certification

Exhibit “C-l” — Initial Approved Budget

Exhibit “C-2” — Budget Revision Request Form

Exhibit “C-3” — Budget Revision Request Certification

Exhibit “D-1” — Assignment of Builder Takedown Contracts (Intentionally Omitted)

Exhibit “D-2” — Assignment of Construction Contracts

Exhibit “D-3” — Assignment of Unit Purchase Contract (Intentionally Omitted)

Exhibit “D-4” — Assignment of Right of Reimbursement (District Receivables) (Intentionally Omitted)

Exhibit “D-5” — Assignment of Rights to Plan and Specifications

Exhibit “E” — Form of Compliance Letter

Exhibit “F” — Affidavit of Commencement

Exhibit “G-1” — Partial Waiver and Release of Lien

Exhibit “G-2” — Final Waiver and Release of Lien

Exhibit “H” — Affidavit and Certificate of Completion

Exhibit “I-1” — Affidavit of Bills Paid

Exhibit “I-2” — Owner’s Affidavit of Bills Paid

Exhibit “J” — List of Tenant Leases (Intentionally Omitted)

iii 

 

CONSTRUCTION LOAN AGREEMENT

     THIS CONSTRUCTION LOAN AGREEMENT (“Agreement”) dated June 12, 2009 is made by and between
AMEGY MORTGAGE COMPANY, L.L.C. d/b/a Q-10 Amegy Mortgage Capital, a Texas limited liability
company (“Lender”), and CAMPUS CREST AT HUNTSVILLE, LP, a Delaware limited partnership
(“Borrower”).

     Borrower has applied to Lender for a loan for the purposes hereinafter described concerning
the Land (hereinafter defined) described on Exhibit “A” attached hereto and made a part
hereof for all purposes; and Lender is willing to make such loan upon the terms and conditions
herein set forth in consideration of the mutual covenants and agreements herein contained, Borrower
and Lender agree as follows:

ARTICLE I: DEFINITIONS

     For purposes of this Agreement, the following terms shall have the respective meanings
assigned to them.

     1.01 Advance. The term “Advance” shall mean a disbursement by Lender of any of the
proceeds of the Loan.

     1.02 Application for Advance. The term “Application for Advance” shall mean a
written application by Borrower (and such other parties as Lender may require) to Lender
utilizing (i) the Draw Request form, a copy of which is attached hereto as Exhibit
“B-l”, (ii) the Draw Request Certification to be signed by Borrower, a copy of which is
attached hereto as Exhibit “B-2”. (iii) the American Institute of Architects’ Forms
G-702 and G-703, copies of which are attached hereto as Exhibit “B-3” and (iv) the
Contractor Draw Request Certification to be signed by the Contractor, a copy of which is
attached hereto as Exhibit “B-4”] and if requested by Lender, a Contractor’s Affidavit
of Bills Paid described in Section 2.05(b), all accompanied by such schedules, certificates,
affidavits, releases, waivers, statements, invoices, bills, and other documents as Lender may
reasonably request.

     1.03 Appraisal. The term “Appraisal” shall mean a written appraisal of the Land and
Improvements in form and substance and prepared by an appraiser acceptable to Lender. The
Appraisal shall comply and be in conformity with the regulatory requirements for federally
chartered national banks.

     1.04
Approved Budget. The term “Approved Budget” shall mean a budget or cost
itemization prepared by Borrower and approved by Lender specifying the cost by item of (a) Land
acquisition or refinance and closing costs related thereto, (b) all labor, materials, and
services necessary for the construction of the Improvements in accordance with the Plans and all
Governmental Requirements, and (c) all other expenses anticipated by Borrower incident to the
development of the Property, and the construction of Improvements. The Approved Budget will show
total costs of all items and proposed allocation of Advances and Borrower’s Equity to such
items. The initial Approved Budget is attached hereto as Exhibit “C-l” and incorporated
herein by reference. The Approved Budget may be amended by Borrower, from time to time, with the
prior written consent of Lender, which consent will not be unreasonably withheld or delayed. It
is contemplated by Borrower and Lender that the Approved Budget shall be amended, as
construction of the Improvements is undertaken by Borrower and Loan proceeds are used for
payment of portions of the cost of construction. In connection with said amendments, Borrower
shall have the right to reallocate savings and/or surplus on a particular line item of the
Approved Budget to one or more other line items without Lender’s prior written consent; provided
that any use of the “Contingency” line item shall require Lender’s prior approval. A copy of the
Budget Revision Request Form and Budget Revision Request Certification to be

 

 

utilized by Borrower for amendment of the Approved Budget are attached hereto as Exhibit
“C-2” and Exhibit “C-3”, respectively. Lender hereby agrees not to unreasonably
withhold its consent to any budget line item reallocation request and to use good faith efforts to
respond to any such request within five (5) Business Days after Borrower’s request,

     1.05 Assignment of Construction Contracts. The term “Assignment of Construction
Contracts” shall collectively mean one or more collateral assignments in the form attached hereto
as Exhibit “D-2” and incorporated herein for all purposes, executed by Borrower and
acknowledged by the general contractor, assigning the construction contract with the general
contractor to Lender.

     1.06 Assignment of Permits and Licenses. The term “Assignment of Permits and Licenses”
shall mean a collateral assignment in form and substance acceptable to Lender, executed by
Borrower to Lender, assigning all permits, licenses and other agreements affecting the Property
and/or necessary or desirable for the ownership, use and operation thereof, as and if same shall
come into existence.

     1.07 Assignment of Purchase Contracts. [Intentionally deleted.]

     1.08 Assignment of Rights to Plans and Specifications. The term “Assignment of Rights
to Plans and Specifications” shall mean a collateral assignment in form attached hereto as
Exhibit “D-5” and incorporated herein for all purposes of Borrower’s rights with respect
to the Plans, duly executed by Borrower and acknowledged by Design Professional.

     1.09 Availability of Utilities Letter. The term “Availability of Utilities Letter”
shall mean a letter or letters or other evidence, in form and substance acceptable to Lender, to
be completed by parties acceptable to Lender certifying that the Property, when the Improvements
are completed, will have adequate rights and means of access to all water, storm and sanitary
sewer facilities, gas, cable t.v., telephone, and electric service necessary for the intended use
of the Property and adequate pedestrian and vehicular access to one or more dedicated public
streets.

     1.10 Borrower’s Equity. The term “Borrower’s Equity” shall mean the amount of
Borrower’s
cash equity investment in the Land and the Improvements as reasonably
calculated from time to time by Lender. Borrower’s Equity shall be at least equal to the total
cost shown on the Approved Budget less the proceeds of the Loan, but will in no event be less
than $7,191,000.00. The amount of Borrower’s Equity required may be increased in the event
additional funding is required pursuant to the terms of Section 2.02 of this Agreement.

     1.11 Closing Date. The term “Closing Date” shall mean the date of the execution and
delivery of this Agreement by Borrower and Lender.

     1.12 Completion Date. The term “Completion Date” shall mean eighteen months from the
effective date hereof, or such earlier date on which Borrower is required to deliver space to
tenants under any lease agreements.

     1.13 Compliance Letter. The term “Compliance Letter” shall mean a letter to be
delivered to Lender upon approval of the Plans, and at any time that there shall be a change or
modification in the Plans, in form or substance satisfactory to Lender, completed by the Design
Professional, certifying that the Improvements, when completed as designed, including such changes
and modifications, will be in compliance with all applicable Governmental Requirements of each
Governmental Authority having jurisdiction over the Property [including but not limited to Section
404 of the Federal Clean Water Act,] and in compliance with

2

 

the conditions which must be satisfied to maintain any permits for the Improvements. An
acceptable form of Compliance Letter is attached hereto as Exhibit “E” and made a part
hereof for all purposes.

     1.14 Construction Contract. The term “Construction Contract” shall mean all
contracts executed between Borrower and each Contractor for the rendering of services or
furnishing of materials in connection with the completion of Improvements.

     1.15 Contractor. The term “Contractor” shall mean each “original contractor” (as
defined in Section 53.001 of the Texas Property Code, as amended from time to time), with whom
Borrower contracts for the construction of any of the Improvements or any other work with respect
to the Property. All Contractors under any Construction Contract exceeding ten percent (10%) of
the amount of the Approved Budget shall be bonded with payment and performance bonds in accordance
with Lender’s reasonable requirements unless waived by Lender based upon Lender’s review of the
Contractor’s financial condition. The term “Contractor” shall not include CAMPUS CREST
CONSTRUCTION, LLC.

     1.16 Current Survey. The term “Current Survey” shall mean an on-the ground survey of
the Land (and Improvements, if applicable) dated within ninety days of the date such survey is
required to be furnished pursuant to any provision of this Agreement, performed by a surveyor duly
licensed as such in the State of Texas, in form and substance acceptable to Lender and Title
Company such that the Title Company may amend the Title Insurance Policy under procedural rule P-2
to delete the standard pre-printed exception concerning areas and boundary, save “shortages in
area”.

     1.17 Deed of Trust. The term “Deed of Trust” shall mean the deed of trust securing the
payment of the Note and the payment and performance of all obligations specified in said deed of
trust and this Agreement, and evidencing a valid and enforceable first priority lien on the
Property.

     1.18 Depository Bank. The term “Depository Bank” shall mean Amegy Bank National
Association.

     1.19 Design Professional. The term “Design Professional” shall mean the architect,
designer, draftsman, engineer or other professional selected by the Borrower and approved in
writing by Lender, who is responsible for the creation of the Plans.

     1.20 Engineering Reports. The term “Engineering Reports” shall mean all soil analysis
reports, construction and mechanical feasibility reports and plans and such other reports of
engineers and others regarding improvement and site development of the Land as shall be reasonably
required by Lender.

     1.21 Event of Default. The term “Event of Default” shall mean:

	 	(a)	 	A default under or failure by Borrower to comply with any of
the terms or conditions, or breach of any covenant or warranty specified
herein or in any other Loan Document and the expiration of any cure period as
follows: (i) ten (10) days after notice from Lender, for any default under any
term, covenant or condition of any of the Loan Documents (excepting the
default for failure to pay the Debt as described in subsection 10(a) of the
Security Instrument) which default can be cured by the payment of a sum of
money and (ii) thirty (30) days after notice from Lender in the case of any
other default, provided that if such default cannot reasonably be cured within
such thirty (30) day period and Borrower shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and

3

 

	 	 	 	expeditiously proceeds to cure the same, such thirty (30) day period shall
be extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension
shall be for a period in excess of sixty (60) days;
	 
	 	(b)	 	The cessation of the construction of the Improvements for more
than thirty (30) consecutive days (excluding Force Majeure events) without the
written consent of Lender;
	 
	 	(c)	 	A failure of any of the materials supplied for the
construction of the Improvements to comply with the Plans or any Governmental
Requirements and such failure is not cured within thirty (30) days after
written notice from Lender of such default;
	 
	 	(d)	 	A reasonable determination by Lender that construction of the
Improvements will not be completed on or before the Completion Date.

     Notwithstanding anything contained herein to the contrary, Borrower shall have all grace
periods and notice and curative rights as provided in the Note prior to Lender declaring an Event
of Default; provided however, during any such grace periods and notice and curative rights
periods, Lender shall have no obligation to make Advances.

     1.22 Force Majeure. The term “Force Majeure” shall mean occurrence beyond the control
of the party affected, including, but not limited to, acts of God or
of the public enemy;
expropriation or confiscation of facilities or property; compliance with any order or request of
any Governmental Authority or person purporting to act therefor, adversely affecting the supply,
availability or use of materials or labor; acts of war, public disorders, rebellion, sabotage,
fires, explosions, floods, storms, or breakdowns; riots, strikes or other concerted acts of
workmen, whether direct or indirect, or any other causes whether or not of the class or kind
specifically named above, not within the reasonable control of the party affected and which, by
the exercise of reasonable diligence, said party is unable to prevent or avoid; provided, however,
that any claim for an extension of time or excused non-performance as a result of such occurrence
shall be made by written notice to Lender, claiming such extension or excused non-performance and
delivered not more than thirty days after the commencement of such occurrence.

     1.23 Governmental Authority. The term “Governmental Authority” shall mean the United
States of America, the State, the County, the TCEQ, the City, Municipal Utility District, Road
Utility District, or any other political subdivision in which the Property is located, and any
other political subdivision, agency, district, department, commission, board, bureau, court or
instrumentality which now or hereafter has jurisdiction or extra territorial jurisdiction over
Lender, Borrower, Contractor or any part of the Property (including, but not limited to, platting,
zoning, utilities and site development or construction on the Property).

     1.24 Governmental Requirements. The term “Governmental Requirements” shall mean all
applicable laws, ordinances, orders, rules, and regulations of any Governmental Authority
applicable to Borrower or the Property.

     1.25 Guarantor. The term “Guarantor” shall mean TED W. ROLLINS, MICHAEL S. HARTNETT,
TXG, LLC, a South Carolina limited liability company, MADEIRA GROUP, LLC, a North Carolina limited
liability company, MXT CAPITAL, LLC, a Delaware limited liability company, CAMPUS CREST GROUP,
LLC, a North Carolina limited liability company, CAMPUS CREST DEVELOPMENT, LLC, a North Carolina
limited liability company, CAMPUS CREST CONSTRUCTION, LLC, a North

4

 

Carolina limited liability company, THE GROVE STUDENT PROPERTIES, LLC, a North Carolina limited
liability company, and CAMPUS CREST PROPERTIES, LLC, a North Carolina limited liability company.

     1.26 Guaranty Agreement. The term “Guaranty Agreement” shall mean any guaranty
agreement executed by the Guarantors from time to time, to guarantee payment of the Loan and
performance of the Loan Documents.

     1.27 Improvements. The term “Improvements” shall mean all site and building
improvements (including, but not limited to, the clearing, grading, paving, and appurtenances
directly related thereto), buildings, utility improvements, drainage improvements, landscaping,
amenities, infrastructures and all other facilities and on-site and off-site improvements to the
Property, the construction of which is required to properly develop the Land in accordance with
the Master Plan, the Plans and the Approved Budget.

     1.28 Inspecting Engineers. The term “Inspecting Engineers” shall mean the inspecting
or consulting engineers or other third party inspectors retained by Lender for the purpose of
making the inspections contemplated hereunder.

     1.29 Inspection Certificate. The term “Inspection Certificate” shall mean a
certificate issued by the Inspecting Engineers approving, among other matters, soils test, Plans
(including, without limitation, systems, structural details, and compliance with any local, state
or federal laws), construction cost breakdown, progress schedules and contracts with the
Contractor and major subcontractors.

     1.30 Land. The term “Land” shall mean the land described on Exhibit “A” attached
hereto and incorporated herein by reference for all purposes.

     1.31 Letters of Credit. The term “Letters of Credit” shall mean one or more standby
letters of credit issued by Depository Bank for the benefit of Borrower in favor of a Governmental
Authority or other beneficiary to assure completion of the development and furnishing of the
Property.

     1.32
Loan. The term “Loan” shall mean the financing evidenced by the Loan
Documents.

     1.33 Loan Documents. The term “Loan Documents” shall mean this Agreement, the Deed of
Trust, the Note, and such other instruments evidencing, securing, or pertaining to the Loan as
shall, from time to time, be executed and delivered by Borrower, any guarantor of the Loan, or any
other party, to Lender pursuant to this Agreement.

     1.34 Master Plan. The term “Master Plan” shall mean collectively, the various related
materials provided to the Lender by Borrower with regard to the construction of Improvements on
the Property. Such Master Plan shall include appropriate budgets, construction schedules, draw
schedules, plans, specifications, list of construction contracts, construction timeline and other
particulars, in form and content, as required by Lender. Any component of the Master Plan may be
amended from time to time by Borrower, upon Lender’s prior written consent. Except for the Initial
Advance, no Loan proceeds shall be advanced until Borrower submits and Lender approves the Master
Plan.

     1.35 Note. The term “Note” shall mean the promissory note from Borrower to Lender
dated of even date herewith in the amount of $13,355,000.00 and evidencing the Loan.

5

 

     1.36 Operating Account The term “Operating Account” shall mean an Operating Account
established by Borrower with Depository Bank which shall be the exclusive operating and deposit
account used by Borrower in connection with the Property.

     1.37 Phases. [Intentionally deleted.]

     1.38 Plans. The term “Plans” shall mean, if any, architectural, structural,
electrical, plumbing, heating, ventilation, air conditioning, sprinkler system, topography,
on-site utilities, off-site utilities, landscaping, road and parking plans and specifications, all
certified as such by the Design Professional, if any, preparing the same. The Plans shall be
approved in writing by Lender, and Borrower and, if applicable, all necessary Governmental
Authorities for the construction of the Improvements. With respect to any Plans for Improvements
costing more than $100,000.00, Lender reserves the right to have an independent architect or
engineer of its choice review the Plans so submitted and to provide a written report thereon to
Lender prior to the acceptance or rejection of the Plans by Lender, the cost of which shall be
borne by Borrower. Lender shall have the right to require reasonable changes in the Plans.

     1.39 Property. The term “Property” shall mean the Land together with the Improvements
and all other property constituting the “Property,” as described in the Deed of Trust.

     1.40 Purchase Contracts. [Intentionally deleted.]

     1.41 Supervision Professional. The term “Supervision Professional” shall mean the
architect, engineer, construction consultant or other third party selected by the Borrower and
approved in writing by Lender to supervise the construction of the Improvements on behalf of the
Borrower. Borrower is required to hire and direct the Supervision Professional until completion of
the Improvements. Lender hereby approves Campus Crest Group, LLC as the Supervision Professional
hereunder.

     1.42 TCEQ. The term “TCEQ” shall mean the Texas Commission on Environmental Quality
or its successors.

     1.43 Title Company. The term “Title Company” shall mean Chicago Title Insurance
Company.

     1.44 Title Insurance Policy. The term “Title Insurance Policy” shall mean the
mortgagee title insurance policy or title policy binder on interim construction, issued by the
Title Company, naming Lender as the insured party, in the amount of the Loan, insuring or
committing to insure that the Deed of Trust constitutes a valid first priority lien covering the
Property, and subject only to exceptions approved by Lender.

     1.45 Title Underwriter. The “Title Underwriter” shall mean Chicago Title Insurance
Company.

     1.46 Other Terms. Other terms used, but not defined, herein shall have the meaning
assigned to such term as provided in the Deed of Trust. The term “construction” as used herein
shall also include renovation of existing Improvements and the development of infrastructure
improvements of the Land.

ARTICLE II ADVANCES BY LENDER

     2.01 Use of Loan Proceeds. Advances shall be made from time to time at the request of
Borrower in accordance with the terms of this Agreement. Advances shall be made only for:

6

 

	 	(a)	 	an “Initial Advance” at closing for costs of acquisition of the Property
(or for refinance of such acquisition costs) and for other items approved by
Lender and shown on the Approved Budget;
	 
	 	(b)	 	labor, materials (stored on the Property in accordance with the
requirements of this Agreement) and services for the construction of
Improvements on the Property approved by Lender and in accordance with the
Plans and the Approved Budget (the “Construction Allocation”); and
	 
	 	(c)	 	other items approved by Lender and shown on the Approved Budget
which may include costs associated with the development of the Property which
are not included in the Initial Advance and Construction Allocation such as
architectural and engineering fees, tenant improvements costs, interest,
property taxes, insurance, leasing commissions, title and recording fees, and
loan fees (the “Non Construction Allocation”).

     2.02 Procedure for Advances.

	 	(a)	 	Subject to the terms of this Agreement, the amount of each
Advance for the Construction Allocation shall not exceed a sum calculated by
multiplying the Construction Allocation portion of the Loan amount times the
percentage of completion of the Improvements less the total aggregate amount of
funds previously disbursed under such Loan for the Construction Allocation,
less applicable Retainage, provided however, that the total amount advanced
shall never exceed the original principal amount of the Note. Percentage of
completion of the Improvements shall be determined in the reasonably discretion
of the Lender.
	 
	 	(b)	 	Subject to the terms of this Agreement, the amounts available
for the Non Construction Allocation shall be advanced, but only to the extent
that such charges have been incurred, or that the Borrower is otherwise
entitled to payment on account of such items as provided for in the Approved
Budget or otherwise in accordance with the Loan Documents.
	 
	 	(c)	 	Each Application for Advance shall be made in writing, signed by
the Borrower, and shall be accompanied by a certificate prepared by the
Borrower, or at Lender’s election, Borrower’s Supervision Professional, which
certificate shall state the percentage of completion of the Improvements and the
services and/or materials to be paid for therefrom. Upon approval of such
certificate by the Lender, the Advance shall be made. Prior to approval by
Lender, the Lender shall be entitled to make any and all inspections and require
further documentation from Borrower, all as Lender may deem necessary in order
to substantiate and determine the percentage of completion of such Improvements.
Lender may retain, at Borrower’s cost, the Inspecting Engineers to complete said
inspections and to review the Master Plan and the Plans, prior to approval.
Borrower agrees to pay to the Lender the actual cost of each inspection made by
the Lender, its employees, agents, or contractors.
	 
	 	(d)	 	Advances shall be made after construction of the Improvements
(“Work”) has commenced and shall be made for Work done preceding the date of
request upon Lender’s receipt of an Affidavit of Commencement in the form
provided on Exhibit

7

 

	 	 	 	“F” attached hereto and made a part hereof for all purposes.
Application for Advance shall be filed no more often than twice monthly,
shall be filed at least ten working days before the date upon which an
Advance is desired, shall be certified by the Supervision Professional, if
any, and Borrower, and (if required by Lender) approved by the Inspecting
Engineers, shall specify which contractors, subcontractors/suppliers are
being paid out of said Advance and in what amounts, making reference to
specific line items on the Approved Budget, and shall contain such
information as Lender reasonably may request. Lender, at its discretion, may
require a Compliance Letter and/or an Inspection Certificate prior to
approving any Application for Advance. The amount of each Advance of the
Construction Allocation under the Loan shall be the amount which the
Contractor has earned under the Construction Contract, as approved by Lender,
less amounts for which sums have been previously advanced, less the Retainage
as more fully described in subparagraph (e) hereinafter and such amount shall
be advanced under the Loan on behalf of Borrower and shall be delivered
directly to Borrower. Lender shall not be required to advance funds if in the
good faith opinion of Lender (i) the Work is not being completed in a timely
and good and workmanlike manner, in accordance with the Plans, (ii) Borrower
fails to promptly pay for any labor or materials relating to the Work, or
(iii) the portion of the Loan then remaining unadvanced will not be
sufficient to complete the Work in accordance with the Master Plan and the
Approved Budget, whereupon no additional Advances will be due Borrower unless
and until Borrower at its sole cost performs a sufficient portion of the Work
so that such portion of the Loan then remaining unadvanced (including the
Borrower Deposit as such term is defined in Subsection 1.10 hereinabove) is
determined by Lender to be sufficient to so complete the Work. In such latter
event, Lender may also require Borrower to provide evidence of availability
of additional funds to make up such deficiency and/or may require that the
additional funds be held by Lender as part of the Borrower Deposit, to be
funded in accordance with the terms hereof. Notwithstanding the foregoing,
completion of the Work for which an “Advance is requested and the amount of
each Advance shall be determined in the reasonable discretion of Lender.
Borrower shall utilize all Advances made to it by Lender only for the payment
of the costs itemized in the Approved Budget as amended from time to time.
Anything to the contrary contained in this Section notwithstanding, in the
event that Borrower is required to deposit balancing funds with Lender
hereunder and the Property is thereafter completed with subsequent savings
that, had they occurred prior to the requirement of the balancing funds,
would have rendered all or a portion of such deposit to be unnecessary,
Borrower shall be entitled to a reimbursement of the funds deposited equal to
the lesser of (a) the amount of such subsequent savings or (b) the amount of
the balancing funds deposit.
	 
	 	(e)	 	Lender may, at its election, retain the statutory 10% Retainage
from each Advance relating to construction of Improvements hereunder in order
to allow Borrower to fully comply with Section 53.101 of tire Texas Property
Code for the payment of mechanics, materialmen, subcontractors, contractors and
artisans or others entitled to liens against the Property for work done or
materials supplied (the “Retainage”), such Retainage to be held until thirty
days after the date the Lender has received the following: (1) a substantial
completion certificate executed by Inspecting Engineers, the Supervision
Professional, Contractor and Borrower, (2) evidence that

8

 

	 	 	 	all Governmental Requirements have been satisfied, including if
applicable, but not limited to, delivery to Lender of certificates of
occupancy permitting the Improvements to be legally occupied, (3) evidence
that no mechanic’s or materialmen’s liens or other encumbrances have been
filed and remain in effect against the Property, (4) final lien releases or
waivers by Contractor, and all subcontractors, materialmen, and other
parties who have supplied labor, materials, or services for the construction
of the Improvements, or who otherwise might be entitled to claim a
contractual, statutory, or constitutional lien against the Property, and (5)
issuance by the Title Company of an endorsement to the mortgagee title
policy deleting the mechanic’s lien and pending disbursements exceptions and
recertifying the survey deletion endorsement, at which time, such retained
sums shall be disbursed by Lender to Borrower and then by Borrower to
contractors, suppliers, artisans, and others entitled thereto. In the event
that Lender does not retain the statutory 10% Retainage from each Advance
relating to construction of Improvements, it is agreed that Borrower, upon
request by Lender, shall provide the Lender with proof in form and content
satisfactory to the Lender that such statutory Retainage requirement is
being complied with by Borrower. At the Lender’s discretion, upon notice to
Borrower, the Lender may withhold such Retainage from each such Advance in a
special account of Borrower established for that purpose for the use and
benefit of those entitled thereto. Notwithstanding anything contained in
this Agreement to the contrary, Lender shall not withhold Retainage on
materials, soft costs, payments to subcontractors whose work has been
completed and who have furnished a final lien waiver and release, and any
Construction Contract for which payment and performance bonds acceptable to
Lender have been obtained.
	 
	 	(f)	 	All Advances hereunder shall be made directly to Borrower,
provided if an Event of Default has occurred, the Lender at its option may
make Advances directly to Borrower’s contractors, subcontractors, suppliers
and artisans for work done, or other person entitled thereto, or jointly to
Borrower and the applicable third party, or Lender may elect to make one or
more Advances through the title company, at Borrower’s expense.
	 
	 	(g)	 	Any provision in the Loan Documents to the contrary
notwithstanding, Lender shall have no obligation to make any Advance hereunder
or under any of the Loan Documents if, as a result of such Advance, Lender
would be in violation of any applicable federal or state statute, law,
regulation, or interpretation thereof, whether effective or prospective,
regarding lending limits imposed upon Lender, including but not limited to the
Garn-St. Germain Depository Institutions Act of 1982, the Federal Reserve Act
and applicable interpretive letters issued by the Office of the Comptroller of
the Currency.
	 
	 	(h)	 	Any provision hereof or in the Loan Documents to the contrary
notwithstanding, the total of the Advances for the Improvements hereunder shall
not exceed the lesser of (1) $13,355,000.00; (2) an amount equal to sixty-five
percent (65%) of the appraised value of the Property on an “as completed”
basis, as set forth in the Appraisal; or (3) an amount equal to sixty-five
percent (65%) of Borrower’s costs expended on the Land and Improvements on
items included in the Approved Budget, exclusive of any developer fees not
included in the Approved Budget.

9

 

	 	(i)	 	The initial Approved Budget does contain a line item for
$637,049.00 in Development Fees, such fees may be funded through Application
for Advance as follows:

	 	(1)	 	$10,000.00 per month beginning in the first
month Advances for Improvements are made, up to $120,000.00;
	 
	 	(2)	 	$100,000.00 upon substantial completion of the
Improvements and obtaining a project certificate of occupancy from the
City of Huntsville;
	 
	 	(3)	 	$100,000.00 when the monthly gross rents are
equal or greater than the monthly expenses including debt service; and
	 
	 	(4)	 	The balance to be funded at Borrower’s request
after Rent Stabilization, to wit: when the Property reaches a 1.30 to
1,00 debt service coverage ratio for 90 consecutive days based on
collected rents, a 30 year amortization utilizing an assumed
underwriting interest rate equal to the greater of (i) seven percent
(7.00%) per annum or (ii) the per annum interest rate for a permanent
loan quoted in the market at the time of the calculation for loans on
student housing properties.

     2.03 Requirements for Subsequent Advances. Prior to Lender funding additional
Advances subsequent to the Initial Advance funding on the Closing Date, Borrower shall have
provided Lender with the following:

	 	(a)	 	Executed originals of all of the Loan Documents;
	 
	 	(b)	 	All required Title Insurance Policies;
	 
	 	(c)	 	Evidence from Borrower of Borrower’s Equity in the project;
	 
	 	(d)	 	Satisfactory evidence the Borrower has established the
Operating Account with Depository Bank. All Advances made subsequent to
closing shall be funded into such account;
	 
	 	(e)	 	Executed original of the Availability of Utilities Letter;
	 
	 	(f)	 	Building permits for the construction of the Improvements,
except that Lender agrees to Advance for Borrower to obtain Letters of Credit
or to pay soft costs prior to receipt of said building permits;
	 
	 	(g)	 	Adequate evidence of appropriate zoning for the intended
usage of the Property;
	 
	 	(h)	 	Final Plans of the proposed Improvements;
	 
	 	(i)	 	If required by the Governmental Authority, a copy of the
final recorded subdivision plat;

10

 

	 	(j)	 	The Appraisal in form and substance satisfactory to Lender
indicating a fair market value in compliance with the limitations of
Section 2.02(h) of this Agreement;
	 
	 	(k)	 	Borrower and the general contractor shall have executed and
delivered the Assignment of Construction Contract;
	 
	 	(l)	 	Borrower and the Design Professional shall have executed and
delivered the Assignment of Rights to Plans and Specifications;
	 
	 	(m)	 	Borrower shall have executed and delivered the Assignment of
Permits and Licenses;
	 
	 	(n)	 	Satisfactory evidence of the compliance by Borrower with all
insurance requirements provided in the Deed of Trust;
	 
	 	(o)	 	Receipt and approval by Lender of the Master Plan;
	 
	 	(p)	 	If required in writing by Lender, receipt and approval of an
attorney’s opinion rendered by Borrower’s counsel in form and substance
satisfactory to Lender;
	 
	 	(q)	 	Receipt and approval by Lender of the Compliance Letter;
	 
	 	(r)	 	Fully executed copy of the Affidavit of Commencement in form
of the affidavit attached hereto as Exhibit “F” and made a part hereof
for all purposes;
	 
	 	(s)	 	Receipt and approval by Lender of all change orders affecting the Work; and
	 
	 	(t)	 	Satisfactory evidence with regard to adequate parking.

     2.04 Conditions to Subsequent Advances. As a condition precedent to each Advance
subsequent to the Closing Date, and, in addition to all other requirements herein, Borrower must
satisfy the following requirements and, if required by Lender, deliver to Lender evidence of such
satisfaction:

	 	(a)	 	There shall then exist no Event of Default or any condition or
event which, with the giving of notice and/or passing of time, would
constitute an Event of Default;
	 
	 	(b)	 	The representations and warranties made in this Agreement and
all Loan Documents shall be true and correct on and as of the date of each
Advance, with the same effect as if made on that date;
	 
	 	(c)	 	Borrower will procure and deliver to Lender, if required by
Lender, releases or waivers of mechanic’s liens in form of the Partial Waiver
and Release attached hereto as Exhibit “G-l” and made a part hereof
for all purposes, and receipted bills showing payment of all parties who have
furnished materials or services or performed labor of any kind in connection
with the construction of any of the Improvements;

11

 

	 	(d)	 	The Title Insurance Policy shall, if available under local rules,
be endorsed and extended to cover each Advance with no additional title
exceptions objectionable to Lender; and
	 
	 	(e)	 	Borrower shall be required to furnish Lender an acceptable
“slab” or “forms” survey prior to disbursement of the first Advance following
the completion of all foundation and slab work for the improvements. All
surveys are to be satisfactory to Lender in all respects, and are to include
among other things, encroachments, building set-back lines, public access and
flood plain disclosures, and must be dated, signed and stamped by a surveyor
licensed by the State of Texas.

     2.05 Completion of Improvements. Construction of the Improvements shall be completed
on or
before the Completion Date. Within forty-five days after completion, Borrower must provide to
Lender the
following:

	 	(a)	 	If Borrower has provided title insurance coverage during the
construction period by purchase of an title policy binder on interim
construction, Borrower shall provide Lender, at time of completion, a
mortgagee title policy with no exceptions except those approved by Lender. If
Borrower has already provided a mortgagee title policy, Borrower shall provide
an endorsement of said policy deleting the mechanic’s lien and pending
disbursements exceptions, and recertifying the survey deletion endorsement;
	 
	 	(b)	 	Borrower shall provide Lender, at time of completion and final
funding, those affidavits, releases and certificates in form of the exhibits
attached hereto as follows:

	 	 	 

	Final Waiver and Release of Lien:

	 	Exhibit “G-2”
	Affidavit of Certificate of Completion:

	 	Exhibit “H”
	Contractor’s Affidavit of Bills Paid:

	 	Exhibit “I-1”
	Owner’s Affidavit of Bills Paid:

	 	Exhibit “I-2”

	 	(c)	 	The final plat or replat, if any, must be recorded if not previously recorded;
	 
	 	(d)	 	Receipt of certificates of occupancy where and when available
from the Governmental Authorities;
	 
	 	(e)	 	Receipt of a hazard and general liability insurance policy
meeting the requirements of the Deed of Trust; and
	 
	 	(f)	 	An “as built” survey in a form satisfactory to Lender in all
respects, which shall include among other things, encroachments, building
set-back lines, public access and flood plain disclosures, and must be dated,
signed and stamped by a surveyor licensed by the State of Texas.

     2.06 No Waiver. No Advance shall constitute a waiver of any condition precedent to the
obligation of Lender to make any further Advance or preclude Lender from thereafter declaring
the failure
of Borrower to satisfy such condition precedent to be an Event of Default.

12

 

     2.07 Conditions Precedent for the Benefit of Lender. All conditions precedent to
the obligation of Lender to make any Advance are imposed hereby solely for the benefit of Lender,
and no other party may require satisfaction of any such condition precedent or be entitled to
assume that Lender will refuse to make any Advance in the absence of strict compliance with such
conditions precedent. All requirements of this Agreement may be waived by Lender, in whole or in
part, at any time.

     2.08 Subordination. Lender shall not be obligated to make, nor shall Borrower be
entitled to, any Advance until such time as Lender shall have received, to the extent reasonably
requested by Lender, subordination agreements from the general contractor and the Design
Professional, subordinating to the lien of the Deed of Trust any hen, claim, or charge they may
have against Borrower or the Property.

     2.09 Operating Account. The Operating Account shall be maintained by Borrower at all
times during the term of the Loan. The Operating Account shall be, and by execution hereof is,
pledged to secure the Loan. All net revenues generated by Borrower in connection with the Land not
required to be applied to the principal balance of the Loan shall be deposited in the Operating
Account.

     2.10 Letters of Credit. It is contemplated by Borrower and Lender that Borrower, or
one or more of its affiliates, may desire to apply for and obtain one or more Letters of Credit
from Depository Bank. In the event that any such party applies for a Letter of Credit with
Depository Bank and is approved, at Borrower’s request, Lender may consent to same and in such
event will reserve an amount of Loan proceeds to cover any potential advances that may be made
under the Letter of Credit to the beneficiary thereunder. Any such approval by Lender will be at
Lender’s sole discretion but will not be unreasonably withheld, and the aggregate amount of Loan
proceeds to cover any potential advances under the Letters of Credit will not exceed $1,000,000.00
at any one time. Borrower agrees to execute any and all documents reasonably deemed necessary by
Lender in connection with Letter of Credit transactions, including amendments to this Agreement,
amended Approved Budgets, additional security agreements and other collateral documents. In the
event a Letter of Credit contemplated by the terms of this section is presented to Depository Bank
and drafted upon, Borrower agrees that Lender shall, without the consent of Borrower, advance Loan
proceeds to repay die Depository Bank for advances under the Letter of Credit. Lender will not be
required to release its collateral securing the Loan until such time as all obligations of the
Depository Bank under any Letters of Credit have expired or been terminated, and until the Note is
paid in full. The expiration dates of any such Letters of Credit shall not exceed twelve months
from date of issuance, and shall not extend past the Scheduled Maturity Date as defined in the
Note, as may be extended from time to time. Borrower shall also pay to Lender or to Depository
Bank (but not to both of them) at the time a Letter of Credit is issued by Depository Bank
pursuant to the terms of this section, a letter of credit fee equal to one percent (1%) of the
face amount of each Letter of Credit. If the Note matures prior to expiration of the Letter of
Credit, then at the time of issuance of the Letter of Credit, the Borrower shall deposit with
Depository Bank in a controlled account the principal necessary to fund the Letter of Credit upon
any draw on the Letter of Credit.

     Borrower shall be irrevocably and unconditionally obligated to reimburse Lender for any
amounts to be paid by Lender upon any drawing under any Letter of Credit issued by Depository Bank
for the benefit of Borrower, without presentment, demand, protest or other formalities of any kind.
All such amounts paid by Lender and remaining unpaid by the Borrower shall bear interest at the
Applicable Interest Rate as such term is used and defined in the Note. The Borrower’s obligations
under this paragraph shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have
had against Lender or the beneficiary of a Letter of Credit issued by Depository Bank pursuant to
the request of Borrower.

13

 

     Borrower further irrevocably and unconditionally agrees with Lender that Lender shall not be
responsible for, and Borrower’s reimbursement obligation in respect of any Letter of Credit shall
not be affected by, among other things, the validity or genuineness of documents or any
endorsements thereon, even if such documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or among Borrower, the beneficiary of any
Letter of Credit or any financing institution or other party or any claims or defenses whatsoever
of any of the Borrower or any of its affiliates against the beneficiary of any Letter of Credit.
Lender shall not be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in connection with any Letter
of Credit. Borrower irrevocably and unconditionally agrees that any action taken or omitted by
Lender or Depository Bank under or in connection with each Letter of Credit and the related
drafts and documents, if done without gross negligence or willful misconduct, shall be binding
upon Borrower and shall not put Lender under any liability to Borrower.

     Lender and Depository Bank shall be entitled to rely, and shall be fully protected in relying
upon, any letter of credit, draft, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons, and upon advice and statements of legal counsel, independent accounts
and other experts selected by Lender.

     EXCEPT FOR LENDER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES TO INDEMNIFY AND HOLD HARMLESS LENDER AND ITS DIRECTORS, OFFICERS, AGENTS
AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES, LIABILITIES, COSTS OR
EXPENSES WHICH LENDER MAY INCUR (OR WHICH MAY BE CLAIMED AGAINST LENDER BY ANY PERSON WHATSOEVER)
BY REASON OF OR IN CONNECTION WITH THE ISSUANCE, EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT
OR FAILURE TO PAY UNDER ANY LETTER OF CREDIT OR ANY ACTUAL OR PROPOSED USE OF ANY LETTER OF
CREDIT, INCLUDING, WITHOUT LIMITATION, ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES
WHICH LENDER MAY INCUR BY REASON OF OR ON ACCOUNT OF LENDER ISSUING ANY LETTER OF CREDIT WHICH
SPECIFIES THAT THE TERM “BENEFICIARY” INCLUDED THEREIN INCLUDES ANY SUCCESSOR BY OPERATION OF LAW
OF THE NAMED BENEFICIARY, BUT WHICH LENDER DOES NOT REQUIRE THAT ANY DRAWING BY SUCH SUCCESSOR
BENEFICIARY BE ACCOMPANIED BY A COPY OF A LEGAL DOCUMENT, SATISFACTORY TO LENDER, EVIDENCING THE
APPOINTMENT OF SUCH SUCCESSOR BENEFICIARY.

ARTICLE III: REPRESENTATIONS AND WARRANTIES OF BORROWER

     3.01 Representations and Warranties. Borrower hereby, and upon submission of each
Application for Advance and acceptance of each Advance, represents and warrants as follows:

	 	(a)	 	All representations and warranties made by Borrower under the
Deed of Trust are true and correct;
	 
	 	(b)	 	No claims for unpaid bills for the supplying of labor,
materials, or services for the construction of the Improvements shall have been
recorded in the mechanic’s lien or other appropriate records in the county
where the Property is located, or if such claims are made, Borrower has bonded
the liens in accordance with Chapter 53 of the Texas Property Code. Except as
previously disclosed in writing to Lender, as

14

 

	 		 	of this date no work of any kind or nature, however incidental, has
been performed by any party on behalf of Borrower with regard to the
preparation of the Property for construction of the contemplated
Improvements or construction of the Improvements themselves. Except as
previously disclosed in writing to Lender, no materials have been delivered
to the Property on behalf of Borrower. Except as previously disclosed in
writing to Lender, the Borrower on the date hereof, has made no verbal or
written contract or arrangement of any kind the performance of which by the
other party thereto would give rise to a lien on the Property which on the
date hereof is superior to the liens created under any of the Loan Documents
and/or liens transferred to the Lender thereunder. Borrower shall not cause
or allow any liens to be placed on the Property without the
approval of the Lender;
	 
	 	(c)	 	No litigation or proceedings have been, to the best of
Borrower’s knowledge, threatened against the Property or the Borrower (i) which
would materially and adversely affect the enforceability or priority of the
Loan Documents, or (ii) which would materially and adversely affect the ability
of Borrower to complete the Improvements or the ability of Borrower to perform
its obligations pursuant to and as contemplated by the terms of this Agreement
and the Loan Documents;
	 
	 	(d)	 	The Approved Budget presents a full and complete representation
of all costs, expenses and fees which Borrower expects to pay or anticipates
becoming obligated to pay to complete the construction of the Improvements;
	 
	 	(e)	 	To the best of Borrower’s knowledge: (i) all consents, licenses
and permits and all other authorizations or approvals required to complete the
construction of the Improvements in accordance with the Plans have been or can
be obtained during the course of the construction in time to complete the
construction on or before the Completion Date; (ii) all laws, ordinances,
regulations, restrictive covenants and requirements of all Governmental
Authorities (including, building, health, fire, water, use, zoning laws,
environmental and similar laws, codes, ordinances, rules and regulations)
relating to the construction of the Improvements and operation of the Property
have been or can be complied with; and (iii) all permits and licenses required
for the operation of the Property which cannot be obtained until construction
of the Improvements is completed can be obtained if the Property is completed
in accordance with the Plans. The Plans have been approved by all Governmental
Authorities or, to the best of Borrower’s knowledge, will be approved when
required during the course of the construction of the Improvements in time to
complete the construction on or before the Completion Date. To the best of
Borrower’s knowledge, construction of the Improvements and operation of the
Property will not be delayed or impeded by virtue of any Governmental
Requirements. To the best of Borrower’s knowledge, upon completion of the
construction of tire Improvements, the Property will comply with all
Governmental Requirements; and
	 
	 	(f)	 	When completed in accordance with the Plans, no portion of the
Improvements will encroach upon any adjacent property, building line, setback
line, side yard line, or any recorded or visible easement (or other easement of
which Borrower is aware or has reason to believe may exist) with respect to the
Property. Upon completion of Improvements, the Property will have adequate
rights of access to dedicated public

15

 

	 	 	 	streets and roads and will have (or when the Improvements are completed in
accordance with the Master Plan will have) adequate rights and means of
access to all water, sanitary sewer and storm drainage facilities necessary
for the intended use of the Property; all public roads necessary for
adequate ingress and egress to the Property have been, completed with the
necessary rights-of-way therefor having been acquired by the appropriate
Governmental Authority, and all necessary steps having been taken by
Borrower and such Governmental Authority to assure the completion,
construction and installation thereof before or by the applicable
Completion Date.

     3.02 Survival of Representations and Warranties. Borrower agrees mat all
representations and warranties in this Agreement will be true in all material respects at the date
of the first Advance and at all times thereafter until the Loan is repaid in full. Each
Application for Advance shall constitute a reaffirmation that the representations and warranties
are true and correct in all material respects at such time.

     3.03 Inducement to Lender. The representations and warranties contained in the Loan
Documents are made by Borrower as an inducement to Lender to make the Loan and Borrower
understands that lender is relying on the truth and accuracy of such representations and
warranties.

ARTICLE IV: COVENANTS AND AGREEMENTS OF BORROWER

     Borrower hereby covenants and agrees as follows:

     4.01 Compliance with Governmental Requirements. Borrower shall timely comply with all
Governmental Requirements and deliver to Lender evidence thereof. Borrower assumes full
responsibility for the compliance of the Plans and the Property with all Governmental Requirements
and with sound construction and engineering practices and, notwithstanding any approvals by
Lender, Lender shall have no obligation or responsibility whatsoever for the Plans or any other
matter incident to the Property or the construction of the Improvements.

     4.02 The Construction Contract. Borrower shall not become a party to any contract in
excess of $50,000.00 for the performance of any Work on the Property or for the supplying of any
labor, materials, or services for the construction of the Improvements except upon such terms and
with such parties as shall be approved in writing by Lender. Lender’s approval of any contractor or
contract may be conditioned upon such contractor providing a payment and performance bond for all
or part of the work to be undertaken under the contract. Borrower may retain an affiliated
construction company to act as general contractor; in such case, all approval rights of Lender and
rights to require bonding of Lender shall be for subcontractors and suppliers. The general
contractor must agree in writing that all liens of the genera] contractor are subordinate to the
lien of the Deed of Trust. The general contractor must agree in writing that no change orders to
the Plans for which Lender’s consent is required hereunder, shall be effective without the prior
written approval of Lender. No approval by Lender of any Construction Contract or change orders
thereto shall make Lender responsible for the adequacy, form, or content of such Construction
Contracts or change orders. Upon written request by Lender, Borrower shall supply Lender with a
list of all original contractors and all second and subsequent tier contractors and suppliers, and
their respective addresses and telephone numbers, and information with respect to the portion of
such contracts completed and sums owed to such contractors and suppliers. If requested by Lender,
Borrower will cause all subcontractors whose contract prices exceeds ten percent (10%) of the
amount of the Approved Budget, as provided in Section 1.15 herein to provide a performance bond and
a payment bond of such character, issued by companies; on forms and in such penal sum in connection
with the construction of the Improvements, as Lender shall designate. Unless waived by Lender, all
such bonds shall name Lender as co-obligee.

16

 

     4.03 Construction of the Improvements and Supervision. The construction of the
Improvements shall commence no later than ninety days from the date hereof and shall be prosecuted
with diligence and continuity, in a good and workmanlike manner, and in accordance with sound
building and engineering practices, all applicable Governmental Requirements and the Plans, if
any, Except for Force Majeure events, Borrower shall not permit cessation of work for a period in
excess of thirty days without the prior written consent of Lender and shall complete construction
of the Improvements on or before the Completion Date. The construction of the Improvements will be
prosecuted by Borrower with diligence and continuity and Borrower will complete the same in
substantial accordance with the Plans, free and clear of liens, or claims for liens, for material
supplied and for labor or services performed in connection with the construction of the
Improvements, and in compliance with all applicable Governmental Requirements, restrictive
covenants, set back lines and without encroachment into any existing easements which affect the
Property. Borrower shall hire and direct the Supervision Professional at all times prior to
completion of Improvements in a manner reasonably satisfactory to Lender.

     4.04 Correction of Construction Defects. Borrower shall correct or cause to be
corrected (a) any material defect in the Improvements, (b) any material departure in the
construction of the Improvements from the Plans or Governmental Requirements, or (c) any
encroachment by any part of the Improvements or any other structure located on the Property on any
building line, easement, property line, or restricted area.

     4.05 Storage of Materials. Borrower shall cause all materials supplied for, or
intended to be utilized in, the construction of the Improvements, but not affixed to or
incorporated into the Improvements or the Property, to be stored on the Property, with adequate
safeguards, as required by Lender, to prevent loss, theft, damage, or commingling with other
materials or projects.

     4.06 Inspection of the Property. Borrower shall permit Lender and any Governmental
Authority, and their agents and representatives, to enter upon the Property and any location where
materials intended to be utilized in the construction of the Improvements are stored for the
purpose of inspection of tire Property and such materials at all reasonable times.

     4.07 Notices by Governmental Authority. Fire and Casualty Losses. Etc, Borrower shall
timely comply with and promptly furnish to Lender true and complete copies of any official notice
or claim by any Governmental Authority pertaining to the Property. Borrower shall promptly notify
Lender of any fire or other casualty or any notice or taking of eminent domain action or
proceeding affecting the Property.

     4.08 Application of Advances. Borrower shall disburse all Advances for payment of
costs and expenses specified in the Approved Budget, and for no other purpose.

     4.09 Direct Disbursement and Application by Lender. Upon the occurrence and during the
continuance of an Event of Default, or any event or condition which, with the giving of notice
and/or passing of time, would constitute an Event of Default, Lender shall have tire right, but not
the obligation, to disburse and directly apply the proceeds of any Advance to the satisfaction of
any of Borrower’s obligations hereunder. Any Advance by Lender for such purpose, shall be part of
the Loan and shall be secured by the Loan Documents. Upon the occurrence and during the continuance
of an Event of Default, Borrower hereby authorizes Lender to hold, use, disburse, and apply the
Loan and proceeds of the Borrower Deposit for payment of costs of construction of the Improvements,
expenses incident to the Loan and the Property, and the payment or performance of any obligation of
Borrower hereunder. Borrower hereby assigns and pledges the proceeds of the Loan and proceeds of
the Borrower Deposit to Lender for such purposes. Upon the occurrence and during the continuance of
an Event of Default, Lender may advance and incur such expenses

17

 

hereunder as Lender reasonably deems necessary for the completion of construction of the
Improvements and to preserve the Property, and any other security for the Loan, and such expenses,
even though in excess of the amount of the Loan, shall be secured by the Loan Documents, and be
payable to Lender upon demand. Lender may disburse any portion of any Advance at any time, and
from time to time, to persons other than Borrower for the purposes specified in this Section 4.09
irrespective of the provisions of Section 2.03 hereof, and the amount of Advances to which
Borrower shall thereafter be entitled shall be correspondingly reduced.

     4.10 Costs and Expenses. Borrower shall pay when due all costs and expenses required
by this Agreement, including, without limitation, (a) all fees and expenses of the Inspecting
Engineers, (b) all reasonable fees and expenses of counsel of Lender related to the Loan Documents,
the construction of Improvements or protecting the interests of Lender in the Property, (c) all
title insurance downdates/endorsements and title examination charges, including premiums for the
Title Insurance Policies, (d) all premiums for the insurance policies required under the Deed of
Trust, and (e) all other reasonable costs and expenses payable to third parties incurred by Lender
in connection with the consummation of the transactions contemplated by this Agreement.

     4.11 Change Orders. Borrower shall not make any change order to the Plans or any
other change order with respect to the Approved Budget, which individually exceeds $50,000 or in
the aggregate with all other previously approved change orders exceeds $250,000, without the prior
written consent of Lender, which consent will not be unreasonably withheld or delayed.

     4.12 No Liability of Lender. Lender shall have no liability, obligation, or
responsibility whatsoever with respect to the construction of the Improvements except to advance
the Loan proceeds pursuant to this Agreement. Lender shall not be obligated to inspect the
Property or the construction of the Improvements, nor be liable for the performance or default of
Borrower, the Inspecting Engineers, the Contractor, or any other party, or for any failure to
construct, complete, protect, or insure the Improvements, or for the payment of costs of labor,
materials, or services supplied for the construction of the Improvements, or for the performance
of any obligation of Borrower whatsoever. Nothing, including without limitation any Advance or
acceptance of any document or instrument, shall be construed as a representation or warranty,
express or implied, to any party by Lender.

     4.13 No Conditional Sale Contracts. Etc. No materials, equipment, or fixtures shall
be supplied, purchased, or installed for the construction or operation of the Improvements
pursuant to security agreements, conditional sale contracts, lease agreements, or other
arrangements or understandings whereby a security interest or title is retained by any party or
the right is reserved or accrues to any party to remove or repossess any materials, equipment, or
fixtures intended to be utilized in the construction or operation of the Improvements.

     4.14 Defense of Action. Lender may (but shall not be obligated to) commence, appear
in, or defend any action or proceeding purporting to affect the Loan, the Property, or the
respective rights and obligations of Lender and Borrower pursuant to this Agreement. Lender may
(but shall not be obligated to)
pay all necessary expenses, including reasonable attorneys’ fees and expenses incurred hi
connection with such proceedings or actions, which Borrower agrees to repay to Lender upon
demand.

     4.15 Assignment of Construction Contract. As additional security for the payment of
the Loan,
Borrower hereby transfers and assigns to Lender all of Borrower’s rights and interest, but
not its obligations,
in, under, and to the construction contract with the general contractor upon the following
terms and
conditions:

18

 

	 	(a)	 	Borrower represents and warrants that the copy of such
construction contract it has furnished to Lender is a true and complete
copy thereof and that Borrower’s interest therein is not subject to any
claim, setoff, or encumbrance.
	 
	 	(b)	 	Neither this assignment nor any action by Lender shall
constitute an assumption by Lender of any obligations under the construction
contract, and Borrower shall continue to be liable for all obligations of
Borrower thereunder, Borrower hereby agreeing to perform all of its
obligations under the construction contract. Borrower agrees to indemnify and
hold Lender harmless against and from any loss, cost, liability, or expense
(including, but not limited to, reasonable attorneys’ fees) resulting from any
failure of Borrower to so perform.
	 
	 	(c)	 	Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right at any time (but shall have no
obligation) to take in its name or in the name of Borrower such action as
Lender may at any time determine to be necessary or advisable to cure any
default under the construction contract or to protect the rights of Borrower
or Lender thereunder. Lender shall incur no liability if any action so taken
by it or in its behalf shall prove to be inadequate or invalid, and Borrower
agrees to hold Lender free and harmless against and from any loss, cost,
liability or expense (including, but not limited to, reasonable attorneys’
fees) incurred in connection with any such action.
	 
	 	(d)	 	Borrower hereby irrevocably constitutes and appoints Lender as
Borrower’s attorney-in-fact, in Borrower’s name or in Lender’s name, to enforce
all rights of Borrower under the construction contract during the continuance
of an Event of Default. The power-of-attorney granted hereby is a power coupled
with an interest and is irrevocable.
	 
	 	(e)	 	Prior to an Event of Default, Borrower shall have the right to
exercise its rights as owner under the construction contract, provided that
Borrower shall not cancel or amend the construction contract or do or suffer
to be done any act which would impair the security constituted by this
assignment without the prior written consent of Lender.
	 
	 	(f)	 	This assignment shall inure to the benefit of Lender, its
successors and assigns, including any purchaser upon foreclosure of the Deed
of Trust, any receiver in possession of the Property, and any legal entity
formed by or on behalf of Lender winch assumes Lender’s rights and obligations
under this Agreement.

     4.16 Assignment of Plans. As additional security for the payment of the Loan, Borrower
hereby transfers and assigns to Lender all of Borrower’s right, title, and interest in and to die
Plans and hereby represents and warrants to and agrees with Lender as follows:

	 	(a)	 	Borrower has delivered to Lender a complete and accurate description of the
Plans.
	 
	 	(b)	 	The Plans are complete and adequate for the construction of
the improvements and there have been no modifications thereof except as
described in such description.

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	 	(c)	 	Lender may use the Plans for any purpose relating to the Improvements,
including but not limited to inspections of construction and the completion
of the Improvements.
	 
	 	(d)	 	Lender’s acceptance of this assignment shall not constitute
approval of the Plans by Lender. Lender has no liability or obligation
whatsoever in connection with the Plans and no responsibility for the
adequacy thereof or for the construction of the Improvements contemplated by
the Plans. Lender has no duty to inspect the Improvements, and if Lender
should inspect the Improvements, Lender shall have no liability or obligation
to Borrower arising out of such inspection. No such inspection nor any
failure by Lender to make objections after any such inspection shall
constitute a representation by Lender that the Improvements are in accordance
with the Plans or constitute a waiver of Lender’s right thereafter to insist
that the Improvements be constructed in accordance with the Plans.
	 
	 	(e)	 	This assignment shall inure to the benefit of Lender, its
successors and assigns, including any purchaser upon foreclosure of the Deed
of Trust, any receiver in possession of the Property, and any legal entity
formed by or on behalf of Lender which assumes Lender’s rights and
obligations under this Agreement.

     4.17 Payment of Claims. Borrower shall promptly pay or cause to be paid when due all
costs and expenses incurred in connection with the Property and the construction of the
Improvements, and Borrower shall keep the Property free and clear of any liens, charges, or
claims other than the lien of the Deed of Trust and other liens approved in writing by Lender.
Notwithstanding anything to the contrary contained in this Agreement, Borrower (a) may contest
the validity or amount of any claim of any contractor, consultant, architect, or other person
providing labor, materials, or services with respect to the Property, (b) may contest any tax or
special assessment levied by any Governmental Authority, and (c) may contest the enforcement of
or compliance with any Governmental Requirements, and such contest on the part of Borrower shall
not be an Event of Default hereunder and shall not release Lender from its obligations to make
Advances hereunder; provided, however, that during the pendency of any such contest, Borrower
shall furnish to Lender and Title Company an indemnity bond with corporate surety satisfactory to
Lender and Title Company or other security acceptable to them in an amount equal to the amount
being contested plus a reasonable additional sum to cover possible costs, interest, penalties,
and attorney’s fees, and provided further that Borrower shall pay any amount adjudged by a court
of competent jurisdiction to be due, with all costs, interest, penalties and attorney’s fees
thereon, before such judgment becomes a lien on the Property.

     4.18 Inspections. If required by Lender, Inspecting Engineers shall make periodic
inspections of the Property during the course of construction in order to certify to Lender that at
the time an Application for Advance is made: (a) the amount requested is in proportion to the Work
completed; (b) that all Work has been performed in a workmanlike manner; (c) the Work performed is
substantially in accordance with the Plans; and (d) there are sufficient funds remaining to
complete the Improvements. The Inspecting Engineers must be satisfied that the Improvements are in
compliance with reasonable fire, safety and health standards, in . addition to standards imposed by
law or regulation. All defects in the Improvements disclosed by an engineering report, and
violations of zoning, building, environmental, health, safety or other governmental or regulatory
rules, laws, codes or regulations are to be corrected if in Lender’s reasonable judgment such
defects or violations affect marketability or usage of the Property or the value of the Property
for loan purposes.

20

 

     4.19 Indemnity. BORROWER SHALL INDEMNIFY AND DEFEND LENDER AGAINST, AND SHALL HOLD
LENDER HARMLESS FROM ANY AND ALL LOSSES, DAMAGES (WHETHER GENERAL, PUNITIVE OR OTHERWISE),
LIABILITIES, CLAIMS, CAUSES OF ACTION (WHETHER LEGAL, EQUITABLE OR ADMINISTRATIVE), JUDGMENTS,
COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH LENDER MAY SUFFER OR
INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF: (A) LENDER’S PERFORMANCE UNDER THIS AGREEMENT OR
UNDER ANY OF THE OTHER LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION LENDER’S EXERCISE OR FAILURE
TO EXERCISE ANY RIGHTS, REMEDIES OR POWERS IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS; (B) BORROWER’S FAILURE TO PERFORM ANY OF BORROWER’S OBLIGATIONS AS AND WHEN
REQUIRED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION, ANY
FAILURE OF ANY REPRESENTATION OR WARRANTY OF BORROWER TO BE TRUE AND CORRECT AND ANY FAILURE BY
BORROWER TO SATISFY ANY CONDITION; (C) ANY CLAIM OR CAUSE OF ACTION OF ANY KIND BY ANY PERSON OR
ENTITY TO THE EFFECT THAT LENDER IS IN ANY WAY RESPONSIBLE OR LIABLE FOR ANY ACT OR OMISSION BY
BORROWER, WHETHER ON ACCOUNT OF ANY THEORY OF DERIVATIVE LIABILITY OR OTHERWISE; (D) ANY ACT OR
OMISSION BY BORROWER, ANY CONTRACTOR, SUBCONTRACTOR OR MATERIAL SUPPLIER, ENGINEER, ARCHITECT OR
OTHER PERSON OR ENTITY, EXCEPT LENDER, WITH RESPECT TO ANY OF THE PROPERTY; (E) THE CONSTRUCTION
OR OTHER WORK CONTEMPLATED HEREIN; (F) THE OPERATION OR MAINTENANCE OF THE PROPERTY; AND (G) ANY
OTHER ACTION OR INACTION BY, OR MATTER WHICH IS THE RESPONSIBILITY OF BORROWER, EXCEPT FOR ANY
SUCH CLAIM, INJURY, DAMAGE, LOSS OR LIABILITY CAUSED SOLELY BY THE WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF LENDER OR ITS AGENTS OR EMPLOYEES. LENDERS’ RIGHT OF INDEMNITY SHALL NOT BE DIRECTLY
OR INDIRECTLY LIMITED, PREJUDICED, IMPAIRED OR ELIMINATED IN ANY WAY BY ANY FINDING OR ALLEGATION
THAT LENDER’S CONDUCT IS ACTIVE, PASSIVE OR SUBJECT TO ANY THEORY OF ANY KIND, CHARACTER OR NATURE
FOR ANY ACT OR OMISSION BY BORROWER OR ANY OTHER PERSON OR ENTITY EXCEPT LENDER. NOTWITHSTANDING
THE FOREGOING, BORROWER SHALL NOT BE OBLIGATED TO INDEMNIFY LENDER WITH RESPECT TO ANY INTENTIONAL
TORT OR ACT OF GROSS NEGLIGENCE WHICH LENDER IS PERSONALLY DETERMINED BY THE JUDGMENT OF A COURT
OF COMPETENT JURISDICTION (SUSTAINED ON APPEAL, IF ANY) TO HAVE COMMITTED. BORROWER SHALL PAY ANY
INDEBTEDNESS ARISING UNDER SAID INDEMNITY TO LENDER PROMPTLY UPON DEMAND BY LENDER. THIS INDEMNITY
SHALL SURVIVE THE PAYMENT OF ALL AMOUNTS PAYABLE PURSUANT TO THE LOAN DOCUMENTS. PAYMENT BY
LENDER SHALL NOT BE A CONDITION PRECEDENT TO THE OBLIGATIONS OF BORROWER UNDER THIS INDEMNITY.

     4.20 Lender’s Action for its Own Protection Only. The authority herein conferred upon
Lender, and any action taken by Lender, to inspect the Property, to procure waivers or sworn
statements, to approve contracts, subcontracts and purchase orders, and to approve Plans, will be
exercised and taken by Lender for Lender’s protection only and may not be relied upon by Borrower
for any purposes whatever; and Lender shall not be deemed to have assumed any responsibility to
Borrower with respect to any such action herein authorized or taken by Lender or with respect to
the proper construction of the Improvements on the Property, performance of contracts, subcontracts
or purchase orders by any contractor, subcontractor or material supplier, or prevention of
mechanics’ liens from being claimed or asserted against any of the Property. Any review,
investigation or inspection conducted by Lender, or any architectural or engineering consultants

21

 

retained by Lender to verify independently Borrower’s satisfaction of any conditions
precedent to Advance under this Agreement, Borrower’s performance of any of the covenants,
agreements and obligations of Borrower under this Agreement, or the validity of any
representations and warranties made by Borrower hereunder (regardless of whether the party
conducting such review, investigation or inspection shall have discovered that any of such
conditions precedent were not satisfied or that any such covenants, agreements or obligations
were not performed or that any such representations or warranties were not true), shall not
affect (or constitute a waiver by Lender of) (a) any of Borrower’s representations and warranties
under this Agreement or Lender’s reliance thereon or (b) Lender’s reliance upon any
certifications of Borrower or the Contractor required under this Agreement or any other facts,
information or reports furnished to Lender by Borrower hereunder.

ARTICLE V: RIGHTS AND REMEDIES OF LENDER

     5.01 Rights of Lender. Upon the occurrence and during the continuance of an Event of
Default, Lender shall have the right, in addition to any other right or remedy of Lender, but not
the obligation, in its own name or in the name of Borrower, to enter into possession of the
Property; to perform all work necessary to complete the construction of the Improvements
substantially in accordance with the Master Plan and -Governmental Requirements, and to employ
watchmen and other safeguards to protect the Property. Borrower hereby appoints Lender as the
attorney-in-fact of Borrower, with full power of substitution, and in the name of Borrower, if
Lender elects to do so, upon the occurrence of an Event of Default, to (a) use such sums as are
necessary, including any proceeds of the Loan and of the Borrower Deposit, make such changes or
corrections in the Plans, and employ such architects, engineers, and contractors as may be required
for the purpose of completing the construction of the Improvements substantially in accordance with
the Master Plan, and the Governmental Requirements, (b) execute all applications and certificates
in the name of Borrower which may be required for completion of construction of the Improvements,
(c) endorse the name of Borrower on any checks or drafts representing proceeds of the insurance
policies, or other checks or instruments payable to Borrower with respect to the Property, (d) do
every act with respect to the construction of the Improvements which Borrower may do, and (e)
prosecute or defend any action or proceeding incident to the Property. The power-of-attorney
granted hereby is a power coupled with an interest and is irrevocable. Lender shall have no
obligation to undertake any of the foregoing actions, and if Lender should do so, it shall have no
liability to Borrower for the sufficiency or adequacy of any such actions taken by Lender.

     5.02 Cessation of Advances. Upon the occurrence and during the continuance of an
Event of Default, or any event or condition which, with the giving of notice and/or passing of
time, would constitute an Event of Default, the obligation of Lender to disburse the Loan
proceeds and proceeds of the Borrower Deposit and all other obligations of Lender hereunder
shall, at Lender’s option, immediately terminate.

     5.03 Funds of Lender. Any funds of Lender used for any purpose referred to in this
Article V, shall constitute Advances secured by the Loan Documents and shall bear interest at
the rate specified in the Note to be applicable after default thereunder.

     5.04 No Waiver or Exhaustion. No waiver by Lender of any of its rights or remedies
hereunder, in the other Loan Documents, or otherwise, shall be considered a waiver of any other
or subsequent right or remedy of Lender; no delay or omission in the exercise or enforcement by
Lender of any rights or remedies shall ever be construed as a waiver of any right or remedy of
Lender; and, no exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Lender.

ARTICLE VI: GENERAL TERMS AND CONDITIONS

22

 

     6.01 Notices. All notices, demands, requests, and other communications required
or permitted hereunder shall be in writing and shall be given in accordance with the requirements
for notices under the Deed of Trust.

     6.02 Entire Agreement and Modifications. THE LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AND AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS ARISING IN
CONNECTION WITH THE LOAN AND SUPERSEDE ALL PRIOR WRITTEN OR ORAL UNDERSTANDINGS AND AGREEMENTS
BETWEEN THE UNDERSIGNED IN CONNECTION THEREWITH. NO PROVISION OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY BE MODIFIED, WAIVED, OR TERMINATED EXCEPT BY INSTRUMENT IN WRITING EXECUTED BY THE
PARTY AGAINST WHOM A MODIFICATION, WAIVER, OR TERMINATION IS SOUGHT TO BE ENFORCED.

     6.03 Severability. In case any of the provisions of this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

     6.04 Election of Remedies. Lender shall have all of the rights and remedies granted in
the Loan Documents and available at law or in equity, and these same rights and remedies shall be
cumulative and may be pursued separately, successively, or concurrently against Borrower, any
guarantor of the Loan, or any property covered under the Loan Documents, at the sole discretion of
Lender. The exercise or failure to exercise any of the same shall not constitute a waiver or
release thereof or of any other right or remedy, and the same shall be nonexclusive.

     6.05 Form and Substance. All documents, certificates, insurance policies, and other
items required under this Agreement to be executed and/or delivered to Lender shall be in form and
substance satisfactory to Lender.

     6.06 No Third Party Beneficiary. This Agreement is for the sole benefit of Lender and
Borrower and is not for the benefit of any third party.

     6.07 Borrower In Control. In no event shall Lender’s rights and interests under the
Loan Documents be construed to give Lender the right to control, or be deemed to indicate that
Lender is in control of, the business, management or properties of Borrower or the daily
management functions and operating decisions made by Borrower.

     6.08 Number and Gender. Whenever used herein, the singular number shall include the
plural and the singular, and the use of any gender shall be applicable to all genders. The duties,
covenants, obligations, and warranties of Borrower in this Agreement shall be joint and several
obligations of Borrower, and of each party of Borrower if more than one.

     6.09 Captions. The captions, headings, and arrangements used in this Agreement are for
convenience only and do not in any way affect, limit, amplify, or modify the terms and provisions
hereof.

     6.10 Applicable Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State where the Property is located without reference to conflict of
laws rules.

23

 

     6.11 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, and each counterpart hereof executed by any party shall be deemed an original and
shall as to such party constitute one and the same instrument with all other counterparts hereof
executed, regardless of whether the same or any other counterpart hereof is executed by any other
party or by a person intended to be or who becomes a party hereunder.

     EXECUTED AND DELIVERED on the date first recited.

	 	 	 	 	 
	 	BORROWER:

CAMPUS CREST AT HUNTSVILLE, LP, a Delaware limited partnership

 	 
	 	By:  	HSRE-CC Huntsville GP, LLC, a Delaware limited liability company,
 	 
	 	 	its General Partner 	 
	 	 	 	 
	 	By:  	                               HSRE-Campus Crest I, LLC, a Delaware limited
 	 
	 	 	liability company, its sole member 	 
	 	 	 	 
	 	By:  	

Campus Crest Ventures III, LLC, a Delaware limited
 	 
	 	 	liability company, a member 	 
	 	 	 	 
	 	By:  	                                               Campus Crest Properties, LLC, a North
 	 
	 	 	Carolina limited liability company, its Manager 	 
	 	 	 
	 	By:  	/s/ Michael S. Hartnett	 
	 	 	Michael S. Hartnett, Manager 	 
	 	 	 	 
	 	LENDER:

AMEGY MORTGAGE COMPANY, L.L.C.

d/b/a Q10 Amegy Mortgage Capital, a Texas

limited liability company

 	 
	 	By:  	/s/ Don Hickey
 	 
	 	 	Don Hickey, Senior Vice President — 	 
	 	 	Commercial Real Estate Lending 	 
	 

24

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