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HomeMy WebLinkAbout01-14-2008 and 02-04-2008 Economic Development AgreementECONOMIC DEVELOPMENT AGREEMENT THIS ECONOMIC DEVELOPMENT AGREEMENT ("Agreement) is made and entered into as of the 14th day of January, 2008, by and between the City of Friendswood, a home -rule municipality situated in Galveston and Harris Counties, Texas ( "City"), and Crystal Creek Developers, LLC, a Texas Limited Liability Company ("Developer"), collectively referred to herein as the "Parties," WITNESSETH: WHEREAS, Developer proposes to enter into an agreement to construct a certain 21,600 square foot commercial use building containing office, services, and retail uses (the "Project Facility") on lots 3, 4, and 5 of the Southern Breeze subdivision located on Friendswood Drive between the intersections of Castlewood and Whispering Pines, and which location is more particularly described and depicted in Exhibit A attached hereto and made a part hereof; and WHEREAS, Developer proposes to erect a new three-story building of 21,600 square feet, including the partial interior build -out of approximately 6,000 square feet, the estimated cost of which is $2,160,000; and WHEREAS, upon completion of such construction, Developer proposes to expand and relocate three businesses that are currently located in the city that will occupy and use the Project Facility as office, services, and retail uses (the "Project"), collectively employing a minimum of nineteen (19) employees; and WHEREAS, Developer has applied to City for a business incentive grant to help defray a portion of the costs of construction referred to above, a copy of which application (the "Application") is attached hereto and made a part hereof as Exhibit B; and WHEREAS, pursuant to Article III, §52a, Texas Constitution, and Chapter 380, Texas Local Government Code, municipalities are authorized to establish programs to promote local economic development and to stimulate business and commercial activity in the municipality; and WHEREAS, in accordance with such enabling laws, City has adopted a "Chapter 380 Economic Development Program" (the "Program"); and WHEREAS, City hereby finds and determines that Developer's proposed Project, together with the proposed Project Facilities, as set forth in the Application, meets the minimum eligibility requirements for an economic incentive grant pursuant to the Program; and WHEREAS, City hereby finds and determines that the Project encourages the expansion of three local businesses in the City, and the commercial project can be reasonably anticipated to act as a catalyst for further economic development and provide increased employment within the City; and WHEREAS, City desires to provide an economic development incentive grant to induce Developer to proceed with the planning and implementation of the Project; now therefore, FOR AND IN CONSIDERATION of the mutual promises, covenants, and agreements herein, the Parties agree as follows: I. Inducement by CiY. City will provide, in the form of a reimbursement to Developer, an economic incentive grant ("Grant") in an amount not to exceed Thirty Thousand and No/100 Dollars ($30,000.00), payable within thirty (30) days following issuance of required certificates of occupancy applicable to the Project, and after twenty-five percent (251/o) of the commercial lease space is built -out and occupied by business tenants. The final reimbursement amount of the economic incentive grant shall be determined and based on the amounts paid by Developer to City for fees related to the Project Facilities. For the purposes hereof, and subject to the amount limitation set forth above, fees eligible for reimbursement by City hereunder shall include all fees paid to the City relating to the construction and development of the Project Facilities, including, but not limited to, applicable building permit and inspection fees, sanitary sewer, potable water, and drainage impact fees, plan review fees, plat or zoning hearing fees, connection or tap fees, and any other similar fee relating to the review or inspection of plans for or construction of the Project Facilities, or fees relating to or required for the connection of Project Facilities to City public infrastructure facilities. II. Performance by Develo er. A. Improvemeuts to Project Facility. Developer shall provide for the construction and build -out of the Project Facility as set forth in the Application. Construction shall commence within 150 days following the date hereof, and shall be substantially complete within three -2- hundred sixty-five (365) days hereof. The value of improvements to the Project Facility shall be as determined by the Galveston County Central Appraisal District as of January 1, 2009. B. Employment. Business occupants of the Project Facility shall, within two (2) years following the date of issuance of Grant funds, collectively employ, and continuously maintain thereafter for a period of not less than seven (7) years, not less than nineteen (19) full and part-time employees. III. Recapture for Default. Grant funds provided hereunder by City shall be contingent on compliance with the provisions of Section II above. In the event of default on any of such requirements, and failure to completely cure any such default within thirty (30) days following written notice thereof by City to Developer, Developer shall refund to City the full amount of Grant funds provided hereunder. Any required refund payment shall be remitted to City within thirty (30) days following the expiration of the cure period set forth above, and any delinquent payment shall bear interest at the maximum rate allowed by law. IV. Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas. Venue for any action arising out of this Agreement shall be in Galveston County, Texas. V. Notices. Any notice hereunder shall be given in writing to the party for whom it is intended, in person or by certified mail, at the following addresses or such future addresses as may be designated in writing: If to Developer: Selwyn P. Thint • � � .� �., cad, .`l�" . �.r -r If to City: City Manager City of Friendswood 910 S. Friendswood Drive Friendswood, Texas 77546 Notice shall be deemed received upon actual receipt or upon refusal of receipt. -3- VI. Assignment and Succession. This Agreement shall be binding upon and inure to the benefit of the heirs, successors, affiliates, administrators, executors, and assigns of the respective parties. All rights hereunder may be assigned by Developer without restriction to any wholly owned subsidiary or affiliate of Developer or other entity controlled by Developer or by a subsidiary or affiliate of Developer, provided that notice of each assignment shall be given in writing to City, but no other assignment shall be effective without the City's written approval and consent. Provided further, no assignment hereunder shall be effective without the written acknowledgment and acceptance by the assignee of the duties and obligations of Developer set forth in this Agreement. Such approval shall not be unreasonably withheld. VII. Time of Essence. Time is of the essence of this Agreement. However, in the event the date specified or computed under this Agreement for the performance of an obligation by any party, or for the occurrence of any event provided herein, shall be a Saturday, Sunday or "legal holiday" (defined for purposes hereof as any holiday observed by the County), then the date of such performance or occurrence shall automatically be extended to the next calendar day that is not a Saturday, Sunday or legal holiday. VIII. Modification/Cntire Agreement Expressed. No modification of this Agreement shall be valid or binding unless such modification is in writing, duly dated, and signed by the Parties. This Agreement constitutes the entire agreement between the parties. No party shall be bound by any term, conditions, statement, or representations, oral or written, not herein contained. IX. Severabili . If any term or provision of this Agreement is held to be illegal, invalid, or unenforceable, the legality, validity, or enforceability of the remaining terms or provisions of this Agreement shall not be affected thereby; and in lieu of such illegal, invalid, or unenforceable term or provision, there shall be added automatically to this Agreement, a legal, valid, or enforceable term or provision, as similar as possible to the term or provision declared illegal, invalid, or unenforceable. X. Paragraph Headings. The paragraph headings contained in this Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraph contained herein. XI. Operations. It is expressly agreed that nothing contained in this Agreement shall be construed to contain a covenant, either express or implied, to either commence the operation -4- of a business or thereafter continuously operate a business in the Project Facility. The City and Developer acknowledge and agree that Developer may, at its sole discretion and at any time cease the operation of its business in the Project Facility, and City hereby waives any legal action for damages or for equitable relief which might be available because of such cessation of business activity by Developer except for the recapture of Grant funds as specifically set forth in this Agreement. Provided, however, if Developer fails to construct the improvements to the Project Facilities as set forth herein, Developer agrees to reimburse City for all costs expended by City or for which it is legally obligated to expend, as a result of its performance of this Agreement. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture, or other entity between City and Developer, with regard to the Project, and City shall have no right hereunder to control the operation of Developer or the Project. Provided, however, nothing contained herein shall be construed as waiving or limiting the power and authority of City to exercise its police powers, or exempt Developer from complying with lawfully adopted rules, regulations, ordinances, or laws of the State of Texas or City. XII. Agreement Product of Negotiation. The Parties agree that this Agreement is the product of negotiation, that each Party has been represented by counsel of their own choosing, that each has fieely entered into this Agreement after consulting with their counsel, and that this Agreement contains the terms and conditions requested and required by each. This Agreement shall be construed as having been drafted by all Parties and no term or provision shall be construed either in favor of or against a party on the basis that a party did or did not author this Agreement. IN WITNESS WHEREOF, and as authorized respectively by the City Council of the City of Friendswood and Crystal Creek Developers, LLC, the parties have executed this Agreement effective the day and year first written above. ATTEST: WITENO &4AMPAMA�15 Dbloris McKenzie, City Stcretaiy rc-IlVi- -5- City of Friendswood, Texas By: — d J. H. Smith, Mayor ATTEST: C ame and title) e - 6 - Crystal Creek Developers, LLC ,x By: (Name and title) Exhibit A RECORDATION REQUESTED BY€ Ca I!ol Ono, Nalfoeal Assoelatlon At Loan Administration Dept. - Dallas P.O. Box 1524112 Irving, TX 76016.2412 WHIN RECORDED MAIL. TO - Capital Ono, National AssoclatIon Attn: Loan Administration Dept. • Dallas P.O. Box 152412 trving, TX 76016.2412 SEND TAX NOTICES TO, Capitol One, National Asoeelatton Attni Loan Administration Dept, • Da€las P.O, BOX 162412 livInn, TX 78916.241.29 CPATIMPTUMM19to 4R E 0 D R'S USE 0NL Illlllllilllllllllllillllllllllfl[lilllllllllllllllllllflllBIIIIlIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIf IllllIIIIIIIIIIillllll111111illlll l ill! •LP0000eaaoaaaooDTxaaooacoi+ NOTICE OF CONFICENTiALITY RIGHTS; IF YOU ARE A NATURAL, PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALLOF THE FOLLOWING INFORMATION FROM 'THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN 'THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER, DEED OF TRUST THIS DEED OF TRUST Is dated April 26, 2007, among PE equare Investmonts, LLC, whose address Is 2703 LRureh Rosa Lane, Pearland, TX 77581 ("Grantor"); Caplial One, National Association, whose address Is Attn:, Loan Administration Dept. • Dallas, P.O, Box 1152412, Irving, TX 715015.2412 (referred to below sometimes as "Beneflclary"j; and Sally Brink, whose address Is 313 Carondelet Street, Now Orleans, LA 70130 (referred to below as "Trusleo"). CONWEYANGe AND GRANT. For valuablo considerallon, Grantor conveys to Trustee in trust, with power of sate Tar the benefit of Lender as 9enafld , Ina following deaulbad real propariy, together vAth all oidstin or subsoquonUy enacted or affixed �A t . , Improvemonto and i tlxtures; and oil esa re ls, rfohls of way, end opputtanances; ail water and water righla; and ell other rights, royalties, and profits relating. to the real properly, Including wlthoul llmllauon such rights as Granlor may have in all minorals, oil, gag, geothermal and similar matlere, (tile "Real property") located In Galveston County, State of TOXast Sea AttaChod Exhibit The Real Property or its address [a commonly known as Lot 3 & 4 Southern Breeze, Friandsweod, TX 77646. cRoss•COtLATePALIYATION. In addition to the Note, this Deed of Trust secufea all obligation, debts and Nobaltles, plus interest thoreon, of Grantor to Lender, or any one or more of them, as well as all claims by Lander against Grantor or any one or more of them, whether now existing or hereafter srlsing, whether related or unrelated to the purpose of the Noto, wvhalhor voluntarryy or othermso, whothar due or riot due, direct or Indirect, determined or undatermined, absohito or oonUngonl, tfr}uldaled or unllqu1da nVco wha1Aer Grantor troy be Gsblo indMdually or jointly with others, whether obligated as guarantor, surely, accommodation party or otharwvlso, However, Ihls Dead of Trust shall not secure, and the 'Indebtadnosa` shall not Induds, any obllgatlona arising tinder Subchaplere E and F of Chapter 342 of the Texas Finance we, as amended. Grantor hereby absolutely aSBIJIM to Lender (also known se BoneRdary in this Deed of Trust) all of Grantor's right, 11I1e, and interest In and to all Present and fuluro leases of the Property and at€ Rents from the Property. In addition, Grantor granis to Lender a Uniform Commercial Code scarily Interest In rho Pommel Property and RanW THIS DEED OP TRUST, INCLUDING THE ASSIGNMENT Of RENTS AND THE SECURITY INTGREST IN 71-14 RENTS AND PERSONAL PROPERTY, IS OiVEN TO SECURE (A_) PAYMENT OF THE INOEBTEDN86S AND (81 PERFORMANCE' OF ANY AND ALL 0BLIGATIoNs UNDER THE NOTE, THp RELATED DOCUME T8, AHD THIS 48CO 0 TRUST, THIS DEED OF TRUST iS GIVEN AND ACCEPTED ON THE FOLLOY4NO TERMS: PAYMENT AND PERFORMANCE. Except as mhorMse provided in this Dead of Trust, Grantor shall pay to Lender all amounts secured by this Deed of Trust as they become dua, and shall shlcUy and In a ltmoly manner perform all of Orontes obllgaUans under the Note, this Deed of Trust, and the Roraled Documents. VENDOR'S LIEN, The debt evidenced by the Note Is in pod or total payment of the purchase price of the Properly; the debt Is eacUred by both this heed of Trust and by a vendor's Icon on Urs Property, which Is axpressty retained to the dead of the Propody to Cerenlor, This Deed of Trust does not waive the Vendor's Ilan, and the two Sens and the Hghis vealed by this lnstrumont shall be cumulaUve, Leader may elect to foreclose under either of the Ilona without waiving the other or may foredesa under both, The dead wherein the vendor's lien Is retained Is Incorporalod Into this peed of Trust, P05sEasloN AND MAINTENANCE Of THE PROPERTY. Grantor agrees that Grantor's possession end use of the Property shall be governed by The fotlovrfng provisions: Passesslon end Use, Until the oewrronee of on Event of Default, Grantor may (1) mmaln In poseessten and control of the property; (2) use, operate Ofmanege the Property; end (3) collect the Ronir from the Property, Duty to Maintain. Grantor shell maintain the Property In tenantable condition and promptly porforrrt ag repalre, replacements, and matnlenanco nocessory to preserve Its value, Compflance With Envlrohmenlal Laws. Grantor reptesanls and warrants to tender shah (1) During the period of Grantor's Ownership of the Property, thaw has bean no use, genaraUon manufacture, steno e, treatment, disposal, (ofoaso or threatened release of any Nezatdous substance Y any person on, under, about or from the Property; �2) Grantor has no knowledge of, or reason to believe that there has boon, excapl as prev€ously dlsdosed to and acknowMadged by Lender in vaillno (a) any breach or Violation of any Environmental Laws, (b) any use, genorallon, manufacture, storage, treatment, disposal, release or wateno release of any Hazardous Substance on, tinder, about or from the Property by any prior owners or occupants of the Property, or (c) any actual or threatened htigellon or delms of any k kind by any person relating to au matters; and (3) E'xcept as pravlousty disclosed to end scknoWtodged by tender tp writing, (a) neither } Grantor nor any tenant, contractor, agent or other authorized usorof the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substanco on, under, about or from tho property; and tb) any such aotivlty shall be conduoled In compliance wllh all appllcabie federal, state, end local laws, raguiatlona and ordinances, Inducting without PmRaUon ati Envitonmenlal Laws, Cramer authorizes Lender and he agents to enter upon this Property to mako such Inspections and tests, at Grantors expense, as Lender may doom approptiala to delaimins compllanca of the Property with this sscuort of the Dead of Trust Any inspections or tests made by Lender shall bs for Landers putpcsas only end shall not be construed to oreale arty responsibility or liability an rho part of Lender to Grantor or to any DEED OF TRUST (Conthuted) Page 2 other porson. The representations and warranties contalaad hareln are based on Grantor`s due diligence in investigating the Properly for Hazardous Sobstances. Grantor hereby (1) releases and walves any future Balms agektst Leader for indemnity or conlributlon In the event Grantor becomes (table for cleanup or other casts under any such laws; and (2) agraaa to fndomnif(yy, defend, and hate hormleas { i Lender against any and all claims, losses, flabllltes, dome gas, enattles, and expanses which Lender may dtcoolly or indirectly austein or etofer resulting from a breach of this ae0 of the peed of Trust o€ ea a consequence of any use, ganeratlan, manufacture, storage, dispasel, release or lhraslanad release occurring prior to Grantor's ownerom ar lnlorost in i[t@ Property, whether or net the same eves or should have been futown to Grantor. The provisions ofi this s U.n of tie Dead of Trust, InalddJng iho o6ttgg811an to fndemnl(y and defend, shall survive the paymanE of Ina In bled and the sagefaoQen and r.Convmyance of to lion of Ctle bead of Trust and shalt not be affected by London acqursltlon of ony Interest in the Property, tvhethaI by foroclosurs ar atltenvise. Nutsance, Waste, Grantor shell not cause, conduct or permit any nutsonca not commit, permit, or suffer any eldpping of of walla on or to tho property or city perllon of tho Property. Without gmltlng the gonerally of the foregoing, Grantor will nut remove, or grant to an other party the right to remove, any Umber, minerals (tnduding oll and gas), coal, day, ecode, soli, gravel of rer,, produce Without Louden prior written consent. This restriction vtln not apply 10 rights end easements (such as gas and o'I) not owned by Grantor and of which Grantor has informed Lender In wr$lfng prior to Grantor's signing of this Dead of TNaL Removal of Improvements. Grantor shall not demolish or remove any Improvements from the Real Property Without Landar`s prior written consent. As o condillon to the removal of any Improvements, Lender may require Grantor to make arrangements eatlsteclory to Lender to replace such lmprovememe vdtt Improvements of at least equal value. Lender's Right to Enter. Lender and Londor's agents and representatives may enter upon the Real Property at all reasonable Um as to attend to Lender's Interests slid to inspect the Rest Properly for purposes of Grantors compliance with the terms end conditions of this goad of TnrsL Compliance with Govemmenlal Requirements. Grantor shall promptly comply whit all laws, ordinances, and regulations. novr or horeafter In effect, of all governmental authorities applicable to the use or oacapanay of tho'Praporty, lnduding vr;thout llmlladon, the Americans With DisoblWas Act. Granlar may Cohlest In good faith arty such law, ordinance, or ragWetlah and withhold oompllanco during any proceeding, Including appropriate appeals, to Inng as Grantor has notified Louder In waiting prior to doing so and so long as, In Lender's solo opinion, Londoes Interests [aft Property are not Jeopardized. Lender may taquka Grantor to post adequate security or a surely bond, reasonably satisfactory to Lender, to protect Lender's Intor tit. Duty to Prolect, Grantor agrees neither to abandon or leave unattended the Property. Grenlor shall do oil otter acts, in addition to those acts set forth above In thls eodfon, which from the character and use of tho Properly are reasonably nocasswy to protect and preserve the Property. 131,12 ON SALE - CONSENT BY LENDER. Londar tray, at Lander'$ opfloh, dadors Immediately due and payable alLsurns secured by He: Deed of Trust upon the sale or transfer. without Lender's prior written consent, of all or any part of the Reel Properly, or arty interest in the Real Property. A "sale or transfer" means the conveyance of Real Property or any right, the or Interest In the Real Property; whether Iagot, bensgdal or a unable; vvhelher voluntary or Involuntary; whether by outright sale, dead, installment sale contract, land contract, contract for deed, lease Id Inlerestvrith a term greeter than throe (3) years, teaae-ophon cohtraet, or by sale, assignment, or transfer of any beneficial Interest in or to any land trust holding title to the Reel Property, or by any other method of conveyance of an hitarest In the. Real Property. If any Grantor Is EL oorporaton, partnership or limited nab%ty company. transfer also Includes any change In ovmorship of more than hventyfive percent (215%) of the voting slack partnership Interests or limited liability company Interests, as the 00so may be, of such Granter. Howevo, this DpUon that not be axerdsed by onder If each exerolse le prohPAted by federal law or by Taxes lave TAXES AN[) LIENS, The following provisions relallng to the taxes end (lens on the Property are part of thla Dsod of Trost,, Payment. Grantor shall pay when due (end In an events prior to delinquency) all taxes, special taxes, assessments, charges (Induding water and sewer), Rrtes end Imposltlons levied against or on account of the Property, and shell pay whoa due al dahlia forworR dons on or foraervlcas rendered or material fumtshod to the Property. Grantor shall maintain the Property from of oS (Ions hmvfng pdorlty over ar equal to the Intorost of Lonclor under this peed of Trust, except for the Ilan of Was and assessments not due and except as othorMse provided In this Dead of Trust. Rigght to Contest. Grantor may withhold payment of any tsx, assessment, or delm In connadlon vrith a good faith dispute over the ebllgI., It to pay, so long as Lender`s interest In the Piopstty is not jeopstdixod. If a lion arises or is tiled as a resun of�non poymont, Grantor shall within fifteen ff6) days After the lion arises or, Wit tan is lied, vrithln Iifloea (16) days after Grantor has notca of tft8 filing, secure the discharge of the ilon, or if requested by Lander, deposit vrith Lender cash or a suIncfent corporate surety bond or other seWnly eaUsfaotory to Londar in an amount sufficient to Ischarga the, Ilan plus any costs and Lender's reasonable attomays' fells, or other charges that could accnlo as a result of a foreclosure or sals under the lion' In any contest, Granter shalt defend Itself end Lendor And shall satisfy, any edvorsa iudgment before enforcement against the property. Grantor $bell name Lender as on additional obllgaa under any surety bond furnished In a contest proceedings. Evldenco or Payment Grantor shag upon demand furnish to Londer salfafactory eyWanca of payment of the taxes or assessments and shag outhoriza the appropdatc governmental offldal to deliver to Londer at any Irma a written statement or the [axes end assessments against the Properly. Notloo of Consiruollon, Grantor ahell aD1Hy Lender at least fifteen (15) days before Any Work la commenced, any eervlcas are furnished, or any materials are supplied to the Properly. If any mechanto's ten, matodalmon's lien, or other Ilan could be asserted on account of the work, services, ar mateoels, Grantor will upon taquast of Lander furnish to Lender advance aswfoncos satisfactory to Lender that Grantor can and 1HIl pay the cost of such improvamonte. PROPERTY DAMAGE INSURANCE. The (allowing provisions rolallng to Insuring tho Property am a part Of tide bead of trust, Mahilenanee of fnsurence, Grantor Shalt procure And maintain poi{dsa of 11re inSGfahse vrllft standard axtendod coverage endpr5omani6 on a fair value basis far the full insurable value covering all Improvements on tha Real Property in an amount sulfidonl to avoid applIcaton of say Cofasurancr, clauso, end with a standard mortgagee douso In favor or Lander, Grantor shag also pracura and maintain comprahonsivo general Ilablti�y tnsuronw In such coverage amR a as Lendor may request with Trustee and Lender being named as Additional insureds in attar` (lability insurance polides. Addlttonaily,hlor shell mskttala such other IAWOnV3. Including but not limited to hazard, bu4nniss Interruption, and bolter insurance, as Lender reasonably raquire, Potcdes shall be wilogn In forarp amounts, coverages and basis reasonably A�� Iplatrla fa Lendor, with tosses payable to Lender, GRANTOR MAY FURNISH THE R�QUIRHD INSURANCE 4Yr1! THER THROUGH VXtSTING P'LICIEB OWNED OONTROLLED BY GRANTOR OR THROUGH EQUNALENT INSURANCE FROM ANY INSURANCE COMPANY AUTHORIZED TO TRANSAOT BUSINM IN TiiE STATE OF TEXAS, If Granter fails to provide any fequtrad Insurance of falls to continue such insurance. to force, Lender may, but shall not be raqulrad to, do so at Grantor's expense, and the cast of Via insurance will be added to the indebtedness. If any such Insurance is procured by Lender, Grantor Wit be so notified, and Grantor W11 have the option of fumlahtng equivalent insurance through any insurer authorized to Gansnct business to Texas, Grantor, upon requost or Lender, vrgl dgltvor to Louder from time to time the pol€clos or cortillootes of insurance In form satisfactory to Lender, Including stipulations that coverages will hot be Cancelled or dlmialshed without at least thirty (30) days poor written notreo to Londar. Each Insurance policcyy also shall Include an endorsement providing that coverage In favor of Leader Wiil not be Impaired in anyway by any act, omisslon or dofautt of Grantor or any other person. Should the Real Properly be located In en area designated by Uha Director of the Federal Emergency Management Agency all a spacial Rood hazard area, Grantor agrees to obtain and maintain Federal Flood insurance, If avalleble, lvithln 46 days after notice is (;Ivan by Londar that the Property Is located in a special flood hazard area, for the full unpaid pondpai balance of the lean and any prior liens on the property aecuring the loan, up to the maximum policy trotta set under the, Nollonat Flood Insurance Program, or as oIrhefM$a required by Lend or, end to malntaln such Insurance for the term of the loan, , Application of Proceeds. Grantor shall promptly notify Lender of any loss or damage to the Property. Lender mAy make proof of lase If Grantor falls to do so within fifteen (16) days of the casualty. Whether or hot Lender's security Is impaired, Lender may, at Londeea election, receive end retain the proceeds of any Insurance and apply tho proceeds to the reduction of the Indebtedness, payment of any Ilan affaating the Property, or the restoration and repstr of the Property. If Lenderaiocts to appH llhq ptocaeds to resfaratlan and repair: Grenlor shag repair or replace the damaged or destroyed Improvomgnllss In a mpnnor saUsfactoryto Lendor. Lender shall, upon satisfactory proof of t such expanditura, pay or re Grantor hem Ito proceeds for the reasonable cost of rep* or restoration If Grantor fa not In dofautt under thla oeod of Tnsst. Any procsAde which have not been disbursed within 180 days char their receipt and which Lendor has hat committed to the repair or rostoratlon of tie Property shall he used nrst to pay any amount owing to Lotldar under this Dead of Trust, than [o pay acauod interest, and the remainder, If any, shot$ 40 applied to the prfndpel balance of the tndebtedno$s. If Lender holds any proceeds after payment In full of the Indebtedness, such proceeds shalt be pall to Grantor as Grantor's Interests may appear. Grantors Report on tnsuranca. Upon requast of Lender, however not more than once a year, Grantor shell fiumish to Lander a report on DEED OF TRUST (Continued) Page 3 each e*Iing pogoy of insurance showing: (1) the name of the InsUrer; (2) Ute risks Insured; (3) the amount of the pu]lay; (4) tho proparty insured, the then current toplawment value of such property, and the manner or dolermining that value, end (a) the expiration ff data or the pollay. Grantor shall, upon request of Lender, have on Independent appmiser satisfactory to Lender aetormtno the Gash yohla replacement oostofthe Property. LENDER'S EXPENDITURES, Ifany action or "ailing is commented that would materially affect Lender's Interest In the Propertyor If Grantor falls to comply with any provision of this Head Of Trust Or any Routed Documents, fneludtng but not limited to Grantors €sliuro to dlscharga or Pay when due any amounts Grantor Is required to discharge or pay under this Dead of Trust or an Related Documents, Lender on are go a behalf may (but shall not be obligated to) take an action that Lander deems appropriate, inoiuding hul not limited to discharging or paying ritors taxes, dons, aecurlly, lnteres[s, encumbrances and oilier datms, at any Uma levied all or placed on the Property and paying all costa for Insudng, malnlalntng and ppreserving tiro Prapariy, All such expenditures paid 6y Lander for such putrppoosea will then bear interest at the Nofe role from the data paid by Lender to Ute data of repayment by Gtanton To the extent pemuHted by applicable taw, ell such axpbnsea twill become a pail of Uto Indebtedness anti, al Lander10 Option, will (A) 6o payable on damandl (S) 6e added to the be[ancs of the Nota end 4e epporitonsd among and be payable wllh any installment payments to 4ewma duo during either {4) the farm of any eppllcabto lnsuranro policy; or (2) the remalydng term of Use Nato; ar (C} be, heated as a bai[oon gpaMant which M a due and pa able at the Noto's maturity. The Dead of Trust I will secure payment of those amounts, such fight shag ba In addition to .1t ether right. and remedles to which Lander may 4e enUUad upon Dofeult, WARRANTY, DEFENSIN 01 TITLE, The foftowlng protislona relating to ownership of the Property are a part of this Dead of Trust: Vita. Grantor warrants thaU (0) Grantor holds good and marketable title or record to the Property In fee simpple, free and dear or all Ilona and encumbrances other than those set forth in the Real Propf dosctiptton or in any Otte insuranco policy, gUo report, or fine, title opinfon tssuod In favor of, and accoptcd by, Lender In connection with (his Dodd of Trust, and (b) Grantor has the full right, power, and authority to execute and deliver this Dead of Trust to Lender, Defense of Tllto. Subject to MO exception In the paragraph above, Grantor warrants and will forever defend the Uda to the property against the lawful claims of all persons. In the event any action or procaeding Is commenced that questions Grantor's Otis of the interest of Trustee or Lander under this Deed of Rue,, Grantor &hall defend the action at Grenlol•a expanse, Grantor may be the nominal party In such proceeding, but Lander shall be anUded to participate In the proceeding and to be represented In the proceeding by counsel of Lender's own cholto, and Grantor will deliver, or cause.to W delivered, to Lender such Instruments as Lander may request from Uma to time to permit such partidpaUon, Compliance With Laws. Grantor warrants that the Property and Grantor's use of the Properly compiled wllh all extsOng applicable laws, ordinances, and regulations of governments] authorities. burvlval of Representations and Warranties. Alf represenlotions, wairanllea, end ogteemants made by Grantor Iri this Deed of Trust shall earwlVO the axecuUon and delivery of this Deed of Trust, shalt be continuing In nature, and shelf remsln In full force and effect until such Uma as Grantars Indabledness shell be paid in full. CONDEMNATION, JUDGMENM ANn AWARDS, The following provision. relating to condemnation pfoeeud]nge, judgments, dacress and award" for injury to this Property are a part of this Deed of TruaL• proosodtngs. If any proceeding In condemnatton Id rued, Grantor shall promptly notify Lender In wriling, and Grantor shall promplry teko such steps AS may be nocessory to defend the salon and obta]n the award. Grantor may be the nominal party in such proceedfng, but Lander shall be enilded to participate In the proceeding and to be, represented in the proceeding by counsel of Ile own choice, and Grantor will deliver Or cause to be deilvered to Lender such Instruments end documentation as may be requested by Lander from Ume to time to permit such perUclpallon. Appllcallon of Net ptocoods, To Uia extent permitted by applicable law, all judgments, demos and awards for In {ury or damage 10 the property, or any part of tho Property, end awards putsuant to proceedings for condemnation of the Property, are hart y absolutely assigned to Lertdor, and if all or any part of the Property is condemhod by eminont domain proceedfngs or by any piccaodfng or purchase In Iieu of oondemnallon, Lender may at Its election require that ell or any portion of the net proceeds of the award be appRod to the indoblodnoss or the repair or restoration of the Property. The net procoods of the award, judgmonl or decree, shell moan the award after payment of all reasonable costs, expenses, and attorneys food incurred by TtuMoo or Lender in connocUon with the condemnation. SECURr" AGREEMENT, FINANCING STATEhIENf3, The following provisions refaUrig to this Heed of Trust es a security egreamont Oro a part of Ws Deed of Trust: Security Agreement. Title Instrument shall constitute a Security Agreement to the extent any of the Property constiluteo fixtures, and Lander shsil have all of the rights are seared party under the Untfotht Commardal Code as emandod from Ume to Urns, Sscuilty interest, Upon request by Lender. Grantor shag take Whatever action It requested by Lender to perfect and wnitnue Lender's security Interest In the Rants and Personal Property, In addition to recording this Dead of Trust In the teal property records, Lender may, at any time and without further euhodzation from Grantor, file executed countorparls, wp€as or raprodvcttona of this peed of Trust as a financing statement, Grantor shag reimburse Lander for all expenses Inturrad In perfacUno or emhnuing this sAcurity interest Upon default, Grantor shall not remove, sever of detoch the Personal Property from the Ptoparty. upon default, Grantor shell assemble any Personal Property not affixed to the Properly In a manner and at a plate reasonably wrivenlent to Grantor and Lender and make it avansbte to Lenderwfthin three (3) days altar rewlpt orwdttan domand from Lander to the extent permitted by applicable law, Addresses, The mailing addresses of Grantor (debtor) and Lender (secured party) from which Information concerning the security interest granted by this Dead of Trutt may be obtained (oath as tequlred by the Uniform Comaterdal Code) are as stated on the [lust page of this Deed of Trust. FURTHER ASSURANCES: ATTORNEY -IN -FACT. This (alloying PfO&lOne foloUng to further assurances and attorney-In•faot are a port of this Deed of Truatt Further Assurances. At any time, and from Umo to time, upon request of Lander, Grantor Wit make, execute and dofivor, or will cause to be made, executed or delivered, to Leader or to Loader's doalgnso, and when requested by Lander, cause to be filed, recorded, tofrted, or iorewrdod, as the case may be,, at such limos and In such offices and places as Wndot may deem appropriate, any and an such mortgages, deeds of bust, socurity dead&, security agreements, Mandng statements, wnUnuailon statements, Instruments of furlhor assurance, wrUfioates, and other ocumants as may, Ill the ado opinion of Lender, be necomity or des[rablo in order to effectuate, complete, porfact, conUnue, or preserve (1) Grantor's obllgallons tinder the Rote, this Deed of Treat, and tha Related Documents, and (2) the lions and security tnlereats croatod by this Deed of Trust as first and prior lions on the Property, whether now owned or haraailer acquired by Grantor. Unless prohibited by law or Lender agreaa to the contrary In wdting, Grantor shall reimburse Lander for all costs and expenses Incurred in connscUcn with tho matters referred to In Ihta paragraph. Altornoyfn-Fact, if Grantor falls to do any of Via things rofenod to In the preceding paragraph, Lender may do to for and In the name of Grantor and at Grantor's expands, For such purposes. Gfontor hereby Irrevocably appoints Lander as Grantors altomay-In-fact for the purpose of making, executing, delivering, fiitng, r000rding, and doing ell other things as may be necessary or desfrebl% In Landvee sole opinion, to accomplish the matters referred to In tha preceding paragraph. FULL PERFORMANCE, If Granlor pays all tho Indob,odnese, when due, end otherwise performs oil the obligations Imposed upon Grontor under Vila Dead of crust, Lendor shag execute and deliver to Grantor a release of this Deed of Trust lion end suitable statements of larrnlnadon orany gnendng statement on file evidencing Lendere security interest in the Ronts and the Personal property, However, It Is agreed that the payment of an the Indebtedness and performance of ducts obligations afteli not terminate this Dodd of True( unfoss the lions and interests created hereby are released by Lorrtior by a proper rocordabia Instrument. Any filing fees required by law shaft be paid by Grantor, If permitted by appfeabio tavr. EVENTS 0 DEFAULT. Each of the following, at Londor's option, shall constitute an Event of Dofeult under this Dead of Trust; Paym ant Default, Grantor faits to make any payment when due under the Indebtedness, Other Default$, Grantor fairs to comply with or to perform any other term, obUgaton, wvenanl or condition wntalned In this Dead of Trust or In any of the Related Documenta or to comply with or to perform any term, obligation, covenant or cond%an coritalnad In any other afire ement b etwoon Lander and Grantor. Compliance Default, Failure to comply wilh any Other term, obirilmign, wvanent or condition contained In this Mod of Trust, the Note or In any of the Related Documents. DEED OF TRUST (Continued) Pago 4 Default on Other Payments, Failure of Grantor Ydlhtn the time required by this Deed of Trust to make any payment for taxes or Insurance, . or any of hor payment necessary to prevent filing of or to effaol discharge of any lien, .F Default In Favor of Third Parties, Should Grantor default under any loan, extcnsfon of credit, security agreement, Purchase or sales agreement, or any other agroomeml, In favor of any other creditor or person that may materially ollect any of Grantor's property or Gtanlc{s ability to repay the indebtedness or perform their tespeotbre obligations under ills Deed of Trust or Shy of the Re.lad Documents, False Sialamente. Any warranty, toptesenlatfon or statsmont made or NNshod to Lender by Grahlor ar an dranloee behalf under this Dead of Trust or the Re%led Dorumonte Is false or mfsleoding in any tnaledal respect, either now or at the 11mo made or fumishad or becomes false or misreading at any Umo thereafter, Dafocltva Gollaterallration. This Dead of Trust or Say of the RSiaied Documents ceases io be to full force end Wart (including fallure or any collateral document to creele b valid and perfected security interest or flan) at any time edd for any reason, Insolvency, The dissolution or terminallon of Grantor's wdslence as a going business, the insolvency of Grantor, Iho oppo!nunent of a receiver for any pall of Rrontor's property, any assignment for the banefit of cradhora, any typo of tied for workout, or the commencement of any proceeding under any bankruptcy or insolvency taws by or against Grantor. Creditor or Forfeiture Proceedings. Commencement of foredosure or forfeiture procandings, whetter by )udidal proceeding, self-help, repossession or any other mathod, by any cradlfor of Grantor or by any governments? agony against any property securing the Indebtedness. This includes a garnishment of any of Grantors aaounta, tnduding deposit accounts, vrtth Lender, However, No Event of Default oha[I not apply If theta is o good faith dispute by Grantor as to Iha vatd'sty or reasonabtenass of the Balm which is the trash of tho aodilor or forfeiture proceeding and if Grantor gives LaMar written notice of the cred1lor ar forfallure proceeding and deposits with Lander monies or a surety bond for the creditor or fosfatlure proceeding, In an amount deleraried by Lender, fn Its sole dlscrodon, as being on adequate reserve or bond for the dispute. Bleach of Other Agreement, Any breach by Grantor under the Winne of any other agreement betwoon Grantor and Lender that is not remedied within any grace period provided thareln, including without Wagon any Dgfooment consuming any Indebtadness or other obiigallan of Grontor to Lendor, wh8 her existing now or later. Cvents Affecting Guarantor, Any of the precoding events ocoura with respect to any [3uarahlar of any of the indebtedness or any Guarantor dlos or becomes Incompetent, or rovokas or dfspulos rho valldlly of, or Ilabtllty under, any Guoronty of the Indebtedness. Adverse Chong. A meterla) adverse Change occurs In Grantees finandal condition, or Lender believes the prospoct of payment or performance o the Indebtedness Is impalrad. Insocadty. Lender In wood forth believes itself Insecure. RIGHTS AND REMEDIES ON DEFAULT. If an Event of Darsult occurs under this Dead of Trust, ut any Umo thereafter, Trustee or Lendor may exatelss any one or more of the fetovring rights end remedies: Efoollon of Rernedfes. Election by Lender to pursue any remedy shell not exclude pursult of any other remedy, and an election to mako expandllurea or to take edtott to perform an obligation of Grantor under this Deed of Trust, after Grantors failure to perform, shall not affect Lenders right to doctors a default and exorcise Its remedies. Accolerolo indeblodnesa, Lender may declare Iho unpaid principal bafanco of the Indebtedness due and payable, in no event will Grantor be required to pay any uneamed Interest. Forsolosuro. If Lender loyokos tho power of anla, Trustee, at the request of Lender, may sag ell or any portion of the Property at pubito Suction to the highest bidder for cash at the location wllhln the courthouse designated by tha County Commissioners Courts or If no such area has been designated, at the area designated in the notion of solo within the courthouse, between the hours of lo:oo Am. and 4:00 P.M. on iho first Tuesday of any month, after the Trustee or ile agent hoe given notice or tho Uma and place of solo and of the property to f ba bold as required by -the Texas PrapaHy Code, as than emended, 1 UCC Romsdlas. With respect to all or any part of the Personal Property, Lendorshell have all the rtghlo and romedlas or a secured party under the Uniform Commerclal Coda. Colleot Roots. As addidanal socudty for the payment of the Wobtodnoss, Grantor hereby ebso[utely assigns to Leader at Rants as defined In the Degnl€ rim section of this dead of Trust. Uabl rho coeurronco of an Event of Default, Grantor Is granted a license to collect and retato the Rents; however, upon receipt from Lendor of a notice that an Event of Default exists under this Deed of Trust, Leader may terminate Granle{s license, and then Lender, as Grantors agent, may collect the Rents, to addition, if the Property is vacant, Lender may rent or lease the Property, Lender shalt not be Table for Its fallure to rent the property, to collect any Rents, or to exorcise dillgoneo in any innller relating to the Rents,, Leader shot[ he accountable only for Rants actually received, Lender neither has nor essumas any obllgotfon as lassor or landlord with respect to any occupant of the Property, Rants so mootved shall be applied by Lender first to the remaining unpaid balance of tfo Indebtedness, In such order or manner as Lender shelf elect, and the residue, if any, shag bo paid to the person or parsons legally ©nUVed to the residue. Trustee's Powers. Grantor herabylotnliy end sovarally authorizes and empowers Trustee to sell ell or arty portion of the Property together or In tole or parcafs, as Trusloo may doom expedient, and to execute and deliver to the purchaser or PuMbosets of such Pmpetly good and sufficlont deeds of conveyance of foe stmpto Ildo, ar of tosser aslates, and bits of sale and assignments, with covenants of genera[ wartanly made on Grantees behalf. In no event shall Trustee be required to exhibit, present or dispfay at any such onto any of the Property to be sold at such sale. Thu Trustee maldng such solo shall r000tve the proceeds or the solo and shaii apply the same no provided balow. Payment of the purchase price to Trustee shall satisfy the liability of the purchaser at any such sale of the Property, and such parson shall nol be bound to took after the application of the procoods. Appoint Recotvor, Lender whet have the right to have a receiver eppotnied to fake possession of ell or any pert o[ the proyarty, Yrllh Dhe power to protect end presanre the Properly, l0 OppGrata !ha property precoding foredosure or sale, and to celiac! the Rents from lha Property endpahhnllted apply the prosueds, over end strove the cost of lha roceNershlp, against Uha Indebtedness, The receiver may serve without bond if by law. Lando{e right to Iha aplmsnl of a recaMer slat extol tvhathar or not the apparent value of the Property exceeds Iha indebtedness by p aubstantiat amount. mplaymen! by Lander shall not disqual fy a person from serving es a receMen Tenancy at SLfferarloe, If Grantor remains in pomosslon of the Property after the Property Is said as provided abovo or Lendor otharmse bacomas entitled to possasslon of the Prope upon dafault'of Grantor, Grantor shall become a lonont at sufferance of Lender or the purchaser of no Property and shag, at Lends s option, either (f) pay a roasonoblo rental for the use of the Property, (2) vacate the Property immediately upon the demand of Lendaq or (3) if such lonents refuse to surrender possession of the Propetty upon demand, the purchaser shall be olitillod to Instluto and meWaln the statutory notion of forcible entry and datstner and Procure a writ of possession thereunder, and Grantor expressly waives Of damages suateinad by tcoacn thereof, Other Romedles. Trustee or Lander shag hevo any other right or remedy provided in this Daed of Trust or the NOW or available at low or In equity. Sale of the Property To the extent permitted by applicable law, Grantor hareby wallas any and at rights to hevo the Property marshalled. In exercising Ifs rig is and temadlos, the Trustee or Lender shall be free to set all or any part of the property together or soperetety, In Ono safe or by eeparsla safes, Lendaf shell be entitled to bid at any publio We on sit or any portion of the Property. Tfustao may convey ell or any part of the Property to the highest bidder for cash with a General warranty b,nding Grantor, sutr)vot to prior Ifens and to other tion exceps to conveyance and Vtattanty. Granlor wallas all requirements of approlsoment, if any. The afildavit of any pparson having knowladga of the facts to the affect that proper notice as required by tie Taxes Proparly Code was given shaft be prima faala evldenoa of the fact that such notice was 3n fact given. Redtsls and stalareents of fact in any notice or in any conveyance to the purchaser or purchasers of the property in any foredosure sale under this Deed of Trust shall be prima facia avIdonce of the truth of such facts, end all pratequlsltea end taqulremanls necessary to tha validlty of any such seta shall be pissumed to have boon performed. Any sale under the powers granted by Oils Deed of Trust shall be a patpeli ml bar against Grantor, Grantors heirs, successors, Designs and legal ., mpresenlativea, .i Proceeds. Trustee Shall a the proceeds of an Selo of tha Pr o pay pr y op riy (e) filet, to the a��ansas of foreclosure, including reasonable face or the rgoa paid to thin Trustee, including but not limited to fees for onforcing the ten, pasting for sole, Selling, or releasing the Property (b) then to Lender the full amount of the Indebtedness, (a) then to Day amount required by law to be paid before payment to Grantor, and (d) the balance, If any, to Grantor. DEED OF TRUST {Con lnued) page 5 Attorney&' Fees; Expenses, if Lender Institutes day still or octlon to enrorco any of the terms of this Deed of Trust, Lender shaft be entitled to recover such turn as the court may adjudge reasonable as Londer's attorneys' foes at Wei and upon any appeal, Whether or not say court action is Involved, and to the extort not prohlblied by law, all roasonable expenses Lender Incurs that in Lenders opinlon are necessary at any time for the protection of its Interest or the enforcament of Its rights sftsll bocome, a part of the, Indebtedness payable on demand and $hall boor Interest at the Nate rats, from the date of the expandituro until repaid. Expenses covered by this paragraph Include, without limitation, however subject to any limits under applloabla law, Lender's rasaonablo attorneys' fees and Lender's legal expenses, %father or not there Is a lawsull, indueltno Lendor's reasonable attorney&' fees and expenses for bankrupptcy proceedings pndudtno offorts to modify or vacate any automatic stay or injunction), appeals, and arty antidpated post -judgment collection tervicos, the cost orsoarching records, obtaining litie reports (including fored"Um reports), surveyors reports, and eppmlsal fees, Ude fnsuranoo, and fees for fits Trustee, to the extent permitted by appilcable. Iswv Grantor also will ppay any court coats, In addition to all dther seats provided by law. to the event of foreclosure of this Dead of Trust, Leader ghat( be anal ( to recover from Grantor Londar's reasonable ellomays' fees and actual disbursements that Lander necessarily Incurs in pursuing such foreclosure. POWERB AND OBLIGATIONS OF TRUSTEE. The following provislons relating to the powers and obligations of Tnrstao Pro part of this Dead of Trust; . Powers of Trustee. In addtdon to aU power& of Trustee edsing as a metier of law, Trustee shall have the power to take the followring actions with respect to the Properly upon the written request of Lender and Grantor; (a) join In preparing and (ding a map or plat of the Rest property, induding the dedicallon of street$ or other rights to the publloi (bl join In granting any easement or creating any reslrlcton on the Heal property; and (a) join In any subordtnaton or other agreement offed ng this Deed of Trust or the interest of Lender Under this Deed of Trust, Obl€gaUons to Notify. Trustee shall not be abfigatad to notify any other (tenhotdor of the Property of tho commencement of a foreclosure proceed;nil or of the commencement of any other action to which lender may avail itself es a remedy, except to the axiom required by oppifoablo law or by written agreement. Trustee. in addtUon to the rights and romedloS Sol forth alroVe, vdllm respect to ail or any part of the property, the Trustee shall have the right to foreduse by-notlm and sale, and Lender shag have the right to foreclose by judicial foredasure, In either case In eowtdaneo with and to the full extent provided by appllcabfe law, Substitute Trustee. Lender, at Lender's option, from time to time, and mots than once, may appoint In writing a successor or subattute trustea, with or without cause, Including the resignaion, absence, death, inability, refusal or failure to eat of the Trustee, The successor or substitute trustee may be appointed without over requiring the resignation of the former trustee and vdthout any formagty, except for the exowllan and acknowledgment at the appointment by the bonefidory of this Dead of Trust. The successor or substitute Wsteo shall ihen succeed to ail rights, obligations, and duties of the Trustee. This appointment rally be made art Lenders behalf by the President, any Vice President, Secretary, or Cashier of Lender. NOTICES. Any notice required to be given under ihla Dead of Trust, Including without limitation any noUco of default end any notice of said she bo ghran In writing, and shall be effective when actually delivered, wham actually racolvad by tetaracs us (uniass ofhorwiso required by (awl, vrfon deposited with a nationally rocogrized overnight courier, or, If mailed, when deposited In the United States mail, as first class, ce Bad ar registered mail postage prepaid, directed to the addresses shown near the beginning of this Deed Of Trust, Any party may ohengo its address for notcos under No Dead of Trust by giving formal tyrflten notice to the other parties, spocifyfng that the purpose of Ume notion is to change the pparty& address. For nonce purposes, Grantor agrees to keep Lander Informed at all Umes of Grantors current address. Unless othervvlso prov€ded or requited by taw, If there Is more than one Grantor, any notice gtvan by Lender to any Grantor Is doomed to be notice q?ven to ail Grantora. APPRAISAL COVENANT. Lender shall have the right to appraise any collateral securing this ban by an appraiser acceptable to Lender, at Borrowers expense, every 3 years from the date of the most recent appralsat on file with Lender. Additionally, If during the term of this Note, there exists a collateral daaelancy, dolerrdned In Lender's sole dlscrolon, or If a default exfsls heravndar, Lender shall have the right to have said collateral appraised by an appraiser sacepptabla to Lender, at Borrower's expense, to oldies& of whether 3 years has elapsed slnca the last sppralsal Failure to compty with this provision shall consllluto a default hereunder end shall entitle Lender to oxeralae all remedies provided herounder. MISCELLANEOUS PROVISIONS, The following miseellancous provisions are a part of this Deed of Trust; Amendments. This Deed of Trust, together with any Related Documenis, constitutes the entire understanding and agreement of the parties as to the matters eat forth in this peed of Trust. No ai€eraton of or amendment to this Dead of Trust then be effecive unless given In wilting end signed by the party or parties sought to be charged or bound by the elteraUon or omondment. Aaauel Reports. If the Property Is used for purposes other than Granlors residence, Grantor shall furnish to Lender, upon raquast, a earthed statement of net oparadng tncomn rocelvsd from the property during Grantor,, previous ftsoal year In such form and detail as Lender shall requfro. "Not operating Income' shall mean afi cash receipts from the Property less all cash expenditures made in connection with the operation of the Property. Capt(on Headtngs, Caption headings In this Dead of Trust are for convarrlenco purposes only and are not to be used to interpret or derrna the provisions of this Dead of Trust, htorgor, Tharo shall be no merger of the Interest or estate vented by Us Dead of Trust with any other Interest or estate In the Properly at any time held by or for the benefit of Londer In any capacity, without the written consent of Lender. Goyaming Law. This Ddod of Trust will be governed by federal law appltcabis to Lender and, to the extent not praempled by federal law, the taws of the Stoke of Texas without regard to its conrlfets of taw provisions, This Deed of Trust het been accepted by Leader to Iha state of Texas, Cholco of Vomit. If there Is a lawsuit, and If the transaaUon evidenced by Obis Deed of Trust o=trdd In Dallas County, Grantor agrees Upon Lenders request to submit to the judadlWon of the coudo of Gallas County, State of Toxos, No Waiver by Lender. Lender shag not be doomed to hayo waived any Aohls under this Deed of Trust Untoss such waiver is given In writing and signed by Lender. No delay or omfsslon on the part of Lender In exercising any right shell operato as a waiver of such right or any other right, A waiver by Lender of a provision of this Dead of Trust shall not prejudice or Wnslituto a waiver of Lender's right otherwise to demand aidet complfa nee vdth that provision or any other provision of this peed of Trust. No prior watvar by Lender, her any courts of dealing between Lender and Granter, shall constitute a waiver of any of Londoes rights or of any of Grantora obtgaUon$ as to any future transactlans. Whenever the consent of Lender Is rogvlydd under this Doed of Trust, the granting of such consont by Lender In any Instance shall not constitute continuing consent to tubsequont instances whore such consent is required and In ail yeses such consent may be granted or withheld In the We discretion of Lender, Saverablllty, it a court of competent jurisdiction Urds any provision of this nand of Trust to be Illegal, Invalid, or unenforceable as to any dreumalance, that tinding'shall not mako the offending ptovlslon Illegal, Invalid, or unontotoosbio as to any other chcUmstance. if feasible, the offending provision shag be considered modified to at it becomes legal, valid and enforceable. If the offending pprovfstnn cannot be ad modified, N shall be considered deleted from this Dead of TtvzL Unless otherwise required by taw, the (llegafity, Invalidi or unenfarcoabillty of any provision of this Deed of Trust shall not affect rho lngolily, valtdlty or enforcaebllity of any other provision o)T,thisDeed of TntsL sucwssois and Assigns. Subject to any ilmftedons stated In this Dodd of Trust on transfer of Granters Interest, this Dead of Trust shall be binding upon and Inure to the banafrt of the parties, thalr aucaessors and assigns. If ownarship of the Properly becomes vested Ina parson other then Grenlor, Lender, %fthout notice to Grantor, may deal with Grantora 6aace990r$ with roferance to this Dood of Trust and the Indebtedness by way of forbearance or extension without releasing Grantor from tma obligations of this Dsed of Trust or Ilability under the ndobtadnese. Time is of tho Easenoo. Time is of the essence in the parformanco of this Deed of Trust, Waive Jury, All partlea to this Do ad of Trust hereby waive the tlght to say jury Idol In any sollon, py0000ding, or counterclaim brought by any party against any other party. DKFINiTIONS, The folloing capitalized words and terms shall have the following meanings when used In Oils Deed of Trust, Unless specifically stated to the contrary, oli references to doliat amounts shoo moan amounts in lewhrl money of tho United Stales of America, Words end terns used In the singular shall Include the plural, and the plural shall Include the singular, as the context may require. Words and terms not otherwise defined In this Deed of Trust shall have the meanings attributed to such terms in the Uniform Commerdoi Code; DEED OF TRUST (Contlnued) Pago B RonoRolary. The word'Behonalary" means Capital Ono, National Association, and Its successors and assigns, Borrower. The word 'Borrower" moans PE Square Investments, LLC and Includes all co•stgnro ere and co•makesigning the Note and ail their successors and assigns. Deed of Trust. The wards 'Deed of Trust' mean this Deed of 7 st among Arahlor Lender, and TrustaA. ehd fndudoa without ilmlletion ail assignment and security Interest provisions relating to the parson I Property and Renle. Defauii. The word 'Default' moans the Default sat forth In this I lead of Trust In the soodon title d'pafautt". L'nvtronmental Laws. The words 'Eavironmanlal Laws" mean 34Y and oil state, federal And fooel slalutee; regulations and ordinances relating to the proloolton of human hoollh or the onvironment, ncludlng Without ilmliallon the Comprohonsive Environmental Response Compansaffan, and lJoWrity Act of 1080, as amended, 42 U.S C. Section g801, el seq, t'CERCLA }, the Superfund Amendmohts Q the Rssoufceen Act of ConservaCon 1960. nd Recovery ActB842SU3C) Sa one Bot, attseq,, or olTranshor appllcabortation fflo state or federalnlaws, 1801, uleoeor regutations adopted pursuant tharolo. enot of Default, The words 'Event of Dafauil mean any of 1h oyenls of default sat forth In Ih#a Dead of Trust In the events of default section of thla Deed of Trusl. Grantor. The word 'Grantor means PE Square Investments, tL , Guarantor. Thu word 'Guaranlor"meant any guarantor, sufely, 3raccammodatlonParty orany orall ofthe Indebtedness. Guaranty. The word 'Guaranty' means the guaranty from Guar nlor to Louder, InNodtng without IMItatton a gueronly of all or part ofths Note, Hazardous Substances. The words 'Hazardous Substanoes' 0 Gan materials that, beeausa of their quantity, concentration or physloat, chemical or InfooUoue charaolaNsdcs, ma cause or peso a rwont or potential hazard to human haBIkh or the envtronmenl when Improperly used, treated, storad, disposed of, ganorated, ma ufactured, transported or othervdso handfed, The wards 'Hazardous Substances° are used In their vary broadest sense and facluda lhout Ilmllailort any and all hazardous or toxia substancos, maledels or waato as delined by or listed under the Envtronmenlal Laws, Tar term `Hazardous Substances' also fneludos, without Irmitatton, petroleum and petroleum by-products or any fraotlon tharoof end asbestos. Irnprovemonts. Thu word 'Improvements" means ail existing an I future improvements, bundfnga, structuros, moblle homes afiixod on the Roa1 Proporly, facilNles, additions, replacomenia and other coney 101.1on on the Rest Property, indebtednoss, The word'lndoblednase moans all principal, Inl rosl, and other amount,, costs and expanses Pay under the Npte or Relalsd Documents, together With all renewals of, exlensWe f, modlRcatlone of, consolidations of and substitutions for the Note or Related tender to enforce Grantees obligationnsnts expanded undo this Deed of T asf,atagethar to r � ith Werest on such amounts Uon5 or xns pt vidod to thts [load of Trust. Speolgcalty, without limitation, indebtedness includes i 1 amounts that may be IndlrecUy secured by the cross•CollatoraNaVon provision of this Dead of Trust. Lender. The word %under° means Capital One, National Assodq on, Its successors and assigns. Note. The word'Nole' means the promissory note doled Aprl[ I 2OD7, III the odglflal pf)Rc(pa) 9lnount of $234,00D,00 from Grantor to tender, together vvlttt ail renewals of, exlensfons of, Modification Of, FORnancinge of, oonsolidations of, and substitutions for the promissory note or Ago* amont.'rho malu4ly date of tho Not is April 26, 2000, Porsonat Property, Thu words 'Personal Property" mOun all eq IPMOA fixtures, end other artrcies of personal property now or hereafter owned by Grantor, and hove or horuarlor attachod or a(rixod to to Rost Properly, logo thewith all accessions, pails, and additions to, oil replacomonts of, and all substitutions for, any of such ProPor4 and together with all proceeds (Including without limitation all Insurance Proceeds and refunds of prom,ums) from any sale or other dlspos don of the Properly. Property, The word'ProparV means collecpvety the Rest Prop rty and the personal Broparty, Real Property. The words °Real Properly' moan gee feel ptope . Interests and rights, as further described In this Deed of Trust. Rotated Decuman[s. The words 'Related Dowmsnts' moon ill promissory notes, Uedit agreements, loan agreements, endrorvnonial agreements, gusrandes, security agreements, mortgages, deeds or trust, s0cu6ty deeds, Collateral mortgages, and all other Instnsmante, agreements and documents, whether now orhereaRer exfeting, Executed In oonhoction with the indebtedness. Rente, The word "Rents° means on present and future renlo, r enues, Income, Issuos, toyatifes, profits, and other benen(a derived from the Property. Trusteo, The word 'Trustee" means Sally Brink, whose address Is 313 Corondslat Straot, New Orleans, LA 70130 and any sUbaliluto of successor irusteos. GRANTOR ACKNOWLEDOES HAVING READ ALL THE PROVISIONS C 9 THIS DEED OF TRUST, AND GRANTOR AORCES TO ITS TERMS, GRANTOR: PR 13Y eq�111! 1NVR97h1ENTa, LLC Rit,erdo Davld, Manager of eI sgSaTa Investments, LL0 STATL OF COUNTY OF y, orta Jul a Av fdanagor of R Square Investmehts, C COiiPORATE A4KNOWLEDGMENT )ss This Instrument was ecknosyledged before me on 2D by Ricardo David, Manager. Maria Jul;,, tAanagor of PE Square Invaslman[s, LLC a Loulsana corporauo t, on behalf of sold corporation. Notary PUblte, Stela of Texas UNITED TITLE OF TEXAS}lllll�ll�4�l�fllll�lltllllllllll4�1l�1lll�lill�lllfl��ll� I PG5 2007029339 G F# ' WARRANTY DEED WITH VENDOR'S LIE NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE ITIS FILED FORRECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER. Date: APRIL *�-O , 2007 Grantor: GREGORY A. MAHIN and wife JULIE A, MAIHN Grantor's Mailing Address: 2206 CR. 796 Alvin, Texas 77511 Grantee: CRYSTAL CREEK DEVELOPERS, LLC, a� limited liability company Grantee's Mailing Address: f 307-C South Friendswood Drive Friendswood, Texas 77546 Consideration: Cash and a note of even date executed by Grantee and payable to the order of Grantor in the principal amount of ONE HUNDRED THOUSAND AND NO1I00 DOLLARS ($100,000.00). The note is secured by a first and superior vendor's lien and superior title retained in this deed and by a first -lien deed of trust of even date fiom Grantee to GREGORY G. BESS, trustee. Property (including any improvements): Lot Five (5), of Southern Breeze, a subdivision in Galveston County, Texas, according to the map or plat thereof, recorded in Volume 18, Page 3 53, of the Map Records of Galveston County, Texas, Reservations from Conveyance: NONE. Exceptions to Conveyance and Warranty: Liens described as part of the Consideration and any other liens described in this deed as being either assumed by Grantee or subject to which title is taken by Grantee; validly existing i restrictive covenants common to the platted subdivision in which the Property is located; standby fees, taxes, and assessments by any taxing authority for the year 2007 and subsequent years, and subsequent taxes and assessments by any taxing authority for prior years due to change inland usage or ownership; validly existing utility easements created by the dedication deed or plat of the subdivision inwbichthe Property is located; validly existing reservations or exceptions approvedin writing by Grantee and, if applicable, described in Schedule B of the Owner Policy for Title Insurance issued to Grantee as part of this transaction; any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements; homestead or community property or survivorship rights, if any, of any spouse of Grantee; and any validly existing titles or rights asserted by anyone, including but not limited to persons, the public, corporations, governments, or other entities, to (a) tidelands or lands comprising the shores or beds of navigable or perennial rivers and streams, lakes, bays, gulfs, or oceans, (b) lands beyond the line of the harbor or bulkhead lines as established or changed by any government, (c) filled -in lands or artificial islands, (d) statutory water rights, including riparian rights, or (e) the area extending from the line of mean low tide to the line of vegetation or the right of access to that area or easement along and across that area. Grantor, for the Consideration and subject to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty, grants, sells, and conveys to Grantee the Property, together with aII and singular the rights and appurtenances thereto in any way belonging, to have and to hold it to Grantee and Grantee's heirs, successors, and assigns forever. Grantor binds Grantor and 1 Grantor's heirs and successors to warrant and forever defend all and singular the Property to Grantee and Grantee's heirs, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty. The vendor's lien against and superior title to the Property are retained until each note described is fully paid according to its terms, at which time this deed will become absolute. The contract between Grantor, as seller, and Grantee, as buyer, may contain limitations as to warranties; to the extent said contract provides for such limitations to survive this conveyance they shall be deemed incorporated herein by reference. The warranty of title contained in this deed is hereby expressly excluded from the limitations referenced in this paragraph. When the context requires, singular nouns and pronouns include the plural, r GREGOBF &WAIAN IE A. MAHIN } 2 ( I STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on the day of April, 2007, by GREGORY A. MAHIN. Notary PubfiV,&Ate of Texas Notary's Printed Name: My Commission Expires: STATE OF TEXAS 07 fy COUNTY OF HARRIS This instrument was acknowledged before me on the 119-0 day of April, 2007, by RMIE A. MAHTN. of Te Notary PubLate 41--- 'ate 0 8 PI Notary's r ated Name - My Commission Expires: 811me; of 1fi Nft,r Racordlng Retum to vj"tt"j Title a' yano* 400 .177 Rjovc)uaton T>( 77065 3 FILED AND CORDED OFFICIAL PU13LIC RriCoRj)s �l4 A7 A Y 2007029339 May 07, 2007 01:07;40 PM FEE: $24.00 Mary Ann baigle, County Clerk Galveston County, TEXAS p P W ill L9 Rif 3 G 311131f1 14 9 to jil xg S al3 i} b a �9c€ Ilk@gig #g#g Q ��Q� O OO P � �r9 g a HN � . k4i k k �e R 9 RM .. a •1 f N d d d d d_ j FlOISflhIgSaS �Ci ES1'Nil 1 21 .00Ao.gb s cam s¢ t •z1 x� sa7ras av>avd ii � o [ .00,007, m „00,00M, N , ti- .• -e;� �" 1 � •.re .sa I I I e 99 92 r jwtygo ryoet¢ un Sips e� :o@ [fill g g § gg 3 y3 R 2S k a r Ila `OpQ / a Rol M r ECONOMIC DEVELOPMENT AGREEMENT THIS ECONOMIC DEVELOPMENT AGREEMENT ( "Agreement") is made and entered into as of the 14th day of January, 2008, by and between the City of Friendswood, a home -rule municipality situated in Galveston and Harris Counties, Texas ( "City"), and Crystal Creek Developers, LLC, a Texas Limited Liability Company ("Developer"), collectively referred to herein as the "Parties," WITNESSETH; WHEREAS, Developer proposes to enter into an agreement to construct a certain 21,600 square foot commercial use building containing office, services, and retail uses (the "Project Facility") on lots 3, 4, and 5 of the Southern Breeze subdivision located on Friendswood Drive between the intersections of Castlewood and Whispering Pines, and which location is more particularly described and depicted in Exhibit A attached hereto and made a part hereof; and WHEREAS, Developer proposes to erect a new three-story building of 21,600 square feet, including the partial interior build -out of approximately 6,000 square feet, the estimated cost of which is $2,160,000; and WHEREAS, upon completion of such construction, Developer proposes to expand and relocate three businesses that are currently located in the city that will occupy and use the Project Facility as office, services, and retail uses (the "Project"), collectively employing a minimum of nineteen (19) employees; and WHEREAS, Developer has applied to City for a business incentive grant to help defray a portion of the costs of construction referred to above, a copy of which application (the "Application") is attached hereto and made a part hereof as Exhibit B; and WHEREAS, pursuant to Article I1I, §52a, Texas Constitution, and Chapter 380, Texas Local Government Code, municipalities are authorized to establish programs to promote local economic development and to stimulate business and commercial activity in the municipality; and WHEREAS, in accordance with such enabling laws, City has adopted a "Chapter 380 Economic Development Program" (the "Program"); and WHEREAS, City hereby finds and determines that Developer's proposed Project, together with the proposed Project Facilities, as set forth in the Application, meets the minimum eligibility requirements for an economic incentive grant pursuant to the Program; and WHEREAS, City hereby finds and determines that the Project encourages the expansion of three local businesses in the City, and the commercial project can be reasonably anticipated to act as a catalyst for further economic development and provide increased employment within the City; and WHEREAS, City desires to provide an economic development incentive grant to induce Developer to proceed with the planning and implementation of the Project; now therefore, FOR AND IN CONSIDERATION of the mutual promises, covenants, and agreements herein, the Parties agree as follows: I. Inducement by Cam. City will provide, in the form of a reimbursement to Developer, an economic incentive grant ("Grant") in an amount not to exceed Thirty Thousand and No/100 Dollars ($30,000.00), payable within thirty (30) days following issuance of required certificates of occupancy applicable to the Project, and after twenty-five percent (251/o) of the commercial lease space is built -out and occupied by business tenants. The final reimbursement amount of the economic incentive grant shall be determined and based on the amounts paid by Developer to City for fees related to the Project Facilities. For the purposes hereof, and subject to the amount limitation set forth above, fees eligible for reimbursement by City hereunder shall include all fees paid to the City relating to the construction and development of the Project Facilities, including, but not limited to, applicable building permit and inspection fees, sanitary sewer, potable water, and drainage impact fees, plan review fees, plat or zoning hearing fees, connection or tap fees, and any other similar fee relating to the review or inspection of plans for or construction of the Project Facilities, or fees relating to or required for the connection of Project Facilities to City public infrastructure facilities. H. Performance by Developer. A. Improvements to Project Facility. Developer shall provide for the construction and build -out of the Project Facility as set forth in the Application. Construction shall commence within 150 days following the date hereof, and shall be substantially complete within three -2- hundred sixty-five (365) days hereof. The value of improvements to the Project Facility shall be as determined by the Galveston County Central Appraisal District as of January 1, 2009. B. Employment. Business occupants of the Project Facility shall, within two (2) years following the date of issuance of Grant funds, collectively employ, and continuously maintain thereafter for a period of not less than seven (7) years, not less than nineteen (19) full and part-time employees. III. Recapture for Default. Grant funds provided hereunder by City shall be contingent on compliance with the provisions of Section II above. In the event of default on any of such requirements, and failure to completely cure any such default within thirty (30) days following written notice thereof by City to Developer, Developer shall refund to City the full amount of Grant funds provided hereunder. Any required refund payment shall be remitted to City within thirty (30) days following the expiration of the cure period set forth above, and any delinquent payment shall bear interest at the maximum rate allowed by law. IV. Jurisdiction. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas. Venue for any action arising out of this Agreement shall be in Galveston County, Texas. V. Notices. Any notice hereunder shall be given in writing to the party for whom it is intended, in person or by certified mail, at the following addresses or such future addresses as may be designated in writing: If to Developer: Selwyn P. Thint "1— -� If to City: City Manager City of Friendswood 910 S. Friendswood Drive Friendswood, Texas 77546 Notice shall be deemed received upon actual receipt or upon refusal of receipt. -3- VI. Assi nment and Succession. This Agreement shall be binding upon and inure to the benefit of the heirs, successors, affiliates, administrators, executors, and assigns of the respective parties. All rights hereunder may be assigned by Developer without restriction to any wholly owned subsidiary or affiliate of Developer or other entity controlled by Developer or by a subsidiary or affiliate of Developer, provided that notice of each assignment shall be given in writing to City, but no other assignment shall be effective without the City's written approval and consent. Provided further, no assignment hereunder shall be effective without the written acknowledgment and acceptance by the assignee of the duties and obligations of Developer set forth in this Agreement. Such approval shall not be unreasonably withheld. VII. Time of Essence. Time is of the essence of this Agreement. However, in the event the date specified or computed under this Agreement for the performance of an obligation by any party, or for the occurrence of any event provided herein, shall be a Saturday, Sunday or "legal holiday" (defined for purposes hereof as any holiday observed by the County), then the date of such performance or occurrence shall automatically be extended to the next calendar day that is not a Saturday, Sunday or legal holiday. VIII. Modification/Entire Agreement Ex ressed. No modification of this Agreement shall be valid or binding unless such modification is in writing, duly dated, and signed by the Parties. This Agreement constitutes the entire agreement between the parties. No party shall be bound by any term, conditions, statement, or representations, oral or written, not herein contained. IX. Seyerability. If any term or provision of this Agreement is held to be illegal, invalid, or unenforceable, the legality, validity, or enforceability of the remaining terms or provisions of this Agreement shall not be affected thereby; and in lieu of such illegal, invalid, or unenforceable term or provision, there shall be added automatically to this Agreement, a legal, valid, or enforceable term or provision, as similar as possible to the term or provision declared illegal, invalid, or unenforceable. X. Para ra h Headings The paragraph headings contained in this Agreement are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraph contained herein. XI. Operations . It is expressly agreed that nothing contained in this Agreement shall be construed to contain a covenant, either express or implied, to either commence the operation -4- ATTEST: (A (ga"m—e an&tige—) fiem M Crystal Creek Developers, LLC By: (Name and title) Exhibit A RECORDATION REQUESTED BY: Cappital One, Natlonal Association Ann. LoanAdminlelrelton Dept, -Dallas P.O. Box 152412 Irving, TX 75010.202 WHEN RECOROEO MAIL. TO. - Capital Ono, National Association Atlm Loan Adminlstration Depl. - Dallas NO. Box 162412 Irving, TX 76016.2412 SEND TAX NOTICES TO, Capital One, National Assodallon ' Attn: Loan Admintslratton Dept, • Dallas P,O, Box 152412 Irving.60 6• 6 ACE ABOVE THIS U E S f Illlllll llllf flit Illff Ilff Illlf Illfl Ilflf Illfl �IIII Ilfll lull Illlf Ilflf Illll 1111f Illfll If flfllf Ilffl Illlf Ilfl Illlf Ilffll Ilfl Illll Iflf IIIf 'LPO000Oe04000000TX00oo0001" NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER, DEED OF TRUST THIS DEED OF TRUST Is dated AptII 25, 2007, among PE Square Investments, LLC, whose address Is 2703 Lauren Rosa Lana, Pestle nd, TX 77561 ("Grantor"), Capitol One, National Association, whose address Is Attn;, Loan Administration Dept, - Dallas, P.O. Box 162412, Irving, TX 76015-2412 (referred to below sometimes as "Reneflclary"); and Sally Srink, whose address is 313 Carendelat Street, New Orleans, LA 70130 (roforred to below as "Trustee"). CONVEYANCE AND GRANT. For valuable consideration, Grantor conveys to Trustee In trust, with power of sale, for the bon4ftt Of Lender ss Bonenclary, the following described real property, together with all wdsUng or suhsaquonlly opeclad or arRxod btrndings, improvements and flxlures; and all easements, rights of way, and appurtenances; all water and water rights; and all *thou rights, royalties, and profits ral,Ung to the real property, Including Nwlthout Ilmttauvn such rights as Grantor may havo In on mtnorels, ail, gas, geothermal and simllar matters, (the "Real Property") located In Galveston County, State of Texas: Soo Attached Exhlbit The Real Property or Its address Is commonly known as Lot 3 & 4 Southern Breozo, ✓:riandswood, TX 77546 CROSS.COLLATERALVATIOH. In addition to the Note, this Deed of Trust secures all obllyatiana, debts and ttabNtios, plus interest utoraon, of Grantor to Lander, or any one or more of ll,ern, as well us all dollma by Londar against Grantor or any ono or mare of them, whether new existing or hereafter salaMg, whothar related or unrelated to lho purpose of the Note, whothoe voluntary or otherwise, wholhor due or not due, direct or Indirect, datermtned or undaterm$nsd, obsvluto or vontingant, HrIvldated or unllquldatad, whether Grantor may be Debts tndlv[dually or joinlly with others, whether obligated as guruanlor, surety, accommodation party or otherwise. However, this Dood of Trust shall nut secure, end the-Indablednese shall not Include, any ahligatlons eristng under Subchapters E and F or Chspter 342 of the) Texas Finance Cade, as amended, . Grantor hereby absolutely assigns to Lender (also known as Berlendary In "a Deed of Trust) all of Grantor's right, title, and Interest In and to al[ prosant and fuluro leases of Uto Property and all Rents from the Property. In addition, Grantor grants to Lender a Untform Commordal Codo security Interest In rho Personal Property and Rents. THIS 011E0 OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE at:CURITY WEREST IN THE REHT9 AND PERSONAL PROPERTY, 15 GIVEN To sECURe (Al PAYMENT OF THE UIDEBTEDNESS AND (8) PERFGRMAHCH OF ANY AND ALL OBLIGATIONS UNDER THE NOTE, THE RELATED DOCUMENTS, AND THIS DEEO OF TRUST, THIS DEED OF TRUST IS GIVEN AND ACCEPTED ON THE FOLLOVANQ TERMS: PAYMENT AND PERFORMANCE. Excopl as olherAse ptavldad in this Dead of Trust, Grantor shall pay to Lender an amounts socured by this Deed of Trust as they become due, and shall strictly and In it timely manner porfonn on of Grantors ohtlgstlons under the Note, this Deed of Trust, and the Related Documente, VENDOR'S LIEN, 'rho debt avtdeaeed by the Note Is In part or total payment of the purchase price of the Property; the debt Is 6awrad by both this Dead of Trust and by a vendor's Ilan on the Property, which is expressly rotelned In 11to dead or Lho Properly to Grantor This Deed of Trust does hot waive the vandora Ilan, and the two bens and the rights created by this lnstrumont eban he wmutedya. Ladder may elect to foredosa under either of the Ilene without waiving the other or may foreclose under both, The deed wherein the vendors lien Is retained is Incorporated Into this Deed of Twsl, POaSESSION AND IMUTENANCE OF THE PROPERTY, Grantor agrees that Gronlot's possosslan and rise of LhB Property shall be governed by the following prowislons: Passasdon snd Use. Until the occurrence or an Event of Derain[, Grantor may (1) remain In poasosslon and control of the Property, (2) use, operate or manage the Property, and (3) collect the Rents from Iho Proporty. Duty to Motn(eln, Grantor shot maintain tho Froporiy In lanantobte cond(ilon and promptly perform slit repalrs, replacemonls, and malnlenonce necessary to proetrva Ito value. compllahca Wflh Eodronmenlai haws, Grantor represents end warrants to Lender that; (1) During the period of Grantors ownsrshlpp of the Propsrty, vut there has boon no use, Denotation, manufaaturs, storegs, Ireetmonl, disposa, roloasa or lhueatened roloaso of any Hazardous Substance !sy any person on, under, obor from the ProparV, {2) Grantor boo no knowledge af, or reason to belleve that there Iras been, except es previously diadosad io and actmowfodgod by Lender to writing (a) any breech or violation of any Environmental Lows, (b) any Use, ganofatton, manufactura, storage, treatment, disposal, (oleaso or 6ealenod release Of any Hazardous 60stanco on, under, about or from the, Property by any prior owners or occupanla of the Property, or (o) on actual ar threatened lltigotion or dolma of any ! 4 kind by any person raEating to such matters; and t3) Except as previously dlsclwod to and acknowledged by Lander Ip writing, (a) neither l E Grentar nor any tenant, canlrectar, agahi or ether aulhorExod user of the Prap0 a3lali usa, ganarata, manufacture, store, treat, dispose of or release any Hazardous Substant* 011, under, about or from rho Properly; and (�) any such aodvity Shen ba conducted In canpllanco SvSth all appplicable fedoral. stole, and focal lewa, ragutapona end ordinanws, Including Wthout nmftation an Environmental Latra, Grantor au[hotEzea Londor and fie agonte to enter upon the property to mak* suclt Inspections and tests, at Grantors axpgnsa, as Lender may deem apptopdald I. dalerfrdne camplianrs of the Property with this section of the Dasd at Trutt. Any fnspactians or tests made by Londaf shalt W far Landes purpvasa only and shell not Ile oonsaued to Croat. any raspansibnity or tlabl,Ity on rho part of Lander to Grantor or to any DEED of TRUST (Continued) Page 2 other poison. The ropresentations and warrontas owtalned heroin era based on Grantor's doa dnigonce In InvesUgatng the Properly for Hazardous Substances. Grantor hereby (1) relceses and wolves say future delm* Against Lander for Indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any aucli lows; and (2) agrees to Indemnify, defend, and hold harmless Lender against any and of claims, losses, liabilities, damages, penolilm, and expenses which Lender may dlreatly or InilkeoUy sustain or suffer rasulflnp from a breach of this section of the Dead of Trust or se a consoquenco of any use, generation, manufacturo, storage, dleposal, release or threatened release, occurring prior to Grantor's ownership or Interest In the Property, whether or not 010 some was or should have been known to Grantor. The provlslons of thls sectlon of the Deed of Trust, Including the obliggation to Indemnify and defend, shall suivlvo the payment of the Indebtedness and the satisfaction and reoonveyance of the Ilan of tie nerd of Trust and shall not be Wooled by Lender's aequialllon of any Interest in the Property, whether by forardosuro or otherwlso. Nulsanoe, Waste, Grantor shall not cause, conduct or permit any nulsancn not commll, permit, or suf(ar any stripping of or waste on or to the Property or any portion of the Property, without llmlUng the 9e116re€ity of tho foregoing, Grantor wilt not remove, or grant to any other parry the right to remove, any Umbor, minerals (lndvding oli end gas), coal, day, aeorle, sob, gravel or roq t products without LandDea prior written consent. We restriction wtf not apply to rights and easements (suds as qua and oh) not owned by Grantor and of which Grantor has informed Lander In writing prior to Grantora eIgntng of this Dead of Trual. Removal of Improvements. Grantor shall not demolish or remove any improvements from the Real Praporty without Lenders prior wdtlen consent. Asa condition to the removal of any Improvornonte, Lander may require Grantor to make arrangements aellsfeolary to Lander to roplaoe such Improvements with lrnptovernonte of at least equal value. Lender's Right to enter, Lender and Lenders agents and reprosentollves may enter upon the Real Property at all reasonable limas to attend to Lenders Interests and to Inspect the Real Property for purposes of Grantor's compliance With tho terns and conditions of this Deed of Trust. Compliance Willi Govemmantal Requirements. Grantor shall prompdy comply with an lawa, ordlriancos, and reguladons, now or hereafter in Affect, of all govammontal outhoddes applicable to the use or oowpnncy of tha*Property. Including without 11mltation, the Americans With DisablAUes Act. Grantor may contest in good faith any such Inw, ordinance, or regulation and withhold compliance during any proceeding, Including approprialo appeals, to long as Grantor has notified Lander In writing prlor to doing to end so tong as, In l endaYe sort opinion, Lender's Interests in the Proporty era not loopardizod, Lender may ragvleo Grantor to post adequate security or a surely bond, reasonably satlsraclory to Lender, to protect Landers Interest. Duty to Protect. Grantor ageoas neither to abandon or leave unattended the Property. Grantor shall do at other acts, In eddton to those acts sot forth above in this section, which from the charoolor and use of the Property are reasonably nacessary to protect and proservo the Property. DUE ON SALE • CONSENT BY LENDER. Lender may, at Lenders option, declare Immi0atoly due and pa able ag.sums secured by Ibis Deed of Trust upon the sole or transfer, without Lenders prior written consent, of 00 or any port of the Real Property, or any interest In the item Property. A "sale or transfer" means the conveyance of Real Property or any right, title or Interest In the Real Property; whether legal, bsnegdaf or aquliable; Whether voluntary or Involuntory; wholhor by outright safe, dead, Installment sale contract, land contract, contract for deed, leasehold Interest with a torm greater than throe (3) years, teose•opton conirac4 of by sale, assignment, or transfer of any beneficial Interest In or to any land trust holding title to the Real property, or by any other malhod of conveyance of an Interest In the Real Property. it any Grantor Is a oorporaten, partnorshlp or limited Ilubiilty company, transfer also includes any change In ownorship of mare than tvrantyfive percent (26%) of the veUng stock partnership Inlerosla or flmhed Ilab llty company Intetesle, as the case may be, of such Grantor. However, this option shall not be axeiclsed by Lender If such exercise Is prohibited by federal law or by Texas law. TASTES AND LIENS, Tha following provisions relating to the taxes and Ilona on the Property era part of this Dead of Trvslr Payment, Grantor shall pay when due (and in an evohla Prior to dal!nquoncy) sh taxes, special taxes, assessments, charges (Including water and sewer), fines and tmiI009rhs levied against or on account of the Property, and shall pay when due all Balms for work done on or for servfoae rends€ed or materiel hrmishod to the Property. Grantor shell mainlaln the Property free of all nans having pHodty over or oquol to tho Interest of Lender under this Dead of Tws1, except for the Ilan of taxes and assessments not due and except AS olhonvise provided i In this Deed of Trost. R]gght to Contest. Grantor may withhold payment of arty tax, assessment, or clalm In connection with a good faith dlspWe over the obllgatlon to pay, so long as Lender's interest In the Property Is not jeopardized. If a lien arises or Is filed as a Jesuit Of nonpeymenl, Grantor shall col In llfteen (16) days after the lien arises or, If a Ilan Is bled, within 11Aeen (16) daya after Grantor has noVice of Ina filing, secure the discharge of the lion, or If requested by Lander, deposit with Lander cost, or a sufficient corporate surety bond or other secunly, satisfactory to Lander In en amount suff1c€anl to discharge lho lien plus any coats and Lendoea raasonable attorneys' fast, or otter charges that could accrue As a result of a foreclosure, or sale under the Ilan, in any contest, Grantor *hall defend Itself end Lender and shall satisfy any adverse judgment Ware enforcement against the Property. Grantor shot name Lander as an additional obliges under any surety bond fumished In the contest proceedings, Evidence of PsymenL Grantor ahsll upon demand furnish to Lender aalisfactory ovidonce of payment of the taxes or assessments and shall authorize the appropriate govammoniei official to deliver to Lender at any Umo a written statement of the taxes and assessments against the Property. Notice of Construction. Grantor shall noAfy Lander at least fifteen (15) days before any work Is wmmonced, any aendcas era fumished, or any materials are suppled to the Property, If any medhonle's lion, mate almon's lien, or other lien could be asserted on account or tho work, services, or materials, Grantor Will upon request of Lender furnish to Lender advance assurances aatisfaatory to Lender that Grantor can and will pay the cost of such Improvements, PROPERTY DAMAGE INSURANCE, The following proAalons relaling to Insuring the Property Atha a pad of this bead of Trust, Maintenance of Insurance, Grantor ohs[[ procure and matnteln policies of Are Insurance With stendard oxtond©d covorege endorsomenis on a felt value baits for the full Insurable value covering all Improvementa on the Real Property In an amount sufficient to avoid application of any coinsurance clause, and with a stendard mortgagee douse In lavor of Lender. Grantor shalt also procure and maintain comprehensive general liability Insurance In such coverage amounts as Lender may request With Trustee and Lendor being nomad as addttlanei insureds In such Ilablfity insurance pelides, Addlilonally, Grantor *halt malntala such other Insurance, including but not limited to hazard, business interruption, and bolter €nsuranw, as Lender me roa50nabiy require. PoliciesahB% be written to lotrr�� amounts, coverages and basis roasonably acceptable to Lender, with losses ma s payable to Lender. GRANTOR MAY FURNISH THE REQUIRED INSURANCE WHETHER THROUGH 1=5f(3T)NG POLICIES OWNED OR CONTROLLED BY GRANTOR OR THROUGH EOVJVALE Tf INSURANCE FROM ANY INSURANCE COMPANY AUTHORIZED TO TRANSACT BUS1NC4S IN THE STATE; OF TEXAS, if Grantor fells to provide any required rnsurence or fails to continue such Insurance In force, Lender may, but shell not be required to, do as fit Grantees expense, and the coat of the insurance will be added to tha Indebtedness, it any avch Insurance Is procured by Lender, Grantor will be so notified, and Grantor will have the option of humishing equfvalont insurance t iough any Insurer authorized to transact business in Taxes. Grantor, upon request of lendor, Wrfif dolivor to LOWN (rant time, (a Umo the polidos or corUAcalas of insurance In form satisfactory to Lender, including stpuladons that eovoragos Will not be cancelled or dbefnlshad Without at least thirty (30)) days pdor wdltert notice to Lender. Each Insurance policy also shall include an andorsamant providing that coverage in favor of London With not be Impaired In anyway by any act, omission or default of Grantor or any other person. Should the Real Property be locatod In an area designated by the Dlrcotor of the Federai Emetggoncy Management Agency as a special flood hazard area, Grantor agrees to obtain and maintain Federal Flood insurance, If Avanable, %Othin 46 days after notice is given by Lander (list the Property is located In a special toed hazard area, for the full unpaid pdndpal balance of the ban and any prior Ilona on o property securing the, loan, up to the maximum policy limits set under the National Flood Insurance Program, or as otherwise required by Lander, and to maintain such Insurance for the term of the loan. Appllcallon of Proceeds, Grantor shall promptly noUly, Londor of any loss or damage to the Property, Lender may make proof or loss fir Grantor falls to do to Within ARoon (161 days of the casualty. Whether or not Lenders security is Impalrad, Lander may, at Lenders oleollon, racelve end retain the proceeds of any Insurance end apply the prWaods to Ito reduction of the Indebtedness, payment of any lion affecting the Praporty, or the rosloreUan and repair of the Property, If Lander elects to apply the proceeds to rosloraten and repair, Grantor $bait repair Dr rsptace the damaged or destroyod lmprovoments in a manner satisfactory to Londor, Lander shall, upon sailefeclory proof of such expendfivro, payy or raI Weo Grantor from the proceeds (or the reasonable cost of repair or rosioraton If Grantor Is not in default under this Deed of '{rust. Any proceeds which have not boon disbursed wfthln 180 days after their receipt and which Lender has rat committe,d to the repair or rostoraton of 1 he Property shall be used Arsl to pay any Amount owing to Lender under this Dead of Trust, than to pay actxued Interest, end the remainder, if any, shall be applied to the principal balance of the Indebtedness. 1f Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Grantor as Grantors inleresls may appear, drantoes Report on lnsurance, Upon request of Lander, however not more than once a yaa6 Grantor shalt famish to Lander a report on DEED OF TRUST (Contlnued) Pane 3 each exfsUng polloy of Insurance showing: (1) the name of Ule Insurer; (2) Ure risks Insured, (3) the amount of the olicy; (4) Urn properly insured, tllo then current toplacamantvaluo of such property, and the mannor of dotormtning that value' and f6 Utq oxplration 1 dale of the policy. Grantor shall, upon request of Lender, have on Indopondent eppralsef satisfactory to Lander �elermino the cash value replacement cost of the property. LENDER'S SYP9NDITURES, If any action Or proceeding Is commenced that would materially affect Londm a interest In the Property or If Grantor falls to comply with any provision of this Deod Of Trust or any Related Documents, including but not limited to Grantors (allure to dischargp or Pay when due any Amounts Orentor is Inquired to discharge or pay under this Dead of Trust or any Related Documenta, Lander an Grantor's bahelf may (brit shall not be obligated to) take any action that Lander dooms appropriate, fnduding but not limited to discharging or paying ail taxes, liens, security interests, encumbrances and other dalms, at any lime levied or placed on the Property, and paying sit costs for fnauring, mainiaining and preserving the Property. Art such axpandlturea paid 6y Lander for such purrpposaa vAll than boar interest $t the Nofa rate from iha date paid by Lender to the dale of repayment by Grantor. To Ufa extent parmtged by applltab(a taut, all such expanses tvilf become a part of the Indebtedness and, $t Landee opdon, will (A) bo paysbfe an demand; (ti) be added to Ina halanca of the Nato and be, epppoorUonad among and be, payable vAth any fnslaliment payments to bacons duo during either ((1) the term of any eppllcablo Insurance policy; or (2) the romalning term of the Note; or (O} 6o trgatpd as a balloon ppayment lvhlth vAll 6s due and payebja at this Noto's maturity, The Dead of Trust also V aACUra payment -(Chase amounts, Such right shall bo In addition to all athorrights and r."dlos to width Lander maybe antlttad upon DafaulL , WARRANTY; DEFENSE OF TITLE, The following provisions folating to olvnershlp of the Properly are a part of this Dead of Trusl: Title. Grantor watrante thou (a) Grantor holds good and marketable tiUa of rocord to the Property In fan simple, free and dear of all lions and oncumbrencus other than those set forth in the Real property description or In any title Insurance policy, title report, or final 1111e opinion issued In favor of, and accepted by, Lender In connectlon wlIh this Deed of Trust, and (b) Orantor has the full right, power, and authority to execute and deliver Us Dsed of Trust to Lander, Defense of Tlilo, Subject to the exception in the paragraph above, Grantor warrants and will forever defend the tide to the Property against the lawful claims or ail persons. In the Avant any action Or proceeding Is commented that questions Grentoea tltte or the interest of Ttusteu or Lender under this Deed of Truat, Grantor shall ([Grand Vie action at Grantor's expense, Grantor may be the hominai party in such proceeding, but Lender shall be anllgod to perudpote In the proceeding and to be represented in the procooding by counsel of Londor's own cholco, end aranlor will deriver, or cause to Do dallvared, to Lender such Instruments as Lender may request from time to time to permit such paritalpatlon, Complianco With Laws. Gtah(Oe warrants that the Property and Grantor's use of the Property compnes with ail oxlsting sppllcabla laws, ordinances, and regulations of govommonted outhodilos, Survival of Represontatlons and Warranties. All representalfons, warrantloe, and agreements mods by Grentqr in this Dead or Trust shall eurvNa the execution and delivery of this Deed of Trust, shag be Oontlnuing In nature, and shall remain In full force end effect unit such time as Grantors indoblednasa shag be, paid in full, CONDEMNATION, JUDGMENTS AND AWARDS. The following provisions relating to condemnation proceedings, judgments, decrees end awards for injury to Iha Property are a part of this Dead of Trual: Proceedings, If any procooding In condemnation is filed, Oranlor shalt promptly notify Lender In writing, and Grantor shall promptly take such steps as may be necoaseryry to defend Ure botion end obtain the award. Grantor may be the nOminal party in such proceeding, but Lender shall be entided to perticlpalo In the proceeding and to be represented In the proceeding by counsel of tta Own chalee, and Grantor will deliver or cause to be delivered to Lender such instrumenis and dotumerltaUon as may be requested by Lander from lima to lime to permit such parUdpeUon. Appttca0an of Not Proceeds, To the extent permitted by apptleabla law, all judgments, decreas and awards for Injury or damage to the Property, or ony ort of the Property, and awards pursuant to proceedings for condemnation of the Property, are hereby absolutely assigned io Lander, and Ifallor any part of the Property Is condemnad by emfnent domain proceedings or by any proceeding or purchase In lieu of condemnation. Lender may at Its election requlra that ell or any portion of the net protaeds or the award be applied to the indebtedness or the ropeir or rosloretion of the Property, The not proceeds of the award,Judgment or deeteo shall mean the award $floe payment of all feasonowo costs, expenses, and altombys fees Incurred by Trustee or Lender In connection with the condemnation. SECt1RfTY AGREEMENT; FINANCING STATEh1ENT& The following provisions relating to this Deed of Trust es a security agreement ere a pan of this Dead of Trust: security Agteamont. This instrument shall constitute a securly Agreement to the extent any of the property constitutes fixtures, and Lender shall have all of the rfghls of a secured party under the Ungwm Commercial Code as amended from time to time. security Intorost. Upon raquesi by Lender, Grentar shag take whatever action is foquested by Lender to perfect and continue LendeYa security latereM In the Rants and Porsonal Property, In addition to recording this Deed of Trust In the real property records, Lender may, at any time end without further euthodxallorr from Grantor, file executed counlorparts, oopios or reproductions of Ut1s Dead of Trust Be e financIng stalomenl. Grantor shell reimburse Lender for all expenses incurred In pedeoUng or conUnuing this security Inlerost. Upon default, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor shall assemble any Personal Property not affixed to the Property In a manner and at a place reosonpbly convenient to Grantor and Lender and mDko It available to Landorwfthln three (3) days after recelpt orwrillen demand from Lander to the extant permitted by applicable law. Addressee, The Melling addresses of Grantor (debtor) and Lender (satured party) from which Information concerning the security Interest Kanlod by this Deed of Trust may be obtained (each as requited by the Uniform Commercial Code) are es stated on the (trot page of thin Deed of Trust. FURTHER ASSURANCES; ATTORNSY•1N•FACT. The following provisions relating to further oesuranrws and ettamay-In-fact ere a part of this Deed of Trust; Further Assurances. At any UMe, and from Ume to Uma, upon request of Lerxioe, Grantor vAll make, execute and deriver, or will cause to be made, executed or delivered, to Loader or to Lender's dostgnea, end when requosted by Lender, cause, to be plod, recorded, refilad, ar rerecorded, as the case may be, at such times and in such Ofpces and places as Lender may deem appropriate, any and en such mortgages, deeds of trust, security dead$, security ogreemonls, flnandng statements, conUnuadan stetamori% Inshuments of fUrUner assurance, cealffaales, and other duourrionts as may, la the We opinion of Lander, be necessary or dostrabla In order to effectuate, cnmpiete, porfecl, continue, or preserve (1) Gtantar'a obllgatlons under the Note, this Dead of Trust, and the Related Documents, sod (2) the Ilene and security Intoresie created by this Dead of Trust as first and prior lions on the Property, whether now owned or hereafter acquired by Grantor. Unless prohiblled by law or Lender agaves to the contrary In writing, Gfanlor shelf relmburse Lander for all costs and expenses Incurred to connection with Me matters referred to In this paragraph, Attorney -In -Fact. If Grantor falls to do any of the things referred to In the preceding paregraph, Lender may do to for and In the name of Grantor and at Grantor's expense. For such purposes, Orentor hereby Irrevocably appoints Lender as (3rantoes attomoyyIndact for the purposo of making, executing, delivering, firing, recording, and doing ell other thtngs as may be necessary or desirable, In Lenders safe Opinion, to accomplish the matters referred to in the ptocading paragraph, FULL PERFORMANCE. If Grantor pays ati the lndabtednoss when due, and othontiisn pod(orrrrs ali the obggativris Imposed upon Grantor under this Dead of Trust, Lender shot execute and dolNer to Grantor a release of this Deed of Trust Ilan and suitable statements of terminellan of any Onndng statement on file ovldondng Lendays oecwily fntoraet in the Rsnle and the Personal Properrttyy, However, It Is agreed that the payment of all the indebtedness and performance of such ohtigatlons shall not ten-nlnato thts Deod of Trust unlass the liens and Interests crested hereby are released by Lander by a proper rocordoblo instrument. Any filing foes required by law short be paid by Grantor, If parmllted by epplltabia raw. EVENTS of DEFAULT, hsdl of 1ho following, at Londeea option, shall constitute an Event of Default under this Dead of Trust; payment Default. 0011%tor fella to mske any payment when dual under the Indoblsdness, Other Defaults, Grantor fogs to comply vdtih or to perform any other term, obligation, covenant or Oanddnon contelnad In this Deed of Trust or in any of Um Related Documents or to comply with or to perform any tong, obligation, covanent or condition contained ]n any other agtsoment between Lender and Grantor. Compliance Default, Failure to comply with tiny other tens, obligation, covenoni or condition contained In this Deed of Trust, the Nato or in any of the Related Documents. DEED OF TRUST (Continued) page a Default on Other Payments. Faturo of Grantor within Lha Ume required by this Dead of Trust to mako any payment for loxes or triaufance, . or any olhor payment necessary to provenl fling of or to etfa it discharge or any lion. Default in Favor of Third Parties. Should Granlor default under any loan, exlonalon of credl(, sacudty agreemonl, purchase or sales egroomonl, or any other o9moment, In favor of any other creditor or person that may matmtaily affect any of Grantees property or Grenlora ab€tity to repay lie Indebtedness or perform their rospocgve obligations under Usta Dead of Trust or any of the Related Documents, False Statements. Anwarranty, teplosentation or statement mode a Armtshod to Lender by Gtaaior or on Giantoeo behalf under this Deed of Trust or the Listed Documents Is (also or misleading in any material respect, old€er now or at the Umo made or furnished or becomes false or misloading at any Umo thereafter, Defective Colloleraflxatlon, This Deed of Trust or any of the Related Documents Ceases to be In full force and affect (In@uding failure of any Woteral document to creole a valid and perfected security interest or Ron) at any Umo end for any reason. Insolvency, The dissolution or termination of Grantor's axrelenco as a going business, the insoivency of Grantor, Wo appointment of a rocalvor for any part of Grantor's property, any assignment for tha benolit of creditors, any typo of creditor workout, or the commencement of any pm000ding under any bankruptcy or insolvency laws by or against Grantor. Creditor or Forfeiture Proceedings. Commoncament of foreclosure or forfeiture proceedings, whether by judicial proceadrag, self-help, repossession or any other method, by any creditor of Grantor or by any govammeatal agency against any property socurbsg the Indebtedness, This tndudos a garnishment of any of Grantor's accounle, Including deposit accounts, vAth Lender, However, We Event of Default shall riot apply If there, to n good faith dispute by Grantor as to the Validity or reasonableness of the Balm which Is the basis of Wa creditor or forfeiture proceeding and if Grantor gives Lender writien noires of the creditor or forfeiture procoading and deposits with Lender monies or a suraty, bond for the creditor or forrelture, protdsdtng, In art amount determined by Lender, In Its solo discretion, es boing an adequate reserve or bond for the dispute. Broach of Other Ageaamonl. Any breach by Grantor under the terms of any other agreement between Grantor and Lender that Is not remedied within any grew period provided lhoreln, Including 1vilhout l€rr4taUon any agreement ooncdming any Indebtedness or other obligation of Grantor to Lender, wheter oxisUng now or later. Events Affectrrig Guaranlor, Any of the preceding events occurs w4th respect to any Guarantor of any or the Indebtedness or any QUarsolgr dies or becomes Incompetent, or revokes or disputes the velldlty of, or liability under, any Guaranty of the indebtedness, Adverse Change, A maletlat edvsrea ehonge oeturs in Grantees financial condition, or Lender behoves the prospect of paynsont of parformanco of the Indebtedness le impaired. lnsepurlly. Londor In good faith bellevas Real( Insecure. RIGH1•S AND REMEDIES ON DEFAULT. If on Event of Default occurs undor this Dead of Trust, at any Uma thereafter, "trustee or Lander may exerdsa any ono or mono of the following rights and remedles: Election of Remarries. Olecllon by Lender to pursue any remedy shall not exclude pursuit of oily other remedy, and an eloodon to make expenditures or to take each to parrs€m on ebllgaUon of Grantor under this Deed of Trust, after Grantor's fal,ura to perform, shay not effect Lender's right to dWare a default and exorcise Its romodlos. Accelerate Indebtedness, fender may declare the unpaid principal balance or the Indebtedness due and payable, In no event wlli Granlor ba raqulred to pay any uneamod interest. Foreclosure. If Lender Invokes the power of Belo, Trustee, at the ragqcrest of Lander, may $ag all or any portion of the Property at puhllo euWon to the highest bidder for cash al lire location w1Ulin Wa courthouse designated by Iho County Commisslonora Court, or If no such ecoa has been designated, at Use area daetgnatod In Wa notice of sale within the courlhousa, batwoon the hours of 10,00 A.M, and 4:0n P.M. on the first Tuosday of any month, after the Trustee or Its agent has given notice of the Uma and place of sale and of the property to ( be sold as required by. the Taxes Property Code, as then emanded. UCC Remedios, With respect to of or any part of the Personal Property, Lender shall have all the rights and romed2oa of a savored party under the Uniromt.Comrnordal Coda. Collect Rents. As addittona( socudly for the payment of the Indebtedness, Grantor horehy absolutely assigns to Lender all Rents as de6nad In Via Degnlgona eectlon of lids Deed Lf Trust. Untl We occurrenco or on Evont of Default, Grantor is ggrontad a license, to perfect and retain the Rents; however, upon rocelpt from Lender of a no Una that an Event of Default exists under thle Dead of Trust, Lender may taiminats Grantor's ttcense, end then Lender, as Grenloes agent, may collect the Rents. In addlUon, If the Property Is vacant, Lender may rant or lease Die Property, Loader shot not be Table for its failure to rent the Property, to collect any Renle, or to exerdsa dhlgonce In any Moller relating to the Rents; Londor ahalt be anoQUMeblo only for Rents actually received. Lender nallher has nor assumes any obligaflon as lessor of loadlord tvitr respect to any =upont of Vie Property. Rants so ratohrod shall be applied by Lender first to the remaining unpaid balance of the indebtedness, to such order or mannar as Lander shall alepl, and the residue, if any, shag be paid to the person or pefsons legally onUUed to the residua. Trustee's Powers, Grantor hereby Jointly and soverally authorizes and empowers Trustee to sell all or any portion of the Property together or in lots or parcels, as Trustoo may doom axpedldnl, and to oxQwte and deliver to the purchaser or purchasers of suth Property ggeed and sufrident deeds of convoyanoo of fee simple Vila, or Fir lesser osiates, and blils of safe and assignments, with eovonanta of genera! warranty made on Grantor's behalf, In no event shall Trustee be required to exhibit, present ar display at any such sale any of the praporty to be sold at such sale, The Trustee making such sale shot rocolve the proceeds of the sale and shall apply the some as provided below, Payment of the purchase price to Trustee shell satsfy the liability of the purchaser at any such sale, of the Property, and such parson shall not be, bound to fook after the application of the procoods, Appoint Recolvar. Lender shag have the Fight to have a receiver appointed to take possession of fill or any pert of the Property, with ilia power to protect and preserve the Property, to operate the Property preceding foreclosure or seta, and to collect the Rants from the Property end eppty the proceeds, over and above the cost of the receivership, against the Indebtedness, The receiver may serve without bond If pondlhed by lave, Lander'e Fight to the apadntmant of a receiver shall oAst whether or not the apparent value of the Property oxwods the indebtedness by a substanUai amount. Employment by Landersheil not disqualify a person tram soaring as a eecelvar. Tenancy at Sufforanoo, If Grantor remains In pamosslon of the Property after the Property Is sold as provided above or Lender otherwise becomes ani Clod to possession of the Pfope upon dofault-of Grantor, Grantor shalt become a tenant at sufferance of Londor or the purchaser of the Property and shall, at Londe s option, either (1) pay a reasonable rental for the use of the Property, (2) vbcoto the Property Immediately upon the demand of Lender, or (3) If such lananla refuse to autrendar possession of Wa Propady upon demand, the purchaser shell be enUUad to Instituto and malntaln the atslutory action of forcible entry and dafolner and procure a writ of possession thereunder, end Grantor expressly (valves all damages suslatned by reason thereof, Other Romodles, Trustee w Lender short lhsvo any other Fight or remedy provided in this Deed of Trust or the Note or avallabla at lave or In equity. Salo of Ilia Property To the extent pormlUed by epolkabfe few, Grantor horeby vialyes any and all rights to have this Property morshalfad. In exercising Its rights and romedlas, the Trustee or Lendef shall be free to set at or any part of the Property together or separately, In one sate or by separate safes, Londof short be, onUUed to bid of any public sale on all or any portion of the Property, Trustee may convey all or any part of (he Property to the highest brddar for cosh with o 0onorol warranty binding Grantor, subject to prior liens and to other oxoepllons to conveyance end warranty. Grantor watvos all requiremonls of appralsomenr If any, The affl4AWt of any person having knowledgo of the facts to Via offect that proper noUce as required by the Texas Property We was given shall be prima ts0o evidence of Uta fact that such notice lees to fact given. Recileis and stalorneals of fact In any noUce or In any conveyance to the purchaser or purchasers of the Property In any foreclosure sale tinder this Deed of Trust stroll be prima facie evidence of the truth of such facts, and all preraqulslies and requirements necessary to the validity of any such solo shall be presumed to have been perforated. Any sale under the powers granted by this Dead of Trust shall be, a perpetual bar against Otantor, Granter's heirs, successors, assigns and legal reproeanlathroa, Proceeds. Trustee shall pay the proceeds of any sole of the Ptoporty (a) first, to the expenses of foreclosure, Intruding esasonable fees or tharpos paid to We Trustee, indudinB but not €fmitod to foes for onfofdng the Ron, posting for aelo, selling, or releasing the Property, (b) then to Lender the full amount of the Indebtedness, (c) then to any amount required by law to be paid before payment to Grantor, and (d) the balance, If any, to Grantor. [?I~I;p 4F TRUST (Con(inued) Page 5 AUorMys' Fast; Expenses, If lender Institutes any suit or Gallon to entorco any of the istms of this Dead of Trust, Lander shall be entitled 10 court actionuisyturn as the Involved, nd to the may riotreasonable prohibitedss Lendoea by few, ell reasonablefees expensestrial Lender Incurs appeal. atatain L Whether opinion ere necessary at any Umo for the Protection of Its interest or the onforoomont of its rights shell bcwms a part of We Indebtedness payablo on demand and shall boar tntotast at the Note rate from the date of tha oxpandiluro until repaid, F:rponsos cvvarad by Urfa paragraph Include, without limitation, haW$war subject to any limits under oppileabla law, Lender's faasonable attorneys' foes and Lender's legal expenses, whothar or not thers Is a Inwsuft, including Landeez reasonable allornoys' feas and expenses for bankruptcy prorAedings {including efforts la modify or vacate, eny automatic stay or Injunction), appeals, and any anlidpated pool -Judgment cotfadon services, the cost of searching reoords, obtaining Wo reports (including foreclosure reports), surveyors reports, end appraisal fees, title Insurance, and fees for the Trustee, to the extent permitted by sppllcab3o law. Grantor also cull pay eny Court coats, in addition to all other sums provided by low. In the avant of foreclosure of this Dried of Trust, LaMar shall be errUtia to recover from Grantor Lenders reasonable attorneys' fees and actual disbursements that Lander necessarily Incurs In pursuing such forecioauto, POWERS AND ooLIOATIONS OF TRUSTEE. The follotdng provision relating to the powers end obligations of Trustee pro part of this Dead of Trust: Powe s of Trustee. In to As a ecU firs Will Tospecl to the Property allpowers the written requestee st ogf Lender androf Grantor.. (a) join in prTrustee shalleps ing and fdtngoWor to take the a map o platofShe Reef pfopsrty, Including the dodlealtllon of suaets or other rights to the pubilol (b) join to grahgng any easoment or ueaUnp any rostr[ol on De Ida Rcal proparty; and (o) join In any subordination or other agreement affacting thle Deed of Trust or the Interest of Lender under this oeod of Trust. ObilgaUons to Hollfy. Trustee shall not be obligated to notify any other Ifenholder of the Property or the commanwraonl of a fvredosuro proceeding or of the commencement of any other action to which Lander may avail Itself as a remedy, except to Ula extent requIrad by sppltoabio law or by written sgtaament. Trustee. In addition to the rights and remedies set forth above, vA€h raspacl to an or any part of the Pcoporty, the Trustee shall havo the right to foreclose bynotiea end sale, and Lander shall have the right to foreclose by judicial foreclosure, In either case In accordance with and to the full extent prodded by applicable taco, Substitute Trustee. Lender, at Lender'a option, from time (o hire, and more than once, may appoint In writing a successor or substitute trustee, with or without cause, Including the reslanallon, absence, death, I«ebnhy, refusal or (allure to act of the Trustee, The Wecessot or substitute Iruslee may be appointed wlthout ever requiring the resignation of the former trustee and whhoul any formality except for the execution and acknModgment of the appointment by the beneficiary of this Deed of Trust. The successor or subsolule tnstee $hail then succeed to all dghls, obligations, and duties of Via Tnrsleo, This appointment may be made on Landare behalf by the President, any vlco Presleont Secretary, or Cashier of Lender. NOTICES. Arty notice required to be given under this Deed of Trust. Incicrding whhout ffmltalian any notice of default and any notice of sale shag be glvan in writing, and shall be, offactive when aMally delivered, when actually received by talefacslmfta (vokss otherwise required by taw}, when doposlled with a nationally recvgntzed ovamlght louder, or, If mow, when dopositod In tiro United Stales mall, us first class, ce 8ad or Tog slered mug postage prepaid, dreaded to the addresses shown near the beg)nning of Vita Dead of Trust. Any party may change its address for notices under this Deed of Trust by gMng formal written notice to the other parUea, speCllying that the purpose of tiro notice Is to change- the partyra address, rot notice purposes, Grantor agrees to keep Lender Informed at all times of Grantor's current address. Unless o0henNs0 previded or requked by law, If there Is mold then one Grantor, any notica given by Lender to any Grantor Is doomed to be notice given to all Grantors. APPRAISAL COVENANT, Londar shall have the right to appralso any collateral securing Into bon by an appralsor acceptable to Lender, at Borrower's expense, every 5 yeara from the data of the most recent appralsol on rile with Lender. Additionaily, If during the term of this Note, thorn oxists a cotialaral dendency, determined In Lendat's sole dlseretion, or if a default exists hereunder, LaMar shall have the right to have said collateral oppralsod by an appralsor acceptable to Lender, at Borowel'e expense, regardless of wholher 0 years has elapsed since the lost ' eppralsaf, Falture to comply with tills PFOYslon shall constitute a dofeul( hereunder and shelf entitle Lender 10 exorcise all remedies provided hereunder. 6113CELLANEOUS PROVISIONS. The following miscellaneous provisions ere a part or this Deed of Trust; Amendments, This Dead of Trust, togathorWlth oily Related DOCUmonts, constitutes the ontire vnderslandOg and agreement of the pponies as to the traitors eat forth In this Dodd of Tnrsl. No eller�alron of or amendment to this Deed of Trust shag be effective unless given In va(ting and signed by the party or parties sought lobe charged or bound by the alteration or amendment. Annual Repartv, if the Property Is used for purposes other than Grantor's restdoneo, Dranior shall furnish to LaMar, upon request, a oenffisd statement of net operating Income rocei'ed from the Property during Grantors previous natal year in such form end dota!I as Lander shall require, "Net operating Income" shall mean ail cash receipts from the Property less all cesh expenditures made In connection with the opereUon of the Property. Capita" Headings. Caption hooding$ in this Deed of Trust are rot wrwenfonw purposes only and are not to be used to interpret or define the provsions of tills Nod of Trust. Merger, There shall be, no merger of the Interest or estato uaatod by this Deed of Trust with any other Interest or estate In the Propolly al any Umo hold by or for tho banalit ofLonder In any Capacity, MLhopt the wrllton consent of Loader. floveming Law. This Dead of Trust will be governed by federal law applicable to Lender and, to the oxlont not piaempled by federal taw, the laws of the state of Texas without regard to it$ eartg(ats of taw provisions, This Dead of Trust has bean accepted by Lender In the Slate of Texs s, Choice of Vanua. If there Is a lowsull, and If the (rensaWon evidenood by this Deed or Trust accurad to Dallas County, Grantor egress upon Lenders raquost to svhmh to tho jurisdiction of (he scans of belles County, Slate or Taxes, No Walver by Lender, Lendershan not be demmnd to have waived any rights under this Deed of Trust unless such watvsr Is given In vtddrig and signed by Lender. No delay or omission on the part of Lender In exercising any right shall operate as a waiver of such right or any other right, A waiver by Londar of a provision of this Dood of Trust shall n0prejudlca or constitute a waiver of Londers right otherwisa to demand strict comptlanco with that provision or any other provision of this Dead of Trust. No prior walvor by Lender, nor any course of dseUng between Lender and Grantor, shall consttuta a waiver or any of Londers rights or of any of Grantors obligations as to any future transactions. Whenever the consent of Londat Is required under this Deed or Trust, the granting of such consent by Leader In any instance shall not constitute continuing consent to subsequent Insfoncas where such consent is required and In all cases such consent may bo granted orwilhheld In the sole disasflon of Lander. Severabi(hy. Its court of competent jurisdiction finds any p40VISIDO of this Dead of Trust to be illegal, invalid, or unenforceable as to any circumstance, that 11MIng'andll not make the offending ppinvlslan Illegal, Invalid, or unenforceable as to any other dreumstanco. If fmMio, the offending provisloh shaft bo considered modified so Ulat it baeemes legal, valid and ah(orceabla. N the, offonding provision cannot be a modilled, Et shall bo sonslderod deleted from this Deed of Twat. Emile$$ olharMso requited by law, the Illegality, Invalidity, or unonforcaabliity of any provision or this Dead of Trust shall not affect the legailty, va$?dt(y or enforceability, of any other provision of this Dead of Trust. Succassara and Assigns, Subject to any limitations stated In this Deed of Trust on transfer of Grantors, Interest, IhN Deed of Trust shah be binding upon and inues to tha benefit of the paWes, their successors and assigns. if owmershtp of Ura Properly bowmos wastad !n a person otter than Grantor, Lander, without notice Io Grantor, may deal with Grantors successors vAth reference to tills Dodd of Trust and tho Indeblociness by way of forboaranco or extension without releasing grantor from the abllgagons of the Deed of 7rual or liability under the indebtedness. Time is of tho Fssehce, Time Is of tho ossence In the pelrormance of this Deed of Trust. Waive Jury. All parties to itds Deed of Trust hereby waive [he right to any jury trial In any aohmr, preceading, or counterelalm brovghl by l any party against any other party. DEFINITIONS. The following capllellzed Words and terms shall have the following moon)ngs when used In this Dead or Trust Unless specifically stated to the contrary, all references to dollar amounts shall moan amounts In lowful money or the United Stales or Amarlea, Words and terms used In the singular shall Include the plural, and the plural shall Include the singular, as the context may require. Welds and terms not oUtenwise defined in this Dead of Ttual shell havo lire moonings ottdbulod to such terms in the Unifoml Commercial Code: DEED OF TRUST (Contlliued) Pago B Atnn0m. The word'Benagclaryr mean Capital One, Notional Assodadon, and Its successors end assigns. Borrowor. The word "Borrower means PE Squaco investments, LLC and Includes all ca•slgnom And co•makera signing the Note and ef# their successors and assigns, Band of Trust. The Words 'Dead of Trust' mean this Deed of T st among Grantor, Londe, and TrusleR, ehd Includes without ttmltetlon all amtgnment and security Interest provisions telaltn0 to the Parson I Property and Rents. Default, 'lire word'DofaulV means the Default set forth In this f eed of Trust In the eecilon filled'Defoulr, Envtronmonlal Laws. The words 'Environmental Laws" mean My and all state, fedarai and tocel statutes; regulations and ordinances ratating to the protection of human health or Via anvtronmarri, Including without Ilmllation the Comprehans{ve Environmental Respanss, Compepastlon, and Liability Act of 1080, as amended, 42 LIA O. SecUen g&Of, et seq. ("CERCEA"r the SupEnvro mental Rasp and the Resource Act Conservation Pub. L, flfl 4 , (2 UA, , Bo alardous Maledels Transportation Act, 4a tf.s.0, Section 1801, at soq., lea ResourcA pled prsuaand eta. Recovery Act, 42 U.B.C. Sn Inn 0901, at seq., or other oppllcabla slats or federal laws, tuns, or regulellona adopted pursuant thereto. Event of Default. The words 'Event of Default" mean any of th avahls of defeuit out forth In this flood of Trust In U,a evanls of default auction of this Deed of Trust, Grantor, The ward'omnlor means PE Square Investments, LL , Ounrantor. The word *Guarantor" moans any guarantor, surely, r secommodsUoR party of any or ell of the Indebtedness, Guaranty. Do word 'Guaranty" means the guaranty from Guar plot to Lender. Including without timilalon a guaranty of all or part of the Nola, Hasardous Substances, The words 'Hazardous Substances" oan matadals that, because of tholf quangty, tontAntration or physical, chemice! or Infacdous characlArfsS€cs, may cause or pose a roasnt or potential hazard to human health or the pnvlronmenR when improperly used, treated, stored, disposed of, generated, ma uraclutad, transported or othonvlaa hundred, The wards 'Hazardous Substances` are used In their vary broadest same and Include rithout tlmltetion any and At hazardous or toxto substances, materials, or wasto as Matti by or listed undor the Environmental Lows. Th term 'Hazardous Subsiances' also Indudas. Wilhoul limitation, patotoum and P0401euta by-products or any fraction thereof and asbestos, Improvements. The word 'Improvements' means all oxlstIng an I futura Improvomonia, buildings, structuroa, mobgs homes affixed on the Real Property, fadlilion, addl ns, replacements and other eimstr lotion on Ilia Real property. Indebledness, The word'fndebtedness" means all pdndpe#, Inc rest, and other amounts, wets end expenses payable under the Nola or Related Documents, Together with ail renewals of, exienebrta t, rmodlBcadons of, conso$dadons of end aubatllutiat9 for Iho Note or Related Documents and Any amounts expended of advantod by ender to dtschargo Granter's obllgadone or OXPenaea Incurred by Trustee or Lender to enforce Granter's Obligations under this Dead of T list, together with Interest on such amounts as provkled In Urfa Deed of Tarsi, 61700e0gy, without Ymllailon, Indebtedness indudes wt amounts that may be lndlractiy secured by the Cross-CollateiotizatOn provlafon of this Dead of trust, Lender. The Word 'Lender' mearls Capital Ono, Notional Assodrj on, Its aticcossars end assigns. Nola. The word'Note" means the promissory note dated April 2 5. 2007. in the orlgfnal principal amount of $234,000,00 Item Grantor to Lender, together with ail renewals of, extensions of, mndifleatforss of, fafinanelngs of, consolidallons of, Arid subaGlullons fat the promissory hole or agreement. The maturity data of the Noll Is April 26, 20D8. Personal Property, The words 'Personal Property' mean All celt Ipment, rtxlures, and other articles of pareonal prorfparty now or hereafter owAod repiacementts of Grantor, nd all substilutins,and now of ter for, any o� sucor hfixed property, t and together h together if procoads tlnduding without {ImlleVon eand ff Insure tell o, proceeds end refunds of prem!umsj from any sale or other dispoa don of the Ptopsrty. Property, The word'Property` means collectively the Rest Prope fly and the Personal Property, Roar Property. The vrords'Root Property" mean Ste fast prepe . Interests and rights, as Miller described In this Geed of Trust. Rotated Documents. The words 'Related Documents' moan A promissory notes, uedit agreements, loan agreements, envleorunenlal agreements, guaranties, security agreements, mortgages, deeds of trust, soturily deeds, Wlaterot mortgages, and all other (nstfu anta egroomants and documnnls, whether now or heraafler O*ltng, scutacl in connactlon will, the Indebtedness. Renle, The Word 'Rents" means all present and future mnta, re eanU63, Income, Issues, royalties, profile, and other benefits derived from the Property. Trustee. The ward *Trustee' means Salty Brink, whose address Is 313 Carande at Stroet, Now Orleans, LA 7013D and any subatllulo or successor Irustee a, GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS D? THIS DEED OF TRUST, AND GRANTOR AORt Fs 7p ITS TEcRfd6, GRANTOR; PE Stilt RE INVESTMENTS, LLC r a Dav d, M nagsr of PS 9q a e inreslmenle, LLO CORPO A OP + aria uI a taw , danger n E Square Investments, C STATE OF S9 COUNTY OF 1 Tttls Instrument teas acknowledged before me on Dsvtd, Mahogar of PE Squara Investments, LLC a Wm WgNT by Ricardo David, Manage,; Marta dulla Notary Pab or State of Taxes n rm UNITED �'I` OF TEXAS 1ll1lll4��lilllfllli�ltlllllllllllilill llllll11111111 3 PGS 007029339 G4( (1) 4LATP- WARRANTY DE, ED WITH 'VE' NDOR'S LAN NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL ,SECURITY NUMBER OR YOUR DRLVER'S LICENSE NUMBER. Date: APRIL 2007 Grantor: GREGORY A, MAHIN and wife JULIE A. MAHIN Grantor's Mailing Address: 2206 CR 796 Alvin, Texas 77511 Grantee: CRYSTAL CREEK DEVELOPERS, LLC, a 1�152 limited liability company Grantee's Mailing Address: 307-C South Fxiendswood Drive Friendswood, Texas 77546 Consideration: Cash and a note of even date executed by Grantee and payable to the order of Grantor in the principal amount of ONE ZIUNDRED THOUSAND AND NO1100 DOLLARS ($100,000.00). The note is secured by a first and superior vendor's lien and superior title retained in this deed and by a first -lien deed of trust of even date from Grantee to GREGORY G. BESS, trustee. Property (including any improvements): Lot Five (5), of Southern Breeze, a subdivision in Galveston County, Texas, according to the map or plat thereof, recorded in Volume 18, Page 353, of the Map Records of Galveston County, Texas. Reservations from Conveyance: NONE. Exceptions to Conveyance and Warranty: Liens described as part of the Consideration and any other liens described in this deed as j being either assumed by Grantee or subject to which title is taken by Grantee; validly existing t restrictive covenants common to the platted subdivision in which the Property is located; standby fees, taxes, and assessments by any taxing authority for the year 2007 and subsequent years, and subsequent taxes and assessments by any taxing authority for prior years due to change in land usage or ownership; validly existing utility easements created by the dedication deed or plat of the subdivision in which the Property is located; validly existing reservations or exceptions approved in writing by Grantee and, if applicable, described in Schedule B of the Owner Policy for Title Insurance issued to Grantee as part of this transaction; any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements; homestead or community property or survivorship rights, if any, of any spouse of Grantee; and any validly existing titles or rights asserted by anyone, including but not limited to persons, the public, corporations, governments, or other entities, to (a) tidelands or lands comprising the shores or beds of navigable or perennial rivers and streams, lakes, bays, gulfs, or oceans, (b) lands beyond the line of the harbor or bulkhead lines as established or changed by any government, (c) filled -in lands or artificial islands, (d) statutory water rights, including riparian rights, or (e) the area extending from the line of mean low tide to the line of vegetation or the right of access to that area or easement along and across that area. Grantor, for the Consideration and subject to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty, grants, sells, and conveys to Grantee the Property, together with all and singular the rights and appurtenances thereto in any way belonging, to have and to hold it to Grantee and Grantee's heirs, successors, and assigns forever. Grantor binds Grantor and { Grantor's heirs and successors to warrant and forever defend all and singular the Property to Grantee and Grantee's heirs, successors, and assigns against every person who msocver lawfully claiming or to claim the same or any part thereof except as to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty. The vendor's lien against and superior title to the Property are retained until each note described is fully paid according to its terms, at which time this deed will become absolute. The contract between Grantor, as seller, and Grantee, as buyer, may contain limitations as to warranties; to the extent said contract provides for such limitations to survive this conveyance they shall be deemed incorporated herein by reference. The warranty of title contained in this Aced is hereby expressly excluded from the limitations referenced in this paragraph. When the context requires, singular nouns and pronouns include the plural. fry / .y 2 { STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on the day of April, 2007, by GREGORY A. MAMN. Notary Publi to of Texas Notary's Printed Name: My Commission Expires: ?at STATE OF TEXAS �;i _ d _� i�yt•'� i ''s' ;�:lf!it!}i 5i�1�{.,;�•;r . i �..; jai COUNTY OF HARR[S This instrument was acknowledged before me on the �� day of April, 2007, by y JULIE A, MAHIN, C Notary Pub Late of Te Notary's Pr rated Name: Nil , ' M Commission I ,fir,•, i 7/ !,. t +:,�:.._ .:y C scion Expires: _, .����.a�?iii�E�!•Z11 �li�iil�if�:}Gl (/��.}ti s'� p,,ter Recording Return to l`9ln , d `f i lle of yonas .177 Richmond AV Saito 400 ljouato 3 FILED AND RECORDED OFFICIAL PUBLIC Rgcopos A14*1 44 Al�j4 2007029339 May 07, 2007 01:07:40 PIS FEE: $24.00 Mary Ann Ualgle, County Clerk Galveston County, TEXAS 'ttg 1 aa �` zz t ' Y gig Nk �.IAd g6fiddd OW 1= , ®� e Y y IS LL e E M Aga Pu���e�i1n, Erb- i � �a9Ali � ?� HxR"al 5� �� H � � 2ah a M11 io r1 4 d d IZ A d a? f MOISiA148LkSY�ifi51:'@7i ! ,, '00" a � .0o,00 r0 s 53Jld5 OM"d 91 ij au �I SL'LO lb j1 '� ni ',+}I o d • �y �1.- S . b � aT O 1 {J _, _ _ .(..: m 5 I g e ' 1 �' s3Nds aWvaYd f1 at 4 i si€ a � I iVV VV4 !,1 eVV�V V•�� !Y �' 3 11 'l,"-'--I-- i+� IIII[ � 4 I „ led lzo i tiz I i -------•ra ,sa-- FI 4 A AAA $� ill a�R 9 QS q € agay yy Hyd3ti & g _ jig I sR $7g sEl �i moll g � v ` 9 \ \ \ \ O A / � h p� A in wiap" ; )/ n �f 9 a.dill 0 1 Exhibit B Attachment B INCENTIVE WORKSHEET PROJECTS OFFICE OF ECONOMIC DEVELOPMENT USE THIS SECTION Project Name Date 12. 1 D ,g -T Given PROJECT CONTACT Name Company G R Y fiM.- GiQ� E 6wrv� �a+P�t Address 3o7-G S, F�Q�En�_{�S4Yoon Phone (2$t) 49 .- 910 0 tETY YYa413 x FaX 2$1 46,Z• ZloS 7 -1 S!ih. E-Mail S l-f t T p- e bo wr- N E T Mobil B3Z- Z- 103l GENERAL PROJECT DATA Company Name G RysTA; t_ GeRC!-K ;DW6c. pgAs Web Address UNpdy. r&j$r&1)a1oN Location Address,iM S146 Cvr (+ALL New ConsttuctiorGY N _ Expansion Y �1 Type of Circle One; Cor oration Partnership Renovation to Business Proprietorship Other Existing Building Y Real Property Legal Descrip Lv'Cg 3 4 J S,!9qurW6.KpJ $RC6Z8 County (P Nf v d S 1b 4 Ca t�4 Tax Acct #s R 35 p9 a l, R 3 S p 9 g o Primary Type of Product orService 6onsTitucrttr4 J C-N(AN(:-"i�t+ SeKV�4dS If Relocation list current location; 3 01» G S . ft 16,4 aTP Anticipated Open Date Moy. g ea NAICS S 4. S413,�, Circle One; R&D trs. Wholesale Basic Industry cCRcta'ji> Other SALES AND INVENTORY Estimated Annual Percent Subject Sales by Facility to Local Sales Tax Estimated Annual Purcha4es of Operating items Subject to Local Sales Tax Inventory Year 1 $ l D4 l oc° % $ 1,900t l Z o0 At Full Operation$ 4,opd dam year jdc) % $ 4,000.000 4an Estimated Annual Growth (percent) % o % 2 a a no FACILITY AND CONSTRUCTION INVESTMENT Estimated construction start date MAA[.i.l Aon Estimated Construction Material Purchases: Estimated New Furniture and Equipment Purchases: Est, $ of Operating Purchases from Local Service Firms Percent Subject to Amount Local Sales Tax $ Id 300 afro 1 b o % $ 2e o, --ate 1 VC) % 315, odc Value of Property before Improvements Anticipated Business Size of Personal Facility (Square Feet Land Real Froperty Property Year 2 l 8 oo o Year 5 16 po p Investment in Improvements and Bus, Personal Property Business Personal Lease Terms Land Real Property Property Amount $ 111® o .$ -41 Zo ]Lease Dates No t 008 130 aoa UTILITY IMPACT Water Sewer Average monthly usage by the facility: 6 pp Gal 6, oo o Gal Investment needed for the new facility: $ 12 B 0-D $ 6 Di DOD EMPLOYMENT CHARACTERISTICS Total Number of By Employees Type Employee Percents e Average Sa Year 1 I o Executive 33%$ 1 on, too O At Full Operation Professional i 3 % aim Percent Annual Growth d % Administrative % $ %+!�, a-trc Technical $ % $ .5e, a.b ca Skilled Trades i % $ -45 oco Senil-Skilled Trades % $ 3o , Unskilled Trades 1-1 % $ ,1n,8bca Total Facility Payroll J$ (, pp0 boo Number of Jobs Retained/Created in Friendswood F E z TOURISM Number of Annual Visitors: Average Duration of Stay: 2 APPLICATION FOR ECONOMIC INCENTIVE GRANT UNDER CHAPTER 380 ECONOMIC DEVELOPMENT PROGRAM CITY OF FRIENDSWOOD PROPOSED 3-STORY RETAIL./OFFICE BUILDING FM 518 ACROSS FROM THE CITY HALL Friendswood, Texas 77546 01USTAL MEKDEVELOMUj Lit 3o7^C S. Yrfendswood Drive yrktidswood, Te.Kps 7�546 Pl; 2$1.4$2-.2100 Fu281a82-21 of November 30, 2007 IMPACT STATEMENT OF BUSINESS I. Information about the Business A. Histoz Crystal Creek Developers, Ile was formed as a corporate entity on March 22, 2005. The business plan for the corporation is to undertake planning, engineering, construction and development of real property in the Greater Friendswood/ilouston area. B. Ownership The corporation is owned 50% by Clear Creek Ranch, Inc, and 50% by Everest Interests, Ile. The president of Clear Creek Ranch, Inc. is William L. White and the Managing Member of Everest Interests, Ile is Selwyn P. Thint, C. Divisions Within Crystal Creek Developers, llc, the Planning and Engineering Division is managed by Selwyn P. Thint, P.E. and the Construction and Development Division is managed by William L. White. ( ► D. When, inhere Started Crystal Creek Developers, lle was started on March 22, 2005 with an 8-acre single family development on Say ,Area Blvd known as Friendswood Cove subdivision and a 50 townhome project in City of Pasadena know as Shaver Landing. E. State of Organization Crystal Creek Developers is organized as a Limited Liability Company, fled with the Secretary of State of Texas on March 22, 2005, F. _Directors and Officers Management Members are: Clear Creek Ranch, Inc (William L. White) & Everest Interests, llc. (Selwyn P, Thint) G, Annual Rem Crystal Creek Developers, Ile 2006 balance sheet is included herein. ( 1 II. Reasons for Economic Development Incentives The proposed 3-story, 21,600 sf building will offer Class A retail and office space. Crystal Creek Developers, Ile will establish a corporate office presence in this new building. Crystal Creek Developers, llc has invested in the purchase of the land and would like economic assistance towards building construction costs. Crystal Creek Developers, tic will be making substantial capital commitment towards planning, design and construction of infrastructures and building, Additional capital outlay will be required towards tenant improvements. Consideration is requested towards, tenants build -out for retail and lease office spaces in the amount of $120,000.00. Crystal Creek Developers, Ile, will have made capital investment for land, infrastructure and shell building and tenant improvements towards its own corporate office. Economic assistance is requested towards the costs of tenant build -out to lease out the remainder of the building. Expected available lease space is 13,000 sf. The tenant build -out cost is estimated at $40/sf which equals $520,000.00, The $120,000.00 is approximately 5.6% of total building costs, excluding land casts, and 23% of lease tenant build -out cost. The risk is minimized for these funds since Crystal Creek Developers, tic will invest all costs ( ; to build and occupy in the building. The requested funds will be used to assist in the build -out the lease spaces which will comply with the goals of economic incentive program. III. Description of the Project A. The project site is located on FM 518, across from the City Hall, adjacent to the Kwik Isar, There are three lots. Crystal Creek Developers and PE Square Engineering, Inc. purchased three lots. A joint venture has been formed between the two entities to consolidate the three lots into one lot size of 45,000 sf to construct the proposed 3-story retail and office building, The project will offer 7,200 sf of Retail and 14,400 sf of Office Space. The building cost is estimated at $2,160,000.00 and land cost is at $412,500,00 for total development cost $2,572,500.00. B, Map of metes and bounds and survey in included herein. C. Type and Value of Proposed Improvements The proposed 3-story, 21,600 sf new office building is valued at direct construction cost of $2,160,000.00 without any material cost markup, subcontractor markup or the general contactor's profit; since Crystal Creek Developers, Ile will construct the building, Once the building is fully leased, the value of the building will be at $5.1 Million, as calculated below: Net rentable SF = 18,000 sf @ $2/sf =$36,000/month W$432,000/annual At 8% cap rate with NOI of $410,400 - $5.1 Million D, Project Timeline Construction is expected to start in March 2008 and completed by November 2008. E. Environmental Impact The project is expected have minimal or no adverse impact to the environment regarding the following: Storm Water Runoff will be conveyed through inlets and underground storm sewer system to the existing underground trunk sewer behind curb along FM 518. In accordance EPA requirements, Stormivater Pollution Prevention Plan will be prepared to implement Erosion Control Measures consisting of silt fences, inlet protections and construction stabilized entrance during construction to eliminate storm water pollution. Since the subject tract is in Flood Zone X, there will be no impact to floodplains, Additionally, there are no wetlands on the subject site. No hazardous waste or hazardous substance will be generated from the subject site. All solid waste will be disposed in an on -site container to be removed by commercial waste management company. { r The proposed building will serve as noise barrier from FM 518 traffic noise to the residential dwelling along the rear of the property. The proposed development will provide 10 ft landscape buffer with 8ft high fence to comply with the required buffer from a Neighborhood Commercial use to residential use, F, Other Governmental Assistance No other government assistance or incentive will be requested for this project. IV. JOBS A. Current Level ofEm to meat 1. Current Quarterly Payroll:$73,035.22 2, Current Employment by Zip Code 3200 Tyler Court, Friendswood Cove, 77546 2413 San Miguel, San Joaquin, 77546 1650 Friendswood fake, 77546 405 Parkwood, 77546 121 E. Myrtle, Angleton, 77515 3. Copy of latest Texas Workforce Commission Filing for 2007 is included herein. B. Projected Job Creation 1, New Employee Needs Skilled: 2 Professional Engineers Pay Scale: $80,000.00 Training: Project Management and Cadd Upward Mobility: Partnership Opportunity Skilled: 2 Construction Superintendents Pay Scale: $50,000,00 Training: Project Supervision and inspection seminars offered by GrHBA. Upward Mobility: Project Manger Position 2, New Employee Needs Unskilled: 6 laborers Training: Training in painting, drywall, sitework Upward Mobility: Supervisor Opportunities C. Construe ion Jobs to be Created. For approximately 8 months to 2 years, employment will be created for construction job starting with site work to tenant build -out requiring various skilled and unskilled construction workers. Site Contractor for clearing & grubbing and building fill work. Site Plumbing work water, sanitary sewer and storin drainage work. Concrete Contractor for building foundation and parking lot. Carpenters for building framing, installation of windows & door. Roofers for Standing Sears metal roof. Electrician for building wiring Plumbers for building plumbing Mechanical Contractors of building HVAC. Drywall crew for sheetrock work Painters for interior paint Stucco crew for building exterior Sprinkler contractor for sprinkler and fireline Ceiling contractor for acoustical ceiling work Landscape contractor for sod, plants and irrigation. Pavement Markings contractor for parking lot and fire lane markings, D, Commitment to E u 1 Opportunity Hirin Crystal Creek Developers, llc has proven track record of hiring based on ability and will continue to provide opportunity for minority, women owned, disadvantage business entities. Crystal Creek Developers, llc's standing policy on hiring practice is without any discriminating based on race, religion and sex of the applicant. V. COMI'IuTITION WITH LOCAL BUSMSSES ! Although there are businesses who practice in the same industry along FM 518 corridor, as Cerville Homes, Offenburger Builders and Haverford Development, Crystal Creek Developers, lie is unique in its business model which allows opportunities for these businesses. That is, Crystal Creek Developers, llc has three business models. First, as a developer who has equity position on properties, will hire contractors for construction of infrastructure and offer finish lots to home builders. Second, as a general contractor bidding on projects will hire subcontractors for specialty work, Third, as a design firm providing engineering services, will hire services of surveyors, gcoteclurical engineers for design related work. VI. ATTRACTION OF NEW BUISNESS The proposed 3-story building is a Class A building with certain unique features which currently is not available in Friendswood such as walk -out balcony for offices, office -suite concepts in multi -story building and retail -suite concept, The project being located across from City Hall with complementary architecture with retail on ground floor with multi -story office space will be attractive, The retail space will be anchored by a retail food establishment on each end of the building with xetail-suite spaces along the interior of the ground floor. The second story will have individualized office spaces with a common administrative support to be leased out to small business individuals. Based on the nature of the initial tenants, PE Square Engineering, Everest Design Group, Ile and Crystal Creek Developers, Ile, it is anticipated the offices will be leased to business in the industry such as surveyors, real estate professionals, attorneys, accountants, insurance and contractor/builders in the spirit of becoming a "design center". { VII. ALTERNATIVE SITE CONSIDERATION Crystal Creek Developers, Ile has considered locating its corporate office in City of Webster, City of Kemah and City of Pearland. Especially in City of Webster because pant owner of Crystal Creek Developer, Ile, Williarh L. White has a restaurant called Chabuca's on Nasa Parkway. Incentive discussed with the City of Webster has been for reimbursement of infrastructure costs and participation in demolition cost of existing structure on a site, However, since both owners of Crystal Creek Developers, Ile reside in Riendswood, it is their desire to establish permanent office location in City ofFriendswood. VJII. Copy of Deed A copy of the deed is included herein on the land purchased by Crystal Creek Developers, He and PE Square Engineeting, Inc. RECORDATION REQUESTED 13Y: Capital Ono, Nallonal Associailon Alin: LOW Administration Dept, - Dallas j NO, BOX 162412 l Irving, TX 75016.2412 WHEN RECORDED MAIL TO: Capital Ono, National Assodaltoh Alin: Loan Administratlen Dept, - Dallas P.O. Box 152412 Irving, TX 76fl16.2412 SEND TAX NOTICES TO: Capital One, National Asoodatlan Alin! Loan Administration Dept. - Dallas R0, nett 152412 irvtna. TX 7se104412 _ SPACB AaOVE THIJ LiNE IS PO R RE,CORDERIs USE 0, jl LY IIIIIIII IIIII III III f I Illf llllf IIIII IIIII IIIII (Lill IIIII Ili ll IiIII IIiII Illll IIIII iIIIIII fi IIIIII Illfl IIIII IIIII IIIII IIII i I IIIII llll f 111 'LP00aCD0Co000000TXo00000oI NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL. SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER, DEED OF TRUST THIS DEED OF TRUST Is dated April 26, 2007, among PE Square (nvosiments, LLC, whoso address Is 2703 Lauren Rose Lane, Peariand, TX 77881 ("Grantor"), Capital One, National Association, whose address is Attn:, Loan Adnilnlstrallon Dept, - Dallas, P,O. Box 152412, Irving, TX 75016-2412 (roferred to below sotne(&Iles as "Banoflolary"); and Sally Drink, whose address Is 313 Carondalet Street, New Orleans, LA 70130 (referred to below as "Trustee"). CONVEYANCE AND GRANT, For valuable consfderatlon, Grantor convoys to Trusteo In trust, with power of sofa, for the benatit of Lander as Benartolery, Iho folla,ving described fast praporly, together with all o ftiim or aubsaquentiy oracted or alfiXed bulldinga, fmProvarnonis and fixtures; and aA easements, rights or Slay, and all urfenonoos' all water end water rlghls; end all other rights, royalties, and profits vela to tho real property, including without ltmitaVon su� tights as Grantor may hove in o1€ Mina rals, all, gas, geolharmot and elmiler made." e" "Real Property") located in Galveston County, State of Taxes: See Attached Exhibit The Real Property or Its address Is commonly known as Lot 3 & 4 Southem 13reexa, Friendswond, TX 77646, CROSS•COLLATER ALt2ATION, In addition to the Note, this Deed of Trust socuros all obligations, debts and Ilabilllles, plus Interest thereon, of Grantor to Lender, or any one or more or them, es well as at Balms by Lender agalaal Grantor or any ono or more of them, whalhar now erdsttng or hereafter adstrrg, whether totaled or unrelated to the purpose of the Note, whether votunlarryy or otharvdse, whether duo or not duo, direct or Indirect, determined or undotonnlnod, absolute or contingent, Nuldated or unilquldated, whether Grantor may be Debts Indivlduolly or jointly with others, whether obligated as guarantor, surely, eccommodation party or olhorM30. However, this Dead of Trust shall not secure, and the 'Indebtedness' shall not Include, any obligations arising under subchoplers 8 end F of Chapter 342 of Ure Texas Finance Code, as amondad. urenlor hereby absolutely assigns to Lender (also known se Banetidary In thla Deed of Trvsl) ail of Grantors right, title, end Interest In and to ail present and future looses of the Property and 0Rants from the Property. In addition, Grantor grants to Lender a Vniform Commesdat Colo security interest to tho Personal properly and Rents. THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST in THE RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A.) PAYMENT OF THE INDEBTeDNEBS AND (9) PERFORMANCE OF ANY AND ALL OBLIGATIONS UNDER THE NOTE, THE RELATED DOCUMENN78, AND THIS DEED OP TRUST. THiS DEED OF TRUST 19 GIVEN AND ACCEPTED ON THE FOLLOWING TERMS; PAYMENT AND PERFORMANCE, FXoe t as othemlea provided In We Deed of Trust. Grantor shall pay to Lender nit amounts 'secured by thle Dead of Trust as utey become due, and shall MrIctly and in a timely mannef Perform all of Grantors obligations under the Note, wa Dead of Trust, and the Rolaled Documents, VENDOR'S LIEN. The debt evidenced by the Nola is In part or total payment of the purchaso price of the Property; the debt is secured by both this Deed or Trust and by a vendors lien on the Property, which Is exprosaly rofalned In the deed of the Property to Grantor. This Dead of Trust does not lvalvo the vendors lion, and the two lions and the rights creatod by this instrument shag be cumulativa, Lander may Bled to foradoso under either of tho Ilene vAthout walving the other or may foreclose under both, The deed wharein the vendors lion Is ratalned Is incorporated Into this Dead of Trust, POaaESSION AND tIAIVENANCE OF TILE PROPERTY. Grantor agrees that Grantor's possession and use of the Property shall be governed by the fellowtng proAstons: Pessasstorr and Use. Until tho occurrence of an Event of befaull, Grantor may (1) remain In pomesslan and control of ilia property, (2) Lisa, operate or menage the Property; and (3) oollool tho Rents from the Property, Duty to Afalntaln. Grantor shalt mafntaln the Property in tenantable condition and promptly perform all repairs, replacements, and malnlenanco necessary to preserve Its vacua, Compnance With Envlronmental Laws. Grantor represents and warrants to Loader that: (1) During the period of Grantors ownership of the Property, there has been no use, generation, manufacture, stars o, treatment, disposal, release or throalertad release of any Hazardous Substance by any person on, under, about or from the Property; 2) Grantor has no knowlad o of, or reason to ballwa, that Thera has boon, oxcepi as previously drsdosod to and acknowledged by Lender In writing, (a) any breech or violation of any EAvlrenmenlat Laws, (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, unit stall or from the Property by any prior owners or occupants of tits Property or or (o) any actual or €hreatened lttigation or Balms of any 1 kind by any person relating to such matters; and (3) Except as previously d[st>oaad to end actmowfedgod by Lender In writing, (a) neither Grantor nor any tenant, contractor, agent or other authorized user of the ProporlY shall ass, ganotate, manufacture, store, treat, d[sposs of of release any Hazardous Substance on, under, about or from the Property; a 1 f I) any such activity shall bo conducted In rompUsnco with ail applicable federal, Slate, and local laws, reguletlons and ordinances, indudIng without limitation all Envifonmenlal Laws, rantor authorizes LLander and Its agents to ontor upon the Property to make such Inspections and tests, at Grantors expanse, as Loader may deem apptapdate to delermins compfianco of the Property with liras section or the Deed of Trust. Any Inspections or tests made by Lander shall be far Lenders purposes only and shag not be centred to create any responsibility or Irabllfty on the part of Lender to Grantor or to any DEED OF TRUST (Continued) page 2 other pareen, The representations and warranties contained herein are based on Granloes due dnlgence In investigating the Property for Hazardous Substances. Grantor hereby (1) roleases and wolves any future claims against Lender for indemnity or contribution In the avant Grantor becamos liable for cleanup or other costs under any such laws; and (2) agrees to Indemnify, defend, and hold harmlose Lender against any and all claims, losses, gobllldes, damages, ponaftles, and oxpenroa which Lender may directly or lndloolty sustain or author rosuldng from a broach of this section of the Dead of Trust or as a consequonoe of any use, gonaraltatr, manufacture, storage, disposal, release or threatened release occurring prior to Grantor's ownership or Interest in the Property, whathar or not eta cams was or should have been known to Grantor. The provisions of thlo section of the head of Trust, Including the obdgadon to Indernnl and defend, shall surnlva the payment of the Indabledneos and rite asUAfncUan and reeonvayanea of the lien of this Deed of Trust and shall not be Affected by Londer'e acqulsiNon of any interest In the Property, wholher by foredosura or otherwise, nuisance, Waste. Grantor shall not cause, conduct or permit any nuisance not commit, permit, or Buffer any stripping or or Waste on or to the Property or any portion of the Property, Without Umlting the generally of the foregoing, Grantor YAP not remove, of grant to any other parry the fight to remove, any limber, minerals (Including oil and gas), cost, day, scorls, sag, gravel or roc)t ptoducic wlUiout Lenders prior written consent. Thin resirtedon will not apply to rights end easements (such es gas and on) not owned by Grantor end of which Grantor has Informod Lender In writing prior to Grantors signing of this Deed of Trust. Removal of improvements, Grantor shall not demolish or remova any Improvements from the Real Ptopoity without Lendees prior written consent. As a condition to the removal of any improvements, Lender may require Grantor to make arrangements satisfactory to Lender to replace such Improvements with Improvements of at least equal value. Lender's Right to Enter, Lender and Landoea agents and rep(osenlotivas may enter upon the Real Property at all (easonable times to attend to Lender's interests and to Inspect the, Real Property for purposes of Grantor's compliance with the terms and conditions of this Dead of Trust, Compliance with (ievammentsl Requirements. Grantor shall prompgy compty with all €aWs, ordinances, and regulations, now or hereafter In affect, of all governmental SUDrodtles appticebte to the uao or occupancy of the Property, including without Ilm lation, We Amortcans With Disabilities Act. Grantor may writasl In good falth any such taw, ordlnance, or regulation and withhold comptianca dutbig any procooding, Induding oppyopdata appeals, so long as Grantor has notified Lendor In writing prior to doing as and so long as, In Landoez sole opinion, Landoes Interests In Ute property are not )oopardlzed, Lender may require Grantor to post adequate security or a surety bond, reasonably aPile factory to Lender, to protect Londoes Interest. Duty to Protect. Grantor Dorms nehhor to abandon or leave unattended the Property. Grantor shall do al( other acts, In addition to those acts set forth above In this section, which from the character and use of the Property are reasonably nocassary to protect and preserve the Property. DUB ON SALE • CONSENT BY LENDER, Lender may, at Lender's option, declare Immediately duo and payable all.sums sowred by tills Dead of Trust upon the sale or transfer, Without Lenders prior written consent, of all or any part of Uta Real Property, or any Interest in the Real Property. A "sale Or transfer^ moans the oonvoyanao of Real Property or any right, title or Interest In the Real Property; whothnr legal, battegdat nr eqquitabie• whether voluntary of involuntary; whether by outrfght acts, deed, Installment sale contmct, land contract, contract for deed, tsea ohatd Interest with a term greater than three (a) years, loas"Itim contract, or by sale, assignment, or transfer of any beneficial interest in or to any land trust holding tide to the Rest Property, or by any other method of conveyance of an Interest In the Real Property, If any Grantor la a corporatfon, partnership or limited liability company, transfer also includes any ehonge in ownership of more then twenty-five percent (25%) of the voting stack, partnership Interests orilmllad liability company interests, as the case maybe, of such Grantor. HOIYOVBr, this opgan shag not be exercised by tender If such exercise Is prohibited by federal law or by Texas law. TAXES AND LIENS. The following provisions refslino to the- texas and liana on the Property are part of this Deed of Trust: Payment, Grantor shall pay when due (and In ON events prior to delinquency) an taxes, Bpede( taxes, esaossmenla, charges Qnoludino water and sewer), lines end Impositions (muted against or on accolrni of the Property, and shall pay When true oil claims for work done on or for services rendered or malarial furnished to the Property. Grantor $hall maintain the Property free of an MBAs having priority over or equal to the inlerost of Lender under lifts Deed of Trust, except for the lion of taxes and assessments not due and except as ctharMBe provided In this Deed of Trust. Right to Contest. Grantor may withhold payment of any tax, assessment, or oWnt In canneciion with a good Will dispute over the obllgagon to pay, so long as Lunduee Interest In the Ptoporty Is not jeopofd'aod. if a Ron adsoa or Is filed as a result of nonpayment, Grantor shall w;Udn fifteen (16) days offer the lien adios or, I!t a lien Is filed, milhin fifteen (115 days after Grantor has notice of the filing, suwra.the dlschorga of Una lien, of If requested by Londe, deposit with Lender cash or a sufficcflant corporate surety bond or other security satlalactoly to Lender In an amount sufficient to discharge the Lien plus any coals and Lohdoes reasonable nUomaya' fees, or other charges that could a"mo so a result of a foreclosure or solo under the lien, In any contest, Grantor shall defend Itself and Lender and shall satisfy any adverse Judgment before enforcement against the Property, Grantor shag name Lender as an additional obtlgee under any surety bond furnished In the contest proceedings. Evldonce of Payment, Grantor ehalt upon demand furnish to tender satisfactory ovidence of payment of the Iaxes or assessments end shell authodzo the appropriate governmentet offldal to deliver to Lender at any time a Wdttun statement of the taxes and assessments against the Property. Notice of Consttucgon. Grantor shall notify Lender at least fiAoon (16) days before any work Is commenced, any eendces are furnished, or any maladals Are supplied to life Property, If any mechanlo'a lien, matedelmen'B Ilan, or other lien could be asserted on or of the work, aerAcon, or materials, Grantor Witt upon request of Lender furnish to Lender edvance assurances sadsfaclory to Lander that Grantor can and will pay the cost of Such Improvements, PROPERTY DAMAGE INSURANCE, The following provisions totaling to insuring the property are a part of No Deod or Trust Malntonanae of Insurance, Grantor all Bit procure and malntstn poltdas of lira insurance with standard oxtended coverage endorsements on e fair value bass for the fulf Insuroblo value covering eti improvements on the Real Property In an amount sufAdeni to avoid application of any oolnsuranco douso, and with a standard mortgagee clause in favor of Lendor. Grantor shag also procure and malntatn campprehsnstva gonomf liability Insuranco In such coverage amounts as Lender may request with Truslea and Leader being named as addldonat insureds In such Ilnblilty Insurance policies, Addidonatly. Grantor shall maintain such other Insurance, Including but not limited to hazard, business IniorrvpUon, and bollor Insurance, as Londe( may reasonably require. Potictea shag be written In form, amounts, ouvoragos and bast% reasonably accaptable to Lender, with losses made payable to Lender. GRANTOR MAY FURNISH THE 9EOUIREO INSURANCE WHETHER THROUGH EXISTING POLICIES OWNED OR CONTROLLED BY GRANTOR OR THROUGH EQUIVALENT INSURANCE FROM ANY INSURANCE COMPANY AUTHORIZED TO TRMBAOT BUSINESS IN TH6 STATE OF TEXAS, If Grantor falls to provide any required insurance or falls to continue such insurance In force, Lender may, but shall not be required to, do to nt Grantoea expense, and the cast of the Insurance wilt be added to the Indebtedness, if any such Insurance Is ptawrod by Lender, Grantor wilt be so notified, and Grantor will ,AV* the option of furnishing equivalent insurance through any Insurer authorized to transact business in Texas. Grantor, upon taquost of Lender, will deliver to Lender from time to done the policies or Certificates of Insurance In formm aallsfactory to Lander, including stipulations that coverages will not be oanoBllad of diminished without at least thirty (SO) days prior written notice to Lander. Each Insuranoo poi€cy also shall Include an andwsemanl providing that coverage In favor of Loodor v N not be Impaired In any way by any act, omission or dofau€t of Grantor or any other parson. Should the Host Property be located In an area deslgnoted by the Director of the Federal Emerggency Management Agency as a special flood hazard area, Grantor agrees to obtain and mafntsfn Federal Flood Insurance, If available, vAlhln dS days after notice is given by Loader that the Property is located in a mpectal flood hazard area, for the full unpaid principal balance of the loan end any prior liens on the property securing the loan, up to the matdmum policy Omits set under the National Flood Insurancs Program, or as oghaiwlaa required by Londe, and to malatatn such Insurance for the term of the loan, . Application of proceeds. Grantor shall promptly notify Lender of any loss of damage to the Property, Londe( mey make proof of loss If Grantor falls to do to within fifloen (16) days of the casualty. Whether or not Lender's security Is Impaled, Loader may, at Londoes. election, recolve and retain the proceeds of any Insuranco and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the property, or the restoration and repair of the Property. It tender olocls to BP* the PfwAOds to tasloration and repair, Grantor r ) shall repair or replace the damaged or destroyed lmprovomenfe in a manner satisfactory to 1Lender. Lender shall, upon sag factory proor of l such exponditwo, pay or telnburso Glefntor from the proceeds for the reasonable cost of (opal of restoration If Grantor Is not In default undo( this Mod aF 7mitt. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the ropetr or restoration of the Property shall be used first to pay any amount owing to Lender under this Deed of Trust, Won to pay eccrvad Interest, end the remainder, If any, shag be applied to the pdnclpst balance of the Indebtedness. of Loader holds any proceeds after payment In full of the Indebtedness, such proceeds shall to paid to Grantor as Grantors tnlorosts may appear, Grantor's Report on insursnoa. Upon request of Lender, however not more than once a year, Grantor shall furnish to Lander a report on DEED OF TRUST (Contlnuod) Page 3 each oxlsUng policy of insurance showing: (1) the, name of the Insurer; (2) Die risks insured; (3) the amount of the policy; (4) the proporty Immured, the then current roplewmonl value of ouch properly, and the manner of determining that value; and (S) the expiration dale of the pollry. Grantor shall. upon request of Lender, have an independent appraiser soUsfactory to Lander determine the cash value replacement cost of the Property. LENDER'S IVVENDITURES, If any action or proceeding to commenced that would materla[Iy affect Landat'a interest in the Property or It Grantor falls to comply with any provision of this Dead of Trust or any Related Documents, Including but not ilmitod to Grantor's faRvro to discharge, or pay When duo any amoun(a Grantor is required to discharge or pay under [his Dead of Trust or any notated Documents, Lander an Grantor's behalf may (lwt Zee1 not ba obligatod !o) take any action that Lander deems opptopriste, Including but not llmlled to discharging or payiingg a% taxes, Pons, sawrity Interests, encumbrances and other deems, at any time lamed or placed on the Property and paying all costs for tnsuring, meintalning and ppreserving line Pwperty All such oxpsnd€ruins paid by tender for such purposes will :ten beer interest at the Nola rate }ram the data Geld by Lender to Ul a data of repayment by Granto . Ta the, oxtonI pe-III by apptresble la1v, an such axpansos wi116ewmo a part of the lndeblednssa slid, al l.ondez's option, twill (A) ba payable an demand; (B) i7a added to the baie000 ea of line Npta and be, appporllonad among and be payable i'101 any installment payments tO bewms due during ender f1) the torn of any appllcable lnsuraneo potoy ; or {2) its remaWng tor_ of uhe Nab.; or (C) be usatod as a balloon paymenk ivhlch will 6a due and p Sob1. at the Note's maludty. The bead of Trust also wilt secure payment of thee. ahiounls, & ah fight shall ha In addldon to all Other rights and r...dl.a to which Lower may be.11Ued open l7efeult. WARRANTY; DEFENsp oP T1TLE, The following proNstuna raloUng to ownorshfp of the Property are apart of thls Deed of Trust: Tlllo. Granter warrants, that: (a) Grantor holds good and marketable chit of record to the property in tea simple, free and dear of all ;tens and encumbrances other than lhoao set forth In the Real Proporty descdptlan or In any title Insurance policy, tlUo report, or final UUe opinion Issued in favor of, and accepted by, Lender In connection cultic this Dead at Trust, and (b) Grantor has the NO right, pourer, and authority to exocuto and deliver this Deed or Trust to Lender. Defense of 716. Subject to the excapdon In the paragraph above, Grantor warrants and will forovar defend the UUe to the Property against tho lawful claims of all pstsolts, In the event any action or promed!ng 1s commenced that queallone Grnntcea tluo or the lnleieM of Ttuatea or Lander under this Deed of Trust, Grantor shall defend the action at Grantor's axpenso, Grantor may be the nominal pady in such proceeding, but Lender shay be anIttlad to pu ldpalo In the proceeding and to be represented In the proceeding by counsel of Landor's own choice, and Grantor wilt dellvor, or cause to be delivered, to Lender such instruments as Lender may request from Ume to Ume to pormbl such pattlelpation. Compliance W(Ib Law$. Grantor warrants that the, Property and Grantor's use of the property compiles with an existing appllcablo lours, ordinances, and ragalauons of governmental authorities. Survival of Ropresantarions and Warranties, All reprosonleUcns, warranties, and agreements made by Grantor hi this Dood of Trust shag survivo the execution and dolNory of this Dood of Trust, chat€ be contlouing In nature, and shalt remain In full force and effect until ouch Ume as Grontaea Indoblodnoss altar; be paid In fun. CONDERINATION, JUDGMENTS AND AWARDS, The following provisions relating to condemnaton proceedings, judgments, decrees and awards for injury to tho Property era apart of this Dead of Trust: Praaoedfngs. 1r any proceeding in condemnation to filed, Grantor shag promptly notify Lender In Yrrlling, and Grantor shall promptly lake such steps as may be aeoassarryy to defend the acdon and Dbisin the award, Grantor may be the nominal party In such proceeding, but Leader shalt be entitled to participate In the pmoeading end to be, (sprawled In the proceeding by counses of lie own choice, and Grantor will deliver or cause to be doWared to Lender such Instruments end daoumontaUon as may be, requested by lender from Umo to Ume to peril( such partdpallon. Applioallon of Not Proceeds. To the extent permitted by apptfcable Isw, all judgrdonts, decrees and awards for Injury or damage to the Property, or any part of the Property, and awards pursuant to proceedings for tattctemnauon of the Property, are hsraby abadulely assigned to Lander, and if an or any part of the Property Is condemned by ernfnont domaln proceedings or by any proceeding or purchase In neu of oondomnallon, Lender may at Its alectlon requ rO that ail or any portion of the net proceeds of the award be apptled to the Indebtedness or the repair or restoration of the Property. The not proceeds of the award, udgmont or dooree shall moan the award oiler payment of an reasonable costs, expenses, and atturnays, foes lricurrod by Trustee, or Loner in connection with the condomnation. SECURITY A0RE9h(I!NT; FINANCING STATEhIENTS. The folkAving provislons relating to thlo Deed DE Trust as a security agreement are a part OF this Dead of rruat: 5eeurlty Aefoomenl, This Instrument shalt constitute a Soeurlty Agreement to the extent any of the Property oonsUtutas fixtures, and Lender shag have aU of the rights of a socurad party under the Uniform Commerclal Code as amended from time to Ume, Security interest. Upon request by Lander, Grantor shall tske whatever action Is requested by Lender to porract end contnue Lendeee security interest to Ina Ronts and Psrsonot Properly. In OddiUoh to recording this Dead of Trust In tho foal proporty rocofds, Lender may, at any Ume andwithout further authorization from Grantor, file executed counlorparts, copies or reproductions of this Dead of Trust as a Rnandng stalement. Grantor Shoff reimburse Lander for on expenses incurred in perfecting or conUnOng lhls sdcurity, tntorosL UpoA dafouh, Grantor shall not remove, sever or detach the Personal Property from the Property. Upon default, Grantor shag assemble any Personal Property net afibted to the Property In a manner end at a place reasonably convenlent to Grantor and Lender and make It evanable to Lender within three (3) days after reoelpt of written demand from Lender to the extort permitted by applicable low. Addraasea, The mailtng addrossos of Grantor (doblot) and Lander (secured party) from which information concerning the security interest granted by this Deed of Trust may be, obtained (each as requl(sd by the Uniform Commorclel Coda) are as staled on the first page of this bead or Trual. FUR7IIER ASSURANCES, ATTORNSY•IN•PACT. The foltowlng prwvislons refsting to further assurances and attornoy-la-foot are a part of this Dead of Trust: Further Assurahcos. At any time, and from Unto to Ume, upon request of Loador, Grantor Will make, execute and deliver, or vAll Cause (o be made, Oxocutod or delivered, to Lender or to bender's dosignee, and when requested by Lender, cousin to be Rlod, recorded, refried, W rerecorded, so the case may ba, at such Umes and In such offices and places as Lender may doom appropriate, any and all such mortgages, clouds of trust, security deeds, security agreements, finandn statements, contInuatton statements, Instruments of further assurance, cerilowes, and other documarita ss may, in the solo opfnlon of Lander, be, necessary or desitablo in order to effectuate, complete, par(ect, continue, or preserve (1) Grantor's obligations under the Note, this Dead of Trust, and tho Rotated Documents, and (2) the tons end security interests created by this Dead of Trust Be first and prior Ilona on the Property, wheuhor now owned at hereafter acquired by Grantor. Unless prohibited by law or Lender agrees to the contrary In writing, Grantor shell reimburse Lander for all costs and expenses incurred in connocUon With the matters referred to In this paragraph, Attoinoyln•Fatt, If Grantor fails to do any of the things referred to in the prsceding paragraph, Lender may do so for and In the name of Grantor and at Orantoes expanso, For such purpwoe, Grantor hereby irrevocably appoints Lander as Grentnes attome dn4ect for the purpose of making, executing, delivering, filing, tucordfng, end doing elf other things as may be, necessary or doslrable, (n Lendar's sole opinion, to accomplish the matters referred to In the preceding paragraph. FULL PERFORMANCE, If Grantor pays eU the Indebtedness whon due, and otihetwlsa performs all the obligations Imposed upon Grantor under this Dead of Trust, Lender shall execute and deliver to Grantor a release of this Deed of Trust Ilen and sultable statements of termination of any Rnandag statement on (lie Ovldondng Landoes aacurity Interest In the Rents and the Personal Proparty, However, It is agreed that the payment of Ott the lndablodnoes and performance of such obllgatlona shalt not tormfnoto this bead of Trust unless the Rena and interests created hereby ere released by Leader by a proper recordable instrument. Any Rung fees raqulfed by few shag be paid by Grnhior, if permitted by applicable law. @VENTS OF DEFAULT, Each of the following, at Lendoee option, shall conetitulo an Event of Default under this Deed of Trusl: Payment bofault. Grantor fana to make any payment when duo under the Indebtedness, 5 Other bafaulls, Grantor falls to comply with or to perform any other term, obUgetion, covenant or condition conlelna in 1hIs Dead of Trust or In any of tho Ratatod Documents or to cwmpby wtth or to psrtorm any tern, obiigstion, cavanant or condlUon contained In any other agreeme nt behve an Lender and Grantor, Compliance Default, Fanuro to comply wWh any other term, obligation, wvontint or CondlUon conlalned In this Dead of Trust, the Nola at In any oriha Retaled Documents, DEED OF TRUST (Continued) page 4 Dorault on other Payments. Faguro of Grantor within the Unto required by this Dead of Treat to make any payment for loxes or insurance, , or any other payment necesaary to prevent filing of or to affect discharge of any lien. bsfault In Favor of Third Parties. Should Grantor default under any loan, extension of credit, security agreement, purchase or sales agreement, or any other aggraomont, to revor of any other tradllor or person that may matorlaly affect arty of Grantor's properly or Granter's Ability to repay tits Indebtedness or perform their rospaQ0vo obggationa under this Dead of Trust or any of fire Related Documents, False Statomonla. Any warranty, roprosonlation or statement made or fumishnd to Lender by Grantor or on Grantor's beheif under this Dood of Trust or the Related Documents N false or misleading In any material respect, allher now or at the Ume motto or fumishad or bocomas false or misleading at any Urao (heroonor. Dofedlve Collateratizailom This Deed of Trust or any of the Related Documents ceases to be in full force and effect (Induding failure of any collateral document to create a valid and perfected security Interest or lien) at any time end for any reason. Insolvency, 'rho dlssolulion or lerminellon of Grantor's existence as a going business, the Insolvency of Grantor, the appointment or a receiver for any part of Grantor's properly, any asslghmeht for thn bohnfil of creditors, any type of efoditorworltout, or the commenooment of any prooesding under any bankrvptoy or Insolvency laws by or against GrentOr. Creditor or forfeiture Proceedings. Commencement of foredosura or forfeiture pfoceadings, whether by Judicial proceeding, self-help, mposseeston or any other method, by any croditer of Grantor or by any governmantal agency against any property securing the Indebtedness. This Includes a garnishment of any of Grantor's accounts, including deposit accounts, v4th Lander, However, this Event of Default shag not apply if [hero is a good faith dispute by Grantor as to the validity or reasonoblonass of the dalm which Is the basis of the c46dtlor or forfeltura proceeding and If Grantor gives Lander written noUcs of the creditor or forfeiture proceeding and doposlts with Lander manias or a surety bond for the credhor or farfofiuro proceeding, in an amount determined by Lander. In its sofa dlsctollon, as bolno an adequate, reserve or bond (or the dispute. Breach of other Agreement, Any breach by Grantor under the terms of any other agreement between Grantor and Lander that to not remedied within any grace period rovlded therein, Including without 1lmhatlan any agreement tonceming any indebtedness or other obligation of (tnnlor to Lender, whXer exfoling now or later. Rvents Affooting Guarantar, Any of the preceding events Occurs with respect to any Guarantor of any of the lndebledaess at any Guarantordles or becomes incompetent, orrav011" or disputes the velfdlty all orllabliliy under, any Guaranty ortha Indebtedness. Adverse Change, A malaria) adverso change occurb in Granioes financial eondnion, or Lender believes the proepoat of payment or parfonnanco of the Indobledness Is Impaired, insdourily. Lender in good faith believes Itself Insevure, RIGHTS AND REMWES ON DEFAULT, If an Event of Default occurs under this Deed of Trust, at any gmO thereafter. Tristan or Lender may exercise arty ono or more of the following rights and remedies; Etaetron of Remedlas. Election by Lander to pursue any ramody shall not exclude pursuit of any other ramody, and an election to make expondlturet or to Enka action to perform on obllgntlon of Grantor under this Dead of Trust, alter Grahtoea failure to perform, shell not affect Lender's right to dodaro a default and oxerdsO Its remedies. Accelerate Indebtedness. Lander may dedoro the unpaid principal belanco of the Indebtedness duo and payable, in no avant will Grantor be required to pay any unnamed Interest. Forsetosura, if Lender Invokes the power of aale, Trustee, at the request of Lender, may sell OR or any portion of the Prop arty at publlo auction to the highest bidder for cash at the location within the courthouse designated by the County Commisslonere Court, or if no ouch area has been dastgneted, at the eras designated In the notice of sale v4Lhlrt the courthouse, between the hours of 10:00 AN. and 4;00 PA, on the first Tuesday of any month, after the Trustee or Ito egent has glvon nolfca of the tuna and place of sale and of the property to f' be sold as roqulted by the 7exas Property Code, as then amended, UCC Remedios, Nth respect to all or any part of the Personal Property, Lander shell have all the rights end famedfes of a secured party under the Urtform Commerdal Coda. Collect Rents. As eddit€onal security for the payment of the lodebtedness. Grantor hereby absolutely assigns to Lender all Renle as defined In the Dolinitions sectlan of thin Dood of Trust. until the occurrence of on Event of Default, Grantor is granted a license, to collect and retain the Rents; however, upon rocelpt from Lender of a notice that an Event of Default exlste under this Dead of Treat, Lander may terminate Grantor's license, and then Lander, as Grantor`s agent, may coliect the Rents. in addition, If the Property Is vaeani, Lender may rent or lease the Property, Lender shall not be €€able for Its failure to rant the Property, to catlact any Rants, or to exardse diligence 1n any matter relating IQ the Rents; Lander shall be accountable only for Rents actually recelved. Leader halther has not assumes any obligation as lessor or landlord with respaq to soy occupant of the Property. Rents so received shall be, eppllad by Lender Crst to Ole remalning unpaid balance of Ufa lndobladnoas, In such ordor or manner as Lander shag elect, and the residue, ii any, shag be paid to the person or persons legally ongtiad to the realdue. Trustee's Powers. Grantor hereby Jointly end severally authorizes and empowers 7nrsloo to son sit or any portion of the Prop" together or In tots of portals, as Truslco may doom expedient, and to execute and dellvar to the purchaser or pwchasera of such Propefty, good and sufgdent deeds of conveyance of fan simple tills, aw of lesser estates, and bbis of tote and asatgnmants, with oovanania of general warranty made on Grantor's behalf. In no event shag Ttutloo be requirad to exlllbil, present or display nt any such sale any of the Property to be sold at such sale. The Trustee making such sale shelf receive the proceeds of the solo and shell apply the some es provided below. Payment of the purchase price to Trustee shall satisfy the liability of the purchaser at any such sate of the Property, end such person than not be bound to took after the appilcation of the proceads. Appoint Rocslvar, Lender shag have the right 10 have a racelvar appolnlod to take possession of ea or any part of the Property, vdih the power to protect and praserve the Property, to Werale the property preceding rofeclosuro or sate, end to collect the Rents from the Property arid apply the proceeds, over and above the cost of the roralvershlp, against Ole Indebtedness. The receiver may servo without bond If permitted by law. Lehdoes right to the appointment of a receiver shag exist whether or not the apparent value of it. Properly exceeds the Indebtedness by a substantial amount. Employment by Lender shall not dlaquality a person from eerHng so a raceNnr, Tenancy at Sufferance, If Crontor remains In possssalon of the Property error the Propolty is sold as provided above or Londef otherwise becomes entitled to possession of the Proper upon defeult•of Grantor, Grantor shall b000ma a tenant of sufferenco of Louder or the purchaser of the Properly and shag, at Londe a option, eltiher (1) pay a reasonablo rental for the use of lho Property, (2) vacate the Property Immediately upon the domend of tender, or (3) if such tenants refuse to surrender possession of the Property upon demand, the purchaser shall be enSilled to InOMO and maintain the statutory action of forcible entry and dalelnor and procure a writ of pomasslon thereunder, and Grantor expressly waives all damages sustolned by reason Uheract, other Remedies, Trustee or Lander shall have any other right or remedy provided In this bond of Trust or the Nate or available, at taw or In equity. Sato of the Properrty1y To the extent permitted by applicable law, Grantor hereby walvat any end all dobta to have the Property marshagad. In exercising he 211s and remodlos, the Trustoo or Lander shall be, itoo to sag all or soy part of the P(opetty together at sopatatoly, In one solo or by separate sales, Loader shall be enllded to bld at any pubtfu safe on all or any portion of the Property. Trustee may convey ell or any part of the Property to the highest bidder for cash w)th a general warranty Waling Grantor, subject to prior Ilene end to other exceptiona to conveyance and warranty, Grantor waives Ed requirements of appratsomani, If any. The efddavit or any person having knowtndgo of the facts to the erfect that proper notice as requfrod by the Taxes Propargy Code was gNon shall be prima facto evidence of tha fact that such nodoa was In fact given. Recitals and statements of fact In any notice or in any conveyance to the purchaser or purchesom of tho Property is any foradosuio solo under thls Deed of Trust shag be prima fade evldsnce of the truth of such facts, and all prerequisites and requiromants nocessary to the valldtiy of any such sale shall be, presumed to have barn performed. Any safe under the powers granted by this Dead Of Trial shag be a porpotual be against Grantor, Grantor's hairs, suoceasars, assigns end legal repreaontativaO. Preceade, Trvstoa shall pay the proconds of any eats of the property (a) first, to the oxponsos of foreclosure, Induding reasonable fee or charges paid to the Truelloo, Induding but not limited to fees for anfordng the lien, posting for sale, aailing, or releasing the Property, b than to Lander the full amount of the Indebtedness, (o) Glen to any amount required by tart to be paid before payment to Grantor, and (d) the balenco, If any, to Grantor, .DEED of TRUST (cvntEnued) Page 5 Attorneys' Fesal Expenses. If lender institute$ any suh or action to anfarca any of the terms of this Deed of Trust, Lendar shall be entitled to r000ver such sum Be the court may adjudge reasonable as Lenders attorneys' fees at trial and upon any appeal, Whather or not any court action 1s involved, and to the extent not prohlbited by law, all reasonable expenses Lender Incurs that in Lender's opinion Oro necessary at any time for the protection of Its Inlereat or the onfarcemoht of Its tight* shah become it part of the Indobtatiri a payable on demand and sholl bear interest at the Note rate from the date of the oxpohditure until repaid. Exp*nsos covered by Vila paragraph include, without ilmltntion, however subject to any limits under appfleabta lour, Landar's reasonable attorneys' fees and Lender's legal expenses, whether or not there is a lawoull, Including Lender's reasonable attorneys' fees and expenses for bantuufrtcy procood€ngs (Including efforts to modify or vacate any aulomauo stay or Injundon), appeals, and tiny anticipated post•ludgment colraatt an services, the cost of searching records, oblaTning title reports (indudtng foreclosure reporle), surveyors' reports, andsppraisat fees, Otto insurance, and fees for the Trustee, to Vie extant permitted by epp[Icable law, flrantor also wflE pay any court Coals, In addition to ail dUher sums provided 6y law, In the event of foreclosure of this Deed of Trust, Lender 4bd be Ono"U*d to recover from Grantor Lender's reasonable aliordaye fees and actual disbursements That Lender nacessaefy Incurs In pursuing such forecosure. POWERS AND OBLIGATIONS OF TRUSTEE. The following provisions relating to the pavers and obligations of Ttusles are part of this Deed of Trust: Powers of Trustee. In addldpn to art powurs of Truslae erising es a matter of law, Trustee shag have the povrer to lake the following acUans with fospact to the Property upon the vrrilten request of Lender and Grantor. (a) join in preparing end hung a map er plat of the Real Property, Including the dedicallon of streets or other rights to the publlo; (b) Join in granling any oassmont or creating tiny restriction on tha Real Property; and (o) join In any subordination or other agreement aftectfng this Dead of Trust or the interest of Lender under this Dead of Trust. Obligations to HotVy. Trustee shall not be obligated to notify any olhoe penholder of the property of the commencamont of a foreclosure procaeding or of the commencemont of any otter action to whlch Lender may wall useff as a remedy, except to the extent required by aWeable iaw or by written Bare ament Trustee. In addition to the rights and romedles eat forth above, vAih roepacl to ell or any part of the Ptopeq, the Tlusiea shall have the right to foreclose bymotice end sole, and Lander shall have the right to foreclose, by judicial foreclosure, In either case In accordance Lath and to the full extent provldod by Oppticable few. Substiluts Trusloo, Lender, of Lender's option, from time to time, and more than onto, may appoint In Writing a successor or substitute trustee, vAth or without Cause, Ircluding the reegnstian, absence, death, Inobltity, refusal or failure to act of the Trusloe. The successor or substitute trustee may be appointed wlOiout ever requlrtng the reslgnaVon of the farmer trustee and without any formality oxcapt for the oxocullon and acknowledgment of the appointment by the bonegdary of Ihfs Deed of Trust. The auccoasor or substitute, trustee shall than succeed to all rights, obligations, and duties of the Trustee. This appointment may be made on Lohd*r'e behalf by the President, any Vice President, Secretary, or Cssh(er of Leader. NOTICES, Any netice rogdrod to be given under this Dead of Trust, lndnding without urnitavon any 110110 of default and any notice of sale shall be given In wrfling, and shall be effective when actually delivered, whoa actually racotvod by telefaostW(a, (unto" alharvrlse required by taw), whoa deposited with a nationally recognized overnight courier, or, If monad, vdlon deposited In the United -States mall, Do first class, ..ruffed or registered mall postage prepaid, directed to Via Oddrasaes shown near the beginning of this Deed of Trust, Any party may change lie address for notices under this Dead of Trust by giving formal wdlten noUco to Ole other parties, specifying that the purpose of the noticis to chango the party's address, For notice e purposes, Grantor agrees to keop Lander Informed al all limas of Grantor s Currant address, Unless otherwise provided or required by low, If there is more than ono Grantor, any notice given by Londor to any Grantor is doomed to be notice gluon to all Grantors. APPRAISAL COVENANT, Lender shall have the right to appraise any collateral eecuring this loan by an appraiser acceptable to Londor, at Horravrees haro exists apcollatereal deficiency, determined In Lenderrs Irom the date of the s solo discret recent tion, orion rilo with If a dofautt wdsnaar. ho eunderrLendit during the er, shall haveterm of li a rightiis to have a old collateral appraised by an appraiser aceepI blo to Londor, at Rorravees expense, fopardless of whether 9 years has elapsed since the last npprelsal. Falhrro to amply vAlh this pravls on shelf constitute a default hereunder and shag enttUo Lander to exorcise all remodtoe provided horeunder, MISCELLANEOUS PROVISIONS, The foil-Wng miscellaneous provisions are a part of this Deed of Trust: Amendments, This Dead of Trust, together wfUr any Relalod Documents, constitutes The entire underalandbhg end agreement of the parties as to the matters set folds In this (load of Ttusl, No alteration of or amendment to this Deed of Trust shall be affective unless gtvon in writing end slgnad by Via party or parties sought to be charged or bound by the alteration or amendment, Annual Reports, if the Properly is used for purposes other then Grantor's residence, Grantor sha{t fumish to Londor, upon request, e cnrOtigd alolomeni of net operating Income received from the Property during Grantor's previous fiscal year In such form and detall Its Lender shall require. 'Net operating Income' shall moan all cash reeotpts from the Property less ell cash oxpandburea made In connection vAth the operation of the Property. Caption Headings. Caption headings In this Deed of Trust are for convonfenca purpoiw only and are not to be used to Intarprot or dogna the pro*torrs of this Deed of Trust. Merger. There shag be no merger of the interest or estate created by this Dead of Trust with any other tntorosl or asteta in the Property at any Uma hold by or for the benefit of Lender In any capacity, vAthout the )?Mtteh Whsant of Lender, Governing Law. This Dead of Trust will he governed by federal law applicable to Lender arid, to the *xtont not pfoempted by federal law, the laws of the Slab of Texas without regard to lie conflicts of law provisions. This Deed of Trust has Iteen aeceptad by Lender In the Stale of Texas. Choice of Vanua. if there Is a lawsuit, and It the transaction avldancad by this Dead of Trust occurred In Dallas County, Grantor agtoas upon Londoes request to eubmh to the judadlcUon of lho courta of Doges County, state of Texas, Ho W*Isar by Lender, Lendarshali net 6e deemed to have 14aiv6 d anyy rights undor Otis Dood of Trust unless such waiver is given In wAUng and algnad by Lander, Na delay ar amisslon cut the pall of Lon dor In exorcising any right shall operate as a waver of such right or any other right. AwaNer by Lender of a provision or this bead of Trust shag not pre]udlce or consUtuta a waiver of Lendeys right alherwSse to demand sIdel c 0-a- vAlh that prevtstan Or any other pravlslon of lhls Deed o1 Trusl. No prior walver by Lender, nor any owrsa of dealing between Lander and Grantor, elhan id UW a wslvar of any of Lender s right. or of any of GrarttoeA obligations as to any future Iraasacuon.. Whanevar the cons.. of Lando, Es requlwd undor this Daad of Trust, tiro grendng of such consent by Lander in any tnstance shag not . solute oonllnulna ochsenl to subsartuont instances whore such carseat is raqulred end In all cases such consent may be granted ar withheld in the soia dI...iton of Leader, Severablllty, If a court of compolant ]urisdlation Inds any provision of Oils Dead of Trust to be Illegal, invalid, or unenforceable ns to any dreurnslOnco, that finding sban not mako rho offondtng pravtslon illegal, Invalid, or unanloreoable Otto any other dicumslanco, If feasiblo, the offending provision shag be considered modified so that It becomes la al, vand and an(orwabia. If the offending provision cannot bit so modified, it shag be, rQA51 ted deleted from this taxed of Trust, Unless othoryAge required by taw, the Illegality, Invalidity, or unonforceablilty of any provision of this Used of Treat that[ not affect the legally, validity or anforoeabllity, of any other provision of this need of Trust, Suttossois and Assigns. Subjocl to any tfmltallona stated In this Deed of Trust on transfer of Grantoes Interest, this Dead of Trust shall be binding upon and Inure to the bane fit of the paruos, their evccessers and assigns. if ownemblp of the Property becomos vested in a parson other than Grantor, Lander, without notice to Grantor, may deal with Grantors successors vAth reforence to this Deed of Trust and the Indobledness by way of forbearance or extension without releasing flrantor from the oWastigna of this Dead of Trust or llability under the Inds blodnose. Time Is of the Essence, Time Is or the ossonce in the performance of this Deed of Trust, f y Waive Jury, All parties to this Dead of Trust hereby waive the light to any jury trial in any aglfon, procaading, or eouhlorataim brought by 1 any party against any othar party, DEFINITIONS. The following copkeilzed words and terms shag have the following meanings when used in lhle.Dood of Trust, Urfess specificallyslelad to the contrary, ell reforoncos to dotter amounts shall moan amounts to tnvrhrl money of the United States of Amadca, Words and terms used In the singular than Include the plural, and the plural shall include the singutsr, as the %Alext may require, words and terms not otherwlse defined in Ohio Dead of Trust shag have the meanings etWbutod tosuth terms in the Uniform Commercial Code: DEED OF TRUST (Contlnued) Paso e 8enaRclary, The word 'eonafldary means Capital One, National Assactadon, and Its successors and assigns. Borrower, The word `Borrower' moons Pr Square Investments, LLC and Includes sit w-slgnero end co-makero afgntng tine dole and tilt their successore and assigns. Reed of Tntei. The words 'Deed of Tres! moan thlo Dead of T 61 among Grantor, Loader, and Ttustea, end Includes wlthoul llmitation all assignment end security Interest Ixovlsions relating to the Person I Propody and Rents. Default, The Word 'Default" moans the Default set roan In this t aed of Trial In the section tided'Defeult'. Envlranmentol Laws, The words 'Envlronmenlet Laws" mean iny and all atato, federal and tonal statutes; regulations and ordinances relagng to the prolectton of human health or titre envtronmont, nduding without Ilmilagon the Comprehensive Environmental Response, Compensation, and Liability Act of 1080, as amended, 42 U.S C. Section 9801, at seq, CGI!RCLA'), the Suporfund Amancimonts end Reauthorization Act of 49884 Pub. L. No. 0"09 (3ARA ), the lazardous Materials Trumporbtion Act, 49 U.S.C. Section 1 aqj, et seq„ the Resource Consorvatfon and Recovery Act, 42 U.S.C. SoctOn 69D1, at sort„ or other applfcab€o state or federal fates, rules, or (ogulallons adopted pursuant theroto, Event of DOW% The words 'Event of Default' mean any of th evahle of default sot forth In this Deed of Trust In Oho events of default eecdoll of We Dead of Trust, Grantor. The word 'Grantor' means PE Square Investments, 1-1,, ouarahtor, The word 'Guarantor' means any guarantor, Surety, r accommodation party of any or all of the Indebtedness. Guaranty, The word "Guomnty' means the guaranty from Guarantor to Lander, inducting wllhoul llmllation a guaranty, of all or part of the Nola. Hazardous Subsiances. The words "Hazardous substances' a eon materlalo Chet, because of their quonllty, concentration or physical, chemical or Infectious charactedsUcs, may cause or pose a iosont or potontial hazard to human health or the environment vehen Improperly used, treated, stored, disposed o!, gahoraled, ma ufacturad, transported or othenAaD handled. The words 'Hazardous Substances` are used In their very broadest come end Include rlthout IlmrioVDn any and ell hazardove or toxio substances, material% or waste as deftnad by or listed under the Envlro rental Laws. ThC Orm'Hoze(dous Substances" also Includes, without limitation, petroleum and petroleum by-products ar any fraction thereof and asbestos, Improvements. Thu word 'improve manto" moons all eidsting on j (ulure improvomants, butidings, a6volura13, mobile homes affixed on the Root Property, facilities, addrtfonS, repracamonts and other consle lotion on the Real Property, Indsblednrss, The word *Indebtedness` means oil principal, Int rest, and other amounts, costs end expenses payable. under the Note or NNW Documents, together wlth elf renawela of, Wdans€ens f, mod111cad0heggof, consolidaguns of and aubsututlons for the Note or orLontlto "force Granlated Documents and tor's obltggtatlona wideed rtthlle advanced auddOf 1 vets togetherwIlhalnietestro Obligations rch amountexpenses9 povided fn "IF Nod Nodtof Trust. SparJfically, without ltnlllalton, Indebtedness Includes I amounle that may be fnellrectly secured by the Crass-CollalerORWIDn provision of ibis Good of Trust. Lander, The word 'Lender' moons Capital One, Nallonal Assoole Qon, €10 Successors end sastgns. Note. The wDrd'Note' moons the promis6orynote dated Apdt 5, 2007, 111 the ori0€BSI prinolpal amount of $234,000.00 from Grantor to Lender, together with all renewals of, extensions of, modlgoolions of, ragnantings of, consoQdetiorrs of, end substitutions for the ptomisswy note or agreement. The maturity data of the NoIc Is April 26, 2008, Personal Property. The words 'Personal Properly' mean all eq 1pment, fixtures, and other articles of personal propparty nave or hersaRer awned by drenior, and now or hereafter milachoc) or offixed to s Reel Property; together with aft occesalons, pane, and additions to, all replacements of, end all substitutions (or, any or such pro�o end together With oil proceeds Qnduding without Ilmllatton all rnsuraiiw proceeds and refunds of premiums) front any cols or other dlspos tion of the Property. Property. The word "Property' means collectively the Real Prope dy and the Personal Property. Real Property. The worda'ties] Property' mean the real props , Interests end dghta, os further described In this Dead of Treat. Related Documents, Thu words 'Related Documents" mean f 11 prornissory notes, credit agreements, loan ogrearnents, enHronmantai agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and 0 other Instruments, agreements and decumonts, whether now or hereafter existing, c KoWed In connooUan with rho indebtedness. Rwils. The word 'Rents" means ell peasant and future rants, r cameo, income, Issues, royalties, profits, and other benefits dadvad from the Properly, Trustee. The word 'Trustee" means Sally wink, whose addreu IS 313 Carondalet Street, New Orleans, to 70130 and shy substitute or es succsor trustees. GRANTOR ACKNOWL00E8 HAYING RLAR ALL THE PROVISIONS O� THIS DEED DF TRUST, AND GRANTOR AGREES TO IT$ TERMS, ORANTORh PP.. SQU W128TWNTS, LLC Rltkdo Davr , M .nagofof FE `Sclilare, Investrrlonte, LLD STATE OF ) )S8 COUNTY OF 1 11116 feiaWment was acknaviedged before me on David, Manager of P8 Square Invsslments, LLC a Louislano Cerpotatio 1, On Maria Julia /David, Martpger o E agpare Invaslmohts, sLJ�C WENT by Ricardo David, Monagarl Maria Jutia Notary PubilD, $fete ofToxse i i UNITED TITLE OF TE As _ I II�I�N lifll Milli llllll �lillll �lll l ll l 3 PUS ZOV@29339 WARRANTY DEED WITH VENDOR'S LIE, N NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF TH FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FORRECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRI.VEWS LICENSE NUMBER. Date: APRIL , 2007 Grantor: GREGORY A, MAHIN and wife JULIE A. MAHIN Grantor's Mailing Address: 2206 CR 796 Alvin, Texas 77511 Grantee: CRYSTAL. CREEK DEVELOPERS, LLC, a� limited liability company Grantee's Mailing Address: 307-C South Friendswood Drive Friendswood, Texas 77546 Consideration: Cash and a note of even date executed by Grantee and payable to the order of Grantor in the principal amount of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00). The note is secured by a first and superior vendor's lien and superior title retained in this deed and by a first -lien deed of trust of even date fiom Grantee to GREGORY G. BESS, trustee. Property (including Any improvements): Lot Five (5), of Southern Breeze, a subdivision in Galveston County, Texas, according to the map or plat thereof, recorded in Volume 18, Page 353, of the Map Records of Galveston County, Texas. Reservations from Conveyance: NONE. Exceptions to Conveyance and Warranty: Liens described as part of the Consideration and any other liens described in this deed as ( ) being either assumed by Grantee or subject to which title is taken by Grantee; validly existing restrictive covenants common to the platted subdivision in which the Property is located; standby fees, taxes, and assessments by any taxing authority for the year 2007 and subsequent years, and subsequent taxes and assessments by any taxing authority for prior years due to change in land usage or ownership; validly existing utility easements created by the dedication deed or plat of the subdivision in which the Property is located; validly existing reservations or exceptions approved in writing by Grantee and, if applicable, described in Schedule E of the Owner Policy for Title Insurance issued to Grantee as part of this transaction; any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements; homestead or community property or survivorship lights, if any, of any spouse of Grantee; and any validly existing titles or rights asserted by anyone, including but not limited to persons, the public, corporations, governments, or other entities, to (a) tidelands or lands comprising the shores or beds of navigable or perennial rivers and streams, lakes, bays, gulfs, or oceans, (b) lands beyond the line of the harbor or bulkhead lines as established or changed by any government, (c) filled -in lands or artificial islands, (d) statutory water rights, including riparian rights, or (e) the area extending from the line of mean low tide to the line of vegetation or the right of access to that area or easement along and across that area. Grantor, for the Consideration and subject to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty, grants, sells, and conveys to Grantee the Property, together with all and singular the rights and appurtenances thereto in any way belonging, to have and to hold it to Grantee and Grantee's heirs, successors, and assigns forever. Grantor binds Grantor and ( Grantor's heirs and successors to warrant and forever defend all and singular the Property to Grantee and Grantee's heirs, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty. The vendor's lien against and superior title to the Property are retained until each note described is fully paid according to its terms, at which time this deed will become absolute. The contract between Grantor, as seller, and Grantee, as buyer, may contain limitations as to warrantics; to the extent said contract provides for such limitations to survive this conveyance they shall be deemed incorporated herein by refercnce. The warranty of title contained in this deed is hereby expressly excluded from the limitations referenced in this paragraph. When the context requires, singular nouns and pronouns include the plural. aAffG64�MA IN z&dInA JO r� 2 STATE OF TEXAS COUNTY OF-HARRIS This instrument was acknowledged before me on the � day of April, 2007, by GREGORY A. MAIIIN. Notary Publi to of aTexa4s- Notary's Printed Name: My Commission Expires: {;{ ar y_; .'•° •a'-_;• h1 r..� 4 }} 5 S(l(t/��JjJyl7ttt'} ' � � � f< .s � 1i '���''�lvtf i :�� �•'r��it.tw I� J lf� STATE OF TEXAS COUNTY OF HARRIS • _ ...........' ( J This instrument was acknowledged before me on the day of April, 2007, by JULIE A. MAHIM 4 I'ub tare of TIV- Notary Notary's Pr nted Name: My Commission Expires: FILED AND RECORDED y{Ply oA AOFFICIAL PU13LIC RECORDS Afi4ar �corc�i�� -Flue 01 Suite 400 � 2007029339 5177 RiChmotld A"" May May 07, 2007 01:07:40 PM ,�[3llJ�f7ii FEE: $24.00 Mary Ann Daigle, County Clerk j Galveston County, TEXAS 7 S� 3 egg g 3 M 3 8 o p4 lilt l� lilt� .. _... �JAa{ ad�dd� a a 12 E�igii� cgs n $$lSg�@ z1I gp ply Nil © •`'se ax, � �: �.� � �o��it @ ii$Y $ is f I � �i 4 0 0 � b ' pj b e�3 Q4'OQZ 3 ,0Q,OD.�3' vdS�LhWhYd 91 � I i � i r � was i i bl f IC. 3 II � y i J pillJill! Jill H. 1 : le rs D lit ai fill ♦ \ \ ri \ 1 � '♦ 9 � �8r \ lit g w ei Q Q.1 1110m z$`g R H �oU 0 n ! o00 s u 12 Dec 2007 S:27nm CRYSTAL_ CREEK DEVELOPERS 2014822105 p.2 ofte Form 206 etary of State Box 13697 AListin, TX 78711-3697 FAX 5121463-5709 Filing Fee; $2a0 Articles of Organization Pursuant to Article 1528n, Texas Limited Liability Company Act Filed In the Office of the Secretary of state of Texas Filing M 800469849 03/22/2005 Document l#: 86878410002 huge l:3enerated Electronically for Wets Filing nerve 4r lne amlrao Uaouny rwixijuny to qo oar ,wa, Pal—, MalCreek TDevelopers, LLC:..—�_�._.� .... _—.---.---__�..,,.—•----�..................._...-.—...---.__ _ �� nams of the entity must conlainntt 9 Vffirds If m'lad Liability Oompany' or 'itmited Company," or an aaoepte.l abbreviation of auoh ierrris.7he ie rnust not be cite same ee, deceptively similar to or similar to that of an oWing corporate, Whed liability company, or Whited partnership s on Tile WO the secretary of state, A prellm(nary cheok for the "name avellabillty".la reoommanded. 1 --- C • — k, The Initial registered agent Is an organization {cannot be company named above) by the name Of. OR Thu Inttis�l re�tsiered aaertt is an individual resident of the state wtlos'e name Is sat firth below: ward Page Oliver_ FThe business address of the regisieredwagent and the rogislerr i Clear Lake Road Clear Lake Shores TX 77565 . The limited liability company Is to be managed by managers. OR B.,Tho limited ilabllhyr company wllf not have rn_anagers _Management of the company is reserved'to the members. i Tha names and addresses or (he Initial members ate se! forth below: Ovaneging Member 1: (Business Name) ereat Interests. LLC reel Address: J15 Clear lake Road Clear Lake Shores 'rX, USA 77666 �--- Managing Member 2., (Business Name) - ;ear Creek Ranch, Inc. 17trial Address: - 716 Clear Lake Road Clear Lake Shores TX, USA 77606 rnTT ___ _— _..--•_,_-- he pefiad-of-duratiart,Es peTetua- ...._. _ he purpose for which the comy.ls organized Is for the lransaction-of any and ail lawful business farwhlch Ilmlied pari labillly companies may be organized. 19 ---- C 12 Deo 2007 J. 27AM CRYSTHL CREEK DEVELOPERS 2014822105 P. S The attsohed addendum, If any, la lncorporated herein by rorerence.) he name and address of the organizer Is sot fortkbelow, Edward Page 01[ver 715 Clear Lake Road, Clear Lake Shores, Texas 77565 -- - A. Thla cia umant wit! bo=rns si%Llive whan, the document Is filed by the seoretar1l of scale. OR S. Thle document wltl laoccorno eliecllve at a cater datot which Is not.more than ninety (90) dayo rrom the date �rlta flI[ng by 1110 saCretery of ate. Tt!e delayed affwAlve date Is: •. .. Mune Reservation Document Number � . 0 undersi9ne.. or anizer e........................ ............... ...................... .................... ..._..... T ................ a g s these articlBa of Organlzetlen aublact to the penalties Imposed by law for the stbmisslon of a false or traudulenc ocumeM. Edward Page Oliver RIgnature of Organizer PILING OFFICE DOPY 11—i 9;06 PM Crystal Creek Developers, LLC 11/20107 Balance Sheet Accrual Basis As of December 31, 2006 1 ASSETS Current Assets Check] ngIS aving a CCD Compass Account CCD Moody Account Shaver Townhomes Assoc Total CheckinglSavings Accounts Receivable 110-000 -Accounts Receivable 110.300 - Beamer Villas - Loan 110-600 - Account Receivable - Ed Bradley 110-610 - Galloway School -Ed Bradley Total 110-600 - Account Receivable - Ed Bradley Total 110-000 � Accounts Receivable Total Accounts Receivable Other Current Assets 120.000 - Inventory 120-100 • Inventory - Frlendswood Cove 120-200 - Inventory - Brown 120-300 • Inventory • Shaver Landing Total 120-000 - Inventory Total Other Current Assets Total Cureenl Assets Fixed Assets 158-000 - Land 156.100 - Land - Friendswood Cove 160-600 , Land - Black Hawk Tract Total 166-000 - Land Total Fixed Assets Other Assets 160-000 - interest In Shaver Landing Total Other Assets TOTAL ASSETS LIABILITIES S EQUITY Liabilities Current Liabilities Accounts Payable 20000 - Accounts Payable Total Accounts Payable Credit cards 600-300 - CREDIT CARD ACCOUNTS 600-310 - Capital One Visa Credit Card 600.320 - Chase Maeter Credit Card 600-330 - American Express - CCD 600.340 - Amerloan Express - KPID Group Total 500-300 - CREDIT CARD ACCOUNTS Total Credit Cards Dec 31, 06 7,441.70 16,427.85 1,100.00 24,969.65 6A87.70 719.01 719,01 6,206.71 6,206.71 612,670.93 8,978.64 283,382.34 905,031.01 004,031.91 038,208.17 316, 000,00 152,460.00 467,460.00 467,460.00 415,673,83 416,673.83 1,819,342.00 10,885.86 �. 10ASS.88 1,649.02 23,655,97 6,190.00 172.02 JW- 31,667,91 31,567.91 Page 1 9,06 PM 11120/07 Accrual Basis Crystal Creek Developers, LLC Balance Sheet As of December 31, 2006 Other Current Liabilities 20200 - Working Capital - Credit Lines 20210 • MBNAISOA Credit Line 20220 - Compass Credit Line Totes 20200 - Working Capital - Credit Lines 24000 • Payroll Liabilities 600.000 - Loan Accounts 600-200 • Proaperlty Bank Loan - 3104 Total 600.000 - Loan Accounts Total Other Current LiablRies Total Current Liabilities Total Liabilities Equity 30400 - Everest Interests LLC - Equity 30600 • Clear Creak Ranch - Equity Net Income Total Equity TOTAL LIABILITIES R EQUITY Dec 31, 06 11,308.02 16,243.74 27,641.76 278M 226,000.00 .. 226,000.00 252,920,32 295.374,11 295,374.11 652,660.01 923,636,87 47,470.41 1,623,96M0 1,819,342.00 Page 2 3 DO NOT SEND 8, EMPLOYER NAA1E AND ADDRESS (SEE. ITEM 241'OR CHANGE$ TO NAME, ADDRESS, ETC.) THIS COPY Crystal Creek 'Developers, lla TO THE STATE Crystal Creek Developers, LLC 307--C S. Pxiendswood Drive 9.TPIEPHONENUMMR Friendswood, TX 77546 ALIGNMENT 9A,0UAt;' MENDING 09/30/2007 19 Monnkh Rod Month 3rd Month 10. Total (Gross) Wages Paid During this 14. Taxable Wages paid this quarter to each employee up to $ 9000 , the annual maximum amt. If none enter"Il 15. Tax Due (Multiply Taxable Wages, Item #14, by your Tax Rate of 2.700 Note: For Federal Form 940 purposes, your Tax Rate Includes: • A UI Obligation Assessment rate of: • An Employment and Training Assessment Rate of: 1 2 3 4 s 6. Interest, If Tax Is Past Due 17, Penalty, If Report Is Past Duo 281 482-2100 You must VII-8 fits return oven Urpt gat you payroll sti w v insltem 13 antl sipm the dadaratton (Item 25) on this (orm. FILE AND PAY ONLINE www,texa sworkforce.org 9BIFREPOORT13NO POSU EDGY 10/31/2007 t1,5tHOVltti}tECOUNTYGOOE l2.lFyyo�ltlhaveemployeasIn (ses t on Ule C 4 form) fn more a one County rn H1rkh yoU had Uw greatest 11j 7 S, haw many are outside number of employees, openly shown ut neon 1.17 DOLLARS CEMS 1,084.47 18. Balance Due From Prior Periods Subtract Credit Or Add Debit 19. Total Due -- Make Remittance Payable To TWO Include payment voucher with remittance, 2 9.28 20. SCCIAL aECVRITY ] IST 2ND 21. EMPLOYFE NAME NUMBER 1 I INIT IN€T LAST NAME E 22• TOTAL WAGE$ P/UD t THiS QUARTER 23. The sum of all page totals must equal item 13 ........... FORM C•8 03106) 24, Use Envelope STATUS CHANGE FORM to make address and ownership changes 14a.�Mark box with an W i1 reporting wages to enolh�r Stets dydng Uro year far emptaye.as I�ted , Item 2. ONLY rrfvc Estimated DOLLARS GF" INrr7ALs ANWNT RECEIVED II{ 1 25. 1 DECLARE that tho information liefein is true and correct to the best of my knowfedpe and belief, SIGNATURE THE DATE PRE - PARS PItOON'EENNO.S _ 2 81 - 4 8 2 - 210 0 For assistance In completing form call, TxWAD102 01l30107 If you are unable to Illo and pay online, malt report and remittance to, CASHIER TEXAS WORKFORC1; COMMISSION P.O. BOX 149037 AUSTIN, TEXAS 78714.9037 DO NOT STAPLE REPORT) tW(tle Amunt No, On Check) TEXAS WORKFORCE. COMMISSION 22222 AUSTIN, TEXAS 78714-9037 EMPLOYER'S gUARTI~Fil»Y REPORT "_Ar.12�0'70� CONTINtIATION SHEET t. ACCOUNT NUMER COUNTY CCOE 3. TAX Mr -A TAX RATE. NAICS CORE FC• gI<ftA1. I.D. NO. 1. QT1t, YR. 11-030514-1 167 I 2.70°! 531210 20--2839632 3--07 8. EMPLOYER NAME Crystal Creek Developers, llc 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sb 16 17 1E 1s 2C ( 21 I 2e Costal Creek Developers, LLC A. PAGE ND. NUMBER 1 OF 1 ALIGNMENT 1ST 2ND 21. EMPLOYEE NAME 22. TOTAL WAGES PAID M SOCIAL SECURITY NUMBER INIT WIT LAST NAME THIS QUARTER pp NOT FILE ER WITH NOTHE STATE QF'TEXAS 650-95-8635 O A Caballero 850,00 FILE COPY ONLY 458-31-9666 13 O Co ins 5, 667.20 197-72-0951 T S Do 7,230.67 264-42-1021 .7 1, Miller 8,742.62 636-46-8800 D Movibray 5,920.00 510-43-9023 1a portil.la 5 620.00 577-82.8960 S P Thint 19 502.40 265-21-7376 W L White 19,502.40 L23 NI FORC-0(03106) 23. PAGE TOTAL 73,035.291 TXWAU202 03roalo AGREEMENT OF LIMITED PARTNERSHIP 518 VENTURE, LP . r . TABLE OF CONTENTS 1. DEFINITIONS.........„........................................ .......... .............................................H........ 11............1 2. GENERAL.............................................................................................................................................2 3. COMMENCEMENT DATE; TERM OF PARTNERSHIP..............................................................2 4. PURPOSES ... ............................... ..H,... ......,,.,,..... ,.... ....... ,.,..,................ ...................................... ..,,.,..3 5. GENERAL PARTNER AND PLACE OF BUSINESS......................................................................3 6. CAPITAL CONTRIBUTIONS............................................................................................................3 7. CAPITAL ACCOUNTS.......................................................................................................................4 8. CONTROL AND MANAGEMENT....................................................................................................5 94 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS...........................................................7 10, PERCENTAGE INTERESTS; ALLOCATIONS AND DISTRIBUTIONS................................7 11. LOANS TO PARTNERSHIP..........................................................................................................8 11 TRANSFERS OF PARTNERSHIP INTERESTS.........................................................................8 13. WINDING UP AND TERMINATION...........................................................................................9 14, ACCOUNTING .............. ....................... ........... .............. .......... ........ ....... .......... ........... I.,.....,, .... .... 10 15, REPORTS AND STATEMENTS ............................................... ....................................... ............ ll 16. BAND ACCOUNTS................................................................................................................... ...11 17. NOTICES........................................................................................................................................11 18. POWER OF ATTORNEY.......................................................................................................I.....11 19. AMENDMENT...............................................................................................................................12 20. RELIANCE ON AUTHORITY .................... .............. ........ ......... ............ .... .......... I ...... ,.... I ........... 12 21, BUY -SELL AGREEMENT...........................................................................................................12 22. MISCELLANEOUS ......................... ................................ .......... ............... ..... .... I... I ...... .....,........... 14 Agreement of Limited Parhiersbip 518 Venture, LP -1- THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON REGISTRATION OR UPON DELIVERY TO THE PARTNERSHIP OF AN OPINION OF COUNSEL SATISFACTORY TO THE GENERAL PARTNER THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE GENERAL PARTNER OF THE PARTNERSHIP OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE GENERAL PARTNER TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER. THE SALE, PLEDGE OR OTHER TRANSFER OF THESE SECURITIES IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN ARTICLE XII OF THIS AGREEMENT. AGREEMENT OF LIMITED PARTNERSHIP OF 518 VENTURE, LP IBIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into on August 13, 2007, It is between SRB 518 Venture GP, LLC, a Texas limited liability company, referred to in this agreement as the "General Patinet", and Everest Interests, LLC, Clear Creelr Ranch, Iite., and PE Square Investments, LLC as the initial Limited Partners, together with any additional or substituted limited partners admitted to the Partnership in accordance with the terms of this agreement, all of whom are referred to in this agreement as "Limited Partners," 1. DEFINITIONS The following terms have the following mcanings when used in this agreement: 1.1 "Affiliate" means any person or entity that controls or is controlled by the General Partner, or is controlled by the some person or entity that controls the General Partner. In this definition, the term "control" includes the ownership of more than 50 percent of the beneficial interest in the person or entity. 1,2 "Agreement" or "Partnership Agreement" means this agreement of limited partnership, including any amendments that may be made. L3 "Bankruptcy" means, as to any Partner, the Partner's taking, or acquiescing ill the taking, of any action seeking relief under, or advantage of, any applicable debtor relief, liquidation, receivership, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar law affecting the rights or remedies of creditors generally, as in effect from time to tinge, For the purpose of this definition, the term "acquiescing" shall inolude, without limitation, the failure to file, within 10 days after its entry, a petition, answer, or motion to vacate or to discharge any order, judgment, or decree providing for any relief under any such law, 1.4 "Capital Contribution(s)" means the contribution(s) made to the capital of the Partnership from time to time by a Partner in cash, property or services rendered, Agreement of Limited Partnership -- 518 Venture, LP -1- 1,5 "Certificate" means the certificate of formation of limited partnership to be filed by the General Partner with the Secretary of State of Texas in accordance with this agreement, 1,6 "Code" means the Internal Revenue Code of 1986, as amended and in effect from time to time. 1.7 "Percentage Interest" means the interest of a Partner in the capital and profits and losses of the partnership as initially set forth in Section 10.2 of this agreement. 1.8 "Person" means an individual or a corporation, partnership, trust, unincorporated organization, association, or other entity, "His" or "he" shall also mean and refer, as appropriate, to the feminine and neuter pronouns. 1.9 "Required Interest" means one or more of the Limited Partners having among their more than fifty-one percent (51%) of the Percentage Interest of all Limited Partners in their capacity as such. 1.10 "TLPL" means the Texas Limited Partnership Law, part of the Texas Business Organizations Code. 1.11 "Transfer" means the mortgage, pledge, hypothecation, transfer, sale, assignment, or other disposition of any pant or all of an interest in the Partnership by any Partner, whether voluntarily, by operation of law or otherwise. 2. GENERAL Formation 2.01. By this agreement, the General Partner and the Limited Pattners form and establish the Partnership pursuant to the TLPL, Prior to conducting any business in any jurisdiction, the General Partner shall promptly file the Certificate as required by the TLPL and comply with all other legal requirements for the formation and operation of the Partnership, Except as expressly provided in this agreement, the TLPL shall govern the rights And liabilities of the Partners, Naine 2,02, The name of the Partnership shall be 518 VENTURE, LP The General Partner may change the name of the Partnership or adopt such trade or fictitious names as it may determine appropriate. Investment 2,03. Each of the Limited Partners represents Partnership for investment for his or her own distribution of that interest, that he or she is acquiring an interest in the account, and not with a view to any sale or Merger or Consolidation 2.04. The Partnership may merge or consolidate with or into another limited partnership or other business entity, or enter into an agreement to do so, only with the consent of the General Partner and a Required Interest, 3. COMM] CNCEMENT DATE; TERM OF PARTNERSHIP, The Partnership shall commence and be effective on the date the Certificate is filed with the Secretary of State of the State of Texas and shall continue until its business and affairs are wound tip as provided in Section 13.01. Agreement of Limited Partnership -- 518 Venture, LP .2- ' J13MW The general purposes of the Partnership are: to enter into other partnership agreements ill the capacity of a general partner or a limited partner, to become a member of a joint venture, or to participate in some other form of syndieation for investment; to buy, sell, lease, and deal in services, personal property, and real property; and to have and exercise all the powers to engage in any lawful business related or incidental to any of these purposes. In particular, but without limitation, the purposes of the Partnership are as follows: Real Estate 4.01 To engage generally in the development of certain real property and projects described in Exhibit "A" (the "Property"), and further; to improve the Property; to construct, alter, or repair buildings or structures on the Property; to invest in the Property; and to sell, exchange, lease, mortgage, and make contracts concerning the Property. Consent of Partners 4,02 Except as specified in Paragraph 4,01, or elsewhere in this Agreement, the Partnership shall not engage in any business without the prior written consent of all the Partners. 5. GENERAL PARTNER AND PLACE OF BUSINESS The General Partner of the Partnership is SRB 518 Venture GP, LLC, with offices at 307-C S. Friondswood D►ive, Friendswood, Texas 77546. The address of the General Partner is the principal place of business of the Partnership. The General Partner may maintain other offices for the Partnership as it may determine to be necessary or advisable from time to time, Any requests for information concerning the Partnership shall be directed to the General Partner at the principal place of business of the Partnership. SRB 51.8 Venture GP, LLC shall serve as the registered agent of the Partnership. The address of the registered agent of the Partnership shall be 307-C S. Frieirdswood Drive, Friendswood, Texas 77546, The address and the name of the registered agent of the Partnership may be changed as the General Partner may designate by written notice to the Limited Partners and by filing an amended Certificate with the Secretary of State. 6. CAPITAL CONTRIBUTIONS GeneralPartner's Contribution 6.01, At the time of execution of this Agreement, the General Partner shall contribute One thousand five hundred and 001100 dollars ($1,500) to the capital of the Partnership. Limited Partner's Contributions 6,02, The initial Limited Partners shall initially contribute the amount of capital to the Partnership as set forth in Exhibit "B" attached hereto. In exchange for such contributions, the initial Limited Partners will have the Percentage Interests in the Partnership as set forth opposite their names in Exhibit "B". Limited Liability for Limited Partners Agreement of Limited Partnership — 518 Venture, LP -3- 6.03. The liability of the Limited Partners to the Partnership is limited to the amount of their respective capital contributions, Accordingly, the contributions called for in paragraph 6.02 are the only property the Limited Partners are required to furnish to the Partnership, whether by way of contribution, loan, services, or otherwise, However, the Limited Partners are entitled to a return of their respective capital contribution(s) only as provided in this partnership agreement. Voluntary Contributions 6.04. At any time, the Genera[ Partner may determine that additional contributions of cash or property to the Partnership are desirable. Within 10 days following the receipt of notice from the General Partner, each Limited Partner may contribute cash or property to the Partnership as a "Voluntary Capital Contribution" on the terms and subject to the conditions set forth in the notice from the General Partner. All such additional voluntary capital contributions shall be requested in proportion to the then percentage interests of tine Partners in the Partnership. Readjustment ofPercentage Interests 6.05, if any Partner elects to participate in a voluntary capital contribution as described in paragraph 6.04 in an amount smaller than that Partner's current, percentage interest, or elects not to participate at al[, then the percentage interests of the Partners shall be readjusted based on the newly adjusted capital account balance of each Partner. Nothing in this agreement shall obligate any Partner to make any additional contributions to the Partnership. 7. CAPITAL ACCOUNTS Establishment of Capital Accounts 7.01, Separate capital accounts shall be established and maintained for each Partner in accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations, as amended from tune to tile. Credits and Debits 7,02. All Capital Contributions of a Partner, its allocable share of Partnership income and loss, and cash or property distribrftions made to such Partner shall be credited or charged to such Partner's individual capital account as the case may be. To the extent an allocation or adjustment is not specifically described by this provision of the agreement, that item shall be reflected in the Partners' capital accounts in accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations, as amended from time to time. The capital accounts shall not bear interest. Accounting Yor• Partner's Loans 7,03, Loans made by a Partner to the Partnership shall not be considered capital contributions. Return of Capital 7.04. No Partner has the right to demand the return of its capital contribution other than in cash and except as provided in this agreement. Liquidation 7.05, When the Partnership is liquidated, each Partner with a deficit in his ar her capital account (whether by virtue of failure to make an initial contribution, provide promised senvlces, loans, d€stribution, or any other reason) wilt be obligated to contribute to the capital of the Partnership Agreement of Limited Partnership — 518 Venture, LP -4- an amount of cash equal to the deficit in the capital account balance. The cash must be paid within 90 days after the date of the liquidation, and the amounts so contributed may be paid to the creditors of the Partnership or distributed to the other Partners in the ratio of the then positive balances in their respective capital accounts. Partition 7.06. All interests in the property owned by the Partnership shall be deemed owned by the Partnership as an entity. No Partner, individually, shall have any ownership of such property or interest except as a Partner in the Partnership. Each of the Partners irrevocably waives, during the tern of the Partnership and daring any period of its liquidations following any winding tip, any right that it may havo to maintain any action for partition with respect to any of the assets of the Partnership. 8. CONTROL AND MANAGEMENT Role of General Partner 8.01. (a) The General Partner has full, exclusive, and complete discretion in the management and control of the Partnership for any of the purposes set forth hi Article IV of this agreement, unless specifieally stated otherwise in this agreement. (b) The General Partner agrees to conduct the operations contemplated under this agreement in a careful and prudent manner, and in accordance with good industry practice. Individual officers, members and/or managers of the General Partner have been assigned, and [lave agreed to undertake, specific tasks and obligations in accordance with the purposes and objectives of the Partnership. Such tasks and obligations are set forth in Exhibit "C" attached hereto, (c) The General Partner (or any successor to the General Partner) agrees to serve as general partner of the Partnership until the Partnership is terminated without reconstitution as provided below, or until the General Partner's successor is elected. General Partner's Authority 8.02, Subject to any limitations expressly set forth in this agreement, the General Partner is expressly authorized to perform any of the following acts on behalf of the Partnership: (a) Any and all acts necessary or appropriate to the acquisition and management of the Partnership and interests in the Partnership. (b) Maintenance of all necessary Partnership books and records. (c) Commencement of Iitigation or defense of litigation, including settlement of any litigation, involving the Partnership. (d) Establishment of batik accounts in which all Partnership funds shall be deposited and from which payinents shall be made. (e) Procuring and maintaining insurance with responsible companies as may be available in such amounts and coveting such risks as are deemed appropriate by the General Partner. (f) Taking and holding all real, personal, and mixed property of the Partnership In the narno of the Partnership. (g) Executing and delivering, on behalf of and in the name of the Partnership, contracts, agreements, and other documents. (h) Coordinating all accounting and clerical functions of the Partnership and employing accountants, lawyers, engineers and other management or service personnel as may from time to time be required to carry on the business of the Partnership, (I) Filing tax returns and making elections on behalf of the Partnership as provided utrder the Code, Agreement of Limited Partnership — 518 Venture, LP -5- Limitations 8.03. Notwithstanding the generality of the General Partner's authority, the General Partner is not empowered, without the consent of a Required Interest, to; (a) Do any act in contravention of this Partnership Agreement. (b) Do any act that would make it impossible to carry out the ordinary business of the Partnership, except as specifically permitted by the terms of this agreement, (c) Confess a judgment against the Partnership, (d) Possess Partnership property or assign any rights in specific Partnership property for other than a Partnership purpose. (o) Require any Partner to make any contribution to the capital of the Partnership not provided for in this agreement, (f) Amend this partnership agreement. Other and Competing Activities 8.04. Any Partner may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar to, or competitive with the business conducted by the Partnership. Neither the Partnership nor any Partner shall have any rights in or to such independent ventures or the income or profits derived from these other activities, Liability of General Partner 8,05, The General Partner is not liable, responsible, or accountable in damages or otlietvise to the Limited Partners or the Partnership for any act performed by the General Partner in good' faith and within the scope of this Agreement, The General Partner is liable to the Limited Partners only for conduct that involves gross negligence, bad faith, or fraud. Indemnification of General Partner 8,06, The Partnership shall indemnify and hold harmless the General Partner and its officers, directors, agents, and representatives from and against any loss, datnage, liability, cost or expense (including reasonable attorneys' fees) arising out of any act or failure to act by the General Partner, specifically including its sole, partial, or concurrent negligence, to the greatest extent permitted under the TLPL. Contracts with Affiliates 8,07, Notwithstanding anything in this agreement to the contrary, it is understood and agreed that the Partnership may employ any Partner and any person affiliated with any Partner to render services on behnlf of the Partnership and may compensate the person rendering the services on custotrrary terms and at competitive rates, Neither the Partnership nor the other Partners shall have any rights in or to any profits derived from any fees paid by the Partnership for such services, unless such services are within the scope of services pledged to be performed in exchange for ownership interest in the Partnership as set forth on Exhibit "B" attached hereto, Tax Matters Partner 8,08, The General Partner is authorized and required to represent tine Partnership in connection with all examinations of the partnership affairs by tax authorities, including administrative and judicial proceedings, and to expend Partnership funds for professional services and costs in connection with such examinations, The General Partner is be the "Tax Matters Partner" for federal tax purposes and has authority, in its sole and absolute discretion, to represent the Partnership and the Partners in this regard. The Limited Partners agree to cooperate And to do or Agreement of Lhnited Partnership — 518 Venture, LP 4. refrain from doing any and all things reasonably required by the Tax Matters Partner to conduct these sorts of proceedings. 9. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS Limited Liability 9.01. Tile Limited Partners have no personal liability whatsoever, whether to the Partnership, the General Partner, or any creditor of the Partnership, for any of the debts or losses of the Partnership beyond their respective Capital Contributions to the Partnership, Return of Distributions 9.02. To the extent that the Partnership's liabilities to its creditors are not discharged by the Partnership or by the General Partner, the Limited Partners will be liable to return to the Partnership the proportionate amount of any distribution made to the Limited Partners to the extent required by the Act. No Management Rights 9,03, The Limited Partners may not take pant in the management of the Partnership or transact Any business for or on behalf of the Partnership. All management responsibility is vested in the General Partner, subject to the Approval of the Limited Partners in those specific instances described in this agreement, No Authority to Bind Pal-tnerShip 9.04, The Limited Pailners have no power or authority to sign for or to bind the Partnership. All authority to act on behalf of the Partnership is vested in the General Partner. Rights Specified in the Act 9,05, A Limited Partner shall be entitled to at] rights of limited partners contained in the Act to the extent that those rights have not been superseded, or may not lawfully be superseded, by the provisions of this agreement. 10. PERCENTAGE )NTERESTSl ALLOCATIONS AND DISTRIBUTIONS Accounting Principles 10.01, The net income and net loss of the Partnership (and each item of income, gain, loss, deduction, or credit entering Tinto the computation of net income and net loss) shall be determined on an annual basis in accordance with the accounting methods followed by the Partnership for federal income tax purposes and otherwise in accordance with generally accepted accounting principles and procedures. Percentage Interests. 10.02. (a) The phrase "Percentage Interest" of each Partner means that particular Partner's interest in the capital, net income, net loss, and distributions of the Partnership as set forth in this paragraph of this agreement. (b) The initial Percentage Interest of each Partner shall be as set forth on Exhibit "B" attached hereto. (c) The percentage interest of each Partner may be adjusted from time to time by the methods and for the reasons described elsewhere in this agreement, including but not limited to the provisions of paragraphs 6.04 and 6.05. Agreement of Limited Partnership — 518 Venture, LP -7- Allocations 10.03. All net income, net losses, and credits and items of gain or loss of the Partnership shall be allocated to each Partner in accordance with each Partner's percentage Interest, Distributions 10.04, Unless otherwise agreed by the Partners, all cash flow available for distribution (funds beyond those necessary to meet the immediate and foreseeable liquidity needs of the Partnership, including amounts payable on mortgage indebtedness) to the Partners, subject to the establishment of reserves in the General Partners reasonable determination, shall be distributed to the Partners in accordance with their respective percentage interests. Compliance with Treasury Regulations 10.05. It is Intended that the allocation and distribution provisions set forth in this Article X apply in a manner consistent with the provisions of Sections 704 and 706 of the Code, and the Treasury Regulations promulgated for those Sections. The General Partncr shall have reasonable discretion to apply the allocation and distribution provisions set forth ill this Article X in any manner consistent with Sections 704 and 706 of the Code and the Treasury Regulations, 11. LOANS TO PARTNERSHIP Pursuant to a written agreement approved by the General Partner, any Partner may lend fiords to the Partnership for Partnership business. The amount of any loan or advance by the Partner shall bear interest at the lesser of. (i) one percent in excess of the base rate as published from time to time by JP Morgan Chase, or its successor, or (ii) the maximum permissible interest rate allowable under applicable usury laws. Loans made under this provision of this agreement shall be deemed an obligation of indebtedness from the Partnership to the Partner, payable prior to any distributions to the Partners, 12. TRANSFEl RS Or, PARTNERSHIP WrERE, STS Restriction on Transfers by Limited Partners 12.01. The Limited Partners may not transfer any or all of their respective interest in the Partnership without the prior written consent of the General Partner. The General Partner may grant or withhold consent, even arbitrarily, in its sole and absolute discretion, Transfer Requirements 12,02. No permitted assignee or transferee of all or part of the interest of the Limited Partners in the Partnership shall have the right to become a substitute limited partner unless all of the following occur: (a) The transforring Limited Partner has stated the intention that the assignee becomes a limited partner in his or her own right in the instrument of assignment. (b) The assignee has executed an instrument reasonably satisfactory to the General Partner, accepting and adopting the terms and provisions of this agreement, (c) The assignor or assignee pays any reasonable expenses in connection with the admission of the assignee as a Limited Partner. Agreement of Limited Partnership — 518 Venture, LP .8- (d) The General Partner consents to the assignee becoming a substitute limited partner. The General Partner may withhold its consent, even arbitrarily, in the sole and absolute discretion of the General Partner, General Partner as Limited Partner 12.03. if the General Partner should acquire an interest as a Limited Partner, the General Partner shall, with respect to such interest, enjoy all the rights and be subject to all the obligations and duties of a Limited Partner to the extent of such interest. Transfer by General Partner 12,04. The General Partner may not transfer any or all of its interest in the Partnership without the prior written consent of a Required Interest, If a transfer is approved, the transferee assumes all of tine obligations of the General Partner and the General Partner shall be relieved of all further obligations and responsibilities. If a transfer of the General Partner's interest is approved, the transfer will not cause the winding up of the Partnership, which may continue with the transferee as the General Partner the same as if the transferee had been the initial General Partner. The restrictions on the transfer of the General Partner's interest in the partnership do not apply to a transfer by the General Partner to all Affiliate of the General Partner. 13. WINDING UP AND TERMINATION Winding Up 13,01, The Partnership shall wind up its business on the earliest occurrence of any one of the following events, (a) The General Partner's determination, with the Limited Partners' prior written consent, that the Partnership should be dissolved. (b) The winding tip, withdrawal, or bankruptcy of the General Partner, unless the Partnership is reconstituted in tire manner prescribed in paragraph 13,02 of this agreement. The winding up, withdrawal, or bankruptcy of tine General Partner will not result in the winding up of the Partnership so long as the successor to the General Partner's interest in the Partnership, in accordance with paragraph 13.02, assumes all of tine General Pariner's obligations under this agreement. Elec#ion of New General Partner 13,02, At the time of the withdrawal, winding tip, or bankruptcy of the General Partner, the business of the Partnership shall be continued on the terms and subject to the conditions of this agreement if, within 90 clays after such event, the Limited Partners unanimously elect that the business of the Partnership should be continued and, in such election, designate one or more persons to be substituted as general partner. New General Partner(s) elected by this procedure will succeed to all of the powers, privileges, and obligations of the then -existing General Partner. The interest in the Partnership of the General Partner who is succeeded by new General Partner(s) will become a Limited Partner's interest in the Partnership. Jn the event of the winding up, withdrawal, or bankruptcy of the General Partner and the failure of the Limited Partners to elect to continue the business of the Partnership, the Partnership shall be terminated forthwith. No Release From Liabilities Agreement of Limited Partnership — 518 Venture, LP -9- 13.03, It is understood and agreed that no winding up of the Partnership releases or relieves any of the parties to this agreement of their contractual obligations under this agreement, Distributions in Liquidation 13.04. If the business of the Partnership is not continued, the General Partner shall, if possible, act as liquidator. If tine General Partner has itself dissolved, withdrawn from the Partnership, or declared or suffered a bankruptcy, and if the Partnership is not reconstituted with a new General Partner as provided in this agreement, a Limited Partner shall act as liquidator. The liquidator shall liquidate the assets of tine Partnership, make appropriate adjustments made to the capital accounts of the Partners, and distribute the proceeds in the following order of priorities, so far as the proceeds will go; (a) To the payment of debts of the Partnership (other than loans made from the Partners to the Partnership), including the expenses of liquidation. (b) To the repayment of any loans that have been made by the Partners to the Partnership, but if the amount available for such repayment is insufficient, then pro rata up to tine amounts available. (c) To all Partners pro rata in accordance with their respective capital account balances, as adjusted, up to the amounts of those capital accounts. (d) To all Partners pro rats according to their respective percentage interests in the partnership. Distributions In Kind 13,05. In the event any or all of the assets of the Partnership cannot be liquidated, those assets are to be distributed in kind according to the priorities set forth in paragraph 13.04, Assets of the Partnership distributed to the Partners shall be held and owned by the Partners as tenants in common, In the event of tine distribution of Partnership properties in kind, the fair innrket value of such assets shall be determined by agreement of the Partners. The amount of gain or loss which would have been realized by the Partnership for federal income tax purposes if the assets had been sold at such fair market value rather than distributed in kind shall be treated as gain or loss from a disposition of the assets of the Partnership, and allocated among the Partners in accordance with Article X, such allocations then being reflected in the Partners' respective capital accounts, 14, ACCOUNTING Fiscal Year 14,01. The fiscal year of the Partnership shall be January 1 to December 31, Books and Records 14.02. The General Partner shall keep, or cause to be kept, full and accurate records of all transactions of the Partnership in accordance with principles and practices generally accepted for the cash or accrual method of accounting, Inspection of Records I4.03, Any Partner may, for any proper purpose during regular business hours, inspect and copy any of the Partnership books and records at the principal place of business of the Partnership as provided in Article V, or snake other reasonable inquiries as to Partnership affairs. Costs of reproducing or copying Partnership books and records shall be at the expense of the Partnership. Agreecuent of Lincited Partnership — 518 Venture, LF -10- Tax Returns 14.04. Within 90 days after the end of each fiscal year, the General Partner shall prepare, or cause to be prepared, state and federal income tax returns for the Partnership and, in connection with those tax returns, make any available or necessary elections, Copies of all income tax returns of the Partnership proposed to be filed for any year shrill be furnished to each Partner at least fifteen (15) days prior to the date for filing the returns (including any extensions applicable to such returns). The returns shall be filed by the General Partner on or before the due date (including extensions). 15, gEPORTS AND STATE, Mi1NTS Within 90 days after the end of each fiscal year of the Partnership, the General Partner will deliver to the Limited Partners, at the Partnership's expense, financial statements setting forth, as of the end of and for that fiscal year, the following: (a) A profit and loss statement and a balance sheet of the Partnership. (b) The balance in the capital account of each Partner. (c) Any other information that, in the judgment of the General Partner, is reasonably necessary for the Limited Partner to be advised of tine results of operations of the Partnership. 16. BANICACC.O....UNTS The General Partner shall open and maintain a special bank account or accounts in which all funds of the Partnership shall be deposited. Withdrawals from such account or these accounts may be made on the signature or signatures of those persons designated by the General Partner. The General Partner may not commingle the assets of the Partnership with the assets of any other entity or person, However, the revenues and other receipts of the Partnership may be deposited in a central account in tine name of the General Partner or an affiliate of the General Partner, so long as separate entries are made on the books and records of the Partnership and on the books and records of the affiliate reflecting deposits in the bank account of the affiliate with respect to amounts received from the Partnership and withdrawals from tine bank accounts made for the purpose of disbursing firnds to the Partnership or for the purpose of paying liabilities of the Partnership. 17. NOTICES Whenever any notice is required or permitted to be given under this agreement, the notice must be in writing and signed by or on behalf of the person giving the notice. The notice will be deemed to have been given when delivered by personal delivery or deposited in the United States nail, postage prepaid, certified mail, return receipt requested, properly addressed to the persons who must receive notice at the addresses listed in this agreement or as changed by written notice given according to this provision of this agreement. 18. POWER OF ATTORNEY Tile LinitedPartners irrevocably appoint the General Parttrer, its successors and assigns, as their respective true and lawful attorney -in -fact, with full power and authority, on their behalf Agreement of Limited Pnrtnership — 518 Venture, LP 41- and in their respective names, to execute, acknowledge, swear to, deliver and, if appropriate, file in such offices and places as may be required by law (1) any amendment to this agreement that may be required by a change in the name of the Partnership, change in registered agent, or similar matter, and (ii) any amendment to this agreement made in compliance with Article XIX. The power of attorney granted by the Limited partners to the General Partner is a special power coupled with an interest and is irrevocable, and may be exercised by any party who, at the time of exercise, is a General Partner of the Partnership. The power of attorney shall survive any transfer or abandonment of a Limited Partner's Partnership interest, or the Limited Partner's withdrawal from the Partnership, 19, AMENDMENT This agreement may be amended or modified by written instrument executed by both the General Partner and a Required Interest; provided, however, that an amendment adversely affecting a Partner's distributions, allocations, obligations to make contributions to the Partnership, or rights to consent or approve is effective against that Partner only if that Partner agrees in writing.. 20, RE, LZANCE ON AUTHORITY Any person dealing with the General Partner as the representative of the Partnership may rely on the authority of the General Partner, Persons dealing with the General Partner have no obligation to ascertain the General Partners compliance with the terms of this agreement, Every contract, agreement, deed, mortgage, note, or other document or instrument executed by the General Partner with respect to any property of the Partnership shall be conclusive evidence in favor of any and every person relying on the signature of the General Partner that (i) at the time of the execution or delivery of the document this Agreement was in full force and effect, (ii) the instrument or document was duly executed in accordance with the terms and provisions of this agreement and is binding on the Partnership and all Partners, and (M) the General Partner was duly authorized and empowered to execute and deliver any and every such instrument or document on behalf of the Partnership. 21. BUY -SE, LL AGiREEMENT Offer to Buy and Sell 21,01. Although any Partner may initiate the buy -sell procedure under this Section 21 for any reason and at any time, the Partners acknowledge their mutual intentions to maintain a long-term investment in the Property and in this Partnership and agree to explore all reasonable methods to achieve mutual agreement on a course of action before initiating the buy -sell procedure. If any Partner desires to terminate its relationship with the other(s), then that Partner may deliver to the others a written notice described herein, The notice shall constitute offers by the offeror -Partner both (i) to sell its entire interest in the Partnership (the term "entire interest in the Partnership" for purposes of this bury -sell Section 21 offer only shall include the Pnrtner's "Deficit Loans" to the Partnership, if any, but shall not include any contractual arrangements between a Partner and the Partnership other than in that Partner's capacity as a Partner, and shall also include the Partnership interest of any relative of the Partner), and (ii) to purchase the offeree Partner's(s') entire interest in the Partnership. The notice shall state the offeror-Partner's proposed valuation Agreement of Limited Partnership -- 518 Ventnre, LP r12- of the project(s), as though free and clear of all debt financing ("Project Valuation"). The Partners acknowledge and agree that the Project Valuation will reflect prices at which the offeror -Partner would be willing to buy or sell interests in the Partnership and that the Partners do not expect that Project Valuation will necessarily bear any relationship to fair market value, The Project Valuation shall include all property and assets of the Partnership other than cash, securities and other liquid assets, hi order for the above notice to be effective, the offeror - Partner shall, simultaneously with the delivery thereof, tender $100,000 to be held as a deposit, in escrow by the Partnership's attorneys, or if there are none, jointly by attorneys designated by each Partner (the "Deposit"). The Deposit shall (i) be returned to the offerorPattner at the time of acceptance pursuant to Section 21.03 if the offereePartner becomes the buyer, or (ii) shall be accounted for at Closing if the offeror -Partner has become the buyer. Prices 21.02, The offers to buy and to sell shall be at prices equal to the amounts each Partner would receive under Article 13 as though the project had been sold at the time of Closing at the Project Valuation and all other property and assets not included in the Project Valuation had been reduced to cash or sold at fair market value and complete liquidation of the Partnership had occurred immediately, Acceptance 21.03, Within 30 days after delivery of the aforesaid offers, the offeree-Partner may accept either offer, and shall accept one offer, by a written acceptance delivered to the offeror -Partner stating the offeree-Partner's acceptance of the offer to buy or sell, as the case may be. In order for the offeree-Partner's acceptance of the offer to sell to be effective, the offeree-Partner shall, simultaneously with the delivery thereof, tender $100,000. to be held as the Deposit and the Deposit then being held shall be returned to the offeror -Partner. If the offeree-Partner accepts the offer to buy (i.e., the offeror -Partner has become the buyer), the offeror -Partner shall immediately increase the amount being held as the Deposit to $100,000. Failure of the offeree- Partner to accept one of the offers within such 30 days shall be an acceptance of the offeror Partner's offer to buy. Offers shall be irrevocable for 30 days. Once those offers have been delivered by one Partner the other(s) may not initiate a procedure under this Section and no Partner shall dispose of, alienate or in any way encumber all or any part of its interest hi the Partnership. In addition, there shall be no action taken by any Partner that would result in a material change in the assets or liabilities of the Partnership or condition of the Property out of the ordinary course of business. Only necessary leasing and financing transactions shall occur during that period and only with the approval of the Partners. Closing 21,04. Acceptance of an offer pursuant to Section 2I.03 shall constitute a binding agreement between the Partners to buy and sell at a Closing to be held within 60 days after the date of acceptance at the Partnership's principal office or at a location agreed by the Partners. At the Closing, the selling Partner shall assign and deliver its interest in the Partnership to the Buying - Partner or its designee(s) free and clear of all liens, encumbrances and elahns of third parties and shall cancel and discharge or endorse and assign (as the case may be) any Deficit Loan notes. At the Closing, the buying Partner shall have the right to designate Substitute Directors or Officers to replace the selling-Partnor's positions as Directors or Officers, as the case may be. At Closing, the buying Partner shall pay in cash the full purchase price as of tine Closing date as calculated pursuant to Section 21,2 by the Partnership's accountants or other certified public accountant reasonably acceptable to both Partners (as that price may be adjusted for closing adjustments that are customary in sale transaotions involving improved real estate including, Agreement of Unrtted Partnership -- 518 Venture, IMP -13- without limitation, accounting for rent and pro -rations relating to operating expenses, real estate taxes and mortgage interest), shall obtain discharges of any continuing liability of the selling - Partner and its related parties on account of Partnership financing (and guarantees thereof) or, in lieu of those discharges, shall provide to selling -Partner reasonably satisfactory indemnification and hold-harmloss agreements with respect to that liability and to all other continuing liabilities of the selling Partner and its related parties. Each Partner agrees to execute, acknowledge and deliver all documents as are appropriate to effect a transfer of the interest in question, including without limitation, endorsed Deficit Loan notes. hi addition to any rights that the Partners have hereunder, a Partner desiring to enforce a purchase and sale pursuant to this Section shall have the right to apply to a court of competent jurisdiction for specific performance hereof, and the other Partner shall not plead as a defense that an adequate remedy at law exists. Termination of Agreement to Purchase 21.05 If, after acceptance of an offer and before Closing; (a) any proceeding relating to the proposed taking of all or a substantial portion of the Partnership property by eminent domain are instituted, (b) a fire or other casualty occurs as a result of which all or a material portion of the Partnership property is destroyed or seriously damaged, (c) there shall have been filed by or against any major tenant a petition in bankruptcy or a petition or answer seeking relief under the bankruptcy laws of the United States, or a receiver, trustee or liquidator shall have been appointed with respect to that tenant or the tenant's property, or (d) a major tenant wrongfully terminates its lease, then the buying -Partner may, by written notice to the selling -Partner, elect not to proceed with the purchase of the selling-Partrrer's interest in which case the offer and acceptance shall be void without any liability to either Partner. 22, MISCELLANEOU Applicable Laws 22.01. This partnership agreement, and its application or interpretation, shall be governed exclusively by its terms and construed in accordance with the substantive federal laws of the United States and by the laws of the State of Texas, including the Texas conflicts of laws rules. Cumulative Remedies 22.02. Each party to this partnership agreement is entitled to all remedies provided by this agreement or in law or equity. All remedies in this agreement and in law or equity are cumulative, and the use of one right or remedy by any party does not preclude or waive the right to use any or all other remedies. Counterparts 22.03. This partnership agreement may be executed in any number of counterparts with the same effect as if all parties had all signed the same document. All counterparts shall be construed together and shall constitute one agreement. Successors and Assigns 22,04. The terms, provisions, and agreements contained in this agreement are binding on and inure to the benefit of the patties and, to the extent permitted by this agreement, their respective successors and assigns. Agreement of limited Partnership -- 518 Venture, LP -14- Entire Agreement 22.05, This partnership agreement shall constitute the entire contract between the parties, There nre no other or further agreements outstanding not specifically mentioned in this agreement. However, the parties may amend and supplement this agreement, in writing, from time to time, in a manner and to the extent provided by the terms of thus agreement, including but not limited to the terms set out in Article 19 herein, Personal Property 22.06, The interests owned by the Partners in this Partnership are personal property, Invalidity of provisions 22.07. In case any one or more of the provisions contained in this agreement are subsequently determined to be invalid, illegal, or unenforceable in any respect, that invalidity or unenforceabiIity does not destroy the basis of the bargain among the Partners as expressed in this agreement, The validity, legality, and enforceability of the remaining provisions contained in this agreement shall not be affected or impaired in any way by the determination that some portion or portions are invalid, illegal, or unenforceable, Signature Pages 22,08. Each Partner authorizes the General Partner to attach an executed signature page to this partnership agreement. Attorneys Fees 22.09. If any litigation is initiated by any Partner against another partner relating to this agreement or its subject inatter, the Partner prevailing in such litigation shall be entitled to recover, in addition to all damages allowed by law and other relief, all court costs and reasonable attorney's fees incurred in connection with the litigation, Attorney Representations 22.10. The parties all acknowledge that Tamara M. Anderson, Esq., prepared this Agreement on behalf of and in the course of her representation of Selwyn P. Thint ("Thint"), and that; (i) the parties are hereby advised by Mrs. Anderson that a conflict exists among their individual interests; (ii) all Partners, other than Thint, are hereby advised by Mrs. Anderson to seek the advice of independent counsel regarding all of the terms and provisions of this Agreement; (iii) all Partners, other than Thint, have had the opportunity to seek the advice of independent counsel; (iv) all Partners, other than Thint, have received no representations from Mrs, Anderson concerning the tax consequences of this Agreement; (v) all Partners are hereby advised by Mrs. Anderson to seek the advice of independent tax counsel, (vi) all partners have had the opportunity to seek the advice of independent tax counsel; (vii) all the parties to this Agreement hereby waive any and all conflicts of interest that Mrs. Anderson has and may have in connection with preparation of this Agreement and consent to the rendering of services by Mrs. Anderson in connection therewith, and (vii) all partners, other than Thint, further acknowledge and agree that the preparation of this Agreement by Mrs. Anderson will not preclude and/or inhibit in any way the continued representation by Mrs. Anderson of Thint in the future including representation in any matters that may, in whole or in part, be adverse to the interests of the other Partners of the Partnership. Agreement of Limited Partnership -- 518 Venture, LP -15- THE UNDERSIGNED PARTNERS have duly executed this Agreement to be effective as of the day and year first written above. Each Partner has thoroughly reviewed all of the provisions of this Agreement, and each Partner hereby approves of the provisions of this Agreement in all particulars. GENERAL PARTNER: SRB 518 Venture GP, LLC, a Texas limited liability company TIN; By: Selwyn P. Thint Date of Execution: By: William White Date of Execution; By: Ricardo Davits Date of Execution: Agreement of Limited Partnership — 518 Venture, LP -16- LIMITED PARTNERS: Everest Interests, LLC, a Texas limited liability company By; Selwyn P. Thint, Member /Manager Date of Execution: Address: 307-C S, Friendswood Drive Friendswood, Texas 77546 Telephone; EIN#: Clear Creek Ranch, Inc., a Texas corporation By: William White, President Date of Execution: Address: 715 Clear Lake Road Clear Lake Shores, Texas 77565 Telephone: BINM PE Square Investments, LLC, a Texas limited liability company By: Ricardo David, Member /Manager Date of Execution: Address: 211 E, Parkwood Ave,, Suite 201 Friendswood, Texas 77546 Telephone: BIN#: Agreement of Llntlted Partnership — 518 Venture, LP -17- EXHIBIT "A" PROPERTY DESCRIPTION INSERT LEGAL DESCRIPTION OF PROJECT Agreement of Limited Partnership--518'Veature, LP -18- E, XMIT "BA SCHEDULE OF PARTNERSHIP INTERESTS GENERAL PARTNER 1 % SRB 518 Venture GP, LLC INITIAL CONTRIBUTION: $1,500 A Texas limited liability corporation (Schedule of Members of the General Partner) Selwyn P. Thint (33.33 % owner of all Member Interests of SRB 518 Venture GP, LLC) 307-C S. Friendswood Drive Friendswood, Texas 77546 William White (33.33 % owner of all Member Interests of SRB 518 Venture GP, LLC) 715 Clear Lake Road Clear Labe Shores, Texas 77565 Ricardo David (33.33 % owner of all Member Lrterests of SRB 518 Venture GP, LLC)211 E. 211 211 E. Parlovood Ave,, Suite 201 Frieudswood, Texas 77546 Agreement of Lini ted Partno:'shlp -- 5t8 Venture, LP -19- EXHIBIT 1413.2" SCHEDULE Or PARTNERSHIP INTERESTS CONTINUED 1MITED PARTNER.IS 99% Name and Address: Percentage initial Capital Contribution Everest Interests, LLC 33.00% $ 307-C S. Friends► ood Drive Triendswood, Texas 77546 Clear Creek Ranch, Iite. 33.00% 715 Clear Lake Road Clear Lake Shores, Texas 77565 Everest Interests, LLC 33,00% $ 211. E, Parkwood Ave,, Suite 201 TricudsFvood, Texas 77546 Agreement of Limited Partnership — 518 Venture, LP -20. EXHMIT «Cs SCHEDULE OF GENERAL PARTNERS' TASKS AND 013LIGATIOXS Agreement of Limited Partnership — 518 Venture, LP -21- COMPANY OPERATING AGREEMENT .3m SRB 518 VENTURE' GP, LLC TABLE OF CONTENTS ARTICLE L THE COMPANY GENERALLY........................................................ I Section1,01 Formation............................................................................................1 Section1.02 Name...................................................................................................1 Section1.03 Duration..............................................................................................1 Section1.04 Purposc................................................................................................1 Section1.05 Principal Place of Business .................................................:............... 1 Section 1.06 Registered Office and Registered Agent ............................................. 2 Section1.07 Company Property.............................................................................. 2 Section1,08 Merger and Conversion....................................................................... 2 Section1.09 Definitions and Construction.............................................................. 2 ARTICLE1I. MEMBERS AND INTERESTS....................................................... 4... 3 Section 2.01 Initial Members..., ..................................,.,.................,................. 3 Section 2,02 Admission of Additional Limited Members ...................... 4................ 4 ARTICLEIII. FINANCE ...................................... .................... ......... ........... :............... 4 Section 3,01 Capital Contributions.......................................................................... 4 Section 3.02 Capital Accounts................................................................................. 4 Section 3.03 Allocations........................................,................................................. 4 Section3.04 Tax Matters.......................................................................................... 4 Section3.05. Distributions........................................................................................ 5 ARTICLE IV. CONDUCT OF COMPANY. AFFAIRS ................. 4...... ,,.,,,,..,.,,,,,...,, 5 Section 4.01 Managers............................................................................................. 5 Section 4,02 Members Generally............................................................................. 7 Section 4,03 Compensation of Members and Affiliates .......................................... 7 Section 4.04 Good Faith Actions............................................................................. 7 Section 4.05 Indemnification................................................................................... 8 Section 4.06 Meetings of Members......................................................................... 8 Section 4.07 Limitations.......................................................................................... 8 ARTICLE V. BOOKS AND RECORDS.............................................4...................... 9 Section5.01 Books and Records............................................................................. 9 Section 5.02 Access by Members . ...................................... :..................... ............... 9 Section 5,03 Confidential Information.................................................................... 9 ARTICLE VI. TRANSFERS OF INTERESTS........................................................... 9 Section6.01 Transfers Generally............................................................................. 9 Section. 6.02 Rights of Transfexee............................................................................ 9 Section 6.03 Void Assignments ...... ......... ...................... .................. I..................... 10 ARTICLEVII. WINDING UP .................... .................................... I.- ........................ 10 Section 7.01 Events Requiring Winding Up.....................................:....................10 Section 7.02 Winding Up Affauys and Distribution of Assets...............................10 Section 7.03 Termination.......................................................................................11 ARTICLEVIMMISCELLANEOUS..............................................4............................11 Section8.01 Notices....................................................................................4.........11 Section8.02 Entire Agreement............................................,.................................11 Section8.03 Amendments.....................................................................................11 Section8.04 Waivers.............................................................................................12 Section8.05 Severability....................................................................................... 12 Section8.06 Further Assurances............................................................................ 12 Section8.07 Governing Law................................................................................. 12 Section8.08 Power of Attorney............................................................................. 12 Section8.09 Successors and Assigns..................................................................... 12 Section8.10 Counterparts, ................. ................................................................... 12 Section 8.11 Attorney Representations.................................................................. 12 EXHIBIT "A" SCHEDULE OF MEMBER INTERESTS AND SCHEDULE OF MANAGERS EXHIBIT "B" SCHEDULE OF MANAGERS' TASKS AND OBLIGATIONS ii COMPANY OPERATING AGREEMENT Or SRB 518 Venture GP, LLC This COMPANY OPERATING AGREEMENT (this "Agreement," as it may be amended from time to time as provided below) is initially made and entered into as of August 13, 2007, by and among the Initial Members (as defined below). ARTICLE 1. THE COMPANY GENERALLY Section 1.01 Formation. SRB 518 Venture GP, LLC was formed as a limited liability company (the "Company") under and pursuant to the TLLCL and other relevant laws of the State of Texas by the filing of certificate of formation with the Secretaty of State of Texas on August 13, 2007. ,Section 1.02 Name. The name of the Company shall be SRB 518 Venture GP, LLC, The Company shall conduct business under that name or such other names complying with applicable law as the Manager may determine from time to time. Section 1,03 Duration. The Company commenced on the first proper filing of oedificate of formation for the Company as provided in TLLCL § 3,005 and shall continue until its business and affairs are wound up as provided in Auricle VI1. Section 1.04 Purpose, The purpose for which the Company is organized is to conduct any and all lawful business for which limited liability companies may be organized under the TLLCL, Section1.05 PrincipalPlaceofBusiness. The Company's principal place of business shall be at such place or places as the Manager may determine fi'omtime to time. Company Agreement of SRB 518 Venture GP, LLC - t - Section 1.06 Registered Office and Registered Agent, The initial address of the registered office of the Company in the State of Texas shall be 307-C S. Friendswood Drive, Friendswood, Texas 77546, and the name of the Company's initial registered agent at that address shall be ,Selwyn P. Thint. The Manager may change the registered office and the registered agent of the Company from time to time. The Manager may cause the Company to qualify to do business as a limited liability company (or other entity in which the Members have limited liability) in any other jurisdiction and to designate any registered office or registered agent in any such jurisdiction. Section 1.07 Company Property. All real and personal property owned by the Company shall be deemed owned by the Company as an entity and held in its name. No Member shall have any ownership interest in any such property. Section 1.08 Merger and Conversion, The Company may merge with, or convert into, another entity only in accordance with a plan of merger or conversion approved by the Required Members, Section 1.09 Definitions and Construction. (a) As used in these Regulations this Agreement, the following terms have the following meanings - "Agreement" has the meaning specified in the introduction to this Agreement, "Capital Account" has the meaning specified in Section, 3,02, "Claim" has the meaning specified in Section 4.05. "Coveted Person" has the'meaning specified in Section 4,05. ".Initial McMber" has the meaning specified in Section 2.01. "Interest" means, with respect to any Member at any time, that Member's entire beneficial ownership interest in the Company, at such tune, including .that Member's Capital Account, voting rights, and right to share in profits, losses, cash distributions and all other benefits of the Company as specified in, this Agreement, together with that Member's obligations to comply with all of the terms of this Agreement. "IRC" means the Internal Revenue Code of 1986. "Liquidating Agent" has the meaning specified in Section 1102(a), "Manager" means any Person, appointed as a Manager as provided in this Agreement but excludes any such Person that has ceased to be a Manager as provided in this Agreement or the TLLCL. Company Agreement of SRB 518 Venture GP, LLC - 2 "Member" means any Person admitted to the Company as a member as provided in this Agreement but excludes any such Person that has ceased to be a member as provided in this Agreement or the,TLLCL, "Company" has the meaning specified in Section 1,01. "Percentage" for any Member means the Percentage established for that Member in accordance with this Agreement. "Person" means any individual, corporation, partnership, limited liability company, business trust or other entity, government or governmental agency or instrumentality. "Required Members" means Members owning at least two-thirds of the Percentages of all Members. "TLLCL" means the Texas Limited Liability Company Law, part of the Texas Businoss Organizations Code., (b) In this Agreement; (i) Terms defined in the singular have the corresponding meaning in the plural and vice versa, (ii) Reference to one gender includes the others, (iii) The word "include" and its derivatives means "include without limitation," (iv) References to Articles, Sections and Exhibits are to the specified Articles and Sections of, and Exhibits to, this Agreement unless the context otherwise requires, Each Exhibit to this Agreement is made a part of this Agreement for all purposes. (v) References to statutes or regulations are to those statutes or regulations as currently amended and to the corresponding provisions as they may be ' amended or superseded in the fuhue. ARTICLE IL MEMBERS AND INTERESTS Section 2.01 .Initial Members. In connection with the fonnation of the Company, each of the Persons executing this Agreement as of the date of this Agreement (each an "Initial Member") is admitted to the Company as a member affective as of the commencement of the Company as provided in Section 1.03. The Percentage of each Initial Member as of the commencement of the Company is set forth next to that Initial Member's name on Exhibit A, Company Agreement of SRB 518 Veaiture GP, LLC - 3 - Section 2.02 Arlinissloit ofAdditioiial Lrinilted Mettibers. The Managers may cause the Company to issue additional Interests and may admit additional Persons to -the Company as members on such terms as the Managers shall determine, if but only if each such new Member agrees in writing to be bound by the provisions of this Agreement as a Member and notifies the other Members of its address for notices under this Agreement. ARTICLE III. FINANCE Section 3.01 Capital Contributions. (a) On the commencement of the Company, each Initial Member shall make a contribution to the Company in the amount set forth next to its name on Exhibit A. (b) Except as provided in Section 2.02 or 3.01(a), no Member shall have any obligations to make any contribution to the Company. Section 3.02 CapitalAccounts. Each Member shall have a single capital account (its "Copttal Account'), which shall be (a) increased by the amount of cash and the fair market value of any property (net of liabilities assumed by the Company and liabilities to which the property is subject) that Member contributes to the Company, plus all items of income and gain of the Company allocated to that Member, (b) decreased by the amount of distributlons the Company makes to that Member of cash or other property (net of liabilities assumed by that Member and liabilities to which the property is subject),plus all iteim of loss and deduction of the Company allocated to that Member. The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation § 1.704-1(b), and shall be interpreted and applied in a manner conslstent with those Treasury'Regulations. Section 3.03 Allocations. All items of income, gain, loss, deduction and credit of the Company shall be allocated to the Members for accounting and tax purposes pro rata according to their Percentages; provided, however, that any allocations pursuant to this Agreement shall comply with the qualified income offset requirements of Treasury Regulation § 1.704-1(b)(2)(ii)(d) and the norrrecourse deduction or minimum gain chargeback requirements of Treasury Regulation § 1.704-2. Section 3.04 Tew Matters. (a) The Members intend that the Company be treated as a partnership for federal income tax purposes and any similar provisions of state or local law. (b) The Managers, or such other Member as the Required Members may designate, shall be the "tax matters partner" for purposes of IRC § 6231(a)(7). The tax matters partner shall cause to be prepared and shall sign all returns of the Company, make any election which is available to the Company, and monitor any governmental tax authority in any Company Agreement of SRU 518 Venture GP, LLC - 4 - audit that the authority may conduct of the Company's books and records or other documents, Each Member shall take all actions required to cause the Manager so named, or such other Member as the Required Members may designate, to be (and continue as) the tax matters partner and, if requested by the tax matters partner, to otherwise authorize and appoint the tax matters partner as that party with the sole authority to handle all tax matters of the Company, Each Member agrees to execute, certify, deliver, file and record at appropriate public offices or deliver to the tax matters partner such documents as may be requested by the tax matters partner to facilitate the handling of any tax matter as the tax matters partner deems necessary. (c) After the end of each fiscal year of the Company, the Managers shall cause to be prepared and transmitted to each Member, as promptly as possible, and in any event by the end of the third month following the close of the fiscal year, a federal income tax Form K-1 and any required similar state and local income tax form for each Member. Section 3.05 Distributions. The Managers, in their discretion, may cause the Company to distribute to the Members cash available after servicing all Company debts, liabilities and obligations then payable and provision of reasonable reserves for expenses and contingencies, which distributions shall be made to the Members pro rata according to their Percentages. ARTICLE IV. CONDUCT OF COMPANY AFFAIRS Section 4.01 Managers. (a) Subject to the other provisions of this Agreement, the Managers shall have the right to, and shall be fully responsible for, the management and control over the business of the Company, The Managers shall make all decisions affecting the business of the Company, except to the extent that this Agreement or nonwaivable provisions of the TLLCL require the consent or approval of some or all other Members, The Managers shall have all rights, powers and authority generally conferred by the TLLCL on a manager of a limited liability company managed by a manager or as otherwise provided by law or necessary, advisable or consistent with accomplishing the purposes of the Company. (b) Without limiting the other provisions of Section, 4,01, the Managers have the power: (i) to cause this Company to enter into• partnerships or become a member of other limited liability companies and to exercise the authority and to perform the duties required of the Company as such a partner or member; (ii) to acquire, hold and dispose of property or any interest in it; (iii) to protect and preserve the title to and the interest of the Company in all of its property and assets, real, personal and mixed; Company Agreement of SRB 518 'Venture GP, LLC . 5 (iv) to borrow money on behalf of the Company and to encumber the Company assets or place title in the name of a nominee for purposes of obtaining financing; (v) to employ from time to time, at the expense of the Company, consultants, accountants and attorneys; (vi) to pay all expenses incurred in the operation of the Company and all taxes, assessments, rents and other impositions applicable to the Company or any part thereof; (vil) to sign deeds, notes, contracts and other instruments in the name and on behalf of the Company; (viii) to make all filings with governmental authorities, including tax returns; and (ix) to assume any and all overall duties imposed on a manager of a limited liability company managed by a manager by the TLLCL. (c) Notwithstanding any other provision of this Agreement to the contrary, the Managers may do any of the following only with the prior written consent of all the Members: 0) do any act in contravention of this Agreement; (H) do any act that would make it impossible to carry on the ordinary business of the Company, except as otherwise provided in this Agreement; (iii) knowingly do any act that would subject any Member to liability for the obligations of the Company in any jurisdiction; (iv) knowingly do any act that would cause the Company to be treated as an association taxable as, or otherwise taxed as, a corporation for federal income tax purposes unless at the time it already is so taxed; (v) wind up the Company or authorize or agree to do so, other than in accordance with Article'VII; (vi) consolidate or merge the Company with, or convert the Company into, another entity, other than in accordance with Section 1,8; (vii) sell, lease or otherwise dispose of all or substantially all of the assets of the Company, unless the Required Members consent in waiting; or (viii) amend this Agreement, other than in accordance with Section 8,03. (d) The Managers may appoint such officers of the Company as it may deem appropriate and may remove any such officer at any time with or without cause. The Managers may Company Agreement of SRB 518 venture GP, LLC - 6. delegate to the Company's officers such powers and duties as it may deem appropriate and subsequently revoke or modify those powers and duties, and except to the extent that the Managers determine otherwise, each officer will have the powers and duties normally associated with an officer having a similar title with a Texas corporation. The Managers also may delegate authority to other Persons and revoke that delegation as it may deem appropriate include the power to delegate authority. (e) Subject to the provisions of any agreement with the Company entered into,as provided in Section 4.01(g), (i) a Manager may resign at any time by notice to the Members and (11) Members owning in the aggregate at least two-thirds of the percentages, by notice to a Manager, may remove the Manager if, but only if, in the notice the signing Members appoint a successor Managing Member in accordance with Section 4.0l(f), (f) In connection with the resignation or removal of a Manager as provided in Section 4.01(a), Members owning in the aggregate at least two-thirds of the Percentages, by notice to the other Members, may appoint a new Manager provided that new Manager agrees in writing to be bound by the provisions of this Agreement as the Manager, (g) The Required Members must approve any agreement for the employment or compensation of a Manager or the amendment or termination of any such agreement, (h) Without limiting their duties or obligations hereunder, the Managers may agree among themselves to identify and undertake specific tasks and obligations in accordance with the purposes and objectives of the Company and each Manager's individual interests and talents, Such tasks and obligations, if any are specifically identified, are set forth in Exhibit "B" attached hereto. Section 4.02 Members Generally. The Members, in their capacity as Members, shall have no authority to take part in the control, conduct or operation of the Company and shall have no right or authority to act for or bind the Company, including during the winding up of the Company. Other than as specifically provided in this Agreement or nonwaivable provisions of the TLLCL, no Member shall have the right to vote upon any matter concerning the business and affairs of the Company. Section 4.03 Compensaflon of Members mud Affiliates. No Member shall receive any. compensation for its services to the Company, except compensation paid to Members and Affiliates of Members that are engaged on behalf of the Company to provide services or materials that are, in the reasonable judgment of the Managers, necessary or desirable for the Company. Section 4.04 Good Faith Actions, No Member or Manager, or any of its officers, directors, shareholders, officers, constituent partners, managers, members, trustees, representatives, agents or employees, shall be liable to the Company or to any of the other Members for any action taken (or Conipsn), Agreement of $RD 518 Venture GP, LLC - 7 - any failure to act) by it in good faith on behalf of the Company and reasonably believed by it to be authorized or within the scope of its authority, unless that action (or failure to act) constitutes fraud, gross negligence, bad faith or willful misconduct, and then only to the extent otherwise provided by law. Section 4.05 Indemnff cation. To the fullest extent permitted by law, the Company shall indemnify and hold harmless each Member, each Manager, and its respective officers, directors, shareholders, managers, members, omployees, agents, subsidiaries and assigns (each, a "Covered Person") from and against any and all losses, claims, demands, liabilities, expenses, judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative (each a "Claim"), in which the Covered Person may be involved, or threatened to be involved, as a party or otherwise, which relates to or arises out of the Company or its property, business or affairs; provided, however, that a Covered Person shall not be entitled to indemnification under this Section 4.5 with respect to; (a) any Claim with respect to which the Covered Person has engaged in fiaud, willful misconduct, bad faith or gross negligence; or, (b) any Claim initiated by a Covered Person unless that Claim (or part thereof) was brought to enforce that Covered Person's rights to indomnification under this Section 4.5. The Company shall pay in advance of the final disposition of any such Claim expenses incurred by a Covered Person in defending that Claim if, but only if, that Covered Person so requests and delivers -to the Company of an undertaking by or oa .behalf of that Covered person to ropay amounts so advanced if it ultimately is determined that the Covered Person is not entitled indemnification under this Section 4.05. Section 4.06 Meetings of Mentbers. The Managers may call meetings of Members at ,such times and places as the Managers may determine in their discretion. Section 4.07 Lintitations. No Member shall have the right or power to; (a) withdraw from the Company or withdraw any part of its contributions to the Company or its Capital Account except as a result of the winding up of tho Company as provided in Article VXX or as otherwise provided by nonwaivable provisions of law, (b) bring an action for partition of Company property; (c) cause tho winding up of the Company, except as set forth in this Agreement; (d) demand or receive; (i) interest on its contributions to the Company or its Capital Account; or (H) any property from. the Company other than cash except as provided in Section 3.5; or Company Agreement of SRB 518 Venture GP, TALC .8. (e) have priority over any other Member either as to the return of contributions to the Company or as to items of Company income, gain, loss, deduction and credit, or distributions. ARTICLE V. BOOKS AND RECORDS Section 5.01 Books and Becortds. The Managers shall keep complete and appropriate records and books of account of all transactions and other matters related to the Company's business. Except as otherwise expressly provided by this Agreement, such books and records shall be maintained in accordance with generally accepted accounting principles, consistently applied, and shall reflect the allocations provided in Section 3.03, Section 5.02 Access by Members. Subject to Section 5,03, all books and records of the Company shall be made available at the principal office of the Company and shall be open to the reasonable inspection and examination of the Members or their duly authorized representatives during noi7nal business hours, and each Member has the right to inspect, and copy during normal business hours, those records, and to obtain from the Managers, promptly after becoming available, a copy of the Company's federal, state and local income tax or information returns for each year. Section 5.03 Corrfltlelrtiallitfof-rrttttion, Notwithstanding the provisions of Section 5.02, the Managers may withhold and keep confidential from any Member trade secrets, personnel records and other information if the Managers determine in good faith that making that information available to that Member would not be in the best interest of the Company or the Members generally in their capacities as such. Each Member agrees that the restrictions in this Section 5.03 are just and reasonable. ARTICLE VI. TRANSFERS OF INTERESTS Section 6.01 hwnsfers Generally, A Member may sell, transfer, assign, hypothecate, pledge or otherwise dispose of or encumber all or any part of its Interest, but only.to the extent the Managers consent in writing, in their discretion, Section 6.02 Rights of-Dansferee, A Person to which all or any part of a Member's Interest is transferred as permitted by Section 6,01, or that succeeds to all or part of the Interest of a Membar due to the death, divorce or incapacity of a Member who is an individual or the liquidation of a Member that is an entity, or on the bankruptcy of a Member, is entitled to share in the Company's profits and losses, and to receive distributions and allocations of Company income, gain, loss or credit, to the same extent as the predecessor Member to the extent of the Interest, and shall be admitted to the Company as a member only if (a) the Managers consent in ConipHny Agreement of $RD 518 Venture GP, LLC - 9 - writing, in their discretion, and (b) the Person receiving the Interest agrees in writing to be bound by the provisions of this Agreement as a Member and notifies the other Members of its address for notices under this Agreement, Section 6.03 Vold Assignments. Any putpotled sale, transfer, assignment, hypothecation, pledge or other disposition or encumbrance by a Member of all or any part of any Interest not made strictly in accordance with the provisions of this Article VI or otherwise permitted by this Agreement shall be entirely null and void, and of no force or effect. ARTICLE VIL WINDING UP Section 7.01 Events Requiring Winding Up. The Company shall be wound up only on the first to occur of any one or more of the following; (a) written consent of the Required Members; (b) at such time as there is no Member remaining; (c) entry of a judicial order to wind up the Company; or (d) on notice from any Member to the other Members on or after the 90th day following all Managers' ceasing to be Managers, unless a new Manager has been appointed as provided in Section 4.01(f), Section 7.02 Wii:ding Up Affairs rind Distrlbartiort of Assets. (a) If an event requiring the winding up of the Company occurs, the Managers or, if there is no Manager, a Person designated for this purpose by written consent of Members owning more than 50% of the outstanding Percentages owned by Members (the Managers or the Person so designated being called the "Liquidating Agent"), as soon as practicable shall wind up the affairs of the Company and sell and/or distribute the assets of the Company. The Liquidating Agent shall have all of the rights and powers with respect to the assets and liabilities of the Company in connection with the liquidation and termination of the Company that the Managers would have with respect to the assets and liabilities of the Company during the term of the Company, and the Liquidating Agent is expressly authorized and empowered to execute any and all documents necessary or desirable to effectuate the liquidation and termination of the Company and the transfer of any assets. The Liquidating Agent shall apply and distribute the proceeds of the sale or liquidation of the assets and property of the Company in the following order of priority, unless otherwise required by nonwaivable provisions of applicable law- (i) to pay (or to make provision for the payment of) all creditors of the Company (including Members who are creditors of the Company), in the order of priority Company Agreement of SRB 518 Venture GP, LLC 10 provided by law or otherwise, in satisfaction of all debts, liabilities or obligations of the Company due its creditors; (ii) after the payment (or the provision for payment) of all debts, liabilities and obligations of the Company in accordance with clause (i) above, any balance remaining shall be distributed to the Members having positive Capital Accounts in relative proportion to those Capital Accounts. (b) The Liquidating Agent shall have sole discretion to determine whether to liquidate all or any portion of the assets and property of the Company and the consideration to be received for that property, (c) Except as required by nonwaivable provisions of the TLLCL, no Member shall have any obligation at any time to contribute any funds to replenish any negative balance in its Capital Account. Section 7.03 Terminiaiion. on compliance with the distribution plan described in Section 7.2(a), the Liquidating Agent shall execute, acknowledge and cause to be filed a certificate of termination, at which time the Company shall cease to exist as a limited liability company. ARTICLE VIII. MISCELLANEOUS Section 8.O1 .Notices, Any notice to be given under this Agreement must be in writing and delivered personally (including by courier), electronically, by facsimile transmission, or by express, certified or registered inail (a) if to the Company, to the Managers, and (b) if to a Member or the Managers, at its address set forth on Exhibit A or, in the case of a Member subsequently admitted or a Manager subsequently appointed, in the instrument in which it agreed to be bound by this Agreement, or in either case at such other address as that Member may designate by notice to the other Members. A notice is deemed given on receipt at the address so provided. Section 8.02 En fire Agreement This Agreement supersedes all prior agreements and understandings among the Members with respect to the Company. Section 8.03 Amendments. This Agreement may be modified only on the written consent of the Required Members; provided, however, that an amendment adversely affecting a Member's distributions, allocations, obligation to make contributions to the Company or rights to consent or approve is effective against that Member only if that Member agrees in writing. Company Agreement of SRt3 518'Voiture GP, LLC -1X w Section 8,04 Waivers. A waiver of any breach of any of the terms of this Agreement shall be effective only if in writing and signed by the Member against whom such waiver or breach is claimed. No waiver of any breach shall be deemed a waiver of any other subsequent breach, Section 8.05 Severability, If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired, unless that provision was fundamental to the objectives of this Agreement. Section 8,06 Further Assurances. Each Member shall execute such deeds, assignments, endorsements and other instwments and documents and shall give such further assurances as shall be reasonably necessary to perform its obligations under this Agreement. Section 8.07 Governing Lmv, This Agreement shall be governed by and construed in accordance with the law of Texas. Section 8.08 Poiver.ofAttorvey. Each Member constitutes and appoints the Manager(s) as his/her true and lawful attorney with full power of substitution to make, execute, sign, acknowledge and file all certificates and instruments necessary to forth or qualify, or continue the existence or qualification of, the Company in any jurisdiction or before any governmental authority. This grant of a power of attorney is coupled with an interest and shall survive a Member's disability, incompetence, death or assignment by such Member of its Interest pursuant to this Agreement, Section 8.09 Successom andAssigns, Except as expressly provided to the contrary in this Agreement, this Agreement shall be binding on and inure to the benefit of the Members, the Managers and their respective successors and permitted assigns. Section 8.10 Counter'Parts. This Agreement may be executed in any number of counterparts or with counterpart signature pages, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Section 8,11 Attorney Representations. The parties all acknowledge. that Tamara M. Anderson, Esq., prepared this Agreement on behalf of and in the course of her representation of Selwyn P, Thint ("Thint"), and that; (i) the parties are hereby advised by Mrs. Anderson that a conflict exists among their individual interests; (ii) all Members, other than Tbint, are hereby advised by Mrs. Anderson to seek the advice of independent counsel regarding all of the terms and provisions of this Agreement; (iii) all Members, other than Thint, have had the opportunity to seek the advice of independent counsel; (iv) all Members, other than Company Agreement of 8RB 518 Venture GP, LLC -12 - Thint, have received no representations from Mrs. Anderson concerning the tax consequences of this Agreement; (v) all Members are hereby advised by Mrs. Anderson to seek the advice of independent tax counsel; (vi) all Members have had the opportunity to seek the advice of independent tax counsel; (vii) all the parties to this Agreement hereby waive any and all conflicts of interest that Mrs. Anderson has and may have in connection with preparation of this Agreement and consent to the rendering of services by Mrs. Anderson in connection therewith, and (0) all Members, other than Thint, further acknowledge and agree that the preparation of this Agreement by Mrs. Anderson will not preclude and/or inhibit in any way the continued representation by Mrs. Anderson of Thint in the future including representation in any matters that may, in whole or in part, be adverse to the interests of the other Members of the Company, THE UNDERSIGNED MEMBERS AND MANAGERS have duly executed this Agreement to be effective as of the day and year first above written. Each party has thoro-uglily reviewed all of the provisions of this Agreement, and each party hereby approves of the provisions of this Agreement in all particulars, 'MEMBER&MAN,A.GERS: By: Selwyn P. Thint, Member and Manager Date of Execution: Address: 307-C S. Friendswood Drive Friendswood, Texas 77546 Telephone: SS#: By: William White, Member and Manager Date of Execution: Address: 715 Clear Lake Road Clear Lake Shores, Texas 77565 Telephone. SS#: Conipany ,agreement of SRB M Venture GP, LLC -13- Ricardo David, Member and Manager Date of Execution: Address: 211 E. Parkwood Ave., Suite 201 Friendswood, Texas 77546 Telephone: SS#: Company Agreement of SRB 518 Venhtre GP, TLC -1�} EXHIBIT A SCHEDULE OF MEMBER INTERESTS Name and Address; Percentage Initial Capital Contribution Selwyn P. Tiaint 33.33% $ 500.00 307-C S. Friendswood Drive Friendswood, Texas 77546 William L.White -33,33% $ 500.00 715 Clear Lake Road Clean Lake Shores, Texas 77565 Ricardo David 33.33% $ 500.00 211 E. Parkwood Ave., Suite 201 Friendswood, Texas 77546 SCHEDULE OF MANAGER(S) Name and Address: Selwyn P. Thint 307-C S. Friendswood Drive Friendswood, Texas 77546 William wbitc 715 Clear Lake Road Clear Lake Shores, Texas 77565 Ricardo David 211 E. Parkwood Ave,, Suite 20I Friendswood, Texas 77546 EXHIBIT TSB" SCHEDULE -OF MANAGERS' TASTES AND OBLIGATIONS The following outlines key responsibilities for each manager; Selwyn V. Thint 1. Corporate Entity Documents 2. Paxinership Documents 3. Preparation of Plat of Consolidation 4. Site Engineering Package 5. TXDOT Driveway & Drainage Permit 6. Rezoning Process 7. Planning & Zoning Approvals 8. City Council Approval 9. Building Design Input 10. Site Construction Oversight It. Building Construction Financing 12. Building Leasing Plan William L. White 1. Site & Building Design Input 2. Building Construction Pricing 3. Building 1emiit Application 4. Subcontractor Negotiations 5. Material Selection 6. Bu ilding Construction Management 7. Building ConstructionFinaneuig S. Building Occupancy Permit 9. Tenant Build -out 10, Building Leasing Plan Ricardo David 1. Site Layout Package 2. Building Foundation Design 3, Building Structural Design 4. 1ECC RevJow 5. Windstorm Inspection 6, Construction Inspection of Foundations 7. Construction Inspection of Structural Members S. Building Construction Financing 9. Tenant Build -out 10. Building Leasing Plan CRYSTAL CRM DEVELOPERS LLC REAL ESTATE DEVELOPMENT & CONSTRUCTION 307-C S. Fricadswood Drive Friandswood, TX 77546 FAX TRANSMITTAL TO: Karen Capps, CEcD Economic Development Coordinator City of Friendswood Fax; 281-482-3722 FROM: Sel Thint, RE Ph: 281-482-2100 Fx: 281-482-2105 RE: Letters of Intent DATE: December 21, 2007 TOTAL PAGES INCLUDING THIS SHEET: 4 December 21, 2007 SBR 518 Venture GP, LLC 307-C South Friendswood Drive Friendswood, Texas 77646 Attention: Mr. Sel Thint, P.F. Reference: Letter of intent to Lease Location: 518 Office Building Across Friendswood City Hail Friendswood, Texas 77646 Dear Mr. Thint: This letter serves as notice of intent to lease 2,000 square feet at the proposed office building at FM 518 across from the Friendswood City Hall. The Initial lease rate is $1.76 per square foot per month with $0.26 per square foot per month for the common area maintenance. The term of lease will be 10 years with lease escalation clause to be negotiated at the time of contract. We look forward to occupying the new facility In November 2008. If you have any questions or would like to further discuss our recommendations please do not hesitate to contact us at your convenience. We may be reached at (281) 648-7571 or via e- mail at rdaviditmesouare.com. Sincerely, PE Square Engineering Consultants, LLC b, t .'— Ricardo A. David, P.E. President ® 211 Fast Parkwood, Suite 201 ® Friendswood, Texas 77646 ■ P.281.848.7571 ■ F.281.848.7684 www.posquare.com EVEREST DESIGN GROUP, LLL,C ARCHITECTURE ENGINMRING PLANNING December 20, 2007 Mr. William L. White SRB 518 Venture GP, LLC 307-C S. Friendswood Drive priendswood, Texas 77546 Re: Intent to Lease Office Space @ FM 518, across from City Hall. Dear Mr. White: This letter serves as notice of intent to lease 2,000 sf at the proposed office building at FM 518 across fiom the City Hall. The initial lease rate is $1.751sf per month with $0,251sf per month for the common area maintenance. The term of lease will be 10 years with lease escalation clause to be negotiated at the time of contract. We look forward to occupying the new facility in November 2008. Sincerely, Set Thint, P.E. Managing Member 307 S, Friendswood Drive, Suite C, Fr1031dewood, Texas 77546 Ph; 281.4824100 Fx: 281-482.2I05 PLANNING ENGINEERING CONSTRUCTION Dccember 20, 2007 Mr, Set Thirst, PR SRB 518 Venture GP, LLC 307-C S. Friendswood Drive Friendswood, Texas 77546 Re: Intent to Lease Office Space @ FM 51.8, across from City Hall, Dear Mr. Thirst; This letter serves as notice of intent to lease 2,000 sf at the proposed office building at FM 518 across from the City Hall. The initial lease rate is $1,75/sf per month with $0.25/sf per month for the common area maintenance. The term of lease will be 10 years with lease escalation clause to be negotiated at the time of contract. We Zook forward to occupying the new facility in November 2008. Sincerely, d1v &- - William L. White Managing Member 307-C S. FRiENuswoou DRIVE, FRIE Nusw000, 1TCXAs77546 PH: 281-482-2100 Fx: 281-482.2106 CHAPTER 380 INCENTIVE GRANT APPLICATION FOR ECONOMIC DEVELOPMENT January 14, 2008 This is the third economic incentive application for this Council's consideration. The proposed three-story office/retail project would be constructed on three contiguous vacant lots across from City Hall. The proposed 21,600 ft. building would assist with the expansion of two local businesses, the relocation of one business and possibly others to the new building. The Community and Economic Development Committee is recommending Council's approval and reimbursement of up to $30,000 to the business for city -related permitting and development fees. Following Executive Session consideration, Council may act on this item to approve the requested Economic Development Grant application. Agenda2008101. IITSY02